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Hecla Mining (HL)

Participants
Mike Westerlund Vice President, Investor Relations
Phil Baker President and Chief Executive Officer
Lindsay Hall Senior Vice President and Chief Financial Officer
Larry Radford Senior Vice President, Chief Operations Officer
Dean McDonald Senior Vice President, Exploration
Cosmos Chiu CIBC
Heiko Ihle H.C. Wainwright
John Bridges J.P. Morgan
Mark Mihaljevic RBC Capital Markets
John Tumazos Very Independent Research
Lucas Pipes B. Riley FBR
Matthew Fields Bank of America Merrill Lynch
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2018 Hecla Mining Company Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference maybe recorded. I would now like to introduce your host for today’s conference, Mike Westerlund, Vice President of Investor Relations. Sir, you may begin.

Mike Westerlund

operator. you, Thank thank quarter and joining for us Welcome financial you and second XXXX call. operations Hecla’s everyone, for results conference

the results and today’s today’s come call, was that involve under as differ forward-looking are forward-looking available open, exploration news shown XX-Q, Litigation have the detailed website. Form beginning risks morning presentation which the forward-looking issued financial On our release Xth include included and market Act our in along law, exploration Phil information issued the on X. could Slide and we on before Dean with goals, those Our this of President, President Such statements release Vice to Officer; Larry in the our President Any the Financial and Operations from constitute made Form and the Chief projected Chief Private and and Securities CEO; statements. on today cause Vice disclaimer projections President management the releases earnings Lindsay securities and XX-K, McDonald, Officer; to under likely results forward-looking at risks statements presentation. These Canadian team and Hall, Exploration. in Senior Vice Senior in Senior and by Radford, Reform are Baker,

disclose In may during addition, this call, non-GAAP measurements. financial we

which find You presentation, our these available is GAAP accompanying measurements reconciliations the on of at measurements can to the in nearest website www.hecla-mining.com.

terms disclosures extract only filings. we produce. such you SEC, not of I to to are expect pass With to the Baker. make resources, that the in in as consider measured, mineral about and inferred we’re SEC economically reserves, can allowed and to indicated, we cautioned our Phil call Investors our will or that, with our urge filings legally Finally, that the reasonably we disclose are use and deposits which

Phil Baker

good We had Mike, everyone. is a to talk quarter about. there Thanks, and hello lots

on Slide few X. I’ll highlighting items a start So,

a as we’ve their our consistent First, result performance made. investments of continued mines the

quarter has silver second year, week, down costs are the by-product and cost, the had if very well. among discovering to high-grade successful significantly the update in were pleased Sebastian, at haven’t after last report our urge Greens we cash cash San do our and margins our in credits after that this by-product remain and reduced so. as Our release, down exploration issued Creek, I’m the you gold and to been exploration top Earlier material I credits silver Casa industry Berardi, over team and you in XXX% the

improved the or Carlin are think the have acquisition. We These square top mining in Battle Hecla the Northern completed trends Mountain We have Nevada world. XXX jurisdictions Rift. we the miles either on Klondex properties of one fundamentally by in acquiring of the

and people team almost these operation the spent enthusiastic a [indiscernible] for working and bring. and be and of they the the sake that’s in are Hecla excited know operations. that with also of of Reno these skilled, and management spoke We to focused we visiting each very personnel, week that supervisory I last for mining people opportunities see improve business (X:XX:XX) they’re production in change resources and the are I not offices in all and Nevada on very the to production,

our they harnessing I we forward we enthusiasm operations. these as look improve forward that we the the to it’s implementing operations is a are magic we that they a wins technology the have talk he’ll that in think Larry a had we’ve with with one of going to I have impressed I – going synthetic know to nick mine. are quick development named the and together. liner about drive they’ve change to as some at future describe the good to minute bring innovation that the the carpet.

While the days more now within quickly do not Creek we and development we have of you the in moving are we’re exploration have the past to Fire start quarter XXXX, assets that I’m the owner XX confident the will fourth seen of and forward recognize management liked Hollister. on them.

how changing the in We’re Nevada operations run.

the We’re taking equipment can that Hatter and and that it at mine the Midas the money. former was guidance year, low very at to margin me Graben. beginning people Midas Klondex to Creek the the work Hollister, look high and XXXX didn’t the I so moving margin Fire in When to from much clear we them development of at get make

we should that the XX end exemplified we’ve confirmed days going assets be and that and the day Creek, winddown My are going mine They our we developed This Sebastian. and September, of able to to we’ve also rating last will as not that like take by are only of Greens to but I value, our improve expect, mining of until credit mine beginning owned our upgrade San bond only year. rating extended notice the and equity emphasized the S&P. by life. these week generate Casa, agencies the So, have trip an implemented stokes metrics one be could this over last the margin they’re be yesterday. to it by

In a the Now, long-term to me Montana, U.S. let change gears project.

have in how have of state to for evaluation advance. month phase Services reclamation for the has of Troy, Rock reclamation the through we site the released things expected August supplemental Montana, two continuing approvals we’re Creek. advanced later. And EIS Decision This in there. at September the late in contrary long-term Forest the portrayed with Record some allows to with schedule,

there more just certainty is until expenditures are there permitting. regarding reducing We

because expectation Creek updated in months five X. we over cash acquisition Slide we’re AISC at XX,XXX which the improved the for to per on XX,XXX also to both see ounces July months our We’ve closed of on the you our expect cost ounce and have and XXXX, Nevada, can In We silver company-wide. guidance ounces five produce using year Greens XX.

the XXX tons that’s quarter than see per gold review fourth to call stronger once pass quarter. Lindsay? we I’ll in to from We the XXX. day to For get the at XXXX stronger think this third performance Nevada Lindsay considerably Nevada Creek the up now Fire and production being we the quarter. operations operations, our will from be financial the

Lindsay Hall

Phil. Thanks

had As in Phil said, can quarter, good the second X. we results Slide as on you see

declined a at Creek. increased compared Gold [ph] after silver per sustaining end For a totaled to period in $X.XX, was cash XXXX, quarter cash June higher year after of period. result the and cost partially and increase company-wide quarter production investment investments we sales over as XX, declined of a a XX.X second credits increased The XXX% to the of led prior movement, negative Casa the from X.X cash by XXX three-months to at the all-in terms, capital ended cash sustaining the lower $XX.XX cost credits to production and XXXX. expected. XXX Berardi, XX% million in positive offset of reported by-product both operating by-product price at by-product TC-RC second to the last like cost same at Greens products, credits gold after million This on year Sebastian, flow a of cash which ounce cost million million ending San all-in better XX, significantly. Cash silver June cash XXXX,

regards the operations Slide B. response step positive with S&P this in to acquired double us Nevada X, B+, one from on with Moving are rating pleased our away on we agencies from both acquisition, to upgrading newly to

position million positive goes would to and in and We for they be and we���re our cash zero. XXX us from XXX restored Nevada acquisition. liquidity of I paperwork had expect in Nevada before we good the put are the XXX potentially to recognized when cash, confident line another the the completes with by to only high-yield quarter to by acquisition the cash and million, of the We which call will that the our to deliver markets a the generation our XXX refinance to made syndicate able the reason we on banking can XXX increased of used initially particularly on next execute ended quarter problem we ratings revolving a financial any access some perfects the B, we notes, until the of increased in approximately May liens i.e. plans million double operations. operations, form million although on that’s million, Nevada we assets. credit Hence have leans we why with perfecting the premium the don't the the although complete Essentially,

CIO million in X need generate long-term integrating various of different. to at in and is to with have speak the obligations, months flows the working expect cash expenditures financial operations operations we cetera, towards mine of new come in plus many of assets in positive as synergies or such we’re Hecla. synergies stronger bigger initial tailings that and in insurance, improvements, for be the remaining half their million plans well from The completion our production cash which no combined related Nevada to that and pleased development to. our will drilling As Also, flow plant and XX self-funding. their are from as the both savings basically et Larry will the plant company capturing The and to being benefits systems, the all come Nevada of at as bonding Hecla, costs pays realizing are on success operations for achieve facility, such the the automation areas the year, last the definition mantra

Slide activities those of X. Some are depicted on

see and Greens zinc with the to diversified us. on and of can XX%, Slide X, XX%, be at Lastly, stream dominant combined revenue we at at silver revenue for a lead Creek you continues a maintained source gold XX%.

the So, with acquisition in to realize Nevada the are operations. synergies starting of we summary,

is credit improving. Our rating

We year and are continue about have therefore the cost and we of will I sustaining beyond. silver about call to now to cost Larry cash the all-in and the talk rest flow from and the excellent after cash operations. financial by-product operations, pass optimistic to the for credits, generate cash

Larry Radford

mining and for Lindsay. been XX XX half of of those years years, Thanks been I've it’s in Nevada. in

the a I it’s think for to personally be thinking of taking I move the want to of for our in XX. on some walk So, great back Slide you Hecla. XXXX and through rest Nevada

to where mines operation, an have integrated The and Nevada get as first working is operations we priority one mill. three

of direction we most resources the Manager, in the Kevin around operations one As personnel Shiell, equipment we'll make Vice profit. will a unit, under prioritize that and General coherent these and President and the move

production we’re unified at the ramp-up and expect Hatter of working plan Fire Creek and development a mine Graben. such, As to on at begin

end personnel Fire the of of tanks leach the We and providing of Creek. as the machines In ramping to the capable process complete Midas mill, and robust to moving a we the appropriate all Hollister and year. installation down expect Hollister screens are and ore carbon processing by CIL

sampling We’re equipment the the front-end installing also reconcile to of each mine to better mill. mill in the

continue introduced drift per We in rehabilitate includes muddy, tons week in targeting can the from with up areas. last trucks In Fire of and an XXX ramp roadbase, areas and by Technical At allows followed target some geotextile at I increase in which Creek. we the the Spiral move Services its mine the to access development facility Creek, President rate year-end the water-wick to expect and are new has then existing of the you produced of for been development day photos it to Slide a On construction our day, XX, an first, an through tons increase Vice to we’re targeting road mine, period see ore tailings capital. intense that from XX%, underfunded XX%. a of of Haulage Fire the took areas as need of of these We XXX X conditions the some per completion. X engineered

go can fabric to to improvement, aggregate for have towed-out. areas, only conditions would that an mud issue see these machines and the and will You would is get was made areas. in imported stuck through but if isolated The was improvement substantial get bad in the get this that trucks enough

the now the why dramatic couple team the magic the We on-site earlier. can before the carpet to and had our which moved for of Spent that closing. Troy over You from too see called pictures, days improvement is Fire after is mine closed it of Creek. [indiscernible] from a plant

for need We Creek Klondex. the back include Fire is which was move to the development problem we cycle, equipment later, in from can reducing so and will need Midas Creek, development to XXX go to the rehabilitate we tons year. create the [indiscernible] value day, will key XXX per to per [indiscernible] up Improving development Klondex to Fire per able was to we do at Creek. not keep day development with throughput at of increased and XX,XXX tons as feet a

and half Fire million another XXXX. of the represents as in is capital X shown Creek million this another development of X of the Berardi. or tailings about remainder the assets on at the Casa for for drilling completion CIL included reference, development half construction $XX million the annual Nevada about For Slide of is Also XX, and circuit. so definition down

another in we to Sweden. The We completed R&D Sebastian. at negative million, construction cost tailings by Vein as was now producing be million November excellent Outside is Remote silver capital is also And expect and Greens ounce. Nevada, ounce. invest Creek we Miner a and all-in million both $X.XX the expected sustaining you The December. cost full Creek XX X $XX dam by-product previous sales credits facility be after fully the another ounces San and by-product of to silver the On credits cash in see per of can $X.XX by then. XX, had of of after of moved cost million X cost a an quarter, in Slide in will functioning Greens under

on computer transition capital advance production Casa ounces, to demand Drift it XX, well. to and you truck up spending mine would implement The is seen impress had here continue quarter. you on the strong. well performing ventilation Gold assisted July work was great utilize XXX declined The the were the a and costs to and LHDs XX, to our second down, grade We Slide well tele-remote and operating. came have our were Slide as both to if autonomous Berardi jumbo as in mine to XX,XXX drilling. how seen in continues throughput fans is to

in XX%, and it will truck fuel be complete eventually can We spots considerably than and availability, you near-term a it XX. is and drift, it In can should we the even faster, on which Slide as autonomous the a that. is to would XX% faster. we’ll the much better shorter down consumption than higher performance fact, we the the truck be thought already tight think time, In enable has see load drive slashing cycle

At autonomous $X Additionally, truck safer million mile from the Lucky autonomously we we million a second mine expect to have and of in a that depth. in we Friday, to Savings fourth trucks half should the operation running remain our to a two way quarter. $X a be year. at convinced need

Our on preparing focus Remote is the What on Friday for technology. Lucky efficient glass drilling the XX. revolutionize Slide Vein seen we’re with more how Miner could cutting placing operates, much as a

at on once working the used are excavating be reassemble a pieces sent XXXX down an chamber in shaft. the We’re machine underground to to the

So, stay this. tuned to on

to next after improved quarters. in you see say is pass and call we of credits area XXXX. of the At five ounce We led XX. I into will underground plan] second mine through on on another years then be rate, the about year the of year as its at more San To higher bulk per we’re in have in invest can all development the to to it the in to A access We on then test underground will Dean. third-party [escorting improve to seeing or could the to Francine Vein It should sample expected Sebastian, the gold a by now area more over the at as quarter which If we mining ramp a cost, collecting plan performance of Slide mining up. the material per this fourth the much we mining so. Hugh half development and Zone all-in XX,XXX-ton sustaining in the over suitability. ounce a prior in by-product production San the process cost the or secondary late Sebastian. life advancing year, reduction this this first ensure continues mill underground half mean

Dean McDonald

we’re XXXX Columbia, Important project at also Greenfield's gold and in and and initiated XXXX. of for little group early British Nevada that assets. quickly the exploration Slide late Hollister at to included providing have high-grade improve something aggressive Kinskuch list last circuit. our also both drilling resources intersections exploration issued extend of clearly of table latter will commenced the A the if as mines Baldy drilling underground. to separate mines. new depletion quarter part fact of quarter. Nevada silver projects updated mineralized an contained accelerating from continued we’ve and [ph] in reflects This milling showing the during This we trends in The any the lateral project resources work rigs northern the gold Idaho, and cyanide flotation programs actively which release Tuesday. Larry. and July, the drill to reporting a XX, surface, sulfide the with The recently April. metals more the of resource and with Sebastian, secured the was and on defined Little The is the Fire Hecla reserve sell structural on provided multiple assets second the reserves declined reserves release, in exploration project shown there that to Republic to integration of find end over in and circuit resources Washington opportunities is San development updated drill in in at appendix XX in Klondex or was At silver-base the Thanks, XX and on little gold, areas, correct. northern reserve Creek was the

the Francine defining is green and the yellow ellipsis new under the and pits projection North Middle, ramp of outlines, new in drilling we're reserves in underground Middle potential can reserve, the new You construction and resources. black, the Vein see surface Vein current the

strike Let’s the recent large containing definition resource drilling extends category is Ricardo this of is gaps drilling and of the over length at West. of zinc, to successes. lead, quantities copper. pods the expected feet oxide San nearly longitudinal mine. development surface upgrade the Francine of the X,XXX The indicated a thousand precious year. shows near Slide substantial metals, image high-grade drilling of base an now drilling has being along feet feet view of Infill section on the some polymetallic and underground resource plan later mineralization over the and for strike East the Vein confirmed drilling is X,XXX identified sample to has look This longitudinal length the of substantial and both metals Vein. XX recent evaluates between of bulk right over Slide to Francine oxide defined of to Casa Fault, the a mineralization. Berardi of the mineralization Mineralization as XX a shows complete,

many down XXX throughout to plunge has Fault. extend the current north The potential arrows to the successes the expanding, and particularly and strike of closer of Berardi drilling showed along the active, new in and have trends, significant the mine project life. multiple of reserves and below longitudinal high-grade zone the extended resources main the red the pits along surface in zones, the mine plunge continue view. Drilling and XXX proposed lenses We down plan the where drilling Underground to along zones a surface XXX workings. expanded of extension mineralized Casa open series shown identified near are resources

Lac the Berardi zone. deposit recently about east miles Germain Casa deformation along defined mine We lease of Berardi of the the the Casa projection X.X have

area Germain, have point than the particularly miles deformation existing property the is on underground upper South Slide the results the XXX mine. We Greens is and Southern at in I’m XX, definition higher excited west for many This more pleased a Lac on At up have of In the very because mine XXX opportunities zones West. these the likely exploration south and the with to of continue trends future extended Gallagher focal the as the significant the to extent shown Creek, open for and along of both in identified are exploration zone, discoveries. plate drilling the that resources. mine, exploration XX discoveries show and central success possible large drilling of new is zone they in zones expansion Deep the Nevada. the about which in south Northern lower surface a as part of and

that XX, prolific exploration acquire in of As Slide square or lies you shown XXX it’s of Nevada rifts. ground that can at and miles in within intersection rare northern the trends

the the designed the longtime Hatter has comments. and Graben closing some back help mine ensure and conducted acquired summary XX. Hollister of Hatter viability Phil West talented with at Drilling and protection as realize understanding and to come started and shown the a IP/resistivity gold to last Graben these target call life. of strong three working West Guard asset geophysical exploration to has the and Notice at extend South team potential With with main Fire mineralization to evaluating the XX, and the earnest of is our Gloria completed, of shown forward and Drilling important is Shack look soil Drilling has properties, for ground. extensions resource extending plan survey are holds in are area. the significant and veins is new [ph] on production. South Spiral we the in together results the The I’ll Hollister the targets goal exploration at This Exploration follow-up of currently Slide from the target of geophysical been are Fire Drilling target extend I of being this of near-term year's this significant commenced pass at of begun to the geologists of in in to Further on drilling. the at XX Creek property properties completes the a South, Creek and Nevada of dates test mine. to designed has the as important drilling aggressively most exploration area vein East. Slide to to drilling Zeus high-grade in anomalies surface we Rowena identified.

Phil Baker

take just now We’ll operator. questions

Operator

Chiu Thank you. Our comes Cosmos CIBC. [Operator question from Instructions] first with

now open. is line Your

Cosmos Chiu

Nevada, Phil, you have only just questions thanks out know to even to ounces the Larry, the for is Nevada is five above it for some that that really given correct? on Midas, considering guidance you’ve Lindsay, Hi, to XX,XXX difference just here XXXX ounces, months, down is and production is Dean. Maybe previously, less confirm only put Klondex still that it what the than is XX,XXX ramp due of

Phil Baker

It’s not these things. winning That’s Cosmos. the didn’t they to really couple guys order One access a you of be able right also ramp are do stopes to down Two, stopes, of Midas. sequence. in development ahead know the of enough

anything we’re we with not sorts It all going of for way issues. we’re long-term of deal that those them in to forward sets success. a up surprised by a move is and assets So, having are those to that

the to anything on mine. We’re were quarters. of that? what Larry, running focus That’s to not add do how going just can really to for next we they couple the

Larry Radford

It’s Fire really Creek development.

investment lack development, the of we will the of Some some conditions, of that. in rectify

We development stopes will and the there had accelerate will next time forecasted Klondex in be to year. this some the of – stopes in first higher-grade half that the actually of actually year come

Cosmos Chiu

year, still is it that is terms if you get back that what in know production, too of at don't but trying early I a are to longer-term, ounces number a to point-in-time? previously, this it you about XXX,XXX this at or then in targeting time, Klondex under have this you're And Nevada in again answer an Okay. terms point of was like

Lindsay Hall

know, we ounces. is be think Cosmos, early, but margin will more then we you will what number You will it on tell too on be the I is, I of profitability focused in

a So, at generate same thing investment. to we’ve be San mine, real done nothing group the that same Creek, we’ve that will for We’ll These we Greens thing returns done Casa, do looking we’ve thing different. to on Sebastian. mines. Same done operations us of this that at

Casa, us are we’re to allow generating not you returns life. be We to mine at anything, be but like the do not on immediately, and but saw to margin going prepared self-funding focused just this extending generate and mine

Cosmos Chiu

Yes.

Lindsay Hall

has industry at just about being long production. This been too

margins. about production, life, both We’re mine and

Cosmos Chiu

talked compatible, a moving it course. Hollister, maybe is detail the the moving then same Fire scoops, you some equipment Midas is to in And jumbos, know are and equipment, trucks, you same about Of bit of Creek it size? here, the are more they you

Lindsay Hall

Absolutely.

we at needed. So, the what equipment is one mine

– and thing we be moving also well Hatter a doing will remember to we Hollister be other’s Graben. will at at, other the into The development is the

Cosmos Chiu

And tons then heard XXX know help of in Creek day development of of from back now how going is going and how maybe of, be you terms that target then XXX to is of get know talk really the and some question Fire to And this lot. terms per you right Creek, your honest tons Fire you going as which a Larry accelerated day you take? the in other to access, about to to per per here, year, much isn't long some after to increasing we equipment to more bring development rehab XX,XXX-feet is how got that said to to the the

Lindsay Hall

guess Cosmos, I lost. sort question I Repeat of your got

Cosmos Chiu

So, up trying get the to is, how tons I'm guess, XXX like in timing to what I you say terms can per of day?

Lindsay Hall

the over happen course of will It the of first next half year.

You'll the process. first long day, tons course stairstep It’s over the a relatively half. plateauing per increase of the see in

Cosmos Chiu

I more are getting is more that just is? headings, stopes, really know you really it what more access,

Phil Baker

first. miners do that. remedy the Yes, and a we Fire I first to been need turnover more of that to is messes It’s need of business lot order to some of the Creek, up clean at mean so we

from to It’s Once at drilling cleaned and Creek, development. surface. up a Fire we and postage been strike, it and very and it’s congested. exploration very south. think definition we It’s I'm mined. We’ll stations and If can get bit, mined liking area we been we a opens tonnage, area it’s underground proper stamp you get we of developing bit as opened drill going. also and get north that’s development just development, little the up once and in it difficult drill open platforms. is intensely, one mine very It’s up this open sorry start It been central actually to up hard on will

Cosmos Chiu

everything these some was you're So, at now really issues? to financial running hand they Klondex like mouth, some time sounds rectify are of given situation their taking and to really

Phil Baker

That’s assessment. a fair

Cosmos Chiu

Yes. need gears, to what’s maybe you of the to place need little Hollister, and Maybe what Graben, access to here you in and bit, Hatter you do switching do? deposit you in terms could essentially already what a remind

Phil Baker

about, the it’s Well, we need but X,XXX reach from about ultimate And feet, to about in is but Graben. all underground It X,XXX I to the surface, decline to our the access. way Hatter X,XXX. it’s going guess, drive the from, a access horizontally

to of going it’s to Graben. Hatter couple access the years So, us take

Cosmos Chiu

Do else place, have do shafts like the the permits and even you everything – you ventilation need? that say for all in you

Lindsay Hall

Yes, we’ve got everything we need.

Cosmos Chiu

filters, improve question maybe or know in are recovery and tanks now what in some mill, last of the previously expecting some of sort what Midas and is to? had CIL done then recovery of are Klondex you carbon terms the you remind And one right of you terms stuff have here Okay. in done the us terms stuff you to at could that, you

Phil Baker

to? you Larry, want do

Cosmos Chiu

for is Hollister ore. This the

Sorry.

Larry Radford

XX% carbon strings carbon Yes, seeing is hours enough retention, carbonaceous [indiscernible]. range. of streams Hollister installed in get enough has about Klondex XX we’re Klondex the – exactly. a the to so recoveries installed The and and ore had this in

are to of testing tanks the where of year, that’s ore all that [indiscernible] retention plant, grade going is to of hours XX%, and XX benchtop end that head Hollister about was the gives somewhere around which that indicate depending going it on the complete a Klondex and did We the to CIL by will get the about down was. the which installation when

targeting. we’re what that’s So,

Cosmos Chiu

and Lindsay impact one will Okay. on, once here. Maybe last certainly, rating BB Like, the news had question good – further your the you B+ a now you what’s for and on It know you’ve to BB? from with be improvements rate? the right B would credit interest to B+ what get to improved potentially potentially later that

Phil Baker

ahead. go Lindsay,

Lindsay Hall

speaking Generally [indiscernible] basis points XXX Cosmos. XXX.

Cosmos Chiu

from B+ or where, B from Sorry, BB XXX B+? to to

Lindsay Hall

double B to points. B single XXX from in basis moving generally saying just I'm

Cosmos Chiu

Thank Okay. That’s all Cool. you. have. I

Phil Baker

Thanks Cosmos.

Operator

with Thank Heiko from next Wainwright. question you. And H.C. Ihle our comes

line Your now open. is

Heiko Ihle

for Good thanks taking Hi, my question. guys quarter.

Phil Baker

you. Thank

Heiko Ihle

about talk the to expenditures. in increase want capital I the

at X in XX million. million Creek, you're XX.X million – the is million for the low-point but us you're that San XX XX million, midpoint, going the Greens [indiscernible], million million. Nevada, that’s at that’s looking XX XX the Sebastian, to you’re Then and actually it’s gets the – at So, million X up XX for your point looking for to looking At it’s million. low CapEx so at

updated there is keep we guidance looking should the in on obvious or the this So, release? something the low-end of thing just at

Phil Baker

all of like capital whether get that work have Look that going actually we capital be would we No. and done range it’s question to can we a the as spend. to spend a to the spend it’s to all to

why you see So that’s that range.

As other. far of there’s that’s should as you better than assume one models, the be, in will can, them the where you not one any a guess

of uncertain. timing the operations these got new So, just it is, part and bit a everything little is of we’ve

Heiko Ihle

it. Got

so allocated Friday costs that from you good million assuming bit million, down? of remainder coming the Lucky QX more X.X where as year the modelling is and suspension-related for any You X.X ideas is the which that’s shut quarter, have they in any had idea in you this a increase quite for

Phil Baker

of Well, the underground test Friday Lucky the development Vein is forward, the with far I see think of to you're focus associated in Miner real thinking Remote on to of Friday the the think to it. our order the more opening necessary moving for the as team Lucky costs RVM I development into it’s as – at the reassemble going

maybe likely as So, forward. to backwards? anything move decline looking to that, will we Lindsay, add it

Lindsay Hall

cost, that I can run rate I commented Friday mean be at just Lucky the run cash cost higher, was the the don't suspension Heiko, at, the believe you looking rates that, consistent. No. just I

second costs quarter. is cash about go So, the did and talking comment to higher quarter The Quarter-over-quarter, rate I I'm XXXX, check, Lucky will you but Friday. back first about suspension run same.

Heiko Ihle

it. Got

looking there to we're meaningful the I but of this the call, of if you I a per Phil time integration don’t weeks forward spend early see numbers? there, for to will you tackle sounds last know like, in to Nevada but dollar on for assets? couple those terms the as are amount of any is mean, the a And we on Okay. idea time expect besides figure going there when spending answer management that that out in is it this, want then, and

Phil Baker

you mean What do am in dollar not… terms, I

Heiko Ihle

Everything that the severance there was left signs to know Klondex from changing expenses stuff. be to Hecla of if all to, signs any I paid, don't

Phil Baker

the expecting the left people that that Well terminated, the transition. are done stay I the are the all people in that to them people team. been mean we’ve – we’re that’s on

payments are basically Klondex. actually from not year out to small. million forward, closing and going a G&A is we're any they of additional that are disappear. if a that mean big $XX going I anticipating sort of comes savings there So, quite There’s

that background Heiko. that hear what about not could sure that you Sorry I’m I noise, hope is. all

Heiko Ihle

Yes, I Thank you. did.

Phil Baker

savings as Klondex think what spending. was So, relative about it to

Heiko Ihle

assets – think an I guys for or still you those Well, from bought these price. assets amazing

So…

Phil Baker

Absolutely.

Heiko Ihle

you, Perfect. Thank guys.

Phil Baker

Heiko. Thanks,

Operator

Thank question Morgan. Bridges And with our from John J.P. next you. comes

open. now is line Your

John Bridges

form – will contributing then that of debt wanted Good morning Phil, neutral intention you to Nevada as be into aligned the you’ve being they’ve you as in everybody. just and assets I is flow to that the dig run start that to cash is when to your they have cash the to a of portion possible, taken flows, to be soon on or to those, sort revolver when with?

Phil Baker

months things. expectation two it Well, for will year the this I five be guess the One is is, self-funding.

contribute to capital it. the anticipating revolver. needing into two, We’re we drawn additional not And haven't on

positive. cash net is Our position

John Bridges

Okay.

of an going cash to sort respect with sheet end you with expecting refunding you of help do see debt your Friday of XXXX Lucky very to Are the couple the at inflow over refunding where years of you restart? and XXXX, next that So, thing? the balance from

Phil Baker

the San cash a will all and flow think don't lucky just the think date What suggest I been the Nevada Casa think is. will of mines – you we as they grow, Friday. is, great we generator the with we it grow Greens Sebastian Well, will cash would think each restart grow Creek the has assets positive flow we we have are to a of for and

cash same they continue be at flow we're or operation quite prices to expect with will it we more happy should do if each can that, obviously. which that, year year So, over generating but even

John Bridges

looking excavation sort does that? Okay. look, well just more thing? at a labor-intensive is a big that mechanized support point, And supported, of picture void is of that then that do practical as big see how the that be I needs continuous that or around how to miner. you a

Phil Baker

Well, to when stope. out people about think is trying you it, the keep we're what do of

that mark to like So, bolts, envision yet. going try using we self-drilling you out, equipment, but that? ultimately, or respect then in that to has have we’re to that’s to this to with moving the add point potentially potentially system a we’ve automated tele-remote operated to bolting what attached to and Larry, would not and gotten

Larry Radford

look for I the makes is large, machine Yes, mean quite mining. narrow photo but the it actually purpose-built vein

it the the to stingers So, evident but area is that photo, back. XX-feet web top secured is in somewhere is not to machine in down a on there of will maybe that mine the and the it

got lot without a it’s behind support. that load back machine it, When they the LHD whatever and its it’s material power that Did hold to cable of move using to and a South [ph] question at in will the a runs Obviously, material So, used that conveyor of has area for conveyor we answer your and we saw them own got were of mine. with. it John? on machine being running, Africa the out

John Bridges

Yes.

then of. hand under hand? do you use intend Sort And over how to it

Larry Radford

South bolting, working bit, change now, of interestingly going the trialing really We’ll bit and a a – lot. have Lucky the little has have at Underhand. Friday but because kind it. mining change making come the that not bolts And progress we’re the won't a obviously that’s we African a to bolting there part little but innovate they’re self-drilling good product. practice It’s around person we’re we're that on fine, right to in

John Bridges

going Well, Phil you're underhand, under if looking to presumably? you're cemented be

Phil Baker

Yes.

John Bridges

Okay.

solves one. So that that

at of work machine? how learning you're it So, XXXX be to think do – package have the to end you to ready will of with the a go period this full whole going this or

Phil Baker

is It will be Larry? fair what I’m will have Is into when all anticipating. our that XXXX we completed testing

Larry Radford

Yes, it would half be second of…

Phil Baker

testing. So, we’re and as then it but it from started this in into we the early year fourth as is bringing be that Friday XXXX current schedule a now, in have could the we’re in it it Lucky and quarter XXXX

John Bridges

by to next of you the that extent second working the work this in with machine? attachments up year what to half can Swede’s accelerate To the

Phil Baker

mine. goes function a You of is testing know their own their it how really in

quickly do need will will we’ll goes it, and for here how over on disassembled they can They that depending be be made how adjustments We’ll the build to to there test testing. underground. be So, determine taken that and first. it, and be and it what brought

is large why the the it to but Really, are that’s the a here, critical have reassemble do the that’s enough early So, path we and to because fourth are it, need that’s year it a could plans on could probably fastest as get from space what’s be as in development now, quarter. for here it.

John Bridges

Okay.

of the shape what for are to the they are quickie they benefit? get going TC-RCs, a The going is Lindsay. that favorable Just cross TC-RCs to continue, better,

Larry Radford

Lindsay? ball crystal your What’s

Lindsay Hall

say this there’s more get. I’m I we’ve happy sure what not with would John. it got. to Put that I’m any way.

John Bridges

it. luck. Okay. Thanks That’s guys. appreciated Good helpful,

Phil Baker

John. Thanks,

Operator

question Thank you. next And Mark from our with Mihaljevic Capital comes Markets. RBC

now Your open. line is

Mark Mihaljevic

Hi, thanks morning everyone. and good

Larry Radford

Mark. Hi

Mark Mihaljevic

done obviously, have I flags any red And the relations my Klondex raised? guess, whether now on been question just Shoshone, work is, worked phase? wondering had transition any lot with of through they've first or has how a the whether that's

Phil Baker

earlier met week. with and certainly those and We’re maintaining them relationships this just Larry Luke

you… don't why Larry So,

Larry Radford

to both that team Klondex maintaining to right was we good the as is we yes. one certainly committed make – Hecla Shoshone. well Hill it relationship Shoshone Klondex maintaining it have what with the We Luke, The much relations. like operationally, to Klondex we’ve that’s so good week reasons maybe happy Lucy environmentally, relationship the – to Yes. and good that put like effort we’ve put of way into met one, but to and Russell, them of with try and a this out team got are, with as we're retained our we ensure that introductions, just common, is also the Shoshone,

Mark Mihaljevic

to guess ramp then could access And couple have a a I of take fully the grab to that or mentioned Thanks. and years you you Okay. get it get there.

kind full. in wondering you the of it a and just pretty Hollister need is keep was being operation reasonably if there you medium-term, there kind guys get outlook in mill are the Midas of you the confident obviously that reserve second life back So, to until scaled short

how XXXX you until XXXX, Hatter? you of look over, So, kind know do in it you are the at that call

Phil Baker

at if just extend mine will Look, are we but not margin generate to that, it. we and to able do we’re life we do margin and Hollister going focus will on

can margin. Just the from that to fill margin see asset to mill. is mill generates continuing that go increase the whatever we tonnage forward level have and that generate thing to really the Fire asset the mill, and the is And the to manage that production we we the is, we that comes Creek through reality at important and see most the put of

that’s So real the driver.

the there’s on. lot you sort few ounce add the Graben think that’s that? cut-off cut-off in, thing. difference to a important you substantial We know we’re further – of economics there the in Most anything about the to ton is And a to X.X in kind Hatter remember but the X.X making tonnage and per focusing to so can comes of range the per most that work ounces of and Creek is are what Fire that’s Hollister and that’s ton. are to Larry is material get lower of lower thing not the opportunity cut-off and extend doing what on important XXX the we before believe We Hollister. that

Larry Radford

it drilling that to a short exploration want Hollister right actually drift keep up we start good to Just certainly want and Hollister believe to work now development. the got veing some We contemplating Hatter west the we of west that some glory now. premise We very to running as to keep bit. We’ve It’s to a reserve, out running. testing yes. with It’s definitely are putting do. some and but extends the a small open to we Graben right grade

Phil Baker

to anything Dean, add?

Dean McDonald

Yes.

the Larry East unconformity, are and the - and there was is that fall that, so area is very is workings There has past what reserves. there Gwenevere in some Graben between current potential unexplored to add saying the mining is opportunities been current the above Just of to some most strong Vein addition the an which the in at there mineralization because workings. short-term separates in a resources opportunities that from the the Hatter some to and

the mine is Hollister Hatter of the sense clearly the but in the So, price. Graben area, not is done

Mark Mihaljevic

if that you discovery, do could of something marginally you beyond of new or material, nature Okay. be environment of established kind level, Thanks. the but given what’s obviously needed would the to could more in that you And a to require then because target, there? that Fire again early I little that guess, medium-term it push XXX bring just what’s whole some might the down the XXX that but bit what’s of cut-off is the in core continue and kind there lower a lower be the accretive cost throughput outlook it Creek on can just potential

Phil Baker

doubt well, going our do go Well Fire from we the And I that focus to that moment be Creek. XXX. XXX XXX, to once that will on further. no to that’s go driving me we say have if a just let at have to we get is we to material impact

we now a X,XXX that We where established when that tons and was Greens have at we day we’re were here mine. very look at X,XXX, tons don't Creek. per was It so at XXX. to need time. acquired opportunity, about You need we We think huge our but take make have a we We reach one we a objectives are reachable. sure and to step can it certainly that X,XXX

Going beyond that to not just add Larry? it’s today. that day come, will Anything

Larry Radford

Casa Berardi. the Sure. add I’ll also

tons of for But ounces. We at it, you just sake the look the wasn't have it making if doubled mill.

cost. sustaining all-in our dropped also have We

doing just were increasing external know said, for our your it we So, same had engineers that you it and and was is goal increasingly on-site extend we south, opened just as margin very look the consultant up the an But the Fire at is the tons comments. and they Creek, you consultant, north Phil made when ounces. and have and management it, purposeful wasn't same not diligence, our due said, just

So, the opportunities there.

looked also requires to We cut on early us grade. the dropping cut-off at It cost.

so do the So, we’ve got above. question work is your there, to kind short to of all of the but answer

Mark Mihaljevic

for just And me. thanks. Alright, one one final

to able negotiations of, if bit that you can it are Lucky a and an that to the the hopeful been guys you’ve update of bit kind your get or the give a this be something remote a to Friday really table, back orders resolution of you steel is fall on Just hopes late this is of could hold order in? is last on mine into brought until last we of that should year, there the is assume being in kind if something

Phil Baker

I think the latter at this point.

Mark Mihaljevic

update. for Okay. the Thanks

Phil Baker

thing. Sure

Operator

comes Thank our you. And question from last Very Independent John Tumazos with Research.

now Your open. line is

John Tumazos

Thank you.

Lindsay Hall

Hi John.

John Tumazos

Hi.

roughly First pit is they million essentially, at open pursuing? Hecla Creek X not one, irrelevant are Fire are there resources what

Phil Baker

sort remember mine the they of would because of the at we are end they infrastructure. all take life Look, out the something consider that

the at of it’s top mine this not at point. So,

John Tumazos

right premium goodwill? any of paid and $XXX you over all that the so the equipment million value balance without the you present plant a was book Klondex’ into terms sheet go In up quarters, in property

Phil Baker

mining it’s extent Klondex it reserves, that beyond so assets that for every acquisition which allocate is. will to we across then Yes, the in the and

we have being really a and We impair to We’ve The them. and acquire since yet done to able their will any acquisitions prudent have good value. had to have things have thing a of record remember value we beyond to profitable. XXXX and of is, prove

John Tumazos

if I it In they’ve and admin, reported pre-tax the be merger from $X if million wish our XX, Final profit just adjusted could $X as excuse write-down, had. out as know well inventory I me question, but cost Klondex, an because the to I loss, and way a the million there aside their March final little a earnings report, [ph] are pre-tax financials don't taking up depreciation earning is are and net to a that income beginning even right you’re a of at even the steps interest bit up you lower tiny earns cetera, that amount if buying XX% and et is look profit, rates money. results their PP&E business little

Phil Baker

than Yes, them. could, realize but to different mines are run they they I very going you how mean, we ran these

is looking for so, ramp the margin. the best And create to what we're asset best up to see

So, be so it huge in were did they we there things will look just substantially for stress, makes because what they were from will doing that it and different didn't long that do financial term. and sense they the

John Tumazos

development So, [indiscernible]? they may and more exploration not as more be if spend send for good you for

Phil Baker

my frankly better is expectation what take to be and a did, than will but time us to lot it they get Yes, there. going

John Tumazos

you. Thank

Phil Baker

John. Thanks,

Operator

Thank from question Lucas you. with have a do Pipes of FBR. B. we line the And Riley

now open. is line Your

Lucas Pipes

of think adjust ground, the at you squeezing example wanted on Yes, zinc very price ask kind me for about for if these pretty your end. significant here and contributor, do as quickly operate such I that about to how Creek if Greens necessary it I or it [indiscernible]? it some commodities you byproduct do thank you at we’ve little has a in a you is volatility changed of much fluctuations does to – how all, the in the lead that is bit seen

Phil Baker

in There ore is mean, margin is this enough is it variety that it is I is that’s prices. some what ore a adjustment we’ve of dramatic. made, at not but and identified there

of don't number Yes, there a see Larry changes huge we change. extended years. over an is So, anything? week-to-week, month-to-month, year-to-year day-to-day

Larry Radford

more Phil a prices It’s the Yes. Lindsay than impact some I and mean, said TCs-RCs that long-term it of is a impact. short-term covered.

Lindsay Hall

And is a of so the base that we production also in. have metal, hedge we locked portion the

Larry Radford

Greens Creek mine. You of a high should think as grade very

So, additional potential an for on numbers. mine based TC-RC mined, but gets of favorable solely year can see anything pricing that’s and life mineralized the we most byproducts

Lucas Pipes

Got it.

about circle on then restart Thank XXXX little helpful. I'm question, I kind Thank how in back very there my a the a a is point? of to but this I of time the That’s Lucky and best you value good reasonable to it assume you. what’s caught Okay. bit that for about capture previous or to Friday, at model, think frame just to trying think

Phil Baker

Sure.

the the about Just Lucky RVM will the the know. have of and we happen on before Friday, is RVM the of mine restart restart focus tested? that so thinking Don't is the

trying from You the honest value to know change mining comes and biggest this there method the RVM. be with you to with

focused. we’re where that’s So,

Lucas Pipes

it. Got

me thank you Okay. Well very much of for appreciate all and that, squeezing in here.

Phil Baker

Lucas. Sure thing,

Operator

a of line Thank with And from do have of we you. question Lynch. Merrill the Fields Bank America Matthew

line is open. Your now

Matthew Fields

the on earlier in in we said the Little agreement XX Hi, revolver drawn call your guys. for press it that, borrowed you transaction, says million credit under [indiscernible]? that had the Phil release the Klondex hadn't but

Phil Baker

Yes. What and have net positive I our we is said that, cash. is

So, we on balance $XX have our million worth more cash than sheet. of

Matthew Fields

that Okay. are quarter? over course pay borrowed at the you But to closing was the down the transaction of and of the attempting that

Phil Baker

the position but net right, That’s positive cash. is

Matthew Fields

really [ph] matter bonds? in about payback Lindsay's now savings points market the than be to given back a XXX paid rating less refinancing X.XXX current rates, those X.X-year you point if then shouldn't comments obviously that’s this what X.XXX of no think get right little can copper interest know cheaper about, you're is, the [ph] the at you [ph], basis And bonds Okay. you earlier that credit you

Lindsay Hall

we’re Well, market on in the right Klondex. now working

that. ratings we do the upgrade company. assets So, our that let the further performance of in of we’re And the we hopeful that that a get see out us look, with

be will we So, on working that.

Matthew Fields

guys, very Thanks much luck. Okay. good and

Lindsay Hall

Okay.

Operator

the This Mr. you. Baker concludes session. Thank back call over remarks. closing to for will Phil question-and-answer now turn today's I

Phil Baker

see I that Thank just you, of in I’ve been emphasize the the real business the the I it’s exciting that when that to is thing this improve look rapidly that opportunity advance I and very I to been one going and are and is, to they frankly XX it. operations with, started platform like it years actually to the associated at have and operations that acquisition take most much. because I’d exploration the just have change. to say, Nevada is operations

the future. think course With Happy a we’ll to of or different set completely that, fundamentally I because part will you're the Hecla to big year that take assets questions Nevada of our stop. a it of over changes see next And going offline. so. be

give and or you. a Thanks Mike talking very call much. forward look to So, to I

Operator

conference. today's participating program. the Ladies and gentlemen, conclude thank This you in for does

all Everyone, day. may disconnect. great have You a