Q2 2024 Hecla Mining Co Earnings Call
Speaker Change: Hello, everyone, and welcome to the second quarter 2024 Hecla Mining Company earnings conference call.
Operator: and Company Earnings Conference Call. Please note that this call is being recorded. As of right now, everyone is joined on listen-only mode to avoid any background noise. You will have the opportunity to ask questions to our presenter later on in the Q&A session. If you'd like to ask a question during that time, please press star 1. Thank you. I'd now like to hand over to our first speaker for today. Anvita Patil, please go ahead.
Speaker Change: Please note that this call is being recorded. As of right now, everyone is joined on listen-only mode to avoid any background noise.
Speaker Change: You will have the opportunity to ask questions to our presenters later on in the Q&A session.
Speaker Change: If you'd like to ask a question during that time, please press star 1. Thank you. I'd now like to hand over to our first speaker for today, Anvita Patil. Please go ahead.
Anvita Patil: Good morning, LE, and thank you all for joining us for Hecla's second 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. On the call are Cassie Boggs, Interim President and Chief Executive Officer, Russell Lawlar, Senior Vice President and Chief Financial Officer, Carlos Aguiar, Vice President of Operations, and Kurt Allen, Vice President of Exploration.
Anvita Patil: Good morning, LE, and thank you all for joining us for Hecla's second quarter 2024 results conference call. I'm Anvita Patil, Vice President of Investor Relations and Treasurer.
Speaker Change: Our earnings release that was issued yesterday along with today's presentation are available on our website.
Speaker Change: On the call is Cassie Boggs, Interim President and Chief Executive Officer, Russell Lawlar, Senior Vice President and Chief Financial Officer, Carlos Aguiar, Vice President of Operations, and Kurt Allen, Vice President of Exploration.
Anvita Patil: At the conclusion of our prepared remarks, 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 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 statement. Non-GAAP measures cited in this call and related slides are reconciled in the slides or the news release.
Speaker Change: At the conclusion of our prepared remarks, we will all be available to answer your questions.
Speaker Change: 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.
Speaker Change: These and other risks could cause results to differ from those projected in the forward-looking statements.
Speaker Change: non-GAAP measures cited in this call and related slides are reconciled in the slides or the news release.
Anvita Patil: 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 Cassie.
Speaker Change: 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 Cassie.
Cassie Boggs: Thanks, Anvita. Good morning, everyone.
Cassie Boggs: The quote goes, there's nothing permanent except change, and HECLA has seen its share of change over the years. But not only has HECLA survived these changes, it's also grown and thrived during these changes. This period of change and transition is not new to HECLA, and we've embraced it and the opportunities it presents. Let me begin on slide three.
Cassie: Thanks, Anvita. Good morning, everyone.
Cassie: The quote goes, there's nothing permanent except change, and HECLA has seen its share of change over the years.
Cassie: But not only has HECLA survived these changes, it's also grown and thrived during these changes. This period of change and transition is not new to HECLA, and we've embraced it and the opportunities it presents. Let me begin on slide 3.
Speaker Change: Hecla's origins began all the way back in October 1891, in the Silver Valley of Idaho, about 50 miles east.
Speaker Change: of where I'm sitting this morning.
Speaker Change: Since that time, the company has not just withstood, but thrived across macroeconomic events such as the Great Depression, the Great Financial Crisis of 2008, along with two world wars, the pandemic, and multiple other events over this time.
Cassie Boggs: Hecla has also listed other more specific events, such as the 1910 fires, which burned across much of northern Idaho and western Montana, and the low metal prices of the early 2000s. But our most valuable asset that has allowed Hecla to grow and thrive is our people. Hecla would not be the company it is today if it were not for the hard work, determination, and commitment to our core values of safety and environmental stewardship by those who go to work at our operations and elsewhere each and every day.
Speaker Change: Hecla's also listed other more specific events, such as the 1910 fires, which burned across much of northern Idaho and western Montana, and the low metal prices of the early 2000s.
Speaker Change: Our most valuable asset that has allowed Hecla to grow and thrive is our people.
Tecla: Tecla would not be the company it is today if it were not for the hard work, determination, and commitment to our core values of safety and an environmental stewardship of those who go to work at our operations and elsewhere each and every day.
Cassie Boggs: Second is the quality of our assets, the solid foundation of long-reserved lives, low-cost silver operations with great geologic potential in the best mining jurisdictions. While each of our mines has its own specific qualities, there are some characteristics that transcend the portfolio. The first point to highlight is jurisdiction; all of our operating mines are in the U.S. or Canada. Second, each of our operating mines has a reserved mine life of more than a decade, and in the case of Lucky Friday, nearly two decades.
Speaker Change: Second is the quality of our assets. The solid foundation of long reserved lives, low-cost silver operations with great geologic potential in the best mining jurisdictions.
Speaker Change: While each of our mines has its own specific qualities, there are some characteristics that transcend the portfolio.
Speaker Change: The first to highlight is the jurisdiction. All of our operating mines are in the U.S. or Canada.
Speaker Change: Second, each of our operating mines has reserved mine life of more than a decade, and in the case of Lucky Friday, nearly two decades.
Cassie Boggs: And especially on the silver side of our business, we have a competitive cost advantage with Greens Creek and Lucky Friday and their low-cost structures, which drive margins and meaningful free cash flow generation. I'll pass the call to Russell and Carlos shortly, and they will go through the results of the quarter in more detail.
Speaker Change: And especially on the silver side of our business, we have a competitive cost advantage with Greens Creek and Lucky Friday and their low-cost structures which drive margins and meaningful free cash flow generation.
Speaker Change: I'll pass the call to Russell and Carlos shortly, and each will go through the results of the quarter in more detail, but I'd like to take a moment to note that Hecla had a great second quarter.
Cassie Boggs: But I'd like to take a moment to note that Hecla had a great second quarter, in which strong operational performance delivered record revenues and the second-highest silver production in our 133-year history. There are three key messages we'd like to drive home. First, we're on the path of free cash flow generation, especially in this metal price environment, with our Lucky Friday and Greens Creek mines generating strong free cash flow. Second, we're deploying our free cash flow by investing in our operations, especially Keno Hill, where we have seen remarkable success. But more work is needed to daylight the long-term value of this highly prospective geologic district. And third, we're committed to deleveraging our balance sheet as we start to pay down our credit system.
Speaker Change: in which strong operational performance delivered record revenues and the second highest silver production in our 133-year history.
Speaker Change: There are three key messages we'd like to drive home. First, we're on the path of free cash flow generation, especially in this metal price environment with our Lucky Friday and Greens Creek mines generating strong free cash flow.
Speaker Change: Second, we're deploying our free cash flow by investing in our operations, especially Keno Hill, where we have seen remarkable success.
Speaker Change: But more work is needed to daylight the long-term value in this highly prospective geologic district.
Cassie Boggs: I want to take a moment to emphasize the long-term value we see at Keno Hill, delivery of which depends on improving safety, environmental processes, mining practices, and investments in infrastructure. Our investment in Keno Hill is not different from our investments at Lucky Friday or Greens Creek in their early years. Both these operations today are cash flow, free cash flow engines of HEPA.
Cassie Boggs: You know, Hill, with its exploration potential, has parallels to both Lucky Friday and Greens Creek. Back in the 2000s, silver was below $5 per ounce, but Lucky Friday's resource potential was significant. We embarked on a drilling program in 2005 and increased our reserves by more than 300% over a period of seven years. The geologic potential of the mine drove investments in the No. 4 shaft and other infrastructure like the service hoist and the course ore bunker, which, coupled with our innovation of the UCB mining method, has delivered significant results.
Speaker Change: The geologic potential of the mine drove investments in the number four shaft and other infrastructure like the service hoist and the course or bunker which coupled with our innovation of the UCB mining method has delivered significant results.
Cassie Boggs: And I'm confident that the period, the best decade of Lucky Friday is ahead of us. Today, Lucky Friday is a pillar of our production growth, our free cash flow generation, and the bench strength and experience of the team, our culture, and our people.
Cassie Boggs: I want to also speak briefly about the recent developments in Yukon. We've offered our assistance to the First Nations of Nacho Nayak Dunn and the Yukon government to help with the cleanup activities arising from the heat leach failure at Victoria Gold's Eagle Mine. We're committed to Yukon and will continue to be available where possible to assist during this time of crisis. And finally, I just want to bring people up to speed on the status of our executive search for a new CEO.
Cassie Boggs: The search is going very well, and we've had a very robust response. We've identified a number of very qualified candidates who are very interested in the position, and we're confident that out of this wide-ranging pool, we will find the right person to lead Hecla in the future. I'll now turn the call to Russell.
Russell Lawlar: Thank you, Cassie. I'll start on slide five. A quarter ago, we laid out a scorecard with our capital allocation priorities for 2024. I'm happy to report that we continue to make significant progress against these priorities of paying down our revolver and investing in our. While all four of our operations generated free cash flow, the lion's share came from Greens Creek and Lucky. During the first half of this year, Greens Creek and Lucky Friday generated $100 million in free cash flow, with $67 million in the second quarter, including $18 million in insurance.
Speaker Change: While all four of our operations generated free cash flow, the lion's share came from Greens Creek and Lucky Friday.
Speaker Change: During the first half of this year, Greens Creek and Lucky Friday generated $100 million in free cash flow, with $67 million in the second quarter including $18 million of insurance receipts.
Russell Lawlar: Continued investment in Keno Hill is a high priority both in the mine as an asset but also in our workforce and mining and environmental and infrastructure procedures to ensure the safe and stable operations of Keno Hill for decades. Our investments in processes and safety and environmental procedures have started to produce tangible results. However, this is a journey, not a destination, and we plan to continue our investments. Keno Hill had a record quarter producing over 400 tons per day and over 900,000 ounces, which is incredible progress. Although we're encouraged by this progress, we've not yet declared commercial production as we want to ensure these levels are sustainable.
Speaker Change: Keno Hill had a record quarter producing over 400 tons per day and over 900,000 ounces, which is incredible progress.
Russell Lawlar: Carlos will discuss some of these details later in the presentation. Another priority is deleveraging the balance sheet and reducing our revolver bar. In the second quarter, we reduced our net debt by $25 million and ended the quarter with a revolver draw of $62 million, with cash of nearly $25 million on hand. Our net leverage ratio improved with record adjusted EBITDA, which increased 25% over the first quarter. With expected production and current prices, along with the remaining $14.8 million of insurance proceeds from our Lucky Friday claim, we anticipate we'll be able to reduce our net leverage ratio to below two times by the end of the year and pay our revolver down over the next two years.
Speaker Change: Our net leverage ratio improved with record-adjusted EBITDA, which increased 25% over the first quarter.
Russell Lawlar: Our realized price of silver also triggered a higher dividend payment this quarter, adding a penny per share to the minimum dividend component. This larger dividend payment highlights our unique silver-linked dividend policy, which provides additional exposure and leverage to silver prices. Moving to slide six.
Speaker Change: Our realized price of silver also triggered a higher dividend payment this quarter, adding a penny per share to the minimum dividend component. This larger dividend payment highlights our unique silver-linked dividend policy, which provides additional exposure and leverage to silver prices.
Russell Lawlar: Strong operational performance coupled with a favorable metal price translated into free cash flow for the quarter of $28.3 million, which was primarily driven by cash flow from our operations of $61 million, but also aided by cash received from our property insurer of nearly $18 million. As I highlighted in the prior slide, our priority remains on continued investment in our operations while also paying down the revolver. The chart on the slide shows the sources and uses of cash during the quarter.
Speaker Change: Moving to slide six.
Speaker Change: Strong operational performance coupled with a favorable metal price translated into free cash flow for the quarter of $28.3 million, which was primarily driven by cash flow from our operations of $61 million, but also aided by cash received from our property insurer of nearly $18 million.
Speaker Change: As I highlighted in the prior slide, our priority remains on continued investment and operations while also paying down the revolver.
Russell Lawlar: We invested $50 million in capital out of operations, of which $26 million related to growth, while we also paid $78 million on our revolver and exited with an improvement in our net debt of $25 million. As we move to slide 7, I'll speak more about some of the financial highlights from the quarter. In the second quarter, our revenues were dominated by silver at 46% of our sales, followed by gold at 34%, and a nice byproduct credit, which equated to 20% of total revenue.
Speaker Change: The chart on the slide shows the sources and uses of cash during the quarter. We invested $50 million in capital area operations, of which $26 million related to growth, while we also paid $78 million on our revolver and exited an improvement in our net debt of $25 million.
Speaker Change: As we move to slide seven, I'll speak more about some of the financial highlights from the quarter. In the second quarter, our revenues were dominated by silver at 46% of our sales, followed by gold at 34%, and a nice byproduct credit, which equated to 20% of total revenues.
Russell Lawlar: And not only did silver dominate our revenue profile, but we also achieved a margin of 58% of our all-in sustaining cost per ounce of silver, which in turn drove our free cash flow generation and partial pay down of the revolving credit facility. Our net leverage ratio improved to 2.3 times, and as noted, we expect we will achieve our target of less than two times by the end of the year. With that, I'll pass the call to Don.
Speaker Change: And not only did silver dominate our revenue profile, we also achieved a margin of 58% of our all-in sustaining cost per ounce of silver, which in turn drove our free cash flow generation and partial pay down of the revolving credit facility.
Speaker Change: Our net leverage ratio improved to 2.3 times and as noted we expect we will achieve our target of less than two times by the end of the year.
Don Demarco: Thank you, Russell. I will start on slide 9, Green's Creek flagship mine's consistent performance. Greens Creek delivered another strong and consistent quarter, producing 2.2 million ounces. Mint throughput for the quarter was 2,481 tons per day and was lowered due to the completion of multiple major maintenance projects including installation of the new primary screen, relining of the grinding circuit, and drum magnet installation, among others. Silver grades were lower in the quarter as mine grades reverted to mine flat.
Speaker Change: With that, I'll pass the call to the committee.
Speaker Change: Thank you, Russell. I will start on slide 9, Green's Creek, Flagship Mine, Consistent Performance.
Speaker Change: Mid throughput for the quarter was 2,481 tons per day and was lowered due to the completion of multiple major maintenance projects including installation of the new primary screen, relining of the grinding circuit, drum magnet installation, among others.
Don Demarco: Cash costs and all in sustaining costs for the quarter declined to $0.19 per ounce and $5.40, respectively, driven by lower treatment and refining charges, higher by fraud of credit, and lower sustaining capital due to delays in equipment purchase. The mine generated 34 million in free cash flow from the quarter and has generated 72 million during the first half of the year. We expect the mine to continue its strong performance in the second half and are lowering its cash costs and only sustaining cost guidance to reflect its strong performance year-to-day and expected higher by-product credit. Capital guidance has also been reduced to reflect the timing of equipment purchases in some capital projects.
Don Demarco: Greens Creek is a premier silver mine, the 11th largest in the world, and the team continues to do an excellent job of delivering consistent results safely every quarter. Lucky Friday is on track to achieve 5 million ounces in 2024. Turning to slide 10, Lucky Friday's operational performance established new records in the mine's 80-year history. The mine produced a record 1.3 million ounces of silver, achieved a record mean throughput of 1,181 tons per day, and delivered record sales. Cash costs for the quarter were $5.32 per ounce, and all-in sustaining costs for the quarter were $12.74 per ounce, both lower than the first quarter of 2024.
Speaker Change: Greens Creek is a premier silver mine, the 11 largest in the world, and the team continues to do an excellent job in delivering consistent results safely every quarter.
Speaker Change: Cash costs for the quarter were $5.32 per oz. All in sustaining costs for the quarter were $12.74 per oz, both lower than the first quarter of 2024.
Don Demarco: Cost per ounce has exceeded our guidance for the first half of 2024 because of higher labor and contractor costs, additional costs related to mitigation work done in the number two shop, which is the secondary gateway, and higher profit sharing under our collective bargaining agreement due to a strong financial performance. Capital investment of the mine was $11 million in significant sustaining capital projects in the quarter, including repairs to the No. 2 shaft, engineering, design, and initial construction of the surface cooling project, and equipment crew.
Speaker Change: Those programs have exceeded our guidance for the first half of 2024 because of higher labor and contractor costs.
Speaker Change: additional costs related to mitigation work done in the number two shaft, which is the Second Addis Gateway, and higher profit sharing under our collective bargaining agreement due to strong financial performance.
Speaker Change: Capital investment of the mine was $11 million in significant sustaining capital projects in the quarter, including repairs to the No. 2 shaft, engineering, design, and initial reconstruction of the surface cooling project, and equipment purchases.
Don Demarco: These record operational performance with strong metal prices dropped free cash flow generation of $33.7 million in the second quarter, including insurance proceeds of $17.8 million. The mine is on track to be a 5 million ounce producer this year. We are increasing cost guidance for the mine to reflect higher costs included in the first quarter and expected higher profit sharing costs, given the strong performance and better price. The UCB mining method and our capital investments in the mine, like the service hoist, which is the bottleneck of our hoisting capacity, and the ore bunker, which added capacity to stockpile ore for multiple days, and a couple of the mining mills, are instrumental in Lucky Friday' Most importantly, this quarter's performance was a testament to the excellent team we have at Lucky Friday.
Don Demarco: Casa Berardi, Executing a Surface Transition Plan. On slide 11, Casa Berardi produced 23,000 ounces in the second quarter at cash costs of $1,701 per ounce and all-in sustaining costs of $1,825, both within the guidance range. The mine generated positive free cash flow held by the stronghold price. The team has been careful reviewing stop-by-stop analysis for underground operations and given the favorable gold prices. The mine has extended the West Mine operations to the end of 2024.
Speaker Change: Casa Berardi, Executing a Surface Transition Plan
Speaker Change: on slide 11.
Speaker Change: Casa Berardi produced 23,000 ounces in the second quarter at a cash cost of $1,701 per ounce.
Speaker Change: and all in sustaining costs of $1,825, both within the guidance range.
Speaker Change: The mine-generated positive free cash flow held by stronghold prices.
Speaker Change: The team has been careful reviewing stop-by-stop analysis for underground operations and giving the favorable gold prices.
Don Demarco: Thus, we are increasing the production guidance to 80 to 80,000 ounces. Dust and Capital Guidance haven't been changed for the mine. We have more work to do at Casa Berardi as we continue on the surface transition and evaluation of underground exchange. Kino Hill is the largest silver producer in Canada.
Speaker Change: The mine has extended the wet mine operations to the end of 2024. Thus, we are increasing the production guidance to 80,000 to 80,000 ounces.
Speaker Change: Thus, in capital guidance isn't change for the mine. We have more work to do at Casa Berardi as we continue on the surface transition and evaluation of underground exchange.
Speaker Change: Hino Hale, largest silver producer in Canada.
Carlos Aguiar: Moving to slide 12, Eno Hill produced 0.9 million ounces and throughput surpassed 400 tons per day. The mine has produced 1.5 million ounces in the first half of the year, already exceeding 2023 full years of production. Our coal injury frequency rate at the mine declined by 12% to 1.89, and we have continued to make significant improvements in safety and environmental procedures at the mine. Despite the total production, we are not declaring commercial production at the mine because our work is not done.
Speaker Change: Moving to slide 12.
Speaker Change: Eno Hill produced 0.9 million ounces and throughput surpassed 400 tons per day. The mine has produced 1.5 million ounces in the first half of the year, already exceeding 2023 full years of production.
Speaker Change: Our coal injury frequency rate at the mine declined by 12% to 1.89, and we have continued to make significant improvements in safety and environmental procedures at the mine.
Speaker Change: Despite this sum of production, we are not declaring commercial production at the mine because our work is not done.
Carlos Aguiar: But first, let me talk about the improvement we have seen. In the fourth quarter of 2023, we initiated a 10-step action plan to implement best practices in safety training, reporting, and supervision. The program has increased the focus on hazard identification and control, proven reporting of safety metrics, and instituted several safety standards such as traffic management and fire protection, just to name a couple. We have also started mining the flame and mud deposit to supplement the feed from Birmingham.
Speaker Change: But first, let me talk about the improvements we have seen.
Speaker Change: In the fourth quarter of 2023, we initiated a 10-step action plan to implement best practices in safety training, reporting, and supervision.
Speaker Change: The program has increased the focus on hazard identification and control, improved reporting of safety metrics, and instituted several safety standards, such as traffic management and fault protection, just to name a couple.
Speaker Change: We have also started mining the flame and mud deposit to supplement the feed from Birmingham. As we approach the colder winter months to manage the clay from Birmingham, the feed from flame and mud, even though relatively lower in grade, should help improve crushing rates with the commingling of ore.
Carlos Aguiar: As we approach the colder winter months to manage the clay from Birmingham, the feed from flame and mud, even though relatively lower in grade, should help improve crushing rates with the commingling of ore. There are also key infrastructure projects remaining to complete. The cemented sales batch plant will commence construction in the fourth quarter and will change the mining method to underhand at Birmingham in the second half of 2025. We expect this will make ground conditions safer and more productive.
Speaker Change: There are also key infrastructure projects remaining to complete. The cemented sales patch plant will commence construction in the fourth quarter and will change the mining method to underhand at Birmingham in the second half of 2025.
Speaker Change: We expect this will make ground conditions safer and more productive.
Carlos Aguiar: With increased mining rates, we also have work to do on water treatment upgrades and the construction of dry stack tables. We are increasing our capital guidance for the year to $45 to $50 million as we work through key capital initiatives. Increased Underground Development, Cemented Tails Batch Plan, Water Treatment Upgrades, and Work on Dry Stacked Tailing. With the operation also achieving higher throughput of 400 tons per day, reduction costs excluding depreciation are expected to be in the range of $25 to $27 million, as seen in the second quarter.
Speaker Change: With increased mining rates, we also have work to do on water treatment upgrades and construction of dry stack tails.
Speaker Change: With the operation also achieving higher throughput of 400 tons per day, production costs excluding depreciation are expected to be in the range of $25 to $27 million as seen in the second quarter.
Carlos Aguiar: With Kena Hill's 11-year reserve mine life, the strong geological potential of the operation in the district and the jurisdiction, we are optimistic that our investment in Kena Hill will bear high returns in the long term. And with the exploration success we are seeing, we are excited and expect that Quina's reserve life should grow beyond its current 11 years. With that, I will pass the call to Kurt to speak about Quina's exploration success.
Speaker Change: With Kena Hills' 11-year reserve mine life, the strong geological potential of the operation in the district, and the jurisdiction, we are optimistic that our investment in Kena Hills will bear high returns in the long term.
Speaker Change: And with the exploration success we are seeing, we are excited and expect that Quina's reserve life should grow beyond its current 11 years. With that, I will pass the call to Kurt to speak about Quina's exploration successes.
Kurt Allen: Thank you, Carlos. Slide 13 shows plan maps of our underground and surface diamond drilling target areas at Keno Hill. Underground drilling is focused on extending mineralization and resource conversion in both the Birmingham Bear Zone and the Flame and Moss Zone veins and continues to intersect high-grade silver mineralization over significant widths, which highlights the potential for strong silver mineralization within the district. High-grade intercepts in both zones, including 35.4 oz per ton silver over 20.2 feet in the bare zone and 28.6 oz per ton silver over 22.3 feet in the flame and moss zone, should positively impact resource models and are providing more geologic information and confidence to our resource base.
Kurt: Thank you, Carlos.
Kurt: Slide 13 shows plan maps of our underground and surface diamond drilling target areas at Keno Hill.
Kurt: Underground drilling is focused on extending mineralization and resource conversion in both the Birmingham Bear Zone and the Flame and Moss Zone veins and continues to intersect high-grade silver mineralization over significant widths.
Kurt: which highlights the potential for strong silver mineralization within the district.
Kurt: High-grade intercepts in both zones, including 35.4 oz. per tonne silver over 20.2 feet in the bare zone and 28.6 oz. per tonne silver over 22.3 feet in the flame and moss zone.
Kurt: should positively impact resource models and are providing more geologic information and confidence to our resource base.
Kurt Allen: Three surface drills are also active on the property, testing multiple targets, including the Birmingham Deep, the Birmingham Townsite, Elsa 17 Dixie, and Silver Spoon target areas that have potential for the discovery of additional large, high-grade silver deposits. New exploration intercepts continue to add to our understanding of the structural geology of the target areas and demonstrate the mineral potential of this highly prospective district.
Kurt: Three surface drills are also active on the property, testing multiple targets including the Birmingham Deep, the Birmingham Townsite, Elsa 17 Dixie, and Silver Spoon target areas that have potential for the discovery of additional large high-grade silver deposits.
Cassie: New exploration intercepts continue to add to our understanding of the structural geology of the target areas and demonstrate the mineral potential of this highly prospective district. With that, I'll pass the call back to Cassie.
Cassie Boggs: Thanks Kurt. I'll speak to our guidance on slide 14. Our silver production and consolidated cost guidance is affirmed. With concert varieties underground being extended to the end of the year, we are increasing our gold production guidance. Capital guidance is higher because of Keno Hill, as Carlos described. I'd like to wrap up our prepared remarks with a few thoughts on silver.
Cassie: Thanks, Kurt. I'll speak to our guidance on slide 14. Our silver production and consolidated cost guidance is affirmed. With cost of varieties underground being extended to the end of the year, we are increasing our gold production guidance.
Cassie: Capital guidance is higher because of Keno Hill as Carlos described.
Cassie Boggs: The International Energy Agency released its mid-year electricity update in July. Global electricity demand is expected to grow four percent in 2024. That's the highest since 2007. Renewable energy sources are expected to set a new record with their share of electricity generation increasing to 35 percent. And solar is expected to meet half of the demand for renewable sources. Silver is a key component in solar technology, and as such, silver demand for solar is expected to increase by 40 million ounces this year.
Speaker Change: I'd like to wrap up our prepared remarks with a few thoughts on silver. The International Energy Agency released its mid-year electricity update in July . Global electricity demand is expected to grow 4% in 2024. That's the highest since 2007.
Cassie: Renewable energy sources are expected to set a new record with their share of electricity generation increasing to 35%. And solar is expected to meet half of the demand of renewable sources.
Speaker Change: Silver is a key component in solar technology and as such, silver demand in solar is expected to increase by 40 million ounces this year. That's the equivalent of four new Green's Creeks and eight new Monkey Fridays.
Cassie Boggs: That's the equivalent of four new Green's Creeks and eight new Mucky Fridays. Before we open the call to questions, I just want to congratulate all the Hecla employees for their commitment to our values of safety and environmental stewardship. Their dedication to Hecla every day makes Hecla the company it is. And with that, Ellie, I'd like to open the call to questions.
Speaker Change: Before we open the call to questions, I just want to congratulate all the Hecla employees for their commitment to our values of safety and environmental stewardship. Their dedication to Hecla every day makes Hecla the company it is.
Speaker Change: And with that, Ellie, I'd like to open the call to questions.
Operator: Thank you so much. We are now opening the floor to questions and answers. If you'd like to ask a question, please press star 1. Again, that's star 1 on your telephone keypad. Our first question comes from Lucas Pipes from B Reilly Securities. Your line is now open.
Ellie: Thank you so much. We are now opening the floor for question and answer session. If you'd like to ask a question, please press star 1. Again, that's star 1 on your telephone keypad. Our first question comes from Lucas Pipes from B-Rally Securities. Your line is now open.
Nicholas Giles: Thank you very much, operator. Good morning, everyone. This is Nick Giles on behalf of Lucas.
Nick Giles: Thank you very much, operator. Good morning, everyone. This is Nick Giles on for Lucas. Guys, congrats on the quarter. Really nice to see such strong cash flow. Russell, maybe my first question is for you.
Nicholas Giles: Guys, congrats on the quarter. Really nice to see such strong cash flow. Russell, maybe my first question is for you.
Russell Lawlar: Strong progress on the net leverage. What's your appetite for further paydown beyond the targets that you outlined? I believe you said below two times by the end of the year. You know, is there a target beyond that, or? You know, will that be strong enough for now? Thanks very much. Yeah, no.
Speaker Change: Strong progress on the net leverage. What's your appetite for further pay down beyond the targets that you outlined? I believe you said below two times by the end of the year.
Speaker Change: You know, is there a target beyond that or, you know, will that be strong enough for now? Thanks very much.
Russell Lawlar: Thanks for the question, Nick. As it relates to deleveraging from the revolver, our plan will be to, you know, our first priority is going to be to make sure that we invest in our operations and put the capital in when it's necessary, as well as the exploration programs, some of which Kurt just highlighted at Keno Hill. But we do anticipate that we would generate free cash flow on top of that, and we'll allocate that capital to the revolver.
Speaker Change: Thanks for the question, Nick. As it relates to deleveraging from the revolver, our plan will be to, you know, the first priority is going to make sure that we invest in our operations and put the capital in when it's necessary, as well as the exploration programs, some of which, you know, Kurt just highlighted at Keno Hill.
Speaker Change: But we do anticipate we would generate free cash flow on top of that, and we'll allocate that capital to the revolver. Clearly, once it gets to zero, then we'll look to build the cash position back to levels that we've seen in the past, right? If you go back and you look...
Russell Lawlar: You know, clearly, once it gets to zero, then we'll look to build the cash position back to levels that we've seen in the past, right? If you go back and look at the past, you know, three, five years, we had cash balances between $100 and $200 million. We wouldn't be, you know, clearly we wouldn't be concerned if we had a cash balance of that, and then we would talk further about further allocation of capital at that point.
Speaker Change: In the past, you know, three, five years, we've had cash balances between $100 and $200 million. We wouldn't be, you know, clearly we wouldn't be concerned if we had a cash balance of that, and then we would talk further about further allocation of capital at that point.
Russell Lawlar: makes sense. You guys have made some real progress on the cost front as well. I know some higher labor costs at Lucky Friday. Can you just add some additional color on where you may still be seeing some inflation, where you've seen the most relief? Any extra color would be appreciated.
Speaker Change: Makes sense.
Speaker Change: You guys have made some real progress on the cost front as well.
Speaker Change: I know some higher higher labor costs at Lucky Friday, you know, can you just add some additional color on where you may still be seeing some some inflation where you've seen the most relief?
Russell Lawlar: You know, I would suggest, I'll let Carlos speak as well, but, you know, from the cost inflation standpoint, yeah, I don't think that we've seen anything specific to speak to. What we have seen, and we did note it both in the comments we made but also in the earnings release, as you know, you've seen the performance of Lucky Friday, and the performance of Lucky Friday has been very, very strong. As we see the performance of Lucky Friday, there's a profit-sharing component within the collective bargaining agreement, and so as we make more money at Lucky Friday, clearly, we allocate some of that to profit-sharing. Maybe, Carlos, you have some details of those underlying costs that you want to highlight?
Speaker Change: Any of you in color would be appreciated.
Speaker Change: You know I would I would suggest I'll let Carlos speak as well but you know from the cost inflation standpoint
Carlos: Yeah, I don't think that we've seen anything specific to speak to. What we have seen, and we did note it both in the comments we made,
Carlos: but also in the earnings released.
Speaker Change: You've seen the performance of Lucky Friday, and the performance of Lucky Friday has been very, very strong.
Carlos Aguiar: Well, it's, it's uh... The rates are normal from the previous year; I can say 5-7% for most of the mining supplies, and of course, it's still execution of projects every time that we have some updates. We are starting to see those increments. So also the number of contractors that are executing projects, of course, there's always that. And additionally, you know, I think, as has been the case since I've been in the industry, finding good electricians, mechanics, and miners is hard.
Speaker Change: The rates are normal from the previous year. I can say 5-7% in most of the mining supplies and of course still execution of projects. Every time that we have some updates, we are starting to see those increments.
Speaker Change: So also the number of contractors that are executing projects, of course, there's always that.
Carlos Aguiar: And so, in certain cases, we do have to supplement our workforce with contractors for some of those skills. And we continually work to, you know, build out our workforce such that, you know, those are employees in our role versus contractors, and we'll continue to do that.
Speaker Change: And additionally, I think, as has been the case since I've been in the industry,
Speaker Change: , you know, contractors, and we'll continue to do that.
Nicholas Giles: Got it. Got it. Well, guys, I appreciate all the comments. Keep up the good work.
Speaker Change: Got it. Got it. Well, guys, I appreciate all the comments. Keep up the good work.
Heiko Ihle: Our next question comes from Heiko Ihle from H.C. Wainwright. Your line is now open.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Heiko Ihle from HC Wainwright. Your line is now open.
Heiko Ihle: Hey there, thank you guys for taking my questions and congratulations on a pretty strong quarter there. Thanks, Heiko.
Heiko Eli: Hey there, thank you guys for taking my questions and congratulations on a pretty strong quarter there.
Heiko Ihle: There was a sentence in the report related to Keno Hill, and I'll quote you there, that you expect a cost investment that the mine will remain at current levels as more work is required to deliver long-term value. Any thought process on lower-term cost development for the site? I mean, earlier in this call, you had mentioned that you've seen, in your words, tremendous success at the site. When should we see meaningful cost improvements? Is this a second half of next year kind of thing, especially since you just increased your capital investment guidance for the site?
Speaker Change: Thanks, Heiko.
Heiko Eli: There was a sentence in the report related to Keno Hill, and I'll quote you there, that you expect cost investment of the mine will remain at current levels as more work is required to deliver long-term value.
Speaker Change: Any thought process on longer-term cost development for the site? I mean, earlier on this call, you had mentioned that you've seen, in your words, tremendous success at the site.
Speaker Change: When should we see meaningful cost improvements? Is this a second half of next year kind of thing? Especially since you just increased capital investment guidance for the site?
Russell Lawlar: Yeah, yeah, Heiko, the way that we see it, you know, and we lay out in our earnings release, you know, those kind of five quarters of progress, right? And so you can see clearly that the investment that we've made has been able to increase production, the tons of milled, all of that, but with that increase in production, we actually see the cost going up as well. That's what we're trying to make clear.
Speaker Change: Yeah, Heiko, the way that we see it, you know, you can look at it and we lay out in our earnings release, you know, those kind of five quarters of progress, right? And so you can see clearly that the investment that we've made has been able to increase the production, the tons milled, all of that.
Speaker Change: With that increase in production, we actually see the cost going up as well. That's what we're trying to make clear.
Russell Lawlar: You know, once we get to a sustainable level of production, which some of that comes with the capital that we're putting in now, but we'll continue to put in, and I'll, you know, Carlos can speak to some of those specific projects. We would anticipate those costs coming down, but, you know, the first order of business is instilling a safe operating culture at the mine and environmental excellence. Then, you know, we go on to production.
Speaker Change: Once we get to a sustainable level of production, which some of that comes with the capital that we
Speaker Change: We're putting in now, but we'll continue to put in, and Carlos can speak to some of those specific projects.
Carlos: We would anticipate those costs coming down, but first order of business is instilling a safe operating culture at the mine and environmental excellence.
Carlos: Then, you know, we go on to production. We've really made a lot of progress in those areas.
Russell Lawlar: We've really made a lot of progress in those areas. And now, in addition to all of those things, we're going to go to a cost optimization mode, but we do clearly need to make sure that the mine is sustainable before we go on to that. Carlos, is there anything you'd like to add?
Carlos: And then now, you know, we're going to go on to, in addition to all of those things, we're going to go to a cost optimization mode, but we do, you know, clearly need to make sure that the mine is sustainable versus before we go on to that.
Carlos Aguiar: Well, the second half of the year is when, as we say during the presentation, we started the flaming mud deposit back to production again. So we are going to supplement the production from Birmingham, you know, by having two mines running. The construction of the batch plan for tailings, which is going to make a huge impact next year once we modify the mining method to underhand. And then the dry stack tailings, which is the next stage, to which we are going to add additional capacity. So the three pieces of investment in the second half of the year, of course, are going to be significant, but they are going to make a huge impact in the near future of MITEI.
Carlos: Carlos is there anything you'd like to add? Well it's the second half of the year is when...
Carlos: As we say during the presentation, we started the Flaming Mud Deposit back to production again. So we are going to supplement the production from Birmingham, you know, having two mines running.
Speaker Change: The execution or the construction of the batch plan for tailings, which is going to make a huge impact next year.
Speaker Change: Once we modify the...
Speaker Change: mining method to underhand and then the dry stack tailings which is the next stage which we are going to add additional capacity so the three the three pieces of
Speaker Change: Investments in the second half of the year of course are going to be significant that are going to make a huge impact in the near future of the Mai Tai.
Heiko Ihle: Perfect. You prefaced my follow-up question, so I'm going to put a different one out there. Given the progress on the issue discussed earlier in this call, is it fair to say that you expect to announce the new CEO by the end of this quarter?
Speaker Change: Perfect. You prefaced my follow-up questions. I'm gonna put a different one out there. Given the progress on the issue discussed earlier this call, is it fair to say that you expect to announce the new CEO by the end of this quarter?
Cassie Boggs: You know, this is Cassie, our progress. We are really making good progress on finding a new CEO. I can't really commit to a timetable on that, but we're moving very expeditiously. And as these things sometimes, as you know, sometimes they take longer than you expect. Sometimes it happens very quickly. We've had a tremendous response in terms of people interested in it, so I'm confident that we will find the right person as soon as possible.
Speaker Change: You know, this is Cassie, our progress, we are really making good progress on finding a new CEO . I can't really commit...
Speaker Change: to a time on that, but we're moving very expeditiously. And as these things sometimes, as you know, sometimes they take longer than you expect. Sometimes it happens very quickly.
Speaker Change: We've had tremendous response in terms of people interested in it, so I'm confident that we will find the right person as soon as possible.
Heiko Ihle: Splendid. And with that, I'll get back in the queue.
Speaker Change: Splendid, and with that I'll get back in queue.
Joseph Reagor: Our next question comes from Joseph Reagor from Roth MKM. Your line is now open.
Aiko: Thanks Heiko.
Speaker Change: Our next question comes from Joseph Reagor from Roth MKM. Your line is now open.
Joseph Reagor: Hi guys, thanks for taking the questions. I'm kind of following a little bit on the Keno Hill question. Uh, it sounds like, you know, your view is... invest today, the mine will repay you in the future, but under what scenarios would you guys, you know, kind of cut the losses and move on from the mine?
Joseph Rieger: Hi guys, thanks for taking the questions.
Joseph Rieger: Kind of following a little bit on the Keno Hill questions. It sounds like, you know, your eyes view is
Joseph Rieger: Invest today, the mine will repay you in the future.
Speaker Change: Under what scenarios would you guys, you know, kind of cut the losses and move on from the mine?
Russell Lawlar: You know, I would say, and that's, you know, as we think about the operations and Cassie's opening remarks, she made this comment as, you know, Lucky Friday is a good example of a mine that, in the early 2000s, had great geological potential, while silver prices were low. The mine was not making money back then, and if we had cut our losses and walked away at that point, you could see our portfolio would have been cut by a third at least from, or a fourth, I guess, from operating assets. Free cash flow at Lucky Friday this quarter rivaled Greens Creek.
Speaker Change: You know I would say and that's you know as we think about the operations and Cassie's opening remarks she made this comment as you know Lucky Friday is a good example of
Cassie: a mine that in the early 2000s...
Cassie: had great geological potential. Silver prices were low. The mine was not making money back then.
Cassie: And if we had cut our losses and we had had walked away at that point, you know, you could see our portfolio would have been cut by
Russell Lawlar: So, the geologic potential at Keno Hill is significant. We have 11 years of reserves. You know, we believe that the mine has a bright future, but we also believe that it's going to take a lot of work. So we do believe in the mine. And I wouldn't speculate about what specific actions would tell us to do that.
Cassie: A third at least from, or a fourth I guess, from operating assets, you know, free cash flow this quarter, free cash flow at Lucky Friday rivaled Greens Creek. So the geologic potential at Keno Hill is significant. We have 11 years of reserves. You know, we believe that the mine has
Cassie: a bright future ahead of it. We also believe that it's going to take a lot of work. So we do believe in the mine and I wouldn't speculate about what specific actions would tell us to do that.
Russell Lawlar: Yeah, and I would just add that, as Russell said, both Lucky Friday and Green's Creek have shown us that these are long-term commitments. We're planning on being in the Yukon for a long time, so we're committed to making this project work, and we're confident that we can get there.
Cassie: Yeah, and I would just add that, as Russell said, both Lucky Friday and Greens Creek have shown us that these are long-term commitments. We're planning on being in the Yukon for a long time, so we're committed to making this.
Joseph Reagor: Okay, fair enough. And then kind of big picture question. The Post-Phil Era. Are there any large philosophical changes we should expect? I know you guys mentioned how you're a North American-focused company, and within the last 18 months, Phil had made some comments about potentially investing in South America. Has that changed? Big picture changes in the way you guys think about things. Sure.
Speaker Change: Okay, fair enough. And then a kind of big picture question.
Russell Lawlar: Sure, you know, this transition has allowed us to sort of reset, review where we are, and for the time being, we're executing on our strategy to maximize the value of our North American assets. We've got some great assets, and we believe there's more value in all of them. That said, that doesn't mean we won't ever look at opportunities outside of North America, but we are not going to be doing that, at least in the near term.
Speaker Change: Sure, you know, this transition has allowed us to sort of reset, review where we are, and for the time being, we're executing on our strategy to
Joseph Reagor: Okay, thanks for the color. I'll turn it over.
Kevin O'halloran: Our next question comes from Kevin O'Halloran.
Kevin O'halloran: Hi, thanks for taking my question. Maybe just sticking with the Keno Hill theme. Can you remind us what the main points are?
Speaker Change: Hi, thanks for taking my question. Maybe just sticking with the Keno Hill theme, can you remind us what are the main criteria you're looking for before declaring commercial production and maybe what that timing looks like?
Russell Lawlar: As it relates to what the specific criteria are, it would be a sustainable rate of production that would be somewhere in the range of 75% of our permitted production, which you'd look at our earnings release now and say we're there. In addition to that, getting the capital in place that allows that to go on a sustainable basis. What we're not looking to do is have a production quarter like we did this quarter, which was actually very, very positive, but not be able to sustain it. We want to be able to ensure that we are able to sustain this over time. And in terms of timing, yeah, again, I'd like not to speculate on that.
Speaker Change: You know as it relates to
Speaker Change: What the specific criteria are, it would be a sustainable rate of production.
Speaker Change: It would be somewhere in the range of 75% of our permitted production, which you'd look at our earnings release now and say we're there. In addition to that, getting the capital in place that allows that to go on on a sustainable basis.
Speaker Change: What we're not looking to do is have a production quarter like we did this quarter, which was actually very, very positive, but not be able to sustain it. We want to be able to ensure that we are able to sustain this over time.
Russell Lawlar: What we've tried to do in the release is put out what the expectations are from an economic basis for the Keno Hill mine. So that's why we guide those operational costs. We guide the capital, both sustaining and non-sustaining, in the production. So, you know, I think that we try to give the market all of the metrics that are needed to calculate those things if someone finds that necessary. But what we don't want to do is put any unnecessary burden or pressure on our operators.
Speaker Change: And in terms of timing, you know, again, I'd like not to speculate on that. What we've tried to do in the release is
Speaker Change: We put out what the expectations are from an economic basis of the Keno Hill mine, so that's why we guide those operational costs, we guide the capital, both sustaining and non-sustaining, and
Speaker Change: the production. So, you know, I think that we try to give the market all of the metrics that's needed to calculate those things if someone finds that necessary.
Russell Lawlar: You know, those guys are right now working to instill the safety culture, as we've talked about, and environmental excellence. So, we don't want to add another metric, but we also want to give the market what it needs for the market to understand what the economics of that might be.
Speaker Change: But what we don't want to do is put any unnecessary burden or pressure on our operators. Those guys are right now working to instill the safety culture, as we've talked about, and environmental excellence. So we don't want to add another metric, but we also want to give the market what's needed.
Kevin O'halloran: Okay, that makes sense. Thanks for that. On the cost guidance increase at Keno, can you give a bit more color on whether that's driven mostly by the higher activity and the higher production? Or are there some capexing items or other stuff that wasn't included previously in that cost guidance? Well, it's bold, as we say.
Speaker Change: Okay, that makes sense. Thanks for that.
Speaker Change: On the cost guidance increase at Keno, can you give a bit more color on whether that's driven mostly by the higher activity and the higher production, or are there some CapExing items or other stuff that wasn't included previously into that cost guidance?
Carlos Aguiar: Well, it's both. As we say, we are building our team, we are building a safety culture, we are doing environmental upgrades, and we are executing capital projects, we are expanding the camp. So we have a really significant group of people working around to improve the game. That's why we are estimating those costs.
Speaker Change: Well, it's both. As we say, we are building our team, we are building safety culture, we are doing environmental upgrades, and we are executing capital projects. We are expanding the camp to
Speaker Change: So, we had a really significant group of people working around to improve the place, and that's why we are estimating those costs.
Kevin O'halloran: Okay, thanks for that. Last one for me, just quickly, can you give us a sense of roughly the percentage of ore from flame and moth that we should be expecting over the coming quarter? Yeah, for the second half, Flake
Speaker Change: Okay, thanks for that. Last one for me, just quickly, can you give us a sense of
Speaker Change: roughly the percentage of ore from flame and moth that we should be expecting over the coming quarters.
Carlos Aguiar: Yeah, for the second house, uh, Flame and Mud, is going to supplement the production with around 200,000 ounces, which is 15% of the total ounces of the second half.
Speaker Change: For the second half, Flame and Moth.
Speaker Change: It's going to supplement the production with around 200,000 ounces, which is 15% of the total ounces of the second half.
Kevin O'halloran: Okay, that's helpful. Thanks a lot, and I'll pass it on to the next caller.
Speaker Change: Okay, that's helpful. Thanks a lot, and I'll pass it on to the next caller.
Mike Parkin: Our next question comes from Mike Parkin from National Bank. Your line is now open.
Speaker Change: Our next question comes from Mike Parkin from National Bank. Your line is now open.
Mike Parkin: Thanks, guys. Just following up on the cost questions, we've seen quite an improvement in the income statement ramp-up and suspension costs coming down nicely. Is that where we're kind of seeing the transition of some of that flowing now through the operating cost line, specifically at Keno Hill as that's ramping up? And if that is the case, can you give us a sense of how we should be thinking about that ramp-up and suspension of cost expenditure on a go-forward basis? Should we expect that to be stabilizing around 5 million, or will we actually be getting into the zero territory in the not-too-distant future?
Mike Parkin: Thanks guys. Just following up on the cost questions, we've seen quite an improvement in the income statement ramp up and suspension costs.
Mike Parkin: coming down nicely. Is that where we're kind of seeing the transition of some of that flowing now through the operating cost line specifically at Keno Hill as that's ramping up? And if that is the case, can you give us a sense of
Speaker Change: How we should be thinking about that ramp-up and suspension.
Speaker Change: cost expense on a go-forward basis. Should we expect that to be stabilizing around $5 million or will it actually be getting into the zero territory in the not-too-distant future?
Russell Lawlar: Thanks, Mike. Yeah, so the way that the ramp-up and suspension costs, that line item on the income statement works. For an operation that's in ramp-up like Keno Hill, what we'll do is we'll allocate and expend a certain amount of cost. We will allocate an amount that equals revenue to the cost of sales. So if you look at page 6 of our earnings release, you can see that our revenue in Q2-24 was $29 million, and we allocated $29 million of costs to cost of sales for Keno Hill.
Russell Lawlar: That's both cash and non-cash. So you end up with a zero gross profit, and then the remainder goes to the ramp-up and suspension costs. So as you see the improvement at Keno Hill, you see the ramp-up and suspension costs come down. The other thing you'll see is in Q1, we had a bit of Lucky Friday costs in there for January. So that came off in Q2 and caused that improvement. Then once, you know, at some point, I expect we will, you know, that line item will go away for Keno Hill. You know, it's, we don't know when that'll be.
Speaker Change: For an operation that's in ramp-up like Keno Hill, what we'll do is we'll allocate, we expend a certain amount of costs.
Speaker Change: during the quarter and
Speaker Change: We'll allocate the amount that equals revenue to the cost of sales. So if you look...
Speaker Change: Page 6 of our earnings release, you can see that our revenue in Q2 of 24 was $29 million.
Speaker Change: We allocated $29 million of cost to cost of sales for Keno Hill. That's both cash and non-cash.
Speaker Change: So you end up with a zero gross profit and then the remainder goes to the ramp up and suspension costs.
Speaker Change: So as you see the improvement at Keno Hill, you see the ramp-up and suspension costs come down. The other thing you'll see is in Q1 we had a bit of Lucky Friday costs in there for January , so that's come off in Q2 and caused that improvement.
Speaker Change: At some point, I expect that line item will go away for Keno Hill. We don't know when that will be. That will be when we declare commercial production or it makes a total gross profit.
Russell Lawlar: That'll be when we declare commercial production or it makes a total gross profit. But what you will see is suspension costs related to Nevada and Mexico will remain in that line item. And those are roughly, say, $3 million or so for Nevada a quarter. And so those will continue. We continue to try to work those costs down, though, as we, you know, are transitioning more from Nevada just being an exploration.
Speaker Change: But what you will see is suspension costs related to Nevada and Mexico will remain in that line item. And those are roughly, say, three million dollars.
Mike Parkin: All right, that's great, Kelly. Thanks.
Speaker Change: All right, that's great, Kelly. Thanks, guys.
Operator: This concludes our question and answer session. I'd now like to hand the microphone back over to Cassie Boggs for final remarks. Thanks, everyone.
Speaker Change: This concludes our question and answer session. I'd now like to hand back over to Cassie Boggs for final remarks.
Cassie Boggs: Thanks, everyone. We appreciate you calling in, and we very much appreciate you listening to us. We look forward to this next quarter and having another great quarter.
Cassie Boggs: Thanks everyone. We appreciate you calling in and we very much appreciate you listening to us. We look forward to this next quarter and having another great quarter. Thanks.
Operator: Thank you, everyone, for attending today's call. You may now disconnect. Have a wonderful day.
Speaker Change: Thank you everyone for attending today's call. You may now disconnect. Have a wonderful day.
Operator: Please wait; the conference will begin shortly.