Q3 2021 Hecla Mining Co Earnings Call
Good day and thank you for standing by Wolken Q3, 2021 mining Company earnings conference call by Hackler at this time, all participants I don't listen only mode.
After the speaker's presentation there'll be a question and answer session to 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'll know like you had a conference over to envy put the tell yeah. Please go ahead.
Thank you all for data and welcome everyone. Thank you for joining us the headless third quarter of 2021 financial and operations because I was conference calls I'm under <unk> Hecla's Assistant Treasurer I financial results news release that was issued this morning, along with today's presentation at a van.
But unhurt clothes website on today's call behalf filmmaker Hecla's, President and C E O Lord and drawbacks, Heckler Senior Vice President and Chief operating Officer, and wrestle Lawler Hettler Senior Vice President and Chief Financial Officer.
Any forward looking statements made today by the management team come under the private Securities Litigation Reform Act Uninvolved risks that's shown on slides two and three in our earnings release, Antiknock 10-Q, and 10-K filings, but the a C C.
These and other risks could could cause results to differ from those projected in the forward looking statement reconciliations of non-GAAP measures cited in this call and related slides are found in the slides unusually with that I'll pass the caused a <unk>. Thanks, Indeed, good morning, everyone and thanks for joining or a call.
Looking at slides for Hecla continued with another quarter of solid financial performance, including free cash flow generation of 15.6 million and this makes it the eighth out of the past nine quarters of generating free cash flow and we've total $237 million over that period.
As a result, the balance sheet is solid with 190 million in cash and we've been working to improve the operational consistency. It cast sabaudia I'm happy to see that this head works paying off with record throughput this quarter.
Of nearly 400000 tons and realize this is 150 per cent more tons than the third quarter of 2013, which is the year, we acquired Curser berardi.
So since 2013 weeds recommissioned the east main we'd also expand to be operation to include numerous open pits and we've continued to extend the mine life now I'm highlighting these facts not only to give credit to the good work that that the guys at castle guys and gals. It casts are are doing it.
[noise] are doing [noise], but also just to highlight the culture, we have of improvement and innovation.
[noise] further evidence of that culture is our new mining method, the Lucky Friday and that's the this the first time, we really talking about the new mining method and we call. It underhand clothes bench and it's shown positive results in managing seismicity, which is the biggest issue that we have that at the Lucky Friday and this this new mining.
Method was developed as a result of another example of hecla's commitment to innovation the development of the remote vein minor [noise] and as the mine was preparing to receive the R. V. M. We were completing distress blasting and we determined that this blasting method could be optimized in a way to be a new and more.
Fective mining method [noise], so the rdm's been been developed and constructed and we're going to deploy it but it's gonna be at another property and as the the new drill and bless method is better suited to control seismicity [noise] and so that's an important safety element of the mine and Lauren's can tell you more about.
This this method in a moment now.
Now speaking of safety I Wanna give credit to the operations team for their continued commitment to the health and safety of our employees [noise]. This at this point, we've achieved a company wide all injury frequency rate of 1.63.
[noise] and then earlier this year, we published our sustainability report and we emphasized how small the footprint. We have we we generate less than 100000 tons of scope, one and two greenhouse gas emissions and given how smaller emissions are we invested in enough carbon offset credits for hecla to have net zero.
Missions. This year [noise] I suspect ruin a few mining companies that can say they are net zero for scope, one and two and we expect to continue to be net zero again next year.
Lastly, I before I turn it over to Russell and and Lauren I'd like to discuss the inflationary pressure [noise] that has impacted the industry.
[noise] at Hecla, we operate very high grade high value minds [noise] that are also very low tonnage. So we don't move a lot of Iraq.
Yeah, we we do in a in a year, what a larger mining company moves in a day. So we don't use a large amount of consumables, which is where you've had the the the most significant inflationary pressure [noise] also our power is supplied by local utilities from renewable sources, mostly hydro so our energy costs are very stale.
<unk>.
Now we have seen some labor costs and turnover pressure as most businesses are experiencing in at Green's Creek with her fly and fly out and almost fully vaccinated workforce [noise] being able really to work from just about anywhere we had higher than normal turnover and certain job classifications in the last quarter and it also takes longer to.
To replace.
Those employees with newly fully vaccinated employees.
So this is what we saw Green's Creek this quarter, we had higher than normal turnover, which caused us to change the mining sequence in mind tons that we're closer to the portal [vocalized-noise], which also tended to be lower grade [noise]. Thus, while we were able to produce the tonnage the number of ounces, where where lower as a result, we've made changes to these.
Crew schedule and would continue to recruit to ensure full staffing and we see this as a temporary issue, which doesn't impact the longterm value of production of the the World Class screens Creek mine, we have however, lowered our short term production guidance at Green's Creek due to the lower quarterly production [noise] and will speak more about this later in the presentation with.
I don't want to turn it over to Russell, Thanks, Phil turning to fight six journey with.
Over contribute 30% of the company's revenue well gold contributed 46%.
Lower contribution of silver is due to the price of silver having decreased somewhat during the quarter compared to gold holding steady and the production at Green's Creek is Phil's already discussed.
During the quarter of revenue continued to be driven by Greens creaking customer already. However, we can can you just see longterm growth and operational premium Lucky Friday.
We continue to see strong margins in both their silver athletes, where the margin was more than $11 per ounce and the gold assets, where the Muslim is more than $300 per ounce. [noise]. This means the property has generated more than $45 million free cash flow.
Turning to slide seven we continue to add to our balance sheet through cashflow from our operations with our net cash balance increasing roughly $10 million keep in mind. This is after the largest exploration spending the company's history. The semiannual interest payment on our long term debt and during the quarter. We had some other smaller working capital adjustments such as a settlement of a lawsuit relay.
Two in 1989 arrangement purchase of land at the Lucky Friday, which sets us up for tailings expansion for decades into the future and the purchase of carbon credits are leveraged profile has remained similar to that of loss of last quarter at 1.2 time [noise].
Lois since we first issue the long term bonds in 2013, we continue to see strong margins are silver assets, which have driven our free cash flow generation over eight of the last nine quarters. The strength of these assets allows us to not only returned significant amounts of capital to our shareholders in the way of dividends in fact, it's been 20% of our free cash flow and two.
21, and we've been paying dividends for a decade now, but also to enhance the dividend to our shareholders by lowering the silver link threshold of $20 per ounce of silver during the corner [noise] with that I'll pass the call to learn to go through our operations.
Russell I'll start on slide nine.
We produced 1.8 million, so ounces of silver and 9.7 thousand ounces of gold at the Greens Creek mine in Q3 at at all in sustaining cost of $5.94 per ounce of silver.
As Phil described production was lower because of challenges and standing coal mining cruise. The mining sequence was adjusted to make the best use of the available working shifts and this had us focused on zones near to the portal, but with lower silver grade [noise].
Despite this lower grade the my generated strong free cash flow of 34.4 million during the quarter and it's really a testament to the quality of this house.
Biting resumed in a deeper reaches of the mine in October and the silver grades are rebounding.
In the past six quarters Green Street generate a $290 million free cash flow.
To reflect the lower third quarter production, we're lowering silver production guidance to 9.2 to 9.5 million ounces from the 9.5 to 10 million ounces.
Gold production guidance is unchanged silver cash cost is maintained at negative one dollar deposit of one dollar per ounce and silver on sustaining cost guidance is maintained at 325 to $4 for hours.
[noise] moving to slide 10, Lucky Friday mind produced almost 832000 ounces of silver generated positive free cash flow of $7.5 million in the quarter.
Year to date, the my generated $26 million in free cash flow remains on track to achieve production and cost guidance.
We're very excited about the UCB mining method, which is showing significant improvements in managing seismicity, a key operating parameter for us.
Think of UCB as a short long haul stopped with no undercut that is bouncedown depth under engineered fill.
The method keeps a minor within a distressed horizon with work area dimensions that are readily rock bolted.
In the third quarter, 87% of the tons of mine came from the UCB method.
As we continue to refine it we're looking for opportunities to improve productivity as well.
With the success, we are seeing from the UCB plan to deploy the remote vein minor at another heck law operation.
On slide 11, the castle Berardi mine achieved record quarterly throughput of approximately 400000 tons milled this quarter the highest in the minds history.
No optimization investments continued to deliver results with consistent plant availability higher mill throughput and improve metal recovery.
And the third quarter of the mind produce 29.7 thousand ounces of gold at an all in sustaining cost of 1400 and $76 per ounce.
While production and through but our strong we're seeing higher costs related to the increased volume processed milk contractor costs associated with the improvement activities and.
And higher underground mobile maintenance costs.
We are increasing our production guidance to 130 to 135000 ounces of gold for the year.
Cash cough guidance is maintained at 1002 $1125 per ounce of gold.
Our sustaining capital spend was higher than anticipated due to several factors, including accelerating acquisition of two pieces of underground mobile equipment, which were plan for next year.
We are increasing dull and sustaining cash cost guidance to 1300, and 50 to $1400 per ounce.
We remain focused on reducing and optimizing costs at the mind following the impressive results from our mill improvement program.
Casa Berardi generated $73 million in free cash flow in the past six quarters, and we're looking forward to extending this trend.
But that I would like to return the call to Phil. Thanks, Lauren. So slide 13 shows are consolidated production guidance for 2021 to 2023, and we tweaked it slightly with an increase in gold production and a decrease in silver for the year, but no changes for the future years, [noise] and I want to remind.
And everyone that all of our silvers mind in the United States, representing about 40% of the silver mind here and it makes heckler the U S is largest producer.
Now silver cost guidance and gold cash guidance Ah reaffirmed the gold a sick guidance is increase because of the dancing the purchase of some of the equipment is Lorne described and because also the strengthening of the Canadian dollar and unlike our cash costs were 72% of our direct production costs are hedged at an average.
[noise] [noise] right of $1.33 are sustaining capital is unhedged. So we had the impact of the.
The the change in the currency [noise] might changes in the future we might we might hedge [noise].
This the sustaining capital now if you go to the bottom of the slide you can see capital expenditures exploration and Predevelopment cost guidance is unchanged.
Now before I take questions I want to close with a comment about E. S. G.
The way we have approached D. S. G is to make a real difference in our environment.
For our employees and the communities that we operate in and for shareholders and first for the environment I'm really proud of the fact that we probably have the lowest absolute emission per dollar of revenue of any mining company and the fact that we are net zero today for scope one and two.
For for employees I'm proud of the way, we treat our employees were they not only have a living wage [noise], but are generally the highest paid workers and the communities that they live in and for the U S employees. They have the benefits that are really best in class is first health care and and pension benefits, we have both the traditional pension and.
A 401k in the communities that we operate in we've we've been operating there for almost two full generations in the case of Lucky Friday I'm, almost four and are the largest private employer in those communities. So the communities in the mines have a real active engagement because they're largely part of the mine.
And finally Hecla has about 80000 shareholders about half of these are institutions have or individuals and I think [noise] Heckler board governs the business thinking about how to align management to the interests of shareholders and they think they do a very good job of that.
[noise] one one other thing I'll mentioned before taking questions is that I want to remind you that we.
We we give everyone the opportunity to have a one on one conversation with us.
On page eight of the release, you'll see a link that will allow you to sign up for one on ones on one of the four tracks that we have so attract for exploration operations General M. E. S. G. So I I just would encourage you to to take advantage of this opportunity and it's open to to anyone.
And with that operator happy to take questions.
Thank you at this time, if you would like to ask a question. Please press star one on your telephone keypad again to ask a question press star one on your telephone keypad.
And your first question comes from the line of Haiku from H C. Wainwright. Your line is now open.
They still good morning, thanks for taking my questions.
Sure thing.
Hey, you spent almost $14 million an exploration the quarter, you said that at least part of it is related to less COVID-19 limitations, which makes perfect sense, but I mean, you still increased expenditures by about 50% since Q2.
It just went through your September 14th exploration released again in there that you were saying that you were planning on replacing your reserves by the end of the year that all said walk me through your plans for 2022, and while you're likely can't give me actual numbers just sort of philosophically maybe walk me through your thoughts of exploration expenditures over the next <unk>.
Several quarters ideally by quarter, if you can.
Well Heiko it is is you.
Realize we're we're still in the budgeting process for the coming year. So I don't have not gonna be able to give you a quarterly information, but what I can suggest to you is that we'll have a level of expenditure that will be similar to this year.
And you know the reason for that is we we see huge opportunities.
It really each of our operating properties and then we have a suite of you know almost 10 other properties that we we see the need to.
Explore because of the potential that they have to create real value for shareholders.
You know, we it and it it just sort of applies across the board. So I'm not gonna I'm really go through any particular property.
But it is.
You know in the in the time I've been at Hecla I've not seen us have this inventory of exploration offered opportunities [noise].
Having said that we are judicious on the use of this capital. It's it's it's hard to come by we have lots of compete competing interests for the capital both exploration and operations wise and and acquiring additional assets.
So it is a it is a competitive process for the use of it.
That's a good answer more or less what I was looking for.
Uhm building by the way just just to clarify you you're saying the same as this year not the same as this quarter correct.
Correct, I mean, I I would anticipate.
You know you you are a guidance is right at $40 million I would expect us to be something similar to that in 2022.
[noise] and it's we have the capability to do it and we have the opportunity.
Makes sense.
Okay, and then just one one quick clarification F S something somewhat similar Oh, a few quarters ago, but the numbers are just even more extreme now you have essentially the equivalent of a quarter sales in cash on the balance sheet you have more than twice that in available liquidity and I guess, where I'm going with this is when is enough enough.
[noise] look heiko, if you look at US historically, we have viewed the the need to have the balance sheet be [noise].
Relatively.
Conservative.
So levels of of cash on the balance sheet of a couple of hundred million dollars [noise].
Are more is is is something that we will likely have is you know will we have double that you know probably not we probably will we have enough opportunities of where to deploy the capital [noise] that you know that won't grow to that sort of level, but.
You can see the blue could if you you look at the strength of these operations and if you have the right the right medals price.
Thank you so much I'll get back with you.
Thanks Haiku.
Thank you. Your next question comes from the line that Lucas pipes from be Riley a security. Your line is now open.
Thank you very much and good morning, everyone.
Well relative to my expectations for Q3 at Queen's Creek.
It was a little little weaker and I. Just wondered are you able to provide a bit more color. What happened maybe it was just my estimate that was too aggressive, but but what.
What's your take on Greens Creek, and and the outlook for queue for next year I. Thank thank you very much.
Sure sure Lucas as we've tried to indicate.
The what we had was a shortfall in the number of of of workers.
As a result, and it's really as a result of.
The quality of these guys and their ability to move to different positions with different entities, it's a fly and fly out operation for the for the most part [noise] for at least a large portion of the workforce.
And and so we had a we had people that left and we hadn't had the opportunity to replace them. We have now done that uhm through to two ways. One is recruiting more people, but we've also change the schedule and so you'll see things go back pretty much to normal but I.
Think it's going to be an ongoing challenge that we and everyone has I mean, it's it's just a fact.
And every business there seems to be a short shortage of of people and we're all we're quite competitive and we have a great operation and we have a great culture, there where people want to come to to the mine and so I don't think we'll have any long term issues Lauren anything you want to add to that.
So I would just reiterate that.
We're all enjoying the mining sector is we're all enjoying elevated metal prices.
Skilled trades skilled miners are in high demand and.
We should expect some some tunnel as a result, but.
I think it will be manageable for us.
And and to follow up on the competition coming from within the mining sector or is it the broader economy were electricians can.
Find a lot of it's it's.
It it depends on the <unk> on the skill.
Set that the person has certainly for miners, it's within four electricians for mechanics, it's both within and without.
Mhm.
And.
Yeah.
When it comes to retaining skilled labor.
I had some labor rates will go up and as we look out. The 2022 is their ballpark kind of cost inflation figure that we should be.
Sling in two to two to account for this.
I think there's some some increase that you'll see but it is frankly.
When when you think about the fact that we spend an aggregate about half a billion dollars.
Little more than that it's really quite quite small the impact that the the.
That that will have on our cash flow Lauren anything to add.
I I don't think we should anticipate across the board increases were being very focused on staying competitive in certain areas. So if that helps to mitigate the cost exposure.
The other thing is I think we just have a compensation structure, that's quite quite competitive and there's a there's a fair amount of pay that people get that is based on performance and the mine has had very good performance screens Creek in particular, but we see that happening with cassa with the improvements that we've made.
At the Lucky Friday with the new mining method and as a result, there is more as these minds are more productive there is more opportunity for for this incentive pay to to pay out.
That's very helpful. Thank you for that discussion.
Putzing topics.
A couple of.
You know headlines regarding smelter Calvin from the back of her.
High energy prices and I wondered I you see.
That impact you if so uhm.
Would this be showing up operationally and ultimately maybe in the numbers with would be keen to hear your perspective on this.
I guess the I guess the first thing I'd say is that we have framed contracts for our concentrates. So we don't have a concern.
For not having a home for the concentrates which.
Could be a concern we have a small amount that we sell spot and it but it's very desirable concentrate so no.
Nope no concern there yeah, I think longterm, it's probably it's hard to say with the balances, but longterm. It's you know a net net benefit for us too.
I had this sort of consistent production that we have and these contracts Russell anything you want to add just just to confirm kind of what Phil has already said, we have long term customers that we've been dealing with for for many many years and as a result of that we haven't really seen any change in.
Or or risk of us not being able to sell or concentrate as a result of the increase in power costs well. We did see obviously was the the change in the prices of the underlying medals, which certainly was beneficial to us and.
We didn't see the the other side of that being the risk of lack of a place to send the concentrate and the other thing to remember lucas's that we sell all of our concentrates into Asia or North America.
Got it got it very very helpful that maybe one follow up on this in the industry. What's the what's the take on this issue is it viewed as a kind of temporary.
You know energy crunch or folks maybe positioning themselves structurally too.
Take into account and maybe less certain uptake environment.
Yeah. We were we were at the Virtualized that conference and talking to our customers and some of whom have these operations that were shut down and that was the question. We were asking them and it's fundamentally becomes question of how Europe deals with getting the energy costs down and.
Sure seems that they will will have to to do that it's.
The impact of having such high energy costs is [noise].
So difficult for that ultimately for that economy that you know I think I think it will it will eventually reverse but [noise].
There's a lot of politics that come into play as well.
Got it. Thank you one last question for me felt just unlucky Friday wanted to circle back on the seismicity and and you know not just you know wanted wanted to get your take this has always been something that you've been talking about for for some time and.
It sounds very encouraging, but but to start if you're able to elaborate on your prior comments and and your outlook on Lucky Friday it with.
Could trouble controlling the faces of the city going forward. Thank you for your perspective.
Sure. So so absolutely the lucky Friday's biggest impediment too.
Production is seismicity roughly 20% of the.
Stokes available time is not available because we're having to manage seismicity and so with this.
New mining method.
We think we can change that number dramatically.
Most important point is.
We're not going to have workers that are in these headings that have the.
The potential for a seismic event or at least the same level of potential for a seismic event and so we're very very encouraged by the safety improvements substantial improvement in the safety.
Of the mind, particularly of a catastrophic safety event. So so that's number one and then as we.
Fine tune this and fine tunes may be too strong of a description of where we are at this point, but as we improve it.
We think there's the potential for may be productivity improvements.
Learn what what would you like to add.
Well I, just reiterate that being able to utilize the headings more than 80% of the time is a clear and obvious benefit in addition to the safety and.
And as we become more efficient with method, we may be able to improve the productivity. So I think that the three things taken together are very promising.
And you look at the Lucky Friday, and with the reserve in the resource that it has and the expiration potential but it has both.
Dip in on strike.
U E.
And you and within sort of a two or three years, two or three mile range around this infrastructure. The potential. This this has and of being able to manage the seismicity has a huge huge value benefit for the mind and the company.
Okay. Thank you and then a quick follow up on this but when.
It comes to.
The new mining technique kind of what what are your benchmarking again, and then developing this expertise mostly in house or you have consultants that you've brought in who are helping you on that learning curve.
Well look sort of the way this became apparent to US was as we were.
Trying to advance the R V M and tried to.
Make the reduce the seismicity associated with this we came to the conclusion that we could.
Test this and potentially had this UCB method be [noise].
An alternative or or in addition to and we've decided that it's an alternative to the R. B M.
And and.
We have had some assistance in some areas, but for the most part it's been homegrown and I would say most part it's 95% homegrown.
Certainly, there's there's elements of drilling and blasting that we've we've brought.
People in that contractors that have helped us with that but I'm I'm very optimistic that Lauren is team and and with help from others that we're going to really advanced this and realize this is a patented mining method. We are it's patent pending but we have applied for.
That because it is quite unique what we're what we're doing lorne.
I think the only thing I would follow up with Phil.
In answer to Lucas question about benchmarking.
I think really the only thing you can benchmark the new method against is the previous method at the Lucky Friday, because the Lucky Friday really is a unique setting.
From a joke technical perspective, so [noise].
Benchmark this against other mining methods I think is is probably not a very productive exercise, but going forward will be benchmarking against our ability to produce in that mine from the previous method.
And you can expect Lucas uhm over the course of the next sort of six months will we will.
Provide quite a bit of detail and insight into how the method works.
And what the what the cycle is and how it changes the design of the mind because all of those things are have come into play in all of them are in process, where we have been in a full on test of this for over a year now or I guess right at a year.
And as as Lorne said, 87% of the tons have come from this method. So we're not we're not suggesting something to you that is.
Is is at.
Great risk in fact, the we've really taken the risk out of it over the course of the testing period that we've had.
Very helpful really appreciate all the color and <unk> best of luck.
Okay, well. Thank you Lucas we're excited about it.
Thank you. Your next question comes from Michael said Parker from our B C capital markets. Your line is now open.
Thanks, very much guys uhm, maybe drilling down a little bit on Green's Creek can you talk about how things are looking quarter to date.
Are you fully stopped at this point is throughput looking better are you accessing those higher grade areas or is it still too early to provide detail beyond what's implied by the revised guidance.
Sure sure to answered all that is yes.
Yeah, so, so where where you'd get you've seen our guidance. So you can sort of do the math as to what we would expect the fourth quarter to to look like we fully believe will be in that range.
We we did change our schedule schedule had been in the process of being changed during the course of the quarter that has that is I think is fully implemented now that's schedule change Lauren.
With the with the cruise that we've made that trends right. Yeah. So it's not everyone minutes right right and then.
As far as far as hiring yeah, we have the full contingent we don't we don't have budget, but because we we always budget more employees than we need.
And so we still have more hiring that we'll be doing but we don't see any impediment.
At this point to reaching the guidance that we've provided.
So would it be would it be fair to say that October looks better than September AGA, yeah. Okay.
Yes.
Okay.
So where where mining it said the issue was we were not mining and the 200, South the 200 South is about.
About an hour and 40 minute round trip.
45 minutes, one way with a loaded novato yeah.
So so we we.
We.
We are.
Able to mine there we have a personal and we were we were sure 25% of the workforce.
Mining workforce that the cruise that we'd be doing this work. So it was a it was a major impediment and.
It didn't.
Become apparent to us until well into the corner.
Right right that makes sense good to hear about getting better and then maybe following up on the last question or parts of the last question and you've touched on it a bit on the call, but I didn't see the word inflation and your results. Obviously, that's been an ongoing theme for most of your peers.
Benefit somewhat from from not having a big Capex spend ahead of you obviously, but can you talk about what you are seeing at the main level on the cost side in terms of labor or materials or any other impacts that you might be getting visibility on or that we might need to watch into 2022.
So the short answer Michael is that about 50% of our costs are labor about 10% energy and nothing else is double digit.
So so as I said the energy costs are stable the the labor costs that we would anticipate inflation in certain categories of labor, but not across the board.
And and then with respect to everything else, Yeah, there's gonna be a little bit of inflation, but it is it is it is not the same sort of impact for us that you have for you know.
These larger economies of scale type operations remember these mines.
Uhm Cassez, four and a half thousand ounces a day.
2000 tons, a day 2200 tons a day at Green's Creek.
A thousand tons of dates lucky for a really really small.
Operations. So the inflationary pressure is really more on the labor side, and I think that will be largely a trailing factor compared to the other.
Been a consumables Lauren anything to add.
I think you know for us it's.
Our energy is essentially a fixed right cost because of the hydropower.
Labour will see some variation in some categories and then it's kind of a mixed bag, we've been working to renegotiate contracts and in many cases.
We've driven or consumable costs down but in some areas. They go up.
Cement.
Right and and and and you think about.
Contractors cost of contractors is absolutely increased because of the good performance of the sector and yeah. A lot of work, Yeah, Hey, Moore and you know do you think of drilling and it's the same thing an assay. So there is there's no doubt Michael those cost pressure, but it's it's it's on a relative basis. It's.
Muted for us.
And that that actually that that last point was going to be my follow up on the exploration side in terms of your program for this year and especially into next year, realizing that your budgeting and can't get specific but are you seeing impacts in terms of rig availability contractor availability.
Those cost pressures as well.
So the good news is with the given that the two programs are relatively that will be the same.
Most of those rigs that we had in this year, we will have next year.
Uhm is there increased cost pressure, absolutely so we won't get as much footage.
But that also becomes a design issue of Ah how long of of.
Holes will we do so so we're trying to we're trying to manage that I I think we'll still get very good results, even with the cost being.
Higher.
Got it makes sense and then maybe finally for me in terms of a rock Creek and mountain or I know you've stated that you would provide next steps early next year I don't mean to jump the gun here, but can you can you maybe walk us through at a high level.
What that process is from here and how how we should think about how they slot.
Into the portfolio from your perspective.
Sure I don't think anything has dramatically changed in that we still think that rock Creek in Mont nor are and in production.
End of this decade early the next decade.
So we had taken into account. The fact that you you. It's a legal process not a regulatory process that we're really in.
And so you have to react to the decisions that the judge makes.
And and earlier this year the judge made a decision that.
Remanded set aside the record of decision the biological opinion on Rock Creek. So that's one project Martin or is this a separate project and what we have done it or what we are in the process of doing is evaluating how to advance montador.
And rock Creek, but particularly Mont nor because it's it's it's really the next one up so that we satisfy.
The the decision that the judge and it's the same judge that the judge made on Rock Creek and so we're working through that.
And that's really all I can say at this at this point.
Okay, great. Thanks.
Thanks, Thanks for the answers much appreciate it thank you.
Sure Michael.
Thank you and we have a follow up question from Lucas pipes from be Riley security Your line itself.
Thank you very much my my follow up question on Rock Creek them onto Norwich, just asked but.
Since I'm on the line so I'll I'll ask you a high level of question.
So, it's it's macro related but uhm.
Gulf prices hanging in there.
Right.
My opinion really high inflation readings, but they're not but not.
Not breaking out and I wonder how.
How do you look at the investor backdrop of their discussions about how to engage with investors in this environment. It seems to me like there is a disconnect.
Between what I'm seeing on the macro side and how how the group is trading. So so would appreciate your thoughts on that.
Sure well I guess, the first thing I'll say is that the equity investor Uhm.
Is a is a price follower of the commodity and so so you know the.
The ability to to.
C.
Uhm.
But for the equity investor to have an impact on the.
The general view of gold is limited.
Certainly, sometimes you'll see the equities outrun the commodity.
But we're not seeing that at this at this point I think there is as I talked to investors theirs.
A general view, that's similar to yours, but.
There just has to be more of a generalist interest in in the in the commodity itself and that hasn't hasn't come yet I think it will come there's there's everything that you're saying about inflation is absolutely true and you start to look at where real rates.
Are are given that inflationary level uhm and there really should be a a quite an interest in precious metals I dunno Russell if you have anything to add to that the only thing I would add is certainly gold.
Yeah, I think it's got a lot of things in the macroeconomic environment to support it.
No silver on the other side of that which obviously being the largest silver producer in the us.
Highly leveraged this summer and we we see that really being supported similar to gold. But then you also get the industrial demand as well so from.
From the perspective of our portfolio certainly we take a look at that and we take a look at the what's going on on in the macroeconomic environment, we feel quite good about the outlook. Yeah. So that's that's a great point Russell you think about silver and you think about this.
You had the Biden administration that said they want half the vehicles to be electric by 2030, and we want to reduce the cole.
Power generation and those two things require as well as everything else requires more silver and solar vol takes in wind energy and other things so the and the electric vehicles itself. So so you look at the outlook for silver and it's not it's not.
Like the the demand that we've had in the past it is an order of magnitude in higher than than what we've had previously and it's just unlike any time in the history of the metal.
You can go back to the early 19, hundreds and that was that was the last time you had in a change in technology that caused demand for the metal.
In in the same way that we're we're having with this this energy change.
Very helpful. Again really appreciate it then best of luck.
Thanks Lucas.
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Ladies and gentleman that concludes Q3 tiny tiny one had Cola mining company earnings conference call human add disconnect.
Thank you for your participation.
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