Q1 2024 Hecla Mining Co Earnings Call
Please wait the conference will begin shortly.
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Rochelle: Thank you for standing by. My name is Rochelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the first quarter 2024 Hecla Mining Company Earnings Conference call.
Thank you for standing by my name is Rochelle, and I will be your conference operator today at this time I would like to welcome everyone to the first quarter 'twenty to 'twenty four Hecla mining company earnings Conference call.
Rochelle: 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 this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Anvita Patil. Please go ahead.
Rochelle: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star. One again. Thank you I would now like to turn.
Anvita Mishra Patil: The call over to N V. The Patel. Please go ahead.
Anvita Mishra Patil: Good morning, Rochelle, and thank you all for joining us for Hecla's first quarter 2024 Results Conference call. I'm Anvita Patil, Vice President of Investor Relations and Treasurer. Our earnings release that was issued yesterday, along with today's presentation, are available on our website.
Anvita Mishra Patil: Good morning, Rochelle, and thank you all for joining us for Hecla's first quarter 'twenty 'twenty four results conference call.
Anvita Mishra Patil: The top auto Vice President of Investor Relations and Treasurer there.
Anvita Mishra Patil: Our earnings release type of issued yesterday, along with today's presentation.
Anvita Mishra Patil: Notable on our website on the call is for the Baker, President and Chief Executive Officer, That's a Lawler senior Vice President and Chief Financial Officer, and cargoes that guar Vice President of operations Sheridan.
Anvita Mishra Patil: On the call is Phil Baker, President and Chief Executive Officer, Russell Lawlar, Senior Vice President and Chief Financial Officer, and Carlos Aguiar, Vice President of Operations. Phil and Russell will make most of the presentation. Carlos, who's at SEMA Hill, will make a couple of comments. And we will all be available to answer your questions. Any forward-looking statements made today by the management team come under the Private Securities Litigation Reform Act and involve risks, as shown on slides 2 and 3 in our earnings release and in our 10-K and 10-Q filings with the SEC.
Anvita Mishra Patil: Colin Russel doesn't make most of the presentation Carlos who is that you don't know doesn't make a couple of comments.
Anvita Mishra Patil: We will all be available to answer your questions Andy.
Anvita Mishra Patil: Any forward looking statements made today by the management team come under the private Securities Litigation Reform Act uninvolved risks as shown on slides two and three in our earnings release and in our 10 P. M. Thank you filings with the SEC.
Anvita Mishra Patil: These and other risks could cause results to differ from those projected in the forward looking statements.
Anvita Mishra Patil: non-GAAP measures I did on 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 cause of diminishment you can do so by using the link under the section virtual investor event.
Speaker Change: The earnings release that was issued yesterday and now Costa coffee shops, Thanks, Andy and good morning, everyone. As you May know I'm. The chair of the Silver Institute I volunteered for this position because of the worlds growing need for silver and so I'm going to actually start the call talking about silver because I'm just very excited about the role.
Anvita Mishra Patil: 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.
Phillips S. Baker: Thanks, Anvita. Good morning, everyone.
Phillips S. Baker: As you may know, I'm the chair of the Silver Institute, and I've volunteered for this position because of the world's growing need for silver. And so I'm going to actually start the call talking about silver because I'm just very excited about the role that silver has in the energy transition and something I didn't really appreciate, which is the silver demand in India. So let's go to slide three.
Phillips S. Baker: Silver has an energy transition and something I didn't really appreciate which is the silver demand in India. So let's go to slide three.
Phillips S. Baker: I can't overstate how remarkable 2023 was for solar, energy, and silver. New investment in renewable energy was about $675 billion, and of that, $393 billion, or almost 60%, was for solar. And that's a 12% increase over 2022, and it's a new annual record. And this investment should continue.
Phillips S. Baker: I can't overstate, how remarkable 2023 was for solar energy and silver new investment in renewable energy was about $675 billion and of that.
Phillips S. Baker: At 393 billion or almost 60% was for solar and Thats, a 12% increase over 2022, and it's a new annual record.
Phillips S. Baker: Silver's photovoltaic or PV demand increased to 194 million ounces, and that's per the silver survey that was put out about four weeks ago. And that's about four times more than the demand 10 years ago, and it's... Photovoltaics now represent 16% of global silver demand. Silver photovoltaic demand has had about a 17% annual growth rate over the last five years, and in 2024, there should be another 40 million ounces of silver demand for solar.
Phillips S. Baker: And this investment should continue silvers photovoltaic or PV demand increased to 194 million ounces and that's per the silver survey.
Phillips S. Baker: Put out about four weeks ago.
Phillips S. Baker: And that's about four times more than than the demand 10 years ago and it's in photovoltaics now represent 16% of global silver demand.
Phillips S. Baker: Silver photovoltaic demand hasn't had it been a 17% annual growth rate over the last five years and in 2024, there should be another 40 million ounces for solar so to put that into perspective.
Phillips S. Baker: So to put that into perspective, the 40 million ounce increase is about the same as the total demand that you had for photovoltaics in 2013, and you'd need four new Green's Creeks and eight new Lucky Fridays to meet it. Let's go to slide four.
Phillips S. Baker: 40 million ounce increase is about the same as with total demand that.
Phillips S. Baker: The ads for photovoltaics, 2013, and you'd need for new Greens creeks, and eight new Lucky Fridays to meet it let's go to slide four.
Phillips S. Baker: About two weeks ago, I attended the India Silver Conference, where I learned five things. First, India's silver demand is pretty consistent at about 17 to 19% of global demand. You had a drop-off during the pandemic, but it has since come back.
Phillips S. Baker: That two weeks ago I attended the India's Silver conference, where I learned five things.
Phillips S. Baker: First India silver demand is pretty consistent at about 17% to 19% of global demand you had a drop off during the pandemic, but it has since come back and as global demand grows so does Indian demand.
Phillips S. Baker: And as global demand grows, so does Indian demand. And Indians actually have to pay more for their silver because of the 12% duties and taxes that they have now. That's going down 1% per year until it gets to 3%, so it's going to improve for them. February imports set a monthly record of 77 million ounces, and if you take the first quarter in total, it exceeded all of the silver that was imported for the whole year in 2023.
Phillips S. Baker: And Indians actually have to pay more for their silver because of 12% duties and taxes that they have now that's going down 1% per year until it gets to 3%. So so it's going to improve for them.
Phillips S. Baker: February imports set a monthly record of 77 million ounces and if you take the first quarter in total it exceeded all of the silver that was.
Phillips S. Baker: Imported for the whole year in 2023.
Phillips S. Baker: And what might be most surprising of all is the price of silver and rupee terms hit an all-time high in April. And then, finally, I learned the policy commitments the Modi government has made to renewables have really created a very large new market for solar. And that was a lot of the conversation at the Indian conference was about how they are moving forward with solar.
Phillips S. Baker: And what might be most surprising of all is the price of silver in rupee terms hit an all time high in April.
Phillips S. Baker: And then finally I learned the policy commitments the Modi government has made renewables.
Phillips S. Baker: He has made to renewables has really created a very large new market for solar and that was that was a lot of the conversation at the Indian conference West how they.
Phillips S. Baker: Move forward with wind solar and you put the solar in the Indian demand together, it's about 35% of silvers global demand and they are they are both growing in the three year deficit is now over 500 million ounces and I expect more deficit this year.
Phillips S. Baker: If you put the solar and the Indian demand together, it's about 35% of silver's global demand, and they are both growing. And the three-year deficit is now over 500 million ounces, and I expect more deficit this year and into the foreseeable future. Silver's fundamentals are unlike any time in its history. Now turning to slide five, let me talk about Hecla and its role with the deficit.
Phillips S. Baker: And into the foreseeable future silvers fundamentals are unlike any time in its history.
Phillips S. Baker: Now turning to slide five let me talk about Hecla and its role with the deficit with the Lucky Friday back to full production in Keno Hill ramp up progressing we are the fastest growing establish silver company as a result of innovation and the efforts of our people. If you go back to 2010, we produced a total of 10 million ounces Greens Creek.
Phillips S. Baker: With the Lucky Friday back to full production and Kena Hill ramp-up progressing, we are the fastest growing established silver company as a result of innovation and the efforts of our people. If you go back to 2010, we produced a total of 10 million ounces. Greens Creek produced seven, and Lucky Friday produced three. This year's guidance is Greens Creek at around nine and Lucky Friday at five. That's a 40% increase without considering Kena Hill. And it's not just production growth for the sake of growth. We have maintained a low-cost structure, in fact, the lowest in the industry. In 2010, Lucky Friday's cash costs were $3.76 per ounce.
Phillips S. Baker: Seven Lucky Friday produced three this year's guidance is Greens Creek at around nine and Lucky Friday at five that's a 40% increase without considering Keno Hill.
Phillips S. Baker: And it's not just production growth for the sake of growth we have maintained our low cost structure in fact, the lowest in the industry in 2010, Lucky Friday cash costs were $3 76 per ounce were going to be around $2 50 to $3 25. This year.
Phillips S. Baker: We're going to be around $2.50 to $3.25 this year, and this improvement is due to investments that we've made, the four-shaft, the patented UCV and innovation that we made, the mining method, the service hoist, ore storage bunkers, and lots of other improvements. And over the same period, Greens Creek's costs have also remained consistently low. This year, we expect cash costs to be $3.50 to $4.00, and ASIC to be $9.50 to $10.25.
Phillips S. Baker: This improvement is due to investments that we've made the four shaft the patented UCB and innovation that we made mining method the service hoist.
Phillips S. Baker: Or storage bunkers and lots of other improvements and over the same period Greens creek's cost have also remained consistently low this year, we expect cash cost to be $3 50 to $4 basic to benign 50 to $10 25.
Phillips S. Baker: And Greens Creek has had growth in reserves. Since 2010, we've replaced 120 million ounces and added reserves to maintain a 13-year mine plan. When Greens Creek started its operations back in 1989, the mine had a seven-year reserve plan. I think Kino is going to be on the same path as these two mines.
Phillips S. Baker: And Greens Creek has had growth in reserves since 2010, we've replaced 120 million ounces and added reserves to maintain a 13 year mine plan when Greens Creek started its operations.
Phillips S. Baker: 1989, the mine had a seven year reserve plan.
Phillips S. Baker: I think Keene I always got to be on the same path as these two mines.
Phillips S. Baker: Turning to slide six there's really three messages for this quarter first our silver operations, a strong and consistent with Greens Creek, delivering a solid quarter and Lucky Friday, achieving full ramp up second Keno Hills ramped up is going well and we're seeing incremental and steady improvements in our safety culture, and an engineering risks out of them.
Phillips S. Baker: There are really three messages for this quarter. First, our silver operations are strong and consistent, with Greens Creek delivering a solid quarter and Lucky Friday achieving full ramp-up. Second, the Keno Hills ramp-up is going well, and we're seeing incremental and steady improvements in the safety culture and in engineering risks out of the mine. Third, we see the first quarter as an inflection point, with strong free cash flow from our established silver operations and proven performance at Kino and the insurance proceeds, which we will use to de-lever over the next 12 months.
Phillips S. Baker: Mine third we see the first quarter as an inflection point with strong free cash flow from our establish silver operations improving performance at Keno and the insurance proceeds, which we will use to de lever over the next 12 months. Finally, we expect to release, our 2023 sustainability reported or Andy.
Phillips S. Baker: Finally, we expect to release our 2023 sustainability report at our annual meeting on May 17th, and we are again net zero in 2023 on scopes one and two carbon emissions, where we utilize UN certified offset credits. And this year, instead of using credits, we are investing in research to sequester carbon in our operations.
Phillips S. Baker: The meeting May 17th.
Phillips S. Baker: And we are again net zero in 2023 on scopes, one and two carbon emissions.
Phillips S. Baker: Where we utilized UN certified offset credits.
Phillips S. Baker: This year instead of using credits we are investing in research to sequester carbon in our operations with that ill pass the call onto Russell.
Phillips S. Baker: With that, I'll pass the call on to Russell. Thanks, Phil. I'll start.
Russell D. Lawlar: Thanks, Phil. I'll start on slide eight.
Russell: Thanks, Phil I'll start on slide eight.
Russell D. Lawlar: In the first quarter, we saw our financials begin to rebound, as expected from the effect of the fire at Lucky Friday. We had nearly $190 million in revenue, an increase of 18% from the previous quarter, while we still invested free cash flow into the operation. We saw an improvement of approximately $30 million from the fourth quarter last year. Maintaining our net leverage ratio at 2.7, we expect to see the net leverage ratio improve to less than two times over the next 12 months as we see the full effect of Left Week Friday coming back into production, as well as the continued ramp-up at Keno Hills.
Russell: In the first quarter, we saw our financials begin to rebound as expected from the effect of the fire at Lucky Friday, we had nearly $190 million in revenue an increase of 18% from last quarter, while we still invested free cash flow to the operations. We saw an improvement of approximately $30 million from the fourth quarter of last year.
Russell D. Lawlar: Our net leverage ratio at two seven times, we expect to see the net leverage ratio improved to less than two times over the next 12 months as we see the full effect of Lucky Friday coming back into production as well as the continued ramp up at Keno Hill. We also saw our positioning in silver continue to improve as 44% of our revenue was generated from silver.
Russell D. Lawlar: We also saw our positioning in silver continue to improve as 44% of our revenue was generated from silver, an improvement of five percentage points over 2023. The margin at our silver operations remained strong during the quarter at 47% of the realized price of silver.
Russell D. Lawlar: Improvement of five percentage points over 2023, the margin at our silver operations have remained strong during the quarter at 47% of the realized price of silver we expect the margins and the resulting free cash flow from these operations will continue to improve as we continue to see the effect of Lucky Friday for the remainder of the year.
Russell D. Lawlar: We expect the margins and the resulting free cash flow from these operations will continue to improve as we continue to see the effect of Lucky Friday for the remainder of the year. Turning to slide 9, with Lucky Friday back to full production and the Keno Hill ramp-up going well, I'll speak a little bit about our financial priorities in 2024, which are hinged on the fact we have these great silver assets, which have generated over $600 million in free cash flow since 2020.
Russell D. Lawlar: Turning to slide nine with Lucky Friday back to full production in the Keno Hill ramp up going well I'll speak a little bit about our financial priorities in 2020 for us which are hinged on the fact, we have these great silver assets, which have generated over $600 million in free cash flow since 2020.
Russell D. Lawlar: I expect this free cash flow trend to continue and even strengthen as we see support in the price for silver and see the impact of Lucky Friday being back into production. This free cash flow will first be invested in our operations, including the ramp-up of Keno Hill. We anticipate we'll spend $190 to $200 million in capital, lower than last year because of the completion of projects at both Lucky Friday and Keno Hill.
Russell D. Lawlar: I expect this free cash flow trend to continue and even strengthened as we see support in the press for silver and see the impact of Lucky Friday being back into production.
Russell D. Lawlar: This free cash flow will first be invested in our operations, including the ramp up of Keno Hill, we anticipate we'll spend $190 million to $200 million in capital lower than last year because of the completion of projects that both Lucky Friday and Keno Hill. We also anticipate spending just over $30 million on both exploration and pre development with the plan to continue to add to our <unk>.
Russell D. Lawlar: Listing mineral endowment and our various operations and exploration properties. Our next priority will be to delever the amount drawn on our revolver, which we've used for liquidity due to investments made at Keno Hill and Casa Berardi, while the Lucky Friday was out of commission last year with strong expected you've adjusted EBITDA generation I expect our net leverage ratio to revert to our targeted.
Russell D. Lawlar: We also anticipate spending just over $30 million on both exploration and pre-development, with the plan to continue to add to our existing mineral endowment and our various operations and exploration properties. Our next priority will be to de-lever the amount drawn on our revolver, which we've used for liquidity due to investments made at Keno Hill and Casa Verde while Lucky Friday was out of commission last year. With strong expected EBITDA generation, I expect our net leverage ratio to revert to our target of less than two times over the next fall. With that, I'll pass the call to Carlos.
Carlos: Less than two times over the next 12 months.
Russell D. Lawlar: With that I'll pass the call to Carlos.
Carlos: Thank you Russell.
Carlos Aguiar: Also, I'm in Keno Hill and remote from the rest of the team, so I'll keep my remarks short. We started the year on a strong note with Lucky Friday achieving full ramp-up, another strong quarter from Green's Creek, and Keno Hill's improvement on safety and environmental metrics as we ramp up production. Casa Bradley's transition to opt-in fees continues, and we are focused on grading cost control. We have more work to do as we evaluate extending underground operations. I look forward to having all four operations running at full throttle this year. With that, we'll pass the call to fair. Thanks, Carlos.
Carlos: Island Keener Halo Remodels for the rest of the team and will keep my remarks short.
Carlos Aguiar: We started the year on a strong note with Lucky Friday, achieving full ramp up in orders throughout.
Carlos Aguiar: Trout, Florida for Elk Creek, and Keno Hills improvements on 13, and environmental metrics as a way to ramp up production.
Carlos Aguiar: Cats are better at least in fiscal two up in <unk> and we are forecasting rating Costco chalk.
Carlos Aguiar: We have more work to do as we have a late extending the underground operations.
Fair: I look forward to having all of the Florida operations running at full throttle this year.
Fair: With that as the call to Phil.
Carlos Aguiar: Thanks Carlos. I'm going to start on slide 11 with Green's Creek, which reported another solid, consistent quarter with [inaudible] Operatorship of Green's Creek. We were somewhere around 1950 to 2000 tons a day. Cost performance is in line with the plan. Cash cost per ounce was $3.45, and all-in sustaining costs were $7.16 per ounce.
Fair: Thanks, Carlos I'm going to start on slide 11, with Greens Creek.
Carlos Aguiar: Which reported another solid consistent quarter with <unk>.
Carlos Aguiar: Strong free cash flow generation. The mine produced two 5 million ounces and the increase in production was driven by higher grades and throughput and that throughput exceeded 25 to 50 tons per day to put them into context, when we acquired.
Carlos Aguiar: Operator ship the Greens Creek, we were somewhere around $19 52000 tons a day.
Carlos Aguiar: Cost performance is in line with the planned cash cost per ounce was $3.45 all in sustaining costs.
Operator: That's lower than in the fourth quarter due to higher silver production and the byproduct credits. Capital spending was lower than planned due to timing of equipment deliveries and less capital development because of unexpected or where a ramp was planned. That's a great problem to have.
Carlos Aguiar: $7 16 per ounce, that's lower than in the fourth quarter due to the higher silver production and the byproduct credits capital spending was lower than planned due the timing of equipment deliveries and less capital development because of unexpected or where ramp was play and that's a great problem to have.
Operator: First, free cash flow generation for the quarter was $20 billion, lower than the last quarter due to an increase in receivables. So we just have this working capital build-up which is going to reverse. We're reiterating our production guidance of 8.8 to 9.2 million ounces and our ASIC guidance of 950 to 1025. Throughput has continued to increase towards 2,600 tons per day, and it requires a significant focus on maintenance. We're expanding our predictive maintenance practices in the mill and the mine to identify problems proactively.
Operator: Free cash flow generation for the quarter was $20 million lower than the last quarter due to an increase in receivables. So we just have this working capital buildup, which is going to reverse.
Operator: Reiterating our production guidance of eight 8% to $9 2 million ounces and our ASIC guidance of $9 50 to $2 25.
Operator: <unk> has continued to increase towards the 2600 tonnes per day and it requires a significant focus on maintenance, we're expanding our predictive maintenance practices in the middle of the mine to identify problems proactively.
Operator: This has improved availability, increased haulage capacity, and identified numerous opportunities that the team will focus on. But we are reaching the limit of what we probably can achieve in terms of tonnage growth without, you know, sort of rethinking the kind of investment that we need. Turning to slide 12, lots of achievements at Lucky Friday.
Operator: This has improved availability increased haulage capacity and identified numerous opportunities.
Operator: Team will focus on but we are reaching the limit.
Operator: What we probably can achieve in terms of tonnage growth without.
Operator: Sort of rethinking the kind of investment that we need to bank.
Operator: Turning to slide 12.
Operator: Lots of achievements at the Lucky Friday full ramp up in the first quarter, producing one 1 million ounces of silver 1000 days without a lost time injury multiple days in March of record mill throughput over 1300 tonnes per day and to put that into context.
Operator: Full ramp up in the first quarter, producing 1.1 million ounces of silver, a thousand days without a lost time injury, and multiple days in March of record mill throughput of over 1,300 tons per day. And to put that in the context that, traditionally, the throughput rate was probably around 850 tons. We have completed two critical projects, the service hoist, which increased hoisting capacity by about 25%, and the Corsor bunker, which decouples the mill from the mine with five days of stockpile capacity.
Operator: Traditionally the throughput rate was probably around 850 tonnes.
Operator: We've completed two critical projects the service hoist, which increased twisting capacity about 25% and of course or bunker, which decoupled. The mill from the mine with five days of stockpile capacity and that's a big deal to be able to have those two things decoupled.
Operator: And that's a big deal to be able to have those two things decoupled, particularly when we're operating at these higher tonnages. The mill can't catch up otherwise. We continue to work on other improvements like grinding classification to increase throughput. Cash costs in ASIC were $8.55 and $17.36 per ounce, respectively, higher than guidance ranges due to the ramp-up, so that will come down over the course of the
Operator: Particularly when we're operating at these higher tonnages the mill can't catch up otherwise we continue to work on other improvements like grinding classification to increase throughput.
Operator: Cash cost in ASIC, where 855 and $17 36 per ounce, respectively higher than guidance ranges due to the ramp up so that will come down over the course of the year.
Operator: The mine produced $12 million in free cash flow, including the $17.4 million insurance receipts, and is on track to achieve production and cost guidance for the year and be cash flow positive for the year. Turning to slide 13, and this is where I'll spend the majority of the remainder of my time. Keno Hill is improving, and we are learning and trying to do everything through the lens of safety and environmental improvement. And we are making it safer. The all-injury frequency rate is down 41%, but it is still too high.
Operator: <unk> produced 12 million and free cash flow, including the $17 4 million insurance receipts and is on track to achieve production and cost guidance for the year and be cash flow positive.
Operator: For the year.
Operator: Turning to slide 13, and this is where I'll spend the majority of the remainder of the time.
Operator: Keno Hill is improving and we are learning and trying to do everything through the lens of safety and environmental improvement and we are making it safer.
Operator: All injury frequency rate is down 41%, but it is still too high and like every operation. We have a two pronged approach, where we're trying to change behavior and then we're also engineering and designing out risks.
Operator: Like every operation, we have a two-pronged approach where we're trying to change behavior, and then we're also engineering and designing out risks. And so for behavior, we implemented a 10-step action plan to implement best practices in training, reporting, investigations of accidents, and supervision. The program is about 40% complete and has resulted in increased morale and has promoted a culture of transparency. So we actually have had more. There are significant potential incidents, or as many as we had a year ago, but there's been more reporting. And the point of this is that the key to a safe site is really having no fear in telling what is really happening, and the team is responding well to that.
Operator: Her behavior, we initiated a 10 step action plan to implement the best practices in training porting investigations of accidents and supervision.
Operator: Programs about 40% complete and it's resulted in increased morale and has promoted a culture of transparency.
Operator: So we actually have had more.
Operator: Significant potential incidents.
Operator: As many as we had a year ago.
Operator: But theres been more reporting.
Operator: And the point of this is the key to a safe site is really having no fear and telling what is really happening and the team is responding well to that this is where we're making I think great progress.
Operator: This is where we're making, I think, great progress. On the design side, we're focused on modifications to environmental controls to bring it to HECLA standards. And our standards, in many cases, exceed the legal requirements, and I'm struck by a comment that Brian Erickson, who's a longtime Greens Creek leader, some of you probably have met him on tours of Greens Creek, and he's now, well, in June, start overseeing both Greens Creek and Cana Hill, and he rattled off a list of things not legally required, but that we need to do in order to meet HECLA standards.
Operator: On the design side, we're focused on modifications to environmental controls to bring it to hecla standards and our standards and may in many cases exceed the legal requirements and I'm struck by a comment that Brian Ericsson, whose longtime Greens Creek leader. Some of you probably have met him on tours of Greens Creek.
Operator: He's he's now.
Operator: Well in June start overseeing both Greens Creek, and Keno Hill, and he rattled off a list of things not legally required.
Operator: That we need to do in order to meet Hecla standards now, it's kind of like Greens Creek, it's going to be a long process. I mean, we're still improving our standards at Greens Creek 37 year old mine.
Operator: Now, it's gonna, like Greens Creek, be a long process. I mean, we're still improving our standards at Greens Creek, a 37-year-old mine. But the geology at Keno and our culture warrants it. So for the next year or so, our focus is on better monitoring, getting more thorough hydrologic studies, and making the water treatment plant upgrade. Design improvements are also being made operationally to make the mine more predictable and efficient, which makes it safer and more productive.
Operator: But the geology at Keno and our our culture warrants. It so for the next year or so our focus is on better monitoring getting more fulsome hydrologic studies, and making water the water treatment plant upgrades.
Operator: And design improvements are also being made operationally to make the mine more predictable and efficient, which makes it safer and more productive.
Operator: There are a number of things, but the biggest is the Cemented Tails Batch Plant, which is going to allow underhand mining at Birmingham. And whenever you have challenging ground conditions like we have at Keno, nothing could make it safer or more productive than having miners mining under a constructed back, which the underhand method allows you to do.
Operator: A number of things, but the biggest is the cement entails batch plant, which is going to allow underhand mining at Bermingham and whenever you have the challenging ground conditions like we have at at Keno nothing could make it safer more productive than having miners mining under a constructed back.
Operator: This plant is going to be finished by year end, and full conversion to underhand mining will happen by the end of next year. So we're at 277 tons per day, and this is all from the Birmingham deposit, about 30% more than last quarter. We still have too much variability in how much we mine and mill each day, but it's getting a lot better, and we're seeing even more consistency in April and into May.
Operator: Underhand method allows you to do this plant is going to be finished by year end and full conversion to underground mining will happen by the end of next year. So we're at 277 tonnes per day and this is all from the Bermingham deposit about 30% more than last quarter, we still have too much various.
Operator: Ability and how much we mine and mill each day, but it is getting a lot better and we're seeing even more consistency in April and into May.
Operator: At the start of my comments on Keno, I said we're learning, and what immediately comes to mind is that, particularly in the shoulder seasons, in order to manage the clay from Birmingham, we need the hard rock from Flaming Moth Deposit to make the crusher run better. So despite flame and moth being lower grade, and when I say lower grade, I think it's like 24 ounces per ton. So it's not a super low grade.
Operator: To start with my comments on keynote I said, we're learning and what immediately comes to mind is that particularly in the shoulder seasons in order to manage the clay from Birmingham, we need the hard rock from flame and moth deposit to make the crusher run better.
Operator: So despite flame and moth being lower grade and when I say lower grade I think it's like 24 ounces per ton. So it's not super look great.
Operator: A portion of our feed's gonna come from it in order to make crushing better, and you'll start to see that in the next few months. With 600,000 ounces that we've done this quarter, we're confident we're gonna hit our production numbers, reach commercial and full production probably before year end. But only if we make the mine safer and more environmentally compliant. Now, let me go to why Keno's life we think is gonna be longer than the current 11-year mine life, and it's the exploration results we're seeing.
Operator: A portion of our feed is going to come from it in order to make crushing better and you'll see start to see that in the next next few months.
Operator: With 600000 ounces that we've done this quarter, we're confident we're going to hit our production numbers reached commercial and full production probably before year end, but only if we're making the mine safer and more environmentally compliant.
Operator: Let me go to Y Kino as like we think is going to be longer than the current 11 year mine life and it's the exploration results. We're seeing so if you go to slide 14.
Operator: So if you go to slide 14, last quarter, I highlighted high-grade intercepts at Birmingham, including one which was 54 ounces per ton over 39 and a half feet, as well as an intercept which was a thousand feet deeper than any previous drilling. And it provided evidence that high-grade silver mineralization can be hosted within the full depth of the 3,000-foot favorable basal quartzite host rock. Now we've continued drilling, and the results we shared today are just as exciting, where there were two additional intercepts in the footwall vein, one of which was 55.4 ounces per ton over nearly 41 feet, and the second was 51.2 ounces per ton over almost 40 feet. You know, these are multiples of the sort of widths of what we normally see.
Operator: Last quarter I highlighted high grade intercepts at Bermingham, including one which was 54 ounces per ton over 39, and a half feet as well as an intercept which was 1000 feet deeper than any previous drilling and it provided the evidence that high grade silver mineralization can be hosted within the full depth of 3000 foot favorite.
Operator: So based on court site host rock unit.
Operator: Now with the continued drilling and the results. We shared today are just as exciting where there were two additional intercepts in the footwall vein, one of which was $55 four ounces per ton over nearly 41 feet and the second was 51 two ounces per ton over almost 40 feet.
Operator: These are.
Operator: Yeah.
Operator: These holes are near existing infrastructure, and they exceed our model's expectations. We also have two surface exploration drills that we've just started turning, targeting the 3,000 foot of strike length and 2,000 foot of dip length on the Birmingham vein system to test that deeper basal quartzite host. There are also other drilling targets outside of Birmingham to see if we have cracked the code for how this system is in place.
Operator: Multiples of the sort of with what we normally see.
Operator: These holes that are near existing infrastructure and they exceed our modeled expectations. We also have two surface exploration drills that we've just started turning targeting the 3000 and put a strike linked in 2010.
Operator: <unk> linked on the Bermingham vein system to test that that deeper basal quartz site host.
Operator: Though theres also other drilling targets outside of Birmingham to see if we have cracked the code for for how the system is in place we expect to be here for decades to come.
Operator: We expect to be here for decades to come. Turning to slide 15, I'll talk about CASA. CASA produced 22,000 ounces and an ASIC of just under $1,900, and capital costs of about $13 million. All of this is as expected per our guidance. We did experience lower surface grades, about 10 to 15% lower than previous low-grade quarters, some of it due to processing low-grade stockpiles. We'll be watching this in the coming quarters.
Operator: Turning to slide 15, I'll talk about Cassa.
Operator: <unk> produced 22000 ounces M&A sick of just under $1900 capital costs of about $13 million. All of this is as expected per our guidance, we did experienced slower surface grades about 10% to 15% lower than previous Ludwig quarters. Some of it Deane processing low grade stockpiles.
Operator: We'll be watching this in the coming quarters, the mine had $9 million of negative cash flow.
Operator: The mine had $9 million of negative cash flow, and this was an improvement over the prior quarter. This year is an investment year at CASA, but we do expect free cash flow before we reach the gap in production in a few years. So the investment we're making this year is as expected. Going to slide 16, which shows our guidance for the year. We're affirming our production and cost guidance. And before I open the call for questions, I just want to thank all the Hecla employees across all the sites and ask them to continue to focus on safety, both designing out our hazards and making safe choices. With that, Rochelle, I'd like to open the call to questions.
Operator: This is an improvement over the prior quarter and this.
Operator: This year is an investment year cassa, but we do expect free cash flow before we reached a gap in production in a few years.
Operator: So the investment we're making this year is as expected.
Operator: Going to slide 16 shows our guidance for the year, we're affirming our production and cost guidance and.
Operator: Before I open the call for questions I, just want to thank all the hecla employees across all the sites and ask them to continue to focus on safety, both designing out our hazards and making safe choices with that Rochelle I'd like to open the call to questions.
Operator: Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. And if you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of Heiko Ihle of HC Wainwright. Your line is now open.
Rochelle: Thank you we will now begin the question and answer session. If you have dialed in and would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you would like to withdraw your question simply press Star One again and if you are called upon to ask a question and are listening via loud speakers.
Heiko Felix Ihle: On your device. Please pick up your handset and ensure that your phone is not been mute when asking your question.
Operator: Your first question comes from the line of Ichor Ila of each C. Wainwright. Your line is now open.
Heiko Felix Ihle: Hey there, thanks for taking my questions. I assume you can hear me okay? We can, Heiko, thanks. Hey Phil.
Heiko Felix Ihle: Hey, there thanks for taking my questions I assume you can hear me okay.
Heiko Felix Ihle: Can I go thanks.
Phillips S. Baker: So, Keno Hill, your release states that your action plans should be substantially completed before the end of the year, but you do leave a carve out for some longer term infrastructure. I mean, obviously, FLAB and MOTS are starting next month, but building on what you had on slide 13 earlier, can you just provide some color on what exactly you're referring to with that carve out, when you expect to undertake this, and maybe just even what you expect to spend by quarter? I assume it's mostly front loaded. Yeah.
Heiko Felix Ihle: Phil So at Keno Hill your release States that Youre action plans should be substantially completed before the end of the year, but you do leave a carve out for some longer term infrastructure I mean, obviously flame and moth are starting next month, but but building on what you had on slide 13 earlier can you just provide some color on what exactly you are.
Phillips S. Baker: Referring to with that carve out.
Phillips S. Baker: When do you expect to undertake this or maybe just even what you expect to spend by by quarter I assume mostly frontloaded.
Phillips S. Baker: The guidance that we've given for 2024 is unchanged. All of this is as planned.
Phillips S. Baker: No.
Speaker Change: Certainly the guidance that we've given for 2024 is unchanged.
Phillips S. Baker: There is nothing that.
Phillips S. Baker: All of this is as planned.
Phillips S. Baker: I just wanted to make it clear to people that as we go to the underground mining method, it will be a process that will take some time before we're fully under ground at Birmingham. And as far as additional capital in 2025, we haven't gone through those plans, but I'm not anticipating that there's going to be some major capital outlay in any one year. But because of the exploration success that we're seeing here, it's a dynamic situation.
Phillips S. Baker: I just wanted to make the make it clear to people that as we go to the underground the underhand mining method.
Phillips S. Baker: Then it will be a process that will take some time before we will be fully underhand at at Bermingham.
Phillips S. Baker: And as far as additional capital in 2025, we haven't we haven't gone through those plans, but I'm not anticipating that there's going to be some major sort of capital outlay.
Phillips S. Baker: In any one year, but because of the exploration success that we're seeing here, it's a dynamic situation.
Phillips S. Baker: And we're contemplating permitting for a much larger throughput than what we currently have. We haven't finalized that, but that's the path that we're on. And like Greens Creek in the 1990s, its rate was well below the 1,900 or so that we had.
Phillips S. Baker: And we're contemplating.
Phillips S. Baker: Permitting for a much larger throughput than what we currently are currently have we havent, we havent finalized that but that's the path that we're on and and light Greens Creek that over the years and I think if you go back to it's early.
Phillips S. Baker: <unk>.
Phillips S. Baker: It's rate was well below the 1900 or so that we had I don't remember what it was and I don't know if rustling.
Carlos Aguiar: I don't remember what it was, and I don't know if, Russell, you have any? I don't know. I'm not sure what it was. It was... So this is going to be an evolving mine, and, you know, the exploration success that we're seeing justifies that. Carlos, anything you want to add?
Carlos Aguiar: I don't know Im not sure what it was.
Carlos Aguiar: This is going to be an evolving mine and the exploration success that we're seeing.
Carlos Aguiar: Suffice that Carlos anything you want to add.
Carlos Aguiar: No, that's correct. So we still have a long road ahead of us, and we are still evaluating all the stuff that we can make.
Carlos Aguiar: No that's correct.
Speaker Change: There is still a long road ahead of us and we are still evaluating all the stuff.
Carlos Aguiar: Okay.
Speaker Change: Nothing to add on it.
Operator: And then just a quick clarification, you had ramp-up costs of 8.7 million during the quarter at the site. Can you just break that down a little bit?
Carlos Aguiar: And then just a quick clarification, you have ramp up costs of $8 7 million during the quarter at the site.
Operator: Can you just break that down a little bit.
Operator: When you say break it down, I mean, it is sort of the stub, you know, so we have our total revenue that we generate. That goes into operating costs, and then the stub is what goes into the ramp-up costs saved.
Speaker Change: When you say break it down I mean, it is sort of the stub. So we have our total revenue that we generated that goes into two operating cost and then the stub is is what goes into to the ramp up costs.
Russell D. Lawlar: Yeah, we can add. I can add a little bit to that. Basically, the way that we handle ramp-up costs is at Keno Hill, we will allocate. You know, we spent this quarter. We spent about $15 million in cash expenses at Keno Hill, and we generated roughly $10 million in revenue. So, we allocated $10 million of that $15 to cost of sales because we're in a ramp-up period; we're not actually earning margin. It's a combination of earning some revenue while we're actually ramping up or building the operation. And as such,
Operator: Sure.
Speaker Change: Any color we can we can add I can add a little bit to that.
Russell D. Lawlar: Basically the way that we handle rapid ramp up costs are.
Russell D. Lawlar: At Keno Hill, we will allocate your spend we spent this quarter, we spent about $15 million in cash expenses at Keno Hill.
Russell D. Lawlar: And we generated roughly $10 million of revenue. So we allocated $10 million of that 15 to.
Russell D. Lawlar: Two cost of sales because because we're in a ramp up period, we're not actually earning margin where it is.
Russell D. Lawlar: The combination of earning some revenue, while we're actually ramping up our building operation.
Russell D. Lawlar: And as such.
Russell D. Lawlar: Then we'll allocate the remainder to ramp-up costs. So as we see the revenue at Keno Hill increase, we should see the ramp-up costs come down. When we do get to the point where we believe we're in commercial or full production, we would then allocate all of the costs to cost of sales, and at that point, you know we would expect we would have a margin as well.
Speaker Change: Then we'll allocate the remainder to ramp up costs. So as we see the revenue at Keno Hill increase we should see the ramp up costs come down when we do get to the point, where we believe we are at commercial or full production, we will allocate all of the costs too.
Russell D. Lawlar: Two cost of sales and at that point, we would expect we would have a margin as well.
Russell D. Lawlar: And we'll determine that we're in commercial production when we're confident that we have a stabilized operation. And that's, in part, the reason for mentioning the underhand method. I don't expect that we'll have to wait until we get all the way there to use underhand, but just be aware of that, that that's something we'll have to consider.
Russell D. Lawlar: And we will determine that we are in commercial production. When we're confident that we have a stabilized operation.
Russell D. Lawlar: And that's in part reason for mentioning about the underhand method.
Russell D. Lawlar: I don't expect that we will have to wait till we get all the way there to underhand, but just be aware of that.
Russell D. Lawlar: That's something we will have to consider.
Russell D. Lawlar: And lastly, I would just add that it's the same methodology we used at Lucky Friday. You know, we did the same thing with Lucky Friday, whether it was last quarter or earlier. In Q1 of 2024, we did have a little bit of ramp-up costs in January, and that's something we kind of disclosed in our financials, but it was a couple of million dollars. And keep in mind that a line item in the income statement is ramp-up and suspension costs. There's some costs in there for Nevada and a very, very small amount from San Sebastian as well.
Speaker Change: And lastly, I would just add.
Russell D. Lawlar: It's the same method.
Russell D. Lawlar: The methodology, we've used at Lucky Friday.
Russell D. Lawlar: We did the same thing with Lucky Friday.
Russell D. Lawlar: Whether it was last quarter or previously.
Russell D. Lawlar: In Q1 of 2024, we did have a little bit of ramp up costs in January and that's.
Russell D. Lawlar: We've kind of disclose that within our financials, but I suppose a couple of million dollars.
Russell D. Lawlar: Keep in mind that that line item in the income statement is ramp up and suspension costs theres some costs in there for Nevada, and a very very small amount from San Sebastian as well.
Operator: A very comprehensive answer. Good quarter. Stocks are reacting well. I'll get back in queue.
Speaker Change: Very comprehensive answer good quarter stocks reacting well I'll get back in queue.
Speaker Change: Thanks Heiko.
Operator: Your next question comes from the line of Lucas Pipes of B. Riley Securities. Your line is open.
Operator: Your next question comes from the line of Lucas pipes of B Riley Securities. Your line is open thank.
Lucas Nathaniel Pipes: Thank you very much, operator. Good morning, everyone. Um, I like Lucas.
Lucas Nathaniel Pipes: Thank you very much operator, good morning, everyone.
Lucas Nathaniel Pipes: I like this.
Phillips S. Baker: Phil, I wanted to first ask on Lucky Friday, just, you know, looking at Q1, obviously things are going in the right direction, but still more needed for the full year, so I wondered if you could kind of walk through a punch list of what you expect and what you need to see to hit that full year guidance. Thank you very much.
Lucas Nathaniel Pipes: Bill I wanted to first ask on Lucky Friday.
Phillips S. Baker: Looking at Q1.
Phillips S. Baker: Obviously things are going in the right direction, but still it's still more more need it for the full year. So I wondered if you could walk through a punch list of what you expect and.
Phillips S. Baker: And what you need to see.
Phillips S. Baker: To hit that full year guidance. Thank you very much on that.
Phillips S. Baker: Look, I don't think it's doing anything more than what we did prior to the fire, and we're on track to do that. It will be a function of what the actual grade that we hit as we go through, but we're not anticipating any particular issue with getting to the 5 million ounces.
Phillips S. Baker: Look I don't I don't think it's.
Phillips S. Baker: It's doing anything more than what we did.
Phillips S. Baker: Prior to the fire and we're on track to do that.
Phillips S. Baker: It will be a function of what's the actual grade that we hit as we as we go through but.
Phillips S. Baker: We're not anticipating any particular issue with getting to the <unk>.
Phillips S. Baker: 5 million ounces.
Phillips S. Baker: If we have any problem, it's really about getting the people that we need and maintenance. That's our biggest challenge. And so, in order to have the availability, but it's, it's, I think we're going to be, as the year goes on, we're going to be in a optimization mode, you know, what additional changes can we make to get beyond where we, we, where we are expecting to be. Carlos.
Phillips S. Baker: If we have any problem, it's really about.
Phillips S. Baker: Getting the people that we need and maintenance that's.
Carlos Aguiar: That's our biggest challenge.
Phillips S. Baker:
Phillips S. Baker: In order to have the availability.
Phillips S. Baker: But it's.
Phillips S. Baker: We're going to be as the year goes on we're going to be in a optimization mode. What additional changes can we make to get beyond where we were.
Phillips S. Baker: Where we are expecting to be Carlos.
Carlos Aguiar: Anything you want to add or correct?
Speaker Change: Anything you want to add or correct.
Carlos Aguiar: Yeah, this is a really exciting time for Lucky Friday, of course, the end of the major projects that were completed last year. This is going to be our first year, you know, utilizing those projects, and the future is bright for Lucky Friday.
Carlos Aguiar: Yes.
Carlos Aguiar: This is a really exciting time for lucky vital of course, the termination of the major projects that were completed last year. This is Colombia FERC here you know it looks like in those projects.
Carlos Aguiar: Future comps by Fortaleza.
Operator: Thank you for that color and for that information. But for my second question, I'd like to turn to CASA. So you mentioned previously that the free cash flow contribution should really pick up in 2026. Could you quantify your expectations around 2025, give some color around that, and then with the significantly higher gold price environment today, are you looking at that mine differently from a strategic perspective, from an operational standpoint? I would appreciate your thoughts on that. Thank you.
Speaker Change: Thank you for that color.
Speaker Change: But from a second question I'd like to turn to Casa.
Operator: So you mentioned previously that.
Operator: The free cash flow contribution should really pick up in 2020.
Operator:
Operator: Can you quantify.
Operator: Your expectations around 2025 that could give some color around that and then.
Operator: The significantly higher gold price environment today.
Operator: Are you looking at that mine differently.
Operator: From a strategic perspective from an operational standpoint would appreciate your thoughts on that thank you.
Phillips S. Baker: So, Lucas, probably the best source of information as to what we think 2025 and 2026 will look like is our technical report. And so I would... point that out for your attention. And at this point, we don't see anything dramatically different from that, other than we do have higher gold prices. We have experienced some lower grades than what we had in the plan, so we're gonna be watching that closely and trying to figure out what's happening there, if it's temporary or if there's more to that.
Speaker Change: So Lucas.
Phillips S. Baker: Probably the best source of information as to what we think 2025 and 26 will look like is our technical report.
Phillips S. Baker: And so I would.
Phillips S. Baker: Point that up for your attention.
Phillips S. Baker: And at this point, we don't see anything dramatically different from that other than we do have higher higher gold prices.
Phillips S. Baker: <unk>.
Phillips S. Baker: We have experienced some lower grades than what we had in the plan. So we're going to be watching that closely and trying to figure out.
Phillips S. Baker: What's happening there if it's temporary or if there is there is.
Phillips S. Baker: More to that.
Phillips S. Baker: I don't think I have much to add, certainly higher gold prices could potentially cause us to have a little bit more material from the underground. I think if you step back and think about it, the entirety of Casabrode is probably around the edges, but we'll take the opportunity if we have the opportunity. And when you ask the strategic question, I guess, look, we see Casa as playing an important role in providing us with diversification and giving us scale.
Speaker Change: Anything anything else.
Phillips S. Baker: Don't think I have much to add certainly higher gold prices could.
Phillips S. Baker: Could potentially cause us to have a little bit more material from the underground I think you step back and you think about the.
Phillips S. Baker: The entirety of Casa berardi, its probably around the kind of around the edges, but we will take the opportunity if we have the opportunity.
Phillips S. Baker: And when you ask the strategic question I guess.
Phillips S. Baker: Look we.
Phillips S. Baker: We see pass as playing an important role of providing us with diversification, giving.
Phillips S. Baker: Giving us scale.
Phillips S. Baker: You know, but, you know, frankly, we are certainly more focused on silver and always have been. And Casa and gold were a means to an end of being able to be larger in order to take on more silver opportunities. And, you know, it's serving that purpose. And I think it will continue to serve in the future. But the focus is certainly on silver, Lucas.
Phillips S. Baker: But frankly, we are certainly more focused on silver and always have been and cassa in gold.
Phillips S. Baker: A means to an end up being able to be larger in order to take on more silver opportunities and it's.
Phillips S. Baker: It's serving that purpose and I think it will continue to serve in the future, but but the focus certainly is on silver Lucas.
Phillips S. Baker: And Phil, on that, you speak with a lot of excitement and passion about the outlook for the silver market. I think I've heard, you know, growth aspirations about Tecla and the S&P 500. And so, kind of taking a step back, how aggressive do you want to be over the next few years to pursue the silver opportunity? Is this a time to focus on keynote, get that out first, or maybe press forward on a couple different fronts? to pursue the opportunity as outlined it.
Phillips S. Baker: And Phil on that you speak.
Phillips S. Baker: With with with a lot of excitement.
Phillips S. Baker: And passionate about the outlook of the silver market.
Phillips S. Baker:
Phillips S. Baker: I think I've I've heard.
Phillips S. Baker: Our growth aspirations about tech line, the S&P 500, and so.
Phillips S. Baker: Kind of taking a step back.
Phillips S. Baker: Okay.
Phillips S. Baker: How how aggressive do you want to be over the next few years to pursue this software opportunity.
Phillips S. Baker: Is this a time to focus on keynote get that up first or maybe press forward on a couple of different fronts.
Phillips S. Baker: The Aqua.
Phillips S. Baker: Well, I guess, certainly, we've got to focus on Keno and get that up and running the way we think it can, but Keno is a long-term game. It is, I have no doubt that it is probably, you know, we currently have an 11-year mine life. I have no doubt that we are finding more, and we will end up with a longer mine life than that. And so it's one that's an evolution
Phillips S. Baker: The line that well I guess.
Phillips S. Baker: Certainly we've got a focus on kino and get get that App up and running the way we think it can but.
Phillips S. Baker: As a long term game.
Phillips S. Baker: It's.
Phillips S. Baker: It is.
Phillips S. Baker: I have no doubt that it is probably we currently have an 11 year mine life I have no doubt that.
Phillips S. Baker: We are finding more and we will end up with a longer mine life.
Phillips S. Baker: And so it's one that's an evolution.
Phillips S. Baker: With respect to acquiring new things, we're certainly always looking, and we're more focused on the opportunities when they arise and trying to put things together than trying to time something. So if things become available and people want to, they see the vision of Hecla as continuing to be the premier silver producer and one that's even bigger and one that could conceivably, you know, reach this goal of the S&P 500. You know, we would want to have them join up with us to help us achieve that.
Phillips S. Baker: With respect to acquiring new things, we're certainly always looking and it's and we're more focused on.
Phillips S. Baker: And what the opportunities when they arise and.
Phillips S. Baker: Trying to put things together then.
Phillips S. Baker: Then trying to time something.
Phillips S. Baker: So so if things become available and its people want to.
Phillips S. Baker: They see the vision of Hecla.
Phillips S. Baker: As you know.
Phillips S. Baker: Continuing to be the premier silver producer.
Phillips S. Baker: And one that's even bigger than one that could conceivably.
Phillips S. Baker: Reach this goal of S&P 500.
Phillips S. Baker: We would want to have them join up with us to help us achieve that.
Phillips S. Baker: But we don't have to do those things. I mean, within our portfolio, there are eight projects that we have that are silver projects. And some of them, particularly the Libby exploration and things that we have in Montana, have the capacity to fundamentally change Hecla and really take a step forward to be able to accomplish some of these goals on our own. But we're going to be continuing to look, and we want to bring other assets in if we can.
Phillips S. Baker: But we don't have to do those things I mean, we have within our portfolio. There is there is eight.
Phillips S. Baker: Projects that we have that are silver projects.
Phillips S. Baker: And some of them, particularly the.
Phillips S. Baker: Will it be exploration.
Phillips S. Baker: Things that we have in Montana have the capacity to fundamentally change hecla and really have a step forward to be able to accomplish some of these goals on our own but but we're going to be continuing to look and we want we want to bring in other assets.
Phillips S. Baker: If we can.
Operator: Bill, I really appreciate the color and perspective from the entire team. Continue with the best of luck. Thank you. Thanks, Lucas.
Speaker Change: Really appreciate the color and perspective to.
Operator: To the entire team continued best of luck. Thank you.
Operator: Thanks, Lucas.
Speaker Change: Thanks Lucas.
Joseph George Reagor: Again, if you would like to ask a question, press star 1 on your telephone keypad. Your next question comes from Joseph Reagor of Roth and KM. Your line is now open.
Operator: Again, if you would like to ask a question press star one on your telephone keypad.
Joseph George Reagor: Question comes from Joseph Reagor with Roth N. P. M. Your line is now open.
Phillips S. Baker: Hey, Phil and team, thanks for taking the questions. I guess, following on something Heiko asked about the ramp-up and maintenance costs. Can you give us any guidance on what those might look like, you know, over the remainder of this year and then, you know, kind of long term?
Joseph George Reagor: Hey, Phil and team thanks for taking the questions.
Phillips S. Baker:
Phillips S. Baker: I guess following on from Heiko asked on the ramp up in <unk>.
Phillips S. Baker: And maintenance.
Phillips S. Baker: Maintenance costs can you give us any guidance on what those might look like.
Phillips S. Baker: Over the remainder of this year, and then kind of a long term.
Operator: When you say maintenance costs, what are you referring to, Joe? By the way, hi Joe. What are you referring to?
Phillips S. Baker: When you say the maintenance costs were you referring to Joe by the way Hi, Joe.
Operator: Are you referring to.
Operator: So there was in <unk>.
Operator: [inaudible] In Q1, there was like $14.5 million in ramp-up costs, which I know you guys attributed some of that to expenses versus revenue at Lucky Friday and Keno, but beyond that, how much of that is ongoing care and maintenance for like Nevada and San Sebastian, et cetera.
Speaker Change: Q1, there was like $14 5 million between ramp up costs, which I know you guys attributed some of that too.
Operator: Expenses versus revenue at Lucky Friday, and keno, but beyond that like how much of that is ongoing care and maintenance.
Operator: Okay.
Operator: For like Nevada.
Operator: San Sebastian et cetera.
Russell D. Lawlar: Do you have a breakdown? I do, certainly for Q1, most of that cost $9 million was related to Keno, $2 million was Lucky Friday, and then Nevada and San Sebastian were $3 million and a half a million, respectively. So it's like $2 million that the Lucky Friday relates to that one month. I think that, long term, it'll go down to just the Nevada-San Sebastian numbers. And certainly one of the things that we're actively working on is looking to minimize those expenses as well, because we want to make sure that those expenses are as small as we can.
Operator: Can you give the breakdown.
Russell D. Lawlar: I do certainly for Q1.
Russell D. Lawlar: Most of that cost 9 million was related to keno.
Russell D. Lawlar: $2 million was.
Russell D. Lawlar: Lucky Friday, and then Nevada, and San Sebastian were $3 million and $5 million.
Russell D. Lawlar: Respectively.
Russell D. Lawlar: $2 million at the Lucky Friday relates to that wasn't just one month's that one but I think that.
Russell D. Lawlar: Long term it'll it'll go down to just the Nevada, San Sebastian numbers and certainly one of the things that we're working on actively is looking to minimize those as well because we anticipate.
Russell D. Lawlar: We want to make sure that those expenses are as small as we can and Joe I'm glad you asked.
Russell D. Lawlar: Yeah, and Joe, I'm glad you brought that up. Followed up on Heiko's question, because, you know, I probably should point out again that we are taking Brian Erickson, who's been at Greens Creek for 27 years and has been the GM, I don't know, the last four or five years. And we've asked him to be a regional vice president for both Greens Creek and Keno. And the reason for that is to try to look for synergies between the two operations because, in the mining world, they are actually very close together. It's about a six or seven hour trip from one mine to the other. And if you fly the whole way, if you flew, you could do it in, you know, two hours, including immigration. So, so.
Russell D. Lawlar: Followed up on Heico's question because.
Russell D. Lawlar: I, probably should point out again that we are.
Russell D. Lawlar: Taking Bryan Erickson, who has been the.
Russell D. Lawlar: At Greens Creek for 27 years and has been the GM out of the last four or five years and we've asked him to.
Russell D. Lawlar: B, a regional vice president over both Greens Creek, and Keno and the reason for that is to try to look for synergies between the two operations because in the mining world. These are actually very close together there it's about a six or seven hour trip from one mine to the other and if you fly.
Russell D. Lawlar: The whole way.
Russell D. Lawlar: Flu you could do it in two hours.
Russell D. Lawlar: Including immigration so so.
Phillips S. Baker: And when you think about materials, it's all coming up through the Inland Passage. It actually goes right by Greens Creek. And so we're going to try to combine procurement, and nobody will be better than Brian at looking at what things we can do together between those two operations in order to drive the cost structure down and try to apply fixed costs that we have at Greens Creek to Keno without increasing Greens Creek's fixed costs.
Russell D. Lawlar: And you think about materials, it's all coming up to the inland passage. It actually goes right by Greens Creek, and so we're going to try to combine procurement.
Phillips S. Baker: And nobody will be better than Brian looking at what things. We can do together between those two operations in order to drive the cost structure down and try to apply fixed cost that we have at Greens Creek to keno without increasing Greens creeks fixed costs, that's the idea.
Phillips S. Baker: That's the idea. And, you know, it's going to, again, it's going to be an evolution. At Keno, you know, it took a long time for Greens Creek to be cash flow positive. It will not take that long at Keno, but it's going to be a period of time that we will be investing, and I just don't have the visibility at this point as to what those synergies might be in order to drive that quicker.
Phillips S. Baker: <unk>.
Phillips S. Baker: It's going to again, it's going to be an evolution.
Phillips S. Baker: At at Keno.
Phillips S. Baker: It took a long time for Greens Creek to be cash flow positive.
Phillips S. Baker: It will not take that long at keno, but it's going to be a period of time that we will be investing and I. Just don't have the visibility at this point as to what those synergies might be in order to to drive that quicker.
Phillips S. Baker: Okay.
Phillips S. Baker: Okay, fair enough. And then, you know, as you think about Kino, you know, progress again in Q1 compared to Q4, you know, you're maintaining your guidance for the year, but are there any issues that are ongoing there that you guys feel may ultimately result in you needing to make a significant capital investment, you know, to fix something or, you know, increase the fleet size or whatever.
Speaker Change: Okay fair enough.
Phillips S. Baker: And then.
Phillips S. Baker: As you are.
Phillips S. Baker: You think about Kino.
Phillips S. Baker: Progress again in Q1 compared to Q4.
Phillips S. Baker: No.
Phillips S. Baker: You are maintaining your guidance for the year, but.
Phillips S. Baker: Sure.
Phillips S. Baker: Any issues that are ongoing there that.
Phillips S. Baker: Do you guys feel may ultimately result in you needing to make.
Phillips S. Baker: A significant capital investment to fix something or.
Phillips S. Baker: Increased fleet size or whatever.
Phillips S. Baker: You know, I think it's going to be driven more by the exploration success we have and wanting to increase throughput there. That could cause us to make a substantial investment. If, if we, if we stay at 400 tons a day, now there's, there's, it's just hard to, You don't have a lot of space at 400 tons a day to make a significant capital investment.
Phillips S. Baker: I think it's going to be driven more by.
Phillips S. Baker: The exploration success, we have in wanting to increase throughput there.
Phillips S. Baker: That could cause us to make a substantial investment.
Phillips S. Baker: If we if we stay at 400 tonnes a day.
Phillips S. Baker: There is there is it just hard to do.
Phillips S. Baker: You don't have a lot of space.
Phillips S. Baker: At 400 tonnes, a day to make a significant capital investment, but what we're anticipating is the exploration we're seeing.
Phillips S. Baker: But what we're anticipating is, I mean, the expiration we're seeing. The potential is so great, I don't think that'll be the case. I think you will, over time.
Phillips S. Baker: Yes.
Phillips S. Baker: The potential is so great.
Phillips S. Baker: I don't think that'll be the case I think you will over time, but I don't have any visibility on what that might be at this at this point.
Phillips S. Baker: But I don't have any visibility on what that might be at this point. It is a very exciting place, and we've focused a lot of attention to try to get this right from the start because the only thing that could really, I think, cause a problem for us is really safety and environmental poor performance. And, you know, we've got to get those right, so we're focusing a lot of time and attention on those.
Operator: Okay. And then there's one last one.
Operator: But it is a very exciting exciting place.
Operator: And where we've focused a lot of attention to try to get this right.
Operator: Start.
Operator: The only thing that can really I think.
Operator: Cause a problem for us is really safety and environmental.
Operator: Poor performance.
Operator: And we've got to get those right. So we're focusing a lot of time and attention on those.
Phillips S. Baker: On Nevada, the assets have been idled for a while, but given the current gold price north of $2,300, is there any opportunity to consider restarting operations in Nevada or selling that asset to another company who might want to look at that opportunity? You know, is there any way to, you know, generate some value there?
Operator: Okay.
Operator: And then one last one on Nevada.
Phillips S. Baker: Yes, thats been idled for a while but given the current gold price north of $2300 is there any opportunity to consider restarting operations in Nevada, or selling that asset to another company, who might want to look at that opportunity.
Phillips S. Baker: Is there any any way to generate some value there.
Phillips S. Baker: Yeah, certainly we are evaluating if there's material in Midas that could be mined at these higher prices, and we are continuing to do the work necessary in order to get back underground at Hollister on the Hatterdraven. There is nothing that I can, well, there is a huge opportunity for value creation if you could restart those operations at Midas and at Hollister. As far as selling it, I mean, that's always a possibility, but we view it as having so much long-term exploration opportunity and so little has been done on the Eastern Robin Corridor and in Hollister that we think that's not likely something we would do. But we're not going to be wed to an asset, particularly a gold asset.
Speaker Change: Yes. So so certainly we are evaluating if there is material that in midas that could be could be mined at these higher prices and we are.
Phillips S. Baker: <unk> to do the work necessary in order to get back underground at Hollister on the Hatter Graben there is nothing.
Phillips S. Baker: Then I can well there is a huge opportunity for value creation.
Phillips S. Baker: You could restart those operations.
Phillips S. Baker: Midas at Hollister as far as selling it I mean, that's always a possibility, but but we view it as having so much long term exploration opportunity and so little has been done on the eastern corridor.
Phillips S. Baker: And in Hollister that we think thats not likely something we would do but we're not going to be wed to to an asset, particularly gold asset.
Operator: Okay, thanks. I'll turn it over to you.
Speaker Change: Okay. Thanks, I'll turn it over.
Speaker Change: Okay. Thank you.
Phillips S. Baker: There are no further questions at this time. I will now turn the conference back over to Phil Baker for his closing remarks.
Operator: There are no further questions at this time I will now turn the conference back over to Phil Baker for closing remarks.
Phillips S. Baker: The only closing remark I have is I know this is a busy day with lots of companies reporting, and I appreciate folks being on this call and certainly understand if you wanted to reach out to us later. You know, Anvita, Russell, or I and we're happy to answer questions and look forward to speaking to you.
Phillips S. Baker: The only closing remark I have is I know this is a busy day with lots of companies reporting and I. Appreciate you folks being on this call and certainly understand if you wanted to reach out to us later.
Phillips S. Baker: And Lita Russell awry, and we're happy to answer questions and look forward to speaking to you thanks for being on the call.
Operator: Thanks for being on the call. Thank you. That concludes today's call. Thank you all for joining, and you may now disconnect. Please wait; the conference will begin shortly.
Operator: Thank you. That concludes today's call. Thank you all for joining, and you may now disconnect. Please wait. The conference will begin shortly.
Operator: Thank you that concludes today's call. Thank you all for joining and you may now disconnect.
Operator: Please wait the conference will begin shortly.
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