Q4 2023 Hecla Mining Co Earnings Call

Okay.

Operator: Good morning. My name is Jeanne, and I will be your conference operator today. I would like to welcome you to the Hecla Mining Company Earnings Conference. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press the star followed by the number one on your telephone.

Jamie: Good morning, My name is Jamie and I will be your conference operator today.

Jamie: I would like to welcome you to the Q4 2023 Hecla mining company earnings Conference call.

Jamie: All lines have been placed on mute to prevent any background noise.

Jamie: After the Speakers' remarks, there will be a question and answer session.

Jamie: If you would like to ask a question during that time simply press star followed by the number one on your telephone keypad.

Operator: If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the conference over to Anvita Patel. You may begin your question. Good morning, Gini, and thank you all for joining us for Hecla's fourth quarter 2023 Financial and Operations Results Conference Call. I'm Anvita Patil, Hecla's Vice President of Investor Relations and Treasurer.

Jamie: If you would like to withdraw your question Press Star one again.

Vita Jill: Thank you I would now like to turn the conference over to on Vita Jill you May begin your conference.

Good morning, Jamie and thank you all for joining us for Hecla's fourth quarter 2023 financial and operations results Conference call.

And with the bottle Hecla's, Vice President of Investor Relations and thank you for our financial results news release that was issued yesterday along with today's presentation are available on hecla's website on today's call it'd be helpful. Baker, Hecla's, President and Chief Executive Officer, Russell Waller had less senior Vice President and Chief Financial Officer.

Anvita Patel: Our financial results news release that was issued yesterday, along with today's presentation, are available on Hecla's website. On today's call, we have Phil Baker, Hetla's President and Chief Executive Officer, Russell Lawler, Hetla's Senior Vice President and Chief Financial Officer, and Carlos Aguilar, Hetla's Vice President of Operations. Phil and Russell will make most of the presentation. Carlos, who's at Keno Hill, will make a couple of comments. All of them will be available to answer questions.

Vita Jill: And cargo Sigler Hecla's, Vice president of operations.

Vita Jill: Phil and Russell they make most of the presentation Carlos Who's at Keno Hill will make a couple of comments.

Vita Jill: All of them will be available to answer questions.

Anvita Patel: Any forward-looking statements made today by the management team come under the Private Securities Litigation Reform Act and involve risks, as shown on slide 2 in our earnings release and in our 10-K and 10-Q filings with the SEC. These and other risks could cause results to differ from those projected in the forward-looking statements. Non-GAAP measures cited in this call and related slides are reconciled in the slides or the news release. I want to remind you, if you would like to have a call with management, you can do so by using the link under the section Virtual Investor Event in our earnings release that was issued yesterday. I will now pass the call to Phil. Thanks, Indita. Good morning, everyone.

Vita Jill: Any forward looking statements made today by the management team come under the private Securities Litigation Reform Act Uninvolved risks as shown on slide two in our earnings release and in our 10-K and 10-Q filings with the SEC.

Vita Jill: These and other risks could cause results to differ from those projected in the forward looking statements.

Vita Jill: non-GAAP measures cited in this call and related slides are reconciled in the slides or the news release I want to remind you. If you would like to have a call with the management you can do so by using the link under the section virtual Investor event in our earnings release that was issued yesterday I would now pass the call to Phil.

Phil: Thanks, David and good morning, everyone. Thanks for joining our call I'm going to start on slide three.

Phillips S. Baker: Thanks for joining our call. I'm going to start on slide three. 2023 was a year that was marked by wins and challenges. Some of the challenges were expected, some not.

Phil: 2013 was a year marked that was marked by wins in the face of challenges.

Phil: Some of the challenges we're expecting some not so let me first start with the successes we achieved we reported the second highest reserves in our history.

Phillips S. Baker: So let me first start with the successes we achieved. We reported the second highest reserve in our history. Our silver reserves have increased almost 40% over the past 10 years, and we've accomplished this by not only replacing 130 million ounces of silver production but adding 65 million ounces through the drill bit, primarily at the Lucky Friday mine in Greens Creek and most recently by our acquisition of Keno Hill. We've also had a successful year in exploration with some spectacular results at Keno and Greens Creek. We recorded our second highest revenue in silver production, and this was achieved despite Lucky Friday not being in production for five months. Both Green's Creek and Lucky Friday recorded their lowest all-injury frequency rate of all time, and we continue to be rewarded for the innovative culture we've created at our long legacy of 133 years.

Phil: Silver reserves have increased almost 40% over the past 10 years and we've accomplished this by not only replacing 130 million ounces of silver production, but adding 65 million ounces through the drill bit primarily at the Lucky Friday, and Greens Creek and most recently by our acquisition of Keno Hill.

Phil: Also had a successful year in exploration with some spectacular results at Keno and Greens Creek.

Phil: We recorded our second highest revenue in silver production and this was achieved despite lucky Friday.

Phil: Being in production for five months of Greens Creek, and Lucky Friday recorded their lowest all injury frequency rate of all time, and we continue to be rewarded for the innovative culture. We've created at our long legacy of 132 years.

Phillips S. Baker: We received a patent on the Underhand Close Bench Mining Bet. Now, in terms of challenges, this year was really marked by three events, the unexpected fire at the Lucky Friday, our decision to pivot to a surface only operation at Casa, and to prioritize safety over production at Keno, which has resulted in a slower than expected ramp-up of the mine. Now, Lucky Friday is already back in production, and we expect to ramp it up to full production by the end of the first quarter.

Phil: We received a patent on the underhand close bench mining method.

Phil: In terms of challenges. This year was really marked by three events the unexpected fire at the Lucky Friday, our decision to pivot to a surface only operation in cancer and to prioritize safety of production at Keno, which has resulted in slower than expected ramp up of the mine.

Phil: Lucky Friday is already back in production and we expect to ramp up to full production by the end of the first quarter. Our decision in late August to transform cancer tool for open pit operation by mid 2004 was the recognition that we need a radical change and we prioritize margin over volume and our execution.

Phillips S. Baker: Our decision in late August to transform CASA to a full open pit operation by mid-24 was a recognition that we needed radical change, and we prioritized margin over volume, and our execution of this strategy is already yielding results. At Keno Hill, exploration drilling has highlighted the potential and the opportunity at this mine. And while our ramp-up at Keno Hill has gone slower than expected, we firmly believe that focusing on safety and the environment and getting the mine to HECLA standards is critical if we're going to be successful and provide that long-term value that Keno has the potential to provide. Now we've navigated through the challenges of 2023, and we enter 2024 with four operating mines that will give us significant growth over the next three years. So I'm going to talk about exploration and operations after Russell talks about the financial and technical reports and Carlos makes a few comments.

Phil: This strategy is already yielding results.

Phil: Keno Hill exploration drilling has highlighted the potential and the opportunity at this mine and while our ramp up at Keno Hill has gone slower than expected, we firmly believe that by focusing on safety and the environment and getting the mine to Hecla standards is critical if we're gonna be successful and provide that long term value.

Phil: The Keno Hill has the potential to provide.

Phil: We've navigated through the challenges of 2023, and we entered 2024 with four operating mines that will give us significant growth over the next three years, so I'm going to talk about exploration and operations. After Russell talks about the financial technical reports in and colleagues make a few comments.

Russell Thanks, Phil I'll start on slide five.

Russell Lawler: Thanks, Phil. I'll start on slide five. By several measures, 2023 was a very good year. We generated $720 million in revenue.

Russell: Several measures 2023 was a very good year, we generated $720 million in revenue silver contributed 39% of our revenue, which is more than any other metal demonstrating hecla has a tree with silver company. We continue to have very strong margins from our silver operations with a margin of 50% of the average realized price of silver for the year.

Russell Lawler: Silver contributed 39% of our revenue, which is more than any other metal, demonstrating Hecla as a true silver company. We continue to have very strong margins from our silver operations, with a margin of 50 percent of the average realized price of silver for the year. As expected, and as we reported in the last quarterly call, we did see our net leverage ratio pick up from 2.2 times last quarter to 2.6 times this quarter. This is primarily due to Lucky Friday not being in production for the last five months of the year. Our goal remains to manage the net leverage ratio to be less than two times.

Russell: As expected and as we reported in the last quarterly call. We did see our net leverage ratio tick up from two to two two times last quarter to two six times. This quarter. This was primarily due to lucky Friday not being in production for the last five months of the year. Our goal remains to manage the net leverage ratio to be less than two times ill now turn to <unk>.

Russell Lawler: I'll now turn to slide six to discuss the company's priorities with its free cash flow as well as liquidity. On the previous slide, I mentioned the strong margins we see at our silver operations. These margins equate to significant free cash flows.

Russell: Slide six to discuss the company's priorities with its free cash flow as well as liquidity on.

Russell: On the previous slide I mentioned, the strong margins, we see at our silver operations. These margins equate to significant free cash flows with 12 months of production at Greens Creek, and six plus months at Lucky Friday. These operations generated $155 million in free cash flow with this cash flow and using our balance sheet. We've made some strategic investments for production growth.

Russell Lawler: With 12 months of production at Greens Creek and 6 plus months at Lucky Friday, these operations generated $155 million in free cash flow. With this cash flow and using our balance sheet, we've made some strategic investments for production growth. The $64 million investment at both Keno Hill and Casa Verde. In 2024, we anticipate seeing strong free cash flow generation from Lucky Friday and Greens Creek, relatively small investments at Kino and Casa, as well as we expect $50 million from the insurance on the Lucky Friday fire. Our priorities will be continued investment in the long-term production growth of our assets, which include development and exploration in all of our mines, but we'll also be prioritizing de-levering our revolver debt. We have full access to our revolver and can access the accordion if necessary.

Russell: The $64 million investment at Keno Hill, and Casa Berardi.

Russell: In 2024, we anticipate seeing strong free cash flow generation from Lucky Friday, and Greens Creek relatively small investments at keno and cancer as well as we expect $50 million from the insurance on Lucky Friday fire. Our priorities will be continued investment in the long term production growth of our assets, which include development and exploration at all of our minds.

Russell: But we'll also be prioritizing delevering, our revolver debt we.

Russell: We have full access to our revolver Amy can access the accordion if necessary, we expect to have adequate sources of cash flow to not only finance our production growth, but also reduced our revolver debt. Our belief is revolvers are meant to provide liquidity when needed, which ours has put our best undrawn.

Russell Lawler: We expect to have adequate sources of cash flow to not only finance our production growth but also reduce the revolver debt. Our belief is revolvers are meant to provide liquidity when needed, which ours has, but they are best undrawn. As we turn to the next couple of slides, I'll walk through some of the highlights of the technical report. On slide seven, you see the summary of the technical report for Keno Hill. This report confirms the value which we've had the opportunity to capture at Keno Hill. The mine projects to have 55 million ounces of silver in reserves at a reserve grade of more than 26 ounces per ton, with an expected reserve life of 11 years and an undiscounted cash flow of $420 million. After-tax cash flows discounted at 5% is just over $300 million at $22.

Speaker Change: As we turn to the next couple of slides I'll walk through some of the highlights of the technical reports.

Speaker Change: On slide seven is a summary of the technical report for Keno Hill. This report confirms the value, which we've had the opportunity to capture at Keno Hill.

The main projects to have 55 million ounces of silver and reserves.

Speaker Change: At a reserve grade of more than 26 ounces per ton with an expected reserve life of 11 years and an undisclosed to cash flow of $420 million. After tax cash flows discount at 5% is just over $300 million of $22 silver.

Speaker Change: This report demonstrates the value of the reserves at Keno Hill, which is only partially why we made the strategic acquisition.

Speaker Change: Bill will speak to this later in the presentation, but the value that we expect to be added at Keno Hill through the drill bit and our expert and our exploration success confirms the significant exploration potential.

Speaker Change: Turning to slide eight we've owned the castleberry mind for more than a decade and it's been a good mine over that time. However, when we acquired it back in 2013, we realize then that there was the potential for significant value in the open pits, which were anticipated to start production later in the mine life, we see that value crystallizing as we worked through the 160 Pitt and move our way towards the West mine.

Russell Lawler: This report demonstrates the value of the reserves at Keno Hill, which is only partially why we made this strategic acquisition. Phil will speak to this later in the presentation, but the value that we expect to be added at Keno Hill through the drill bit and our exploration success confirms the significant exploration potential. Turning to slide 8, we've owned the Casabrari Mine for more than a decade, and it's been a good mine over that time. However, when we acquired it back in 2013, we realized then that there was the potential for significant value in the open pits, which were anticipated to start production later in the mine life. We see that value crystallizing as we work through the 160 pit and move our way toward the West Mine Crown Pillar and Principal Pits, where we anticipate seeing this mine generate substantial free cash flows. However, it's not all investment in the property until then.

Speaker Change: Crown pillar in principle pits, where we anticipate seeing this mine generate substantial free cash flows.

Speaker Change: However, it is not an investment in the property until then based on this report we anticipate seeing the cash flow from the property would be slightly negative. This year turn positive next and be significant in 2026, which should return a large portion of our investment over the past couple of years prior to taking a production pause while accommodating a permitting timeframe for the higher grade pits in 2020.

Speaker Change: Seven we expect the process to stockpile followed by a production gap of three years when the higher grades that start production. The revised technical report anticipates a mine life of 14 years, returning an undiscovered cash flow of nearly $600 million.

Speaker Change: And a discounted cash flow of almost 350.

Speaker Change: Which demonstrates the value of this mine brings to the hecla portfolio, turning to slide nine and I'll turn the call to Carlos.

Carlos: Thanks, Roger I will make only a few common themes Si and remodel Taylor Boswell.

Carlos Aguilar: Based on this report, we anticipate seeing the cash flow from the property be slightly negative this year, turn positive next, and be significant in 2026, which should return a large portion of our investment of the past couple of years prior to taking a production pause while accommodating a permitting timeframe for the higher grade. In 2027, we expect to process the stockpile followed by a production gap of three years when the higher grades start production. The revised technical report anticipates a mine life of 14 years, returning an undiscounted cash flow of nearly $600 million and a discounted cash flow of almost $350 million, which demonstrates the value this mine brings to the Hecla portfolio. Turn to slide nine, and I'll call I'll turn the call to Carlos. Thanks, Russell. I will make only a few comments since I'm outside and remote from Taylor and Ross.

Carlos: On safety, we had strong all of our safety record.

Carlos: Let the buyer with respected by and you have got the range.

Carlos: Greg's all injury frequency rate was <unk> 29, and Lucky Friday volume 60 snakes above the lowest in the history.

Carlos: I think less not where it should be but had lots of changes.

Carlos: Safety was unacceptable for.

Carlos: For all the operations, but we haven't started our safety program the restock youre seeing more leading indicators like near Macy's Inc.

Carlos: Interactions and inspections, we expect to make all our operation safer for them in.

Carlos: Our four operations have started this year as strong Lucky Fridays really started the planning in the wake of January in Keno Haley safer and therefore is beginning to ramp up faster.

Carlos: <unk> got the weather events behind it and Cassa <unk> continue the good performance of the last few months what are the <unk>. We will have these theatre by having all four properties of duration now with that I will pass it on to fail and starting on slide 10.

Carlos Aguilar: First, on safety, we have a strong overall safety record, ask what the mines suspected by AMCHA have done. Green's Creek's ore injury frequency rate was 0.29 and Lockheed Friday 0.66, both the lowest in their history. Casa Grande was not where it should be but underwent lots of changes. Enid Shafley was unacceptable.

Fail: Thanks Carlos.

Fail: We've labeled Greens Creek on this slide the foundation of Hecla's future since as we grow at Greens Creek, we will continue to be the foundation, providing stability and consistency in our cash flow and production well into the future.

Carlos Aguilar: For all the operations, we have started a safety program that is focusing more on leading indicators like near misses, risk assessment, interactions, and inspections. We expect to make all our operations safer from now on. Our four operations started this year strong. Lucky Friday restarted as planned in the first week of January, and Kena Hill is safer and, therefore, is beginning to ramp up fast. Green's Creek got the weather events behind it, and Casa Verades continued its good performance of the last few months.

Fail: And the line reported a strong year, which could have been even better without the weather, reducing 12 days of production in the fourth quarter.

Fail: Now we expect the mindset.

Fail: Another consistent year in 2024 with production expected to be about eight 8% to $9 2 million ounces. So a little less silver and also produced a little less gold due to mine sequencing.

Fail: Where were mining lower grades.

But we will produce a bit higher zinc zinc grades are a bit higher.

Fail: So the cost per ounce will be higher we also are increasing the capital, replacing some mobile and mobile equipment as risk mitigation of operating at around 2600 tonnes per day.

Phillips S. Baker: What a difference we will have this year by having all four properties operational. With that, I will pass it on to Phil Starr in a moment's light. Thanks, Carlos.

Phillips S. Baker: We've labeled Greens Creek on this slide the foundation of Hecla's future, since as we grow, Greens Creek will continue to be the foundation providing stability and consistency in our cash flow and production well into the future. And the mine reported a strong year which could have been even better without the weather reducing 12 days of production in the fourth quarter. Now we expect the mine to have another consistent year in 2024 with production expected to be about 8.8 to 9.2 million ounces, so a little less silver and also a little less gold due to mine sequencing where we're mining lower grades, but we will produce a bit higher zinc. The zinc grades are a bit higher.

Fail: Particularly important at this higher throughput, we really need everything to be more reliable because there's not really an opportunity to catch up if we have an upset.

Fail: And like we've been at Green Street for 30 years, we still see opportunities to have lower cost of these investments to allow step lower costs and also increase recoveries with with some of the investments.

Fail: Slide 11 shows our planned 24 surface and underground exploration programs, which we'll be testing multiple targets with significant potential to add resources and Greens Creek started the mine had a mine plan of seven years and now 37 year light years later the mine plan is 14 years.

Phillips S. Baker: So the cost per ounce will be higher. We are also increasing capital, replacing some mobile and mill equipment as risk mitigation of operating at around 2,600 tons per day becomes particularly important. At this higher throughput, we really need everything to be more reliable because there's not really an opportunity to catch up if we have an upset.

Fail: This past year as underground exploration had good success in seven of the eight zones drilled with four of those zones in the fourth quarter. So we're very excited.

Fail: Cited about this year's program that coordinates the drilling underground with the surface drilling in the east or the upper plate and Gallagher.

Fail: We will also draw on the land package, we recently acquired that's the Mammoth claims.

Fail: We've had an interest in acquiring these claims or.

Phillips S. Baker: And like we've done at Green Street for 30 years, we still see opportunities to have lower costs for these investments to allow us to have lower costs and also increase recoveries with some of the investments. Slide 11 shows our Plan 24 surface and underground exploration programs, which will be testing multiple targets with significant potential to add resources. When Green Springs started, the mine had a mine plan of seven years, and now 37 years later, the mine plan is 14 years. This past year's underground exploration had good success, and seven of the eight zones drilled, with four of those zones in the fourth quarter.

Fail: At least 20 years.

And then a cliff Creek, which has been known to be a very prospective area, but it's as it's called.

Fail: Called Cliff Creek, it's almost inaccessible.

Fail: We started mapping this past year, but had logistical issues that we know what we need to do and we have a contractor who we think is going to be able to do it. So our focus is not just on the expanding high grade mineralization, but it's also in making new discoveries new discoveries of Cliff Creek potentially and then manage the claims.

Fail: Greens Creek is a premier silver mine, it's the it's actually be 11th largest in the world.

Fail: And I just want to congratulate the team on delivering excellent and consistent results and giving it a great future.

Phillips S. Baker: So we're very excited about this year's program that coordinates the drilling underground with the surface drilling in the east door, the upper plate, and Gallagher. We will also drill in the land package we recently acquired, that's the Mammoth Clag. We've had an interest in acquiring these claims for at least 20 years. And then there is Cliff Creek, which has been known to be a very prospective area, but as it's called, Cliff Creek, it's almost inaccessible. We started mapping this past year but have logistical issues, but we know what we need to do, and we have a contractor who we think is going to be able to do it.

Fail: Because this is truly a world class asset so, let's turn to slide 12 and.

Fail: And if Greens Creek is the foundation of helpless future Lucky Friday is the pillar of near term growth the value consistency culture and leadership at the Lucky Friday brings makes it our second cornerstone asset.

Fail: Yes.

Fail: This together with Greens Creek. These two mines make us the largest silver producer in the United States.

Fail: The mine restarted in early January as.

Fail: Carlos mentioned.

Fail: Production should be about 5 million ounces cost per ounce should be similar to Greens Creek capital will be about $15 million less this year than last year and that's about the same as what we had in 2022.

Phillips S. Baker: So, our focus is not just on expanding high-grade mineralization, but it's also on making new discoveries, you know, new discoveries at Cliff Creek, potentially, and at Mammoth Claim. Now, Greens Creek is a premier silver mine. It's actually the 11th largest in the world.

Fail: Despite a 19 year mining plan, we are focusing on the potential to expand the mine to the east at the current elevation, so we're doing drilling and exploration.

Fail: <unk> now there's lots of unknowns, but success could mean more production and lower cost and with the mine already stabilized we're starting to work on small improvements to allow higher throughput like the five new cycle loans that we're putting in at the mill, which will be installed in June.

Phillips S. Baker: And I just want to congratulate the team on delivering excellent and consistent results and giving it a great future, because this is truly a world-class asset. So, let's turn to slide 12. And if Greens Creek is the foundation of Hekla's future, Lucky Friday is the pillar of near-term growth. The value, consistency, culture, and leadership that Lucky Friday brings makes it our second cornerstone asset.

Fail: I'm going to move to slide 13.

Fail: At Keno Hill were struck by two things first the ore body is growing with a similar or better quality and I'm going to take a minute to talk about exploration.

Fail: But it makes me say that.

Fail: I'll do that in a couple of minutes first though one subject. The second thing we're struck by which is the safety and environmental performance.

Phillips S. Baker: Yeah, if you put this together with Green's Creek, these two mines make us the largest silver producer in the United States. The mine restarted in early January, and as Carlos mentioned, production should be about five million ounces, and cost per ounce should be similar to Green's Creek.

Fail: Not met our standards.

Fail: At fixing them is not an overnight exercise and given the long life that we see we are laser focused that patient on improving it on safety, it's mean changing people's attitudes and habits, and where we can engineering at risk. So we've taken many of our single scene.

Phillips S. Baker: Capital will be about 15 million less this year than last year, and that's about the same as what we had in 2022. Despite a 19-year mine plan, we're focusing on the potential to expand the mine to the east at the current elevation. So we're doing drilling and exploration to the east. Now, there are lots of unknowns, but success could mean more production and lower costs. And with the mine already stabilized, we're starting to work on small improvements to allow higher throughput, like the five new cyclones that we're putting in at the mill, which will be installed in June. Now, I'm going to move to slide 13.

Fail: Senior people from our corporate technical team and also at the Lucky Friday and have them rotating site base.

Fail: Basically what theyre doing is mentoring the qunar team.

Fail: And then I have an example of engineering out the risk we budgeted a cemented tailings backfill plant for Birmingham to enable it to me.

Fail: Mind.

Fail: Yeah, and your hand mining, which we build be safer than it.

Fail: The way we are planning now for.

Fail: So the environmental issues, we haven't chemo, we're doing studies to make the site meet our standards one of the things Thats come out of these studies is putting in a new water filtration plant at Bermingham, which we'll build this year that will cost.

Fail: Maybe $3 million to $5 million.

Phillips S. Baker: At Keno Hill, we're struck by two things. First, the ore body is growing at a similar or better quality. And I'm going to take a minute to talk about exploration that makes me say that. I'll do that in a couple of minutes.

Fail: Now at this point, we're not giving guidance as to when we will be in production in reporting unit costs wanted to make sure that we have the safety and the environmental issues right without the pressure of having the combined production targets with costs.

Phillips S. Baker: First, though, I want to talk about the second thing we're struck by, which is the safety and environmental performance that has not met our standards. Fixing them is not an overnight exercise, and given the long life that we see, we are laser-focused but patient on improving them. For safety, it means changing people's attitudes and habits, and where we can, engineering out risks.

Fail: What I can say is there that we think we're going to produce about 3 million ounces of silver.

Fail: We expect to spend about $15 million to $17 million a quarter, and then there'll be $30 million to $34 million of capital. So 2020 for its current prices should be a small investment year that we didn't make at keno.

Fail: But given the exploration potential in the long mine plan now is the time to get it right similar to what happened at Greens Creek.

Phillips S. Baker: So, we've taken many of our senior people from our corporate technical team and also at Lucky Friday and have them rotate sites. Basically, what they're doing is mentoring the Kino team. And as an example of engineering out the risk, we budgeted a cemented tailings backfill plant for Birmingham to enable it to mine in an underhand manner, which would be safer than the way we're mining it out. For the environmental issues we had at Keno, we're doing studies to make the site meet our standards. One of the things that's come out of these studies is putting in a new water filtration plant at Birmingham, which we'll build this year and will cost maybe three to five million dollars. Now, at this point, we're not giving guidance as to when we'll be in production and reporting unit costs. We want to make sure that we have the safety and the environmental issues right without the pressure of having combined production targets with cost.

Fail: Almost 40 years ago, and so speaking of Greens Creek, we've decided to do it.

Fail: Is to try to create more value by having Greens Creek and keno.

Fail: Try to implement its been synergies as possible. They are actually only two hours apart and it's a seven hour drive between the two sites. Once you get Skagway, which is short 40 minutes 40 minutes flight.

Fail: Now many of the supplies for Keno actually go by Greens Creek to Skagway in then they get truck the keynote.

Fail: So what we're going to do is we're going to promote Bryan Erickson who's our VP and GM at Greens Creek and Kim Campbell.

Fail: Greens Creek controller to provide leadership to both operations.

Fail: Brian In addition to having had the job it's green Street's GM over over the last two decades has led various departments sees you said up mining he's done surface up seats that maintenance and Tim has led purchasing warehousing accounting and a number of other functions. So we're.

Phillips S. Baker: What I can say is, though, that we think we're going to produce about 3 million ounces of silver, we expect to spend about $15 to $17 million a quarter, and then there'll be $30 to $34 million of capital. So, 2024, at current prices, should be a small investment year that we make at Kino. But given the exploration potential in the Long Mine Plan, now is the time to get it right, similar to what happened at Greens Creek, you know, almost 40 years ago. And so speaking of Greens Creek, what we've decided to do is to try to create more value by having Greens Creek and Keno try to implement as many synergies as possible. They're actually only two hours apart, and it's a seven hour drive between the two sites once you get to Skagway, which is a short 40 minute flight.

Fail: Don't know exactly what the synergies will be or what their value will be enrolled will try to outline that over overtime, but given the maturity of the systems that we Havent Greens Creek, this really should accelerate keno and becoming a store.

Fail: Strong cash flow generating mine.

Fail: So now let me go to the exploration at Keno and this is on slide 14.

Fail: Drilling programs continue to provide quite remarkable mineralized drill hole intercepts from both underground definition and surface exploration drilling.

Fail: And I'm only going to talk about the Bermingham. This morning, but realize that there are a series of other targets.

Fail: We know that some of which we will drill this next year that we'll actually get more drilling than then.

Fail: Or as much drilling its Birmingham will get from surface.

Fail: If you look at the plan view that sit in the middle of the slide and it's Mark <unk> Prime in the upper corners, Youll see that the Bermingham deposit has number of zones, the Arctic bear northeast and deep northeast and then there is the small image to the right shows.

Phillips S. Baker: Now many of the supplies for Keno actually go by Greens Creek to Skagway, and then they get trucked to Keno. So what we're going to do is we're going to promote Brian Erickson, who's our VP and GM at Greens Creek, and Kim Campbell, our Greens Creek controller, to provide leadership for both operations. Brian, in addition to having had the job as Green Street's GM over the last two decades, has led various departments. He's headed up mining, he's done surface operations, he's done maintenance, and Kim has led purchasing, warehousing, accounting, and a number of other functions.

Fail: BB prime going through those zones, and then you can see a prime is a cross section that actually goes through the Bernstein.

Fail: And if you look at the left most damage Thats a prime in the upper corners, and the book Bear Zone has three veins. The main named footwall vein at the bear vein and what I want to draw your attention to is the.

Fail: <unk> four ounce over 39, and a half the that is the transfer thing between the main footwall vein.

Fail: This is the widest highest grade intercept to that we're aware of we had a similar grade intercepts.

Phillips S. Baker: So we're, we're, I don't know exactly what the synergies will be or what their value will be, and we'll try to outline that over time. But given the maturity of the systems that we have at Greens Creek, this really should accelerate Keno into becoming a strong cash flow generating bond. So now, let me go to the exploration at Keno, and this is on slide 14. Our drilling programs continue to provide quite remarkable mineralized drill hole intercepts from both underground definition drilling and surface exploration drilling. And I'm only going to talk about Birmingham this morning, but realize that there are a series of other targets at Keno, some of which we will drill this next year that will actually get more drilling than or as much drilling as Birmingham will get from surface.

Fail: Quarter earlier just.

Fail: Just not quite as wide.

Fail: Looking back at the BD Prime image that's in the Middle There's a red star that is the high grade mineralization, that's more than a thousand feet deeper than previous drilling.

Fail: The longstanding view is the keynotes potential was only in the top three or 400 feet from the surface. We now have evidence that the high grade mineralization can be hosted the full depth of the one kilometer favorable basal quartz site host rock unit.

Fail: And so these two holes. So I really think are emblematic of the potential keno.

Fail: Now turning to slide 15 last year, we concluded that we cannot generate enough margin mining two separate underground deposits and open pit like I said at the beginning of the prior remarks, we just had too many people, we actually had 1100 people between employees and contractors and there just wasn't enough.

Phillips S. Baker: If you look at the plan view that's in the middle of the slide, and it's marked BB prime in the upper corners, you'll see that the Birmingham deposit has a number of zones, the Etta, Arctic, Bear, Northeast, and Deep Northeast. And then there's the small image to the right, which shows BB prime going through those zones. And then you can see AA prime is a cross section that actually goes through the Bears. And if you look at the leftmost image, that's AA Prime in the upper corner. And the bare zone has three veins, the main vein, the foot wall vein, and the bare vein.

Value in the rock to to operate the mine that way. So we made the decision to simplify the operations by shutting down the underground.

Fail: And so our team is really very successfully implemented the change 2024, we will have about a half year of underground operations as we mine out the already developed stopes and then we will have only surface tonnes coming out of the 160 Pitt.

Fail: Then go to slide 16.

Phillips S. Baker: And what I want to draw your attention to is the 54 ounces over 39 and a half feet, that is the transverse vein between the main and the foot wall vein. This is the widest, highest grade intercept that we're aware of. We had a similar grade intercept a quarter earlier, just not quite as wide. Looking back at the BB prime image that's in the middle, there's a red star that is the high-grade mineralization that's more than a thousand feet deeper than in previous drilling. The longstanding view is that Keno's potential was only in the top 3-400 feet from the surface.

Fail: And what this shows is our production cost and capital guidance, our 2020 for silver production guidance shows an increase of about 15% to 20%. This year, 30% by 2026 silver cost guidance is slightly higher than 23 cash costs are at $3 $3 75 to 86 between 13 and 14.

Fail: <unk> 50, so we still have substantial margin at current and even lower prices and proves that we are really the low cost leader in the industry.

Fail: Gold cost guidance is lower capital guidance is lower as well as we've completed and seeing the benefits of the major projects such as the service hoist and the oil bunker the Lucky Friday.

Phillips S. Baker: We now have evidence that the high-grade mineralization can be hosted the full depth of the 1-kilometer favorable basal quartzite host rock unit. And so these two holes, I really think, are emblematic of the potential of Keno. Now turning to slide 15, last year we concluded that we could not generate enough margin by mining two separate underground deposits in an open pit, like I said at the beginning of our remarks. We just had too many people. We actually had 1100 people between employees and contractors, and there just wasn't enough value in the rock to operate the mine that way.

Fail: Before I open the call to questions I want to leave you with the increasing role that silvers, playing and so solar and the energy transition and on slide 17, you'll see some of the key numbers that highlights this two.

Fail: <unk> 2023 was the 22nd year in a row that renewable capacity set a new record. So it's just continued to grow year after year and.

Fail: And 75% of this renewable capacity in 2023 and the <unk>.

Phillips S. Baker: So we made the decision to simplify the operations by shutting down the underground. And so our team has really very successfully implemented the change. 2024 will have about a half year of underground operations as we mine out the already developed stokes, and then we'll only have surface tons coming out of the 160 pit. And what this shows is our production costs and capital guidance. Our 2024 silver production guidance shows an increase of about 15 to 20% this year, and 30% by 2026. However, silver cost guidance is slightly higher than 23. Cash costs are at $3 to $3.75, and ASIC is between 13 and 14.50.

Fail: Additionally were solar.

Fail: Just in the United States Solar capacity has expanded by 44% a year on average.

Fail: Since 2009.

Fail: Now it takes about a half a million ounces of silver per gigawatt.

Fail: Solar that's installed.

Fail: So in 2023 silver demand in solar increased by about 50 million ounces to 190 million ounces and that's a 12% growth rate in the last 10 years.

Fail: So to put this 50 million ounces in context, that's the equivalent of five new Green Street's or 10, new Lucky Fridays.

Speaker Change: So not likely to happen.

Speaker Change: We're gonna have production that's going to increase at the same pace that this demand for silver for solar is growing at so that means we're going to ever have to rely upon above ground silver and in order to get that I think youre going to need higher prices to meet that demand so with that Jamie I'd like to open the call questions.

Phillips S. Baker: So we still have a substantial margin at current and even lower prices, and that proves that we're really the low cost leader in the industry. Gold cost guidance is lower. Capital guidance is lower as well, as we've completed and seen the benefits of the major projects, such as the service hoist and the ore bunker at Lucky Friday. Before I open the call to questions, I want to leave you with the increasing role that silver is playing in solar and the energy transition. And on slide 17, you'll see some of the key numbers that highlight this. 2023 was the 22nd year in a row that renewable capacity set new records.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: So Jamie I'd like to open the call to questions.

Speaker Change: Again, if you would like to ask a question press star followed by the number one on your telephone keypad.

Speaker Change: Our first question comes from the line of Lucas pipes with B Riley Securities. Your line is open.

Speaker Change: Thank you operator, and good morning, everyone. This is Nick Charles asking a question on behalf of Lucas.

Nick Charles: Really appreciate the update on keynote here it sounds like you've already made some nice progress.

Nick Charles: Is there still any ongoing assessment or is it is it now down to purely implementation.

Phillips S. Baker: So it's just continued to grow year after year. And 75% of this renewable capacity in 2023 will be solar. And just in the United States, solar capacity has expanded by 44% a year on average since 2009.

Speaker Change: Yes, it's really execution.

Speaker Change: <unk>.

Speaker Change: And just working through getting people, where they need to be when they need to be there.

Speaker Change: Sure.

We certainly one of the things that we've seen is that we have a lot of young.

Speaker Change: Relatively inexperienced people that come from all over Canada, and so that's why having this mentoring.

Phillips S. Baker: Now it takes about a half a million ounces of silver per gigawatt of solar that's installed. So in 2023, silver demand in solar will increase by about 50 million ounces to 190 million ounces. And that's a 12% growth rate in the last 10 years.

Speaker Change: We think it's so important.

Speaker Change: Yes.

Speaker Change: It's Ed will effect, it's been remarkable the improvements that we've seen over the course of last few few months, but having said that we want to be cautious that we're not pushing the organization faster when it's really capable of moving safely.

Phillips S. Baker: So to put this 50 million ounces in context, that's the equivalent of five new green scrapes or 10 new lucky fries. So it's not likely to happen that we're going to have production that's going to increase at the same pace that this demand for silver for solar is growing. So that means we're gonna have to rely upon above ground silver. And in order to get that, I think you're gonna need higher prices to meet that demand. So with that, Jeannie, I'd like to open the call to questions. Again, if you would like to ask a question, press the star followed by the number one on your telephone.

Speaker Change: Okay.

Speaker Change: Okay. Thanks for that.

Speaker Change: Nice nice to hear that the synergies with Greens Creek as well.

Speaker Change: Okay can I appreciate youre, not yes, I'm really I'm really excited about the potential for the synergies.

Speaker Change: One of the things is some back office.

Speaker Change: Things that can that's responsible for.

Speaker Change: Bryan certainly brings.

Speaker Change: Our load in as well.

Speaker Change: His experience in the mining methods.

Speaker Change: Similar.

Operator: Your first question comes from the line of Lucas Pipes with B. Reilly Securities. Your line is open. Thank you, Operator. Good morning, everyone.

Speaker Change: Clinton is.

Speaker Change: Different because it's larger Greens Creek, but one of the things, we're even thinking about us doing rebuilds, we do them in Juneau for Greens Creek, maybe we'll also do an <unk>.

Nick Giles: This is Nick Giles asking a question on behalf of Lucas. I really appreciate the update on Keno. It sounds like you've already made some nice progress. Is there still an ongoing assessment, or is it now down to purely implementation? Yeah, it's really execution where we are, in just working through getting people where they need to be, when they need to be there. You know, we're, certainly one of the things that we've seen is that we have a lot of young, relatively inexperienced people that come from all over Canada, and so that's why having this mentoring, we think, is so important. And, you know, it's had a real effect.

Speaker Change: In general.

Speaker Change: Yes.

Speaker Change: Got it got it that's that's great to hear.

Speaker Change: I can appreciate youre not ready to give some.

Speaker Change: Okay guidance like you outlined but safe to say, it's kind of a.

Speaker Change: Second half event before we see anything or any any color you could give.

Speaker Change: Give around timing just rough estimates.

Speaker Change: Look I'm not going to.

Speaker Change: It will be as fast as we think we can do it safely.

And have a stabilized organization there.

Speaker Change: As we indicated when we made the change we had.

Phillips S. Baker: It's been remarkable, the improvements that we've seen over the course of the last few months. But having said that, we want to be cautious that we're not pushing the organization faster than it's really capable of moving safely. That's it.

Speaker Change: Fortunately no incidents that.

Resulted in the injury.

Speaker Change: A major significant injury, but we have the potential for that and that we're not going to we're just not going to take a risk.

Speaker Change: Got it got it well I appreciate the color here I'll go ahead and jump back in the queue, but continued best of luck.

Phillips S. Baker: Thanks for that. Nice to hear that the Synergies with Greens Creek, you know, can appreciate you're not. Yeah, I'm really excited about the potential for the synergies. I mean, you know, one of the things is some back office things that Kim is responsible for. You know, Brian certainly brings a lot of experience and, you know, the mining methods are similar, although equipment is a bit different because it's larger at Greens Creek. But, I mean, one of the things we're even thinking about is doing rebuilds. We do them in Juneau for Greens Creek.

Speaker Change: Thank you.

Speaker Change: And your next question comes from the line of Joseph Reagor with Roth I'm Kim Your line is open.

Speaker Change: Yes.

Joseph Reagor: Hey, Phil and team thanks for taking my questions.

Joseph Reagor: Hum.

Joseph Reagor: On Keno Hill.

Joseph Reagor: As you look at the guide you gave this year versus the guide that was given at the beginning of last year.

Joseph Reagor: What do you think is the biggest delta for y.

Phil: There isn't as big of an increase as we might have anticipated for the mine. This year is it.

Phillips S. Baker: Maybe we'll also do them for Keno in Juneau, okay? That's great to hear. I can appreciate you're not ready to give, um, guidance like you outlined, but it's kind of a second half event before we see anything or any color you could give around timing, just rough estimates. Look, I'm not going to; it will be as fast as we can do it safely. And, you know, we have a stabilized organization there. As we indicated when we made the change, we had, Unfortunately, no incidents that resulted in injury, a major, serious injury, but we have the potential for that and that we're not going to; we're just not going to take a risk.

Phil: Not getting enough workers societies is still underground development being behind schedule is it.

Phil: Mine sequencing, how do you think about that and then.

Phil: What do you guys think is the biggest things you need to do in the future to kind of get it to where you want it to be.

Speaker Change: Yes, I mean look I think there is an element of caution here Joe.

Speaker Change: We want to make sure it is.

Speaker Change: So that we're not pushing the organization to fast I think.

Speaker Change: I think what we didn't.

Speaker Change: Appreciate was.

Speaker Change: The ability of the organization too.

Phillips S. Baker: Got it. Well, I appreciate the color here. I'll go ahead and jump back in the queue, but I continue. Best of luck. Thank you. And your next question comes from the line of Joseph Rager with RothMKM. Your line is, Hey, Phil and team. Thanks for taking my question. On Keno Hill, as you look at the guide you gave this year versus the guide that was given at the beginning of last year, what do you think is the biggest dilemma for why there isn't as big of an increase as we might have anticipated for the mine this year? Is it not getting enough workers to the site? Is it still underground development, being behind schedule? Is it?

Speaker Change: Deal.

Speaker Change: In a systematic way with issues that that arose and.

Speaker Change: We're getting those systems in place to be able to do that.

Speaker Change: Yes.

Hi.

Speaker Change: I think yeah.

Speaker Change:

Speaker Change: Well it will take a little bit of time, but.

Speaker Change: Im highly confident that over the course of the coming year that we will get there given number one week we fall.

Speaker Change: Our most senior experienced people in our organization and they're spending time, hence why carloads says is there at site.

Joseph Rager: you know, mine sequencing, you know, how do you think about that? And then what do you guys think are the biggest things you need to do in the future to kind of get it to where you want it to be? Yeah, I mean, look, I think there's an element of caution here, Joe, that we want to make sure, as I said, that we're not pushing the organization too fast. I think, I think what we didn't appreciate was the ability of the organization to deal in a systematic way with issues that arose.

With this.

Speaker Change: Reorganization with Brian.

Speaker Change: Heading up the activities.

Speaker Change: Both of these operations Greens Creek and Keno.

Speaker Change: We will have that leadership and the leadership will be close by.

Speaker Change: And so I think I think it puts us on a good path to to see the improvement technically it's not yes, there's challenges, but technically its theyre all manageable short shifts shifts or changes correlation is there anything you would like to add.

Speaker Change: Yeah.

Well, it's just that the mentoring and the training and trying to hire the most adequate it people retain.

Phillips S. Baker: And, you know, we're getting those systems in place to be able to do that, and Yeah. I, I, I think, yeah. You know, it will take a little bit of time, but, you know, I'm highly confident that over the course of the coming year, we'll get there. Number one, we've taken our most senior experienced people in our organization and they're spending time, hence why Carlos is there at FITE, with this reorganization, with Brian heading up the activities and at both of these operations, Greens Creek and Kena, you know, that And so I think, I think it puts us on a good path to see the improvements. It's technically it's not, you know, there are challenges, but technically, they're all manageable sorts of challenges. Carlos, is there anything you would like to add? Well, it's just the mentoring and the training and, you know, trying to hire the most suitable people, retain them, train, promote, and, you know, build the team in the proper way.

Speaker Change: Train promote and build the team.

Speaker Change: Hope you're well.

Speaker Change: Okay.

Speaker Change: Then shifting over to Carter.

Carter: Looking at the long term plan do you guys have off copier had the after tax IRR for that.

Carter: Expansion project.

Carter: Okay.

Carter: Okay.

Speaker Change: We yes.

Speaker Change: When we put the technical report together that'll be filed with our 10-K, we actually didn't we didn't calculate an IRR just because we're kind of mid project here in terms of cash cost is interesting because we're going to put a little bit of investment in this year, we should see some nice cash flows over the next few years then.

Speaker Change: Pause and then and then an investment so we actually didn't calculate the IRR.

Speaker Change: But what we did do is calculate the discounted cash flow ability.

Speaker Change: We're lapping gel because one of our directors.

Speaker Change: Second question.

Speaker Change: Well the reason I ask is is.

Speaker Change: General rule of thumb like if it was not an operating asset a capex that exceeds the MPV after tax would suggest the IRR is.

Speaker Change: The 25% or lower range.

Phillips S. Baker: Okay, and then shifting over to CASA, looking at the long-term plan, do you guys have off the top of your head the after-tax IRR for that expansion project? When we put the technical report together, it'll be filed with our 10K. We actually didn't calculate an IRR just because we're kind of mid-project here in terms of CASA. CASA is interesting because we're going to put a little bit of investment in this year. We should see some nice cash flows over the next few years, then a pause, and then another investment. We actually didn't calculate the IRR, but what we did do was calculate the discounted cash flows over the next few years. We're laughing, Joe, because one of our directors asked the same question.

Speaker Change: I was just wondering if there is.

Any risk at all that you guys decide that there's a better use of capital than that.

Speaker Change: Yes.

Speaker Change: I guess the first thing I'd say is that the investment that is going to end up happening. There is really just the stripping from the pits.

Speaker Change: Will happen in 'twenty eight 'twenty nine.

Speaker Change: And.

Speaker Change: So it's a relatively we will have much of the equipment already in hand. So there is there's very little equipment that needs to be purchased.

Speaker Change: Relative to the just the cost of moving the meeting the rock.

Speaker Change: We have a place to store that waste rock.

Speaker Change: So I think.

Speaker Change: I think.

Phillips S. Baker: Well, the reason I ask is, you know, the general rule of thumb, like if it was not an operating asset, a CapEx that exceeds, the NPV after tax would suggest the IRR is, you know, in the 25% or lower range, and I was just wondering if there's any risk at all that you guys decide that there's a better use of capital than that? You know, I guess the first thing I'd say is that the investment that's going to end up happening there is really just the stripping from the pit, and that it will happen in 28, 29. And so it's relatively, you know, we, and we'll have much of the equipment already in hand. So there is, there's very little equipment that needs to be purchased relative to the just the cost of moving the rock, you know where we have a place to store that waste rock. Uh, yeah, so I think, uh, we can certainly do the math to figure out what we have we have a very good cash flow between now and when we're doing that stripping.

Speaker Change: But certainly we can do the math to figure out what that was yes.

Speaker Change: We have very good cash flow between now and and that pause time, when we're doing that stripping.

Speaker Change: The other thing the other thing the Youll see this in the technical report, but the payback on those pits. The principal on the West mine Crown pillar pit comes very very quickly in the early 2000, <unk>. So that investment period of 2028 29.

Speaker Change: And then a little bit into 2030 gets paid back quickly and.

31, 32 et cetera. So.

Speaker Change: That speaks to what Phil just said in terms of us already today, we're investing in.

Speaker Change: The surface fleet et cetera, setting ourselves up for this.

Speaker Change: Mine for the long run.

Speaker Change: Okay, and one final thing if I could I saw an article a couple of weeks ago. Phil I believe you made the comments that you guys are looking at South America opportunity.

Speaker Change: To maybe expand the company and the production profile is this something that's like a long term thought or is there any potential to do M&A in the next year or two.

Well theres always the potential Joe to do it and what we have.

Phillips S. Baker: Yeah, the other thing the you'll see this in the technical report, but the payback on those pits, the principal in the West Vine cramp pillar pit comes very, very quickly in the early 2030s. So that investment period of 2028 29. And then a little bit into 2030 gets paid back quickly in 31, 32, et cetera.

Speaker Change: Said consistently is we are prepared to go outside the United States and Canada for silver assets.

Speaker Change: We won't do that for gold or any other metal.

Speaker Change: But we will consider it silver having said that.

Speaker Change: The ability to do those transactions are difficult.

Russell Lawler: So, yeah, and that speaks to what Phil just said in terms of us already today, you know, we're investing in the surface fleet, et cetera, setting ourselves up for this mine for the long run. And one final thing, if I could, I saw an article a couple weeks ago, Phil, I believe you made the comments that you guys are looking at South America as an opportunity to maybe expand the company and the production profile. Is this something that's like a long-term thought or, you know, is there any potential to do M&A in the next year or two? Well, there's always the potential, Joe, to do it.

Speaker Change: And so we're not we don't have to push it we're fortunate in that we have.

Speaker Change: Growth in the near term, we should get too close to 20 million ounces.

Speaker Change: By 2026.

Speaker Change: We have in our portfolio, we actually have.

Speaker Change: The operating properties, we have 20 properties in our portfolio half of which are silver assets half of which are gold assets.

Speaker Change: We'd like to advance those some of them are sort of.

Speaker Change: And the permitting process.

Speaker Change: Some we need to do more exploration, but but we do have the ability to do things within our portfolio, but having said that.

Phillips S. Baker: And you know, what we have consistently said is we are prepared to go outside the United States and Canada for silver assets. We won't do that for gold or any other metal, but we will consider it for silver. Having said that, the ability to do those transactions is difficult. And so we're not going to, we don't have to push it.

Speaker Change: Our long term objective is to be.

Speaker Change: Really.

Speaker Change: Premier's Silver company.

Speaker Change: It means more production as well as become and this is this is a super long term goal, but as well as become an S&P 500 company.

Phillips S. Baker: We're fortunate in that we have growth in the near term. You know, we should get to close to 20 million ounces by 2026. We have in our portfolio, we actually have to include the operating properties. We have 20 properties in our portfolio, half of which are silver assets, half of which are gold assets. And, you know, we'd like to advance those. Some of them are sort of in the permitting process; some we need to do more exploration on.

Speaker Change: And we think with more production and higher prices, which were as I indicated why we think we will see higher prices.

We think we think that that's something that could be achieved.

Speaker Change: The long term.

Speaker Change: Okay.

Speaker Change: So the color I'll turn it over.

Sure thing.

Speaker Change: Your next question comes from the line of Don Demarco with National Bank Financial Your line is open.

Don Demarco: Thank you operator, and good morning, Phil.

Don Demarco: My first question, maybe just building on the last caller's question about M&A.

Phillips S. Baker: But having said that, you know, our long-term objective is to be, you know, really the premier silver company, which means more production, as well as to become, and this is a super long-term goal, but as well as to become an S&P 500 company. And we think with more production and higher prices, which we're, as I indicated, why we think we'll see higher prices, we think that that's something that could be achieved in the long term. Okay, thanks for the color.

Don Demarco: We've seen with regard to pursuing silver assets, we've seen some of your peers challenged add silver assets are diversifying into gold.

Don Demarco: I think I heard from you that you're still your priority silver you wouldn't certainly go for gold outside of North America.

Don Demarco: But would you consider <unk> or are you still firmly focused in any way.

Don Demarco: M&A if it met all your hurdles.

Don Demarco: Primarily focused on silver.

Don Demarco: We will absolutely primarily focused on silver we will however, considered gold and maybe even other metals that.

Don Demarco: Or in the jurisdictions in the places that we operate so.

Phillips S. Baker: I'll turn it over to you. Sure thing. Your next question comes from the line of Don DeMarco with National Bank Financials. Your line is open. Thank you, operator. And good morning, Phil.

Don Demarco: We're in we're in.

Don Demarco: <unk>, we're in the Yukon were in Idaho, we're in we have activity in Quebec, and I would characterize just across the board and geologically as being the same so would we consider things other than silver in those places the answer's, yes is it our first priority.

Don Demarco: My first question, maybe just building on the last caller's question about M&A. You know, we've seen with regard to pursuing silver assets; we've seen some of your peers challenged to add silver assets to diversify into gold. I think I heard from you that you're still your priority silver; you wouldn't certainly go for gold outside of North America.

Don Demarco: But we certainly think.

Don Demarco: You saw the APAC transaction that we did in the Yukon.

Phillips S. Baker: But would you consider gold assets? Or are you still firmly focused on any M&A if it met all your hurdles? primarily focused on. We're absolutely primarily focused on silver. We will, however, consider gold and maybe even other metals that, you know, are in the jurisdictions, you know, in the places that we operate. So, you know, we're in Alaska, we're in Yukon, we're in Idaho, we're in the Abitibi, you know, Quebec, and I would characterize just across the border, you know, geologically, as being the same.

Don Demarco: We think that it was a strategic acquisition that really sets up.

Don Demarco: Hurtful for very long term.

Don Demarco: Potential.

Don Demarco: The things that could be very very meaningful so we're prepared to consider those things.

Speaker Change: Okay, Yes, it makes sense looking at potential jurisdiction synergies.

Don Demarco:

Don Demarco: Okay looking at the production outlook.

Don Demarco: We see the silver production is increasing over the next three years, we see 20 million ounces at the high end of the range.

Phillips S. Baker: So would we consider things other than silver in those places? The answer is yes. Is it our first priority? No, but we certainly think so. You know, you saw the ATAC transaction that we did in the Yukon.

Don Demarco: In a few years.

Costs were all included we get that but how should we think about costs over this timeframe should we think the cost is increasing or flat or is there any.

Phillips S. Baker: We think that it was a strategic acquisition that really sets up Hecla for the very long-term potential of things that could be very, very meaningful. So we're prepared to consider those things. Okay, yeah, it makes sense to look at potential jurisdiction synergies. Okay, looking at the production outlook, we see that silver production is increasing over the next three years. We see 20 million ounces at the high end of the range in a few years. Costs weren't included, we get that, but how should we think about costs over this timeframe? Should we think about costs as increasing or flat, or is there any..., just kind of for the sake of modeling what trends we should think about.

Don Demarco: Kind of for.

Don Demarco: For the sake of modeling on what trends, we should think about.

Speaker Change: I would generally say that in our call.

Speaker Change: You'll have some inflationary pressures so youll see cost increase as a result of that.

Speaker Change: It's something that I'm going to talk about first in terms of the total quantum of costs rather than on a unit basis Youll see so you can have some slight increases but nothing nothing.

Speaker Change: At Greens Creek, and the Lucky Friday, I'm, not anticipating any sort of significant sort of sort of cost increase.

Phillips S. Baker: You know, I would generally say that you'll have some inflationary pressure, and so you'll see costs increase as a result of that. It's something that I'm going to talk about first. In terms of the total quantum of costs, rather than on a unit basis, you'll see some slight increases, but nothing, nothing. You know, at Greens Creek and the Lucky Friday, I'm not anticipating any sort of significant cost increase. And at Keno, it's in a transitional period, it will be in a transitional period. I think Keno will, the objective we will probably have long term, given the exploration results we have, is to see that property increase its throughput.

Speaker Change: And keno, it's in a transitional it will be in a transitional period, I think I think Keno Hill.

Speaker Change: The objective, we will probably have long term given the exploration results. We have is to see that.

Speaker Change: Property increase its throughput we in fact in the in the technical report have an assumption that we get to.

Speaker Change: <unk> 550 tons.

Speaker Change: 600 short tons per day.

Speaker Change: Sort of three or four years.

Speaker Change: From now so as a result, you will see more dollars needing to be spent at at that location, but then when you look at it on a unit basis.

Phillips S. Baker: We in fact, in the technical report have an assumption that we get to I think 550 tons or 600 short tons per day in sort of three or four years from now. So as a result, you'll see more dollars needing to be spent at that location. But then when you look at it on a unit basis, for example, Greens Creek and the Lucky Friday, it's really going to be a function of the byproducts and the prices of those byproducts. To the extent that we're at the similar sort of price levels that we are now, I wouldn't anticipate much of a change. For Keno, I think over time we will be able to drive the cost down pretty substantially, but it's going to take more time. And I think trying to get some of these synergies with Greens Creek could be a benefit to both properties. Anything to add, Russell?

Speaker Change: Four four.

Speaker Change: Greens Creek, and the Lucky Friday, it's really going to be a function of the byproducts of the prices of those byproducts.

Speaker Change: To the extent, we're at the similar sort of price levels that we are now I wouldn't anticipate much much of a change.

Speaker Change: For sure.

Speaker Change: I think over time, we will be able to drive the cost down pretty substantially, but it's going to take more tons.

Speaker Change: And I think I think trying to get some of these synergies with Greens Creek, I think could be a benefit to.

Both properties.

Speaker Change: Okay anything to add Russell I agree with what you've said, there's really nothing that we have coming at us.

Phillips S. Baker: I agree with what you said. There's really nothing that we have coming at us that we could point to that would say this is going to change our cost profile dramatically, especially at the Lucky Friday in Greens Creek. And I'm thinking about it from the kind of just as produced production cost, what the cost we're going to spend on a monthly or yearly basis. Keno Hill, you know, Keno Hill's cost structure has quite a bit of fixed costs within it, and so as we are able to scale that up and see more throughput, there will be additional variable costs, but we should see, on a per unit basis, those should come off.

Russell: We would say we could point to that would say this is going to change our cost profile dramatically, especially at the Lucky Friday, and Greens Creek and I'm thinking about it from the kind of just as produce production costs. The costs were going to spend on a monthly or yearly basis.

<unk> Hill.

Russell: Keno Hills cost structure is quite is quite a bit of fixed cost within it.

Russell: So as we are able to scale that up and see more throughput.

Russell: There will be additional variable costs, but we should see on a per unit basis.

Russell: Would come off.

Russell: And then Phil you mentioned, the the treatment charge or the.

Phillips S. Baker: And then, Phil, you know, mentioned the treatment charges or the by-product credits, but we also have the treatment charges in there as well, and, you know, right now, I think the outlook for the treatment charges should be relatively stable, but, you know, we'll see those things can fluctuate and actually have an impact on our cost profile as well. Pretty dramatic treatment charges over time.

Russell: The byproduct credits, but we also have the treatment charges in there as well and right now I think the outlook for the treatment charges should be relatively stable, but we will see those things can fluctuate.

Russell: And to actually have an impact on our cost profile as well as a pretty dramatic.

Russell: Treatment charges over time.

Speaker Change: Okay and just as a final question. So you mentioned Keno Hill there.

Speaker Change: Ramping up to a throughput rate of around $5 50 short tons per year.

Russell Lawler: Mm hmm. Okay. And just as a final question, Phil, you mentioned Keno Hill there ramping up to a throughput rate around 550 short tons per year. And it's, what should we think about C 2024 production at 2.7 to 3 million ounces of silver? and, um... What should we pair up in terms of the throughput rate for that?

Speaker Change: And.

<unk>.

Speaker Change: Well should we think about 2024 production at $2 seven to 3 million ounces silver.

Speaker Change: And.

Speaker Change: What should we pair up in terms of throughput rate for that.

Speaker Change: Rather than $5 550 tons per day I would imagine so what should we think about in terms of tonnes per day and 24.

Speaker Change: Yes.

Speaker Change: That's certainly what we're still working through because we do have higher grade areas, but generally speaking somewhere between three and 400 tons per day.

Phillips S. Baker: Rather, that's 550 tons per day, I would imagine. So what should we think about in terms of tons per day and 24? You know, that's certainly what we're still working through because we do have, you know, higher grade areas, but generally speaking, somewhere between three and 400 tons per day. But again, we're not going to, we're not going to push it. But if we're at the lower end of the range of ounces, then we're at the lower end of the tons per day.

Speaker Change: But again, we're not we're not going to push it but.

Speaker Change: If we're if we're at the.

Speaker Change: The lower end of the range of ounces.

Speaker Change: A lower end.

Speaker Change: The tons per day, if we were at the higher end of the range and it's just more tons that we've been able to process.

Speaker Change: 400 tons.

Speaker Change: Okay. Thank you very much for your answers that's all for me and good luck with the rest of the quarter.

Speaker Change: Thank you.

Speaker Change: Again, if you would like to ask a question press star followed by the number one on your telephone keypad.

Phillips S. Baker: If we're at the higher end of the range, then it's just more tons that we've been able to process. 2 Williams, 410. Okay, thank you very much for your answers. That's all for me, and good luck with the rest of the quarter. Thank you. Again, if you would like to ask a question, press the star followed by the number one on your telephone. Your next question comes from the line of John Tumazos with his Variant Dependent Research.

Speaker Change: Your next question comes from the line of John Tumazos with John Tumazos very independent research. Your line is open.

John Tumazos: Thank you.

John Tumazos:

John Tumazos: Was the $21 million inventory adjustment.

John Tumazos: Fully related to falling zinc prices and zinc concentrates in transit.

John Tumazos: I think John I think the short answer to that is is it still lucky Friday. So John you are looking at the cash flow statement correct. The noncash the correct on the cash flow, yes, Thats a couple of things first that's related to Casa Berardi I would say the largest part of it.

John Tumazos: Your line is open. Thank you. Um, was the $21 million inventory adjustment solely related to falling zinc prices and zinc concentrates in transit? I think, John, I think the short answer to that is it's lucky Friday.

Phillips S. Baker: So, John, you're looking at the cash flow statement, correct, the non-cash, the add-back? Correct. On the cash flow? Yeah. That's a couple of things.

John Tumazos: <unk>.

John Tumazos: Where the cost per ounce, especially when you take into account the noncash charges. The depreciation that goes into the inventory there was a net realizable value write down there.

Russell Lawler: First, that's related to Casa Berardi, which I would say is the largest part of it, where, you know, the cost per ounce, especially when you take into account the non-cash charges, the depreciation that goes into the inventory, there was a net realizable value right down there. And that was accelerated because we stopped the development of new resources or new reserves at the West Mine Underground. We accelerate the depreciation because we anticipate that we'll mine it out in mid-2024. So we see the non-cash charges at Casa Verde have gone up. And yeah, I think that detail, if you go into the 10K, you'll see that detail as the non-cash charges have gone up. So that's the biggest driver of that.

And that was accelerated because we when we.

John Tumazos: Stopped development of new resources, and new reserves at the <unk>.

John Tumazos: West mine underground.

John Tumazos: We accelerated the depreciation because we anticipate that we'll mine out in mid 2024, So we see the noncash charge of the Casa Berardi has gone up.

John Tumazos: And I think that detail. If you go into the 10-K youll see that detail as the noncash charges have gone up. So that's the biggest driver of that there is then some changes as well at Greens Creek, where you shift.

John Tumazos: Concentrate and you get you have to true up estimates of what the inventory is that you have in the concentrate barns. So those will flow through there as well, but it's primarily cassa what I would say as you mentioned the change in the price of zinc and we have seen the change in the price of zinc has come off a couple of things, though if you look at the <unk>.

Russell Lawler: There are then some changes as well at Greens Creek where you ship concentrate and you get, you know, you have to true up estimates of what your inventory is that you have in the concentrate barn. So those will flow through there as well, but it's primarily CASA. What I would say is, you mentioned the change in the price of zinc and, you know, we have seen the price of zinc come off. A couple of things, though, if you look at the realized price of zinc, it's actually pretty healthy because we had hedges in place that, you know, caused us to not have to take that lower price, right? So it's above $1.30 for the quarter. But also, even at $1 or $1.10 zinc, both Greens Creek and Lucky Friday, you know, have strong positive margins. So there's really no, you know, NRV right down to either of those lines.

John Tumazos: Prices zinc it is actually pretty healthy because we had hedges in place that.

John Tumazos: Cause us to not have to take that lower price right. So it's above $1 30 for the quarter.

John Tumazos: But also even at even at a $1 or $1 10 zinc.

John Tumazos: Both Greens Creek and Lucky Friday.

John Tumazos: Strong positive margin, so there's really no.

John Tumazos: <unk> write downs at either of those mines.

Speaker Change: Second question on retirement.

The $76 million in idle facilities costs.

Speaker Change: Does that largely disappear.

Speaker Change: After the January restarted at Lucky Friday, and then say mid year, when Keno Hill starts to produce revenue.

Speaker Change: Short Answer's, yes, yes, that's correct.

Speaker Change: Yes.

Russell Lawler: The second question, if I may, is the 76 million dollars in EIDL facilities costs. Does that largely disappear? after the January restart at Lucky Friday and then say mid-year when Keno Hills starts to produce revenue, the short answer is yes. That's correct. In 2023, it was primarily driven by Lucky Friday, and then also there's a chunk of it that was Keno Hill as well, right, this ramp up at Keno Hill where we essentially have our cost of goods sold match our revenue, and then the rest of the costs go through that. So as we see Keno Hill produce more, that should shrink as well, and a little bit, yeah, a little bit of CASA and some of

Speaker Change: In 2023, it was it was primarily driven by.

Speaker Change: Lucky Friday, and then and then also there was a chunk of it that was.

Keno Hill, as well right Thats ramp up at Keno Hill, where we we essentially have our cost of goods sold match our revenue and then the rest of the cosco through that so as we see Keno hill produce more of that should shrink as well.

Speaker Change: Little bit, yes, a little bit of Cassa in southern Nevada is in there as well.

Speaker Change: Yes.

Speaker Change: Cash that we had the we had.

Speaker Change: The fire.

Speaker Change: And the in Quebec.

Speaker Change: I'll just have to be shut down.

Speaker Change: Correct.

Speaker Change: Thank you very much.

Phillips S. Baker: Remember, remember, Cassie, we had the fire in Quebec that caused this to have to be shut down. Thank you very much. Thanks, John. Your next question comes from the line of Lucas Pipes with B. Reilly Securities. Your line is open. Hey, thanks, Operator. This is Nick Giles, again, on behalf of Lucas Pipes.

Thanks, John.

Speaker Change: Your next question comes from the line of Lucas pipes with B Riley Securities. Your line is open.

Speaker Change: Hey, Thanks, operator, this is Nick Charles again on behalf of Lucas.

Could you provide any color around the cadence of insurance payments throughout the year I know first proceeds were here in February.

Lucas Pipes: Could you provide any color around the cadence of insurance payments throughout the year? I know the first proceeds were here in February. And then how should we think about timing as far as paying down the revolver? Is paying that down contingent upon receiving these payments? Well, you know, Nick, this is an insurance company, so I'm not going to give you a guess as to when they'll actually pay us, but we did. They actually have been very good, and they did make a payment just a couple of days ago.

Nick Charles: And then how should we think about timing as far as paying down. The revolver is is paying that down contingent upon receiving these payments.

Speaker Change: Well Nick this.

Speaker Change: This is an insurance company.

Speaker Change: And we're a guess as to when they'll actually pay us, but we are we.

Speaker Change: We did they had actually been very good and they did we did make a payment just a couple of days ago.

Phillips S. Baker: But, you know, what they have said is that they would anticipate during the course of the year. So just sometime over the course, as far as paying down the revolver, it will be a function of both that and the cash flow from our operation. So it's, you know, ideally, we will, as we build up our cash position, we'll pay it down.

Speaker Change: <unk>.

Speaker Change: And what they have said is that they would anticipate during the course of the year. So just sometime over the course as far as paying down the revolver it'll be a function of both that and the cash flow from our operations. So it's yes.

Speaker Change: Ideally.

Speaker Change: We will as we buildup cash position, we'll we'll pay it down.

Phillips S. Baker: Got it. Got it. Okay. Well, fair enough. I appreciate the color.

Speaker Change: Got it got it okay, well fair enough appreciate the color best of luck.

Nick Giles: Best of luck. Thanks a lot. There are no further questions at this time. I will now turn the call back over to Phil Baker, CEO, for closing remarks. Okay, well, thank you everyone for participating in the call. I'll remind you that we have the opportunity, if you'd like to have a one-on-one meeting with us, you can schedule one with us in the next hour or two, and if that doesn't work, then please feel free to reach out to INVITA, and we'll be happy to schedule you at a different time. I just appreciate the interest, and I definitely think that we're in a place with silver that we've not been before, and, you know, we're going to keep banging that drum to try to get people to realize what's happening in the silver space with the growth in silver. So, thanks so much.

Speaker Change: Thanks, Nick.

Speaker Change: There are no further questions at this time I will now turn the call back over to Phil Baker CEO for closing remarks.

Phillips S. Baker: Okay, well, thanks, everyone for participating in the call I'll remind you that we have the opportunity if you'd like to have a one on one meeting with US you can you can scheduled one with us in the next hour or two.

Speaker Change: And and if those if that doesn't work then please feel free to reach out to in beta.

Phillips S. Baker: And we'll be happy to schedule.

Phillips S. Baker: At that time.

Phillips S. Baker: Just appreciate the interest in <unk>.

Phillips S. Baker: Definitely think that we're in a place with silver that we've not done before.

Phillips S. Baker: We're going to keep banging the drum to try to get people to realize what's happening in the silver space with the growth in solar so thanks, so much Chuck soon.

Phillips S. Baker: Talk soon. This concludes today's call. You may now disconnect.

Speaker Change: This concludes today's call you may now disconnect.

Operator: Please wait. The conference will begin shortly. Please wait. The conference will begin shortly. Please wait. The conference will begin shortly.

Speaker Change: Please wait the conference will begin shortly.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Yeah.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: [music].