Q3 2024 Hecla Mining Co Earnings Call
Speaker Change: Roy Urykh, Greta Thunberg, John Peck, Eric有一1871 Listen to the residents of Motown Thank you for watching
Speaker Change: Thank you for standing by. At this time, I'd like to welcome you to the third quarter 2024 Hecla Mining Company earnings conference call.
Anvita Patil: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Thank you. I would now like to turn the call over to Anvita Patil. Please go ahead.
Anvita Patil: Good morning, Adam, and thank you all for joining us for Heckler's 3rd Quarter 2024 Results Conference Call.
Anvita Patil, Vice President of Investor Relations and Treasurer.
Anvita Patil: Our earnings release that was issued yesterday along with today's presentation are available on our website.
Anvita Patil: On the call is Cassie Boggs, Interim President and Chief Executive Officer.
Speaker Change: Rob Krishmaroff, Incoming President and Chief Executive Officer Russell Lawlar, Senior Vice President and Chief Financial Officer
Speaker Change: Carlos Aguiar, Senior Vice President and Chief Operations Officer, and Kurt Allen, Vice President of Exploration. At the conclusion of our prepared remarks, we will be all available to answer questions.
Speaker Change: and involve risks, as shown on slide 2, in our earnings release and in our 10-K and 10-Q filings with the SEC. These and other risks could cause results to differ from those projected in the forward-looking statements.
Speaker Change: Any non-GAAP measures cited in this call and related slides are reconciled in the slides or the news release.
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. I want to express both my excitement and gratitude that Rob has agreed to join us as the next president and CEO of HECLA.
Speaker Change: I've known Rob for 19 years, and based both on my experience in working with him and his proven track record of success, the board is confident he is the right person to lead HECLA not only at this junction, but well into the future.
Speaker Change: Rob is a seasoned and successful geologist having worked in the mining industry for three decades. He has broad experience across various geographies and operations.
Speaker Change: But more importantly, he is a leader who provides vision and fosters collaboration and teamwork by bringing diverse groups together. And that's what HEPLIN needs.
Speaker Change: So with these opening remarks, I'll pass the call to Rob, both to introduce himself and to get some perspective on why he decided to join HECLA.
Speaker Change: Well, thank you, Cassie. As Cassie noted, she and I have known each other for 19 years. And I really cannot think of a better leader to have led Heckler over the past six months. And really, that's one of the primary reasons I've chosen to join this team.
Speaker Change: As this opportunity presented itself, I evaluated Heckler and confirmed my understanding of the company.
Speaker Change: The independence, strong governance and complementary skills of the board were reassuring and as you know Heckler has a long and rich history of being a leader in the silver mining space with silver assets that are among the best in the industry when considering all the attributes.
Speaker Change: Additionally, I'm joining a well-seasoned and talented team, and in fact, let me be the first to congratulate Carlos as Heckler's new Chief Operating Officer.
Speaker Change: Let's turn to slide three and I'll talk a bit more about why I chose to join Heckler.
Speaker Change: The value of a mining company rests on two key pillars, the quality of the team and the strength of its assets.
Heckler is fortunate to have both.
Speaker Change: Our team is talented and dedicated, and our assets are world-class, with reserved lives exceeding a decade in every mine.
Speaker Change: and nearly two decades at Lucky Friday. These silver mines are among the highest grade in the industry, really setting us apart from our peers.
Speaker Change: Equally important is Heckler's culture of innovation. So for example we pioneered and implemented the underhand closed bench mining method at Lucky Friday and in fact
Speaker Change: I'm excited to visit there tomorrow to meet the people who pioneered this mining method and to see it in action.
Speaker Change: We also boosted throughput and recoveries at Greens Creek and integrated generative AI into our drilling programs. And so this culture extends to our commitment to ESG practices, which is crucial for maintaining our social licence to operate.
Speaker Change: A standard example is Keno Hill where a year ago we prioritised the safety of our employees, contractors and the environment over production.
Speaker Change: We remain committed to responsible operations and valuing input and collaboration from the Yukon Government and the First Nation of Ngacho-Ngakdun.
Speaker Change: With strong exploration success, we're invested in the long-term future of this operation, and in fact the entire district.
Speaker Change: building on our foundation of stakeholder engagement and continuous improvement in safety and environmental practices.
Speaker Change: Lastly, one of our most exciting attributes is our exploration potential. Beyond our active mines, projects like Midas and Aurora in Nevada, and Libya exploration in Montana, they could create lasting value for our shareholders. With that, I'll hand the call over to Russell.
Russell Lawlar: Thank you, Rob. I'll start on slide five. We previously provided our priorities for capital allocation during the year, and similar to the second quarter, we've made progress on these priorities during the third quarter.
Russell Lawlar: Carlos will speak more on our investment in Keno Hill during the quarter.
Russell Lawlar: but I want to highlight that we've invested approximately $40 million in capital at the mine during the year.
Russell Lawlar: with more than 14 million in the third quarter while producing almost 600,000 ounces of silver this quarter, bringing the total to over 2.1 million ounces, which puts us on track to meet our guidance this year.
Russell Lawlar: As we saw an opportunistic market environment, we issued equity under our ATM program to pay down our revolver. At quarter end, we had $13 million drawn on the revolver and $22 million in cash on hand, giving us a net positive cash balance of $9 million.
Russell Lawlar: With the deleveraging from our revolver and improvement in our adjusted EBITDA, we've also seen our net leverage ratio improve to 1.8 times compared to 2.3 times in the prior quarter.
Russell Lawlar: Moving to slide six, as you can see, we generated strong cash flows from our operations during the quarter and consistent with our strategic priorities, we invested in our assets with a total capital investment of almost $55 million split almost half between growth and sustaining capital.
Speaker Change: Slide 6 shows that we raised $57.3 million under the ATM and paid down $49 million on the revolver, further demonstrating our due leveraging.
Speaker Change: The last point on this slide is our SilverLink dividend. With our realized price of silver at last quarter at $29.77, cash used to pay our dividend was $8.7 million, which includes the additional one penny per share owing to the price of silver.
Speaker Change: As we move to slide 7, I'd like to highlight the exposure Heckley gives to investors to silver. As 44% of our revenue is derived from silver, and as we see increases in the silver price, it continues to contribute a greater share of our revenues.
Speaker Change: Another interesting development in the quarter is what is likely the first time in decades we also generated a small amount of revenue from copper.
Speaker Change: Due to continually monitoring and responding to changing market conditions, we've been able to transition the copper contained in Greens Creek's high-grade silver concentrate to now being a payable metal.
Speaker Change: This is similar results seen in continual development of zinc payability in this product over the years, and further adds to the diversity and value of this product. Not only is it desirable as smelter feed for its precious metal content, but also provides benefits in terms of base metal content from zinc, lead, and now copper.
Speaker Change: Current proceeds from copper aren't projected to be significant, but we continue to explore opportunities to increase its impact. We continue to see strong margins at our Greens Creek and Lucky Friday mines, where during the third quarter, our consolidated all-in sustaining costs per ounce compared to the realized price of silver provided a margin of 48%.
Speaker Change: This is slightly less than the previous quarter, primarily driven by a higher ASIC, which was due primarily to lower production.
Speaker Change: And as I noted previously, during the quarter, we were able to reduce our net leverage ratio to 1.8 times and do leverage significantly from the revolver. This was primarily driven by a $41 million increase in our adjusted EBITDA, ATM proceeds, and receiving the remaining insurance funds from the Lucky Friday claim.
With that, I'll pass the ball to Carlos.
Carlos Aguiar: Thank you, Russell. I will start on slide nine. Green screen, flagship mine.
Speaker Change: Green's Creek produced 1.9 million ounces of silver. Throughput of 2,314 tons per day was lowered due to five days of unplanned sack mill maintenance where we had a failure of the variable frequency drive.
Speaker Change: The team's quick response helped address the issue, and we brought forward a portion of scheduled maintenance for the fourth quarter during the downtime. In all, we had seven days of unplanned downtime, five of which were in the third quarter.
Speaker Change: Silver grades were lower in the quarter, but are expected to increase in the fourth quarter.
Speaker Change: Despite lower production in the quarter, revenues were higher compared to the second quarter at $117 million as we drew down on the prior quarter's silver and zinc concentrate inventory bill.
Speaker Change: While production costs at Greens Creek remain stable, cash costs and all in-sustaining costs per silver ounce increased to $0.93 and $7.04, respectively.
due to lower silver and by-product production.
Speaker Change: A strong metal prices and higher sales, coupled with a stable cost, resulted in a strong free cash flow generation of $47 million. In year today, the mine has already generated more than $100 million in free cash flows.
Speaker Change: Primarily because of the unplanned milk shutdown of seven days, we are lowering our production guidance slightly to 8.6 to 9 million ounces.
Speaker Change: Guidance for cash costs and all in sustaining costs per silver ounce, it's also revised lower as high prices for zinc and gold are expected to more than offset lower metal production.
Speaker Change: While the unplanned sag mill maintenance has impacted our production slightly this year, I am very proud of our team for handling their repair expeditiously. Green's Creek is a premier silver mine, our flagship operation, and positioning for a strong finish to the year.
Talkie Friday. Innovation Driven Growth.
Speaker Change: Lockheed Friday produced 1.2 million ounces of silver, with 3.6 million ounces produced over the nine months of the year.
Speaker Change: Our production over the first nine months was the highest over the past 23 years. Production was lowered quarter-over-quarter due to lower milk throughput and lower grades.
Speaker Change: While the mill throughput was 3% lower over the last quarter, it was the second highest throughput in the mine history after a record last quarter.
Speaker Change: Lower mill throughput primarily stems from the installation of new cyclones which should help us consistently achieve a higher throughput.
Speaker Change: Cash costs and all in sustaining cost per silver ounce were $9.98 and $19.40 respectively and trended higher due to higher maintenance costs for parts and mobile equipment and higher use of contractors in the quarter.
Speaker Change: We expect contractor costs to trend lower in the fourth quarter as we expect to achieve the forecast headcount.
Speaker Change: Cask, year-to-date, have also impacted due to repairs and infrastructure upgrades this year after the fire last year in the Second Addis Gateway.
Speaker Change: Capital investments in the quarter totaled $11.2 million and included significant development in pre-production drilling, a key recalc- primer for the UCB mining method.
Speaker Change: The mine generated free cash flow of $23.2 million in the third quarter.
Speaker Change: with $69 million generated here today. We completed the $50 million Lucky Friday insurance claim, collecting the remaining $14.8 million during the quarter.
Speaker Change: We are revising our production and cost guidance for Lucky Friday to reflect the strong but lower-than-expected production and higher cost in the third quarter. Our revised production guidance is 4.7 to 5 million ounces.
Speaker Change: with all in-sustaining costs now expected to be in $14.50 to $15 per ounce of silver range.
Speaker Change: Our capital guidance for the mine is affirmed at $45 to $50 million with $37 million invested here today.
Speaker Change: Lucky Friday is our second cornerstone asset, and while the quarter was impacted by lower throughput and grades, we expect improved grades and mid-throughput in the fourth quarter.
Speaker Change: Our investments in the mine over the past three years, including the UCB mining method, the service hoist to increase our hoisting capacity, and the core-shore bunker to decouple the mill from the mine,
Speaker Change: have established a foundation for this mine to be a 5 million ounce producer over the next decade.
Casa Berardi, Executing a Surface Transition Plan.
Speaker Change: On slide 11, Casa Berardi produced 21,000 ounces in the third quarter at cash costs of $1,754 per ounce and oil in sustaining costs of $2,059, both higher than the guidance range, primarily due to the lower production than planned, reflecting lower mill grades.
Speaker Change: Production costs at Casa Berardi have remained stable as the team remains focused on cost containment.
Speaker Change: The team has continued the detailed stop-by-stop analysis to review further extension of the waste mine underground stops.
Speaker Change: Given the current strain in gold prices, we expect the underground operations to cease in mid-2025.
Speaker Change: We are reiterating the production cost and capital guidance of the mine, but our work at Casa Berardi is not done.
Speaker Change: We have made significant progress in transitioning the mind to a surface-only operation.
Speaker Change: When we moved, 62% more surface ore and waste tons during the first 9 months of this year compared to last year. Currently, approximately 70% of the mill feed comes from the 160 pit.
Speaker Change: In the second half of 2025, we expect the 160P to fill the mill.
Speaker Change: The pit should continue production until 2027, with production levels of the mine expected to decline once the underground operation ceases production next year.
Speaker Change: We expect long-term value creation of the mine with a higher grade principal and weights mine crown pillar pits, given the timelines around permitting, stripping, and the watering of the pits.
Speaker Change: We expect the production hiatus of the mine to be about five years.
Speaker Change: We expect the pits to generate significant free cash flow once in production.
Eno Hale, largest silvers producer in Canada.
Speaker Change: Keno Hill produced approximately 600,000 ounces in the third quarter, with year-to-date production of 2.1 million ounces.
Speaker Change: Meat throughput for the first nine months of the year was 314 tons per day.
Speaker Change: They fell to 260 tons per day in the water as the mill was not operational for about 35 days due to delays in receiving an authorization for construction and a permitting for the dry stack test facility as a result of the heap leach pad incident at the Eagle Gold Mine in late June.
Speaker Change: Ultimately all authorizations were received and we completed related design and construction work at the facility and the mill restarted operations on October 26.
Speaker Change: While the mill was not in operation, we continued mining activities, and as of October 26, we have mined 2.5 million ounces of silver, including an ore stockpile of nearly half a million ounces.
Speaker Change: During this downtime we also made upgrades in the secondary ball mill and the filter presses.
Speaker Change: For the quarter, expenditures on production costs, including ramp-up costs, were $25 million, within our guidance range of $25 to $27 million.
Speaker Change: Capital investment of $14.4 million were related to construction of dry stack tails, development, and equipment purchases.
Speaker Change: Due to permitting delays, construction of the Cemented Tails Batch Plan, which is instrumental in changing the mining method from overhand to underhand, has been delayed and is now expected to be complete in mid-2025.
Speaker Change: Transition to underhand mining which will improve safety and productivity of the mine is now expected in 2026.
Speaker Change: I want to congratulate the Keenoheel team for making significant improvements in safety, environmental, and mining practices.
Speaker Change: In and Hill, 12 months, rolling all injury frequency rate was 2.82, a 27% decline over 2023.
Speaker Change: Ina Hill currently has a reserved life of 11 years. Our ability to successfully operate in Yukon for the next decade depends on, among other factors, a strong relationship with the Yukon government and the First Nation of Nachon Yangdon.
Speaker Change: These relationships and continued investments are critical to operate and deliver long-term value at Kena Health.
Speaker Change: With that, we'll pass the court forward to speak about Kena Hills Exploration Resorts.
Speaker Change: Thank you, Carlos. Slide 13 contains 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 and the Flamin' Moth Vein systems.
Speaker Change: Slide 14 contains longitudinal sections contoured by silver grade times thickness values through the Birmingham footwall vein to the left and through the Flamin' Moth vein number one to the right.
Speaker Change: At the Birmingham football vein, you can see the high-grade intercepts received during the quarter show significant silver values and widths in areas that were previously interpreted as containing lower grades.
Speaker Change: These intercepts include 63.8 oz per tonne silver over 10.2 feet.
Speaker Change: At the Flamin' Mop Drilling in Vane 1 has intersected wide and high-grade silver mineralization in areas that were previously interpreted to be barren and includes intercepts up to 71.6 oz per ton silver over 14.8 feet.
Speaker Change: Drilling in both veins will positively impact resource models and is providing more geologic information and confidence in our resource space.
Speaker Change: Three surface drills were also active on the property and are continuing to test multiple targets including the Birmingham Deep, the Birmingham Townsite, Elsa 17 Dixie, Silver Spoon, and Inka target areas.
Speaker Change: These target areas have the potential for the discovery of large, high-grade silver deposits.
Speaker Change: With each new exploration intercept, we continue to add to our understanding of the structural geology of our target areas and continue to demonstrate that the mineral potential of this highly prospective district remains significant. With that, I will pass the call back to Cassie.
Cassie Boggs: Thanks Kurt. So before I speak about guidance, I'd just like to spend a few minutes discussing our strategy, investment, and why we are in the Yukon.
Cassie Boggs: The geologic environment at Keno Hills specifically, and in Yukon more generally, is world class.
Speaker Change: And while each generation has its challenges, the Yukon government, the First Nations of the Nacho Nayak Dan, and all other external stakeholders have historically been supportive of mining.
Speaker Change: But now, given the tragic events in June at the Eagle Gold Mine, which, like Keno Hill, is within the First Nations' traditional territory, some of the local community are questioning the emphasis on increasing production.
Speaker Change: We value the perspectives of the First Nations and the Yukon government and our ability to successfully operate in Yukon is premised on environmental stewardship, responsible mining practices, and sustainable mining for the benefit of all stakeholders.
Speaker Change: As such we are prioritizing stakeholder outreach in the near term and we expect our 2025 production at Keno Hill will remain at 2024 level.
Speaker Change: We plan to use this opportunity to strengthen community ties, advance permitting, and improvements to infrastructure, including the new water treatment plant at Birmingham and the new cemented tails batch plant.
Speaker Change: With this base, we are on a long-term mission of building value at Keno Hill and in the Yukon.
Speaker Change: The strong geologic potential of the operation in the district is a critical driver of why we see Keno Hill to potentially join Greens Creek and Lucky Friday as cornerstone assets in our portfolio.
Speaker Change: And with the exploration success we're seeing, we remain confident that Keno Hills Reserve Mine Life will continue to grow.
Speaker Change: and talking about guidance. As Carlos described before, we're lowering our silver production guidance for Greens Creek and Lucky Friday and affirming Aquino Hills silver production. We are also increasing Lucky Friday's cash cost and all-in sustaining cost guidance while reducing Greens Creek cost guidance.
Overall, our consolidated silver and gold cost guidance remain unchanged.
Capital and Expiration Guidance is
Speaker Change: And before I open the call to questions, I just want to express our gratitude to all our dedicated employees. Your unwavering commitment to safety and environmental stewardship has been instrumental in establishing HECLA's strong reputation and operational success.
Speaker Change: We're confident that your continued dedication will play a vital role in shaping a successful future under Rob's leadership.
Speaker Change: And with that, operator, I'd like to open the call to questions.
Speaker Change: At this time, I'd like to remind everyone to ask a question. Press star, then the number 1 on your telephone keypad.
Speaker Change: Our first question comes from Lucas Pipes with B-Rally, your line is open.
Lucas Pipes: Thank you so much, operator. Good morning, everyone. Rob, congratulations. Great to see you.
Speaker Change: My first question is on the strategic side, and maybe a touch early, but I wondered where Heckler
Speaker Change: is positioning itself. I think of three dimensions, gold versus silver, base versus precious, North America versus America as a whole. That's kind of been a traditional way of how I've thought about it. And so I'd be curious where you think Hecla would be sitting within that matrix.
Thank you very much.
Speaker Change: Thanks very much, Lucas. In terms of the strategy, let me just start out by saying we've got two flagship mines and two mines that haven't really met our expectations.
Speaker Change: And so really our focus is going to be on organic growth.
Speaker Change: and really focusing on maximising the value of what's really quite an extensive portfolio and in particular making sure that Keno Hill follows a measured path to optimum production and profitability. So reaching that point is going to take a bit longer than we initially anticipated.
Speaker Change: And as in our release, an important precondition is really some of the remediation of past work and completing several capital projects, improving the safety of our people, environmental compliance.
Speaker Change: and most importantly coordinating with our most important stakeholders the First Nations of Ngunnaw and the Yukon government and really looking to obtain their support and input.
Speaker Change: Moreover, there's going to be an increasing renewed focus on cash flow generation at all of our assets and not just production maximization.
Speaker Change: Regarding geographic spread, right now we want to stay focused on Canada and the US. While there's large mines and deposits in Mexico,
Speaker Change: Granting of permits in that country, even on operating mines, has come to a standstill.
Speaker Change: And so, when you look at the additional security risk, that's become unacceptable for Heckler, and right now we're not really prepared to speculate the conditions are going to improve.
Speaker Change: We prefer to focus on safe jurisdictions where our investors can be reassured that there's a clear path to...
Speaker Change: Obtaining the required permits and the production and the cash flow continues uninterrupted so long as we meet our commitments obviously and have social licence.
Speaker Change: So we'll continue to evaluate the situation in Mexico, but right now we're going to continue to focus on our own assets, internal growth in the US and Canada.
Speaker Change: Rob, this is very helpful. I appreciate that color. And on the point of cash flow, how should investors think about allocation? Is it back into the business, be it operational improvements, CapEx, exploration, or is there also a priority towards debt reduction? Thank you very much.
Speaker Change: Well, we're obviously not comfortable with our debt, and we will address that in due course. But our attention is to allocate capital to make sure that Keno Hill and Casa Berati are performing to the optimum levels.
Speaker Change: And the only, maybe if I just add a little bit, well you know the continuation of investment at Greens Creek and Lucky Friday clearly will also continue as you know those those mines are the mines that we're using the cash flow from to invest in those mines of CASA and Keno Hill as well but.
Speaker Change: Clearly, investing in our business needs to be one of our first priorities.
and including exploration as well.
Speaker Change: I would look at it right now. We will continue to invest in our operations, both capital exploration. You saw during the quarter, we paid our revolver such that we're almost net zero at the end of the quarter. We really wanted to get off the revolver just because revolvers are great, but they're best undrawn, right?
Speaker Change: And so we were able to do that, you know, the market was conducive to do that.
Speaker Change: And, you know, as we move forward, we'll look to, as we generate more cash, we'll look to build a cash balance. So there will be a bit of a balance between building a cash balance such that that net leverage ratio continues to come down.
Speaker Change: But, you know, our future is going to be organic growth, like Rob had mentioned, at these assets, so we'll need to continue to invest in them as well.
Speaker Change: Rob, congratulations again and to the entire team, all the best of luck. Thank you.
Thank you, Lucas.
Speaker Change: Our next question is from Heiko Ely with HC Rainwright. Your line is open.
Speaker Change: Hey there, thanks for taking my question, Rob. Congratulations on your appointment as you probably already know. I just want to say you have a very talented team around you. I've covered Hecla for going on a decade at this point. Looking forward to meeting you in person and obviously also congratulations to Carlos on his promotion.
Speaker Change: They know it's your first day, so maybe a little bit more of a general question, but what have you been seeing with labor costs in the fourth quarter thus far? And I'm not sure if you can maybe give some granularity by asset, but if you can, that would be great. And otherwise, maybe just a little bit of a more general answer of what you're seeing.
Speaker Change: Thanks Iko. I'm going to hand that one over to Russell and perhaps Carlos to comment.
Russell Lawlar: Well, our labor costs in two of the four mines are close to 55%, and that includes the usage of contractors. So, as you know, in the third quarter, and according to our jurisdictions, most of the capital projects are executed.
Speaker Change: So, during that period of time, of course, we had an extra people executing all the projects, and that's why we are expecting for...
Speaker Change: So once that construction drops a little bit in the last quarter, we are expecting a decrease in the use of contractors in the near future.
Speaker Change: Yeah, I don't have a whole lot to add to that, but you know, Carlos did mention one of our, one of our larger drivers of cost is, is labor, you know, 45 or so percent is.
Speaker Change: internal labor, then you add some contractors on top of that. But what we did mention in the release was that we expect to see the contractor labor come off in the fourth quarter as we both fill our roles and, as Carlos had mentioned, complete some of the work that was done in the third quarter.
Speaker Change: But I mean, are there any meaningful changes in regards to, we talked about capital allocation earlier, but besides that, M&A for the future, that kind of stuff that we should expect to see?
Speaker Change: With regards to M&A, I'll continue to engage with the board and most importantly, I think it's really important that we actually are very clear on what our M&A criteria are going to be. And so we'll have that discussion, establish some parameters, some guidelines and really have a disciplined approach to that.
Thank you.
Speaker Change: In my past life, I've been involved in a fair bit of M&A, and it's really important that we have a thorough due diligence. So if we choose to proceed, we're only going to do that subject to a full and thorough due diligence and a fully informed board.
Speaker Change: M&A is best done from a position of strength, but we're not there yet. I believe that we can add value to our existing assets by focusing on the internal growth that I spoke about and really maximizing the value of our existing portfolio. So really, it's going to be more introspective.
Speaker Change: make sure that all of our assets are performing and then at some point in the future with the blessing of the board and very clear direction we will consider M&A.
Speaker Change: Farah, I assume you don't have a favorite asset yet, do you?
Speaker Change: Too early. I mean it's it's hard not to love Greens Creek because it's um you know it's just a fabulous asset. I have to say even though with
Speaker Change: You know, Keno Hill has been a slower ramp up than we expected. I love the exploration potential there, I really do. I think that's got district scale exploration potential and in fact I like the Yukon as well.
Speaker Change: Very good. I'll get back in queue. Thanks so much and congratulations again.
Thanks so much.
Speaker Change: Our next question comes from Mike Parkin with National Bank. Your line is open.
Mike Parkin: Hi guys, thanks for taking my question. Could you clarify how long the mail at Kino was offline in the third quarter?
We were down 35 days during the third quarter.
Okay, and then.
with the tailings.
Speaker Change: You kind of had previous notes in your Q2 that the TANF capacity would be...
Speaker Change: you know, met by the end of this year. With the work you're doing, what kind of capacity have you been able to add and are you able to still complete, do further construction into year-end or is it kind of weather dependent and you're having to wait till the spring to resume work?
Speaker Change: So, we are going to continue expanding the current dry stack tailings capacity at the end of this year and the following year. And we are going to end with over two years of capacity to continue the operation.
Okay, so you're not weather dependent or strained?
Yup.
Okay, great. And then one other one.
Speaker Change: Robert, like you've obviously given us quite a bit of color in terms of what you're thinking of but
Speaker Change: As you get more comfortable with the assets, do you foresee giving like a broader market update on the path forward for HECLA in terms of once you've had the time to visit the sites, you know, really get into the numbers?
Speaker Change: Is there that thought to come out with, here's where, you know, I plan to take the company or is it going to be just a bit more piecemeal and we'll get updates on like quarterly earnings, that kind of thing?
That's a good question, David.
Speaker Change: As you can imagine, I'm going through an intense onboarding. I've already been to Casa and I'll be visiting the other three operations in the next three weeks actually. In fact, tomorrow I'm going to Lucky Friday.
Speaker Change: Once I get a clearer picture, the thinking is going to evolve, and I'd like to think that at some time, when it makes sense, we'll have an investor day and more fully articulate our vision.
Speaker Change: Okay, and you guys have quite a massive project pipeline that hasn't been talked about much in the market.
Hello.
Speaker Change: Are you planning to do any tight tours of those assets?
Speaker Change: Is there a thought towards possibly rationalizing that portfolio down to core projects and potentially
letting loose some of the non-core post-review.
Speaker Change: and those that perhaps might be best managed in the hands of other operators who will give it probably the attention that it deserves. So yes, we will rationalise the portfolio and focus on the very best assets.
Great. Looking forward to the updates and welcome aboard.
Thank you very much.
Thank you.
Speaker Change: Our next question comes from Sean Wondrak with Deutsche Bank. Your line is open.
Thanks for taking my questions and welcome.
Speaker Change: It was just a couple of months ago at our High Yield Conference that I had asked how serious HECLA was about repaying the revolver, so it's really nice to see the opportunistic pay down there.
There was a comment made earlier on the call.
Speaker Change: Is that fair to assume that was referencing the coupon or is that referring more to the size of the facility?
Speaker Change: and look to bring that down. But we'll look to also balance that with the investment in our assets, like I had mentioned previously, the exploration, but then also the capital development and the projects that need to take place with the assets.
Speaker Change: And is there any kind of a more formal net leverage target or a band which you'll seek to operate within?
Speaker Change: Historically, we've said two times, less than two times, which we're at that level now.
Speaker Change: Historically, though, if you go back, you know, we would run one times or less much of the time.
Speaker Change: I'd like to see us, you know, be able to build that position back up again and, you know, if those things take time, you know, certainly we're in an environment where the prices should be helpful with that though.
Speaker Change: All right, and then as we think about moving into next year, is there any reason to believe that CapEx will be materially different relative to 24? I know it's a little early, I'm not sure if you...
Speaker Change: can comment on that. Yeah, yeah, I would suggest, you know, we'll come out with our full detailed guidance next year. You know, we've, we've kind of directionally said where we expect Keno Hill to be, etc. But, you know, as it goes for those details, we'll come out with guidance next year, early next year.
All right, thanks for taking my question.
Thank you.
Speaker Change: Again, to ask a question, press star 1 on your telephone keypad. Our next question comes from the line of Joseph Rieger with Roth Capital. Your line is open.
Hey everyone, and Rob, welcome to the team.
Thanks for taking the questions guys
Speaker Change: So I guess a lot of my questions have already been touched on, but just on Keno Hill, as you guys switch the mining method, how much cost savings maybe on a per ounce basis are you expecting from that?
Speaker Change: We still don't know. We need to evaluate, but the main purpose is, you know, the safety. That's the main purpose of the change of the mining method, which is going to occur until 2026.
Speaker Change: But as today, we don't have any estimate above the reduction in cost because the main top priority is the safety.
Okay, and...
Speaker Change: You guys aren't, for one reason or another, able to ramp up production there, whether it be due to First Nations issues or anything else.
Speaker Change: And the costs don't come down significantly. Is there any risk in anyone's eyes that that asset would need to be curtailed in the current price environment, or is there a certain price environment where you would consider that?
Speaker Change: Yeah I think Joe I think maybe even a quarter ago we talked a little bit about this as it relates to our commitment to the Yukon and I think that you know clearly Cassie's remarks on I think the last slide that we had presented you know we're committed and as well as you know Rob mentioning as
Speaker Change: He was asked about what his favorite asset was and his his view on the Yukon. We we look at the Yukon as a district that we're invested in and we expect to be there for the long term.
Speaker Change: We do believe that we need to make investment in that operation,
Speaker Change: or in a number of ways, right? That's both the community, it's infrastructure, it's environmental practices and infrastructure, safety, et cetera, and we're gonna do those things and expect to see those results.
Okay, fair enough. And then kind of just.
Speaker Change: Adding on to these big-picture questions about the whole company, obviously debt, reductions of focus. Any thoughts about changes in dividend policy?
Speaker Change: or, you know, a timeline on when we might see you guys kind of empty a little bit of the cupboard of these longer-term assets.
Speaker Change: Well, I'll speak to your first point on that. You know, the dividend policy, we believe, gives our shareholders exposure to silver, and I think that many of our shareholders like that exposure. It's clearly, you know, the dividends are approved by the board, and so as a result, you know, it's at board discretion as to how that goes.
Speaker Change: But we do believe that it does give that exposure to silver. As it relates to emptying the cupboard, you know, maybe defer to Rob, but I think that's probably, you know, I don't know. I'll defer to you and let you maybe answer that. As it relates to the, I think you were talking about the rationalization of the portfolio.
Yeah, yeah, what the time frame is.
Speaker Change: Yeah, it'll be when opportunities arise, I guess, is what I would suggest.
Speaker Change: I would like to visit some of those assets and personally understand what the opportunity is and whether we should be focusing on it. Really the priority right now is the operations, so perhaps some time during the...
I'm going to guess Q2. I'll have a clearer picture.
Speaker Change: Okay. I look forward to the updates. I'll turn it over. Thanks, everyone.
All right. Thank you, Jason.
Speaker Change: Well, thank you everyone for your questions. This concludes the call and we look forward to engaging with you again soon. Have a good day.
Speaker Change: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.