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Hecla Mining (HL)

Participants
Anvita Patil Assistant Treasurer
Phil Baker President and Chief Executive Officer
Russell Lawlar Senior Vice President and Chief Financial Officer
Lauren Roberts Senior Vice President and Chief Operating Officer
Heiko Ihle H.C. Wainwright
Mike Jalonen Bank of America
Call transcript
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Operator

Good day, and thank you for standing by. Welcome to the Q2 2021 Hecla Mining Company Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there’ll be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. now today, hand Anvita would to conference I speaker your Patil. Instructions] like the to over [Operator Thank you. Please go ahead.

Anvita Patil

results XXXX Thank you, us and Patil, quarter joining Treasurer. you Thank I’m operation Hecla’s financial Assistant operator, and for welcome, Hecla’s everyone. conference Anvita call. for second

results Lawlar, X and was and of the Hecla’s also forward-looking statements CEO; those earnings those the in Securities Vice Phil have are in from financial Slides today presentation, slides President and come risks morning, and today’s will and and X, in Phil Chief Roberts, issued I differ Chief Baker, Operating Reconciliations Officer. President XX-Q along Hecla’s by projected with filings involve Act call team we Russell news Financial this cause release, and Vice the risks Our available and Senior today’s on call, related SEC. this XX-K pass These Officer; with could management Lauren and Senior other are Litigation to our non-GAAP Reform Baker. Hecla’s in shown release found that website. On Private President Any made under forward-looking the Hecla’s the to our With measures that, as and cited results statements. documents. in on call

Phil Baker

quarter. continued reported on and history, and many We going per silver, prices sustaining call. in cash quarter has flow EBITDA record now that as focus Greens the higher and our this fronts. Hecla year, margin At delivered again lowered we’ve and cost of silver to cash operations second ounce Good Anvita. the production our our a our Creek Lauren’s at contributor gross and record management. thanks We everyone, to adjusted was realized we on XX% for morning, and in results near joining Thanks, guidance company, capitalize with minute. silver commodity from highest our profit, on strong for for for cost and the of a reported dominant revenue cost as speak $XX.XX the revenues, our all-in

Our strengthen to with flexibility. continues financial it, and financial our position along

from has as $XXX to increased a free almost result our Our year X.X generation. cash times cash the of prior position million flow

dividends. is And increases, even in we the Our now the financial to is the few cash in of generation shareholders the common first to flow it our This participate in of returned have announced dividends. strength $XX as pay we’ll payment. quarter make the XXth price paying we’ll just XXXX, at dividend our quarter silver-linked have consecutive new same And the now not of with dividend. this and we incremental September years. and XX% a cash that will maintaining free time, shareholders flow And million years. ability And for in we that six XX dividend in be the dividend months minimum paid free our silver our past

mines in as small is is because most we mines, driver I that you the and understanding would generator is had for I when report, next XX-plus ESG, taken at we large in footprint, small, encourage fact next I take earlier on the our mean, very Hecla’s at quarter mines to are say a that the our for energy our And to mine sustainability published to because will economic years been look all many communities, small we so. drivers of we’re XXXX of on largest is say small a And the and I about I or do this, tons When this industry three companies slide operations ESG day private haven’t Now The tonnage. moment hydro. of Key very you entitled the underground in for year. slide, communities we’ve economic benefit. as it this do a if which been want our talk large employer little generations. a use small

gas XX% low XXXX in an And consumes the average produced to water United So equivalent we emissions ounces silver person and day. times ounces per our are ton emissions X.X per of almost peers. greenhouse think States know I use of amount in extraordinarily in the of that industry. what I silver equivalent the is in the compared best we more a

small. when generation We the just impact private to social intern started towns Hecla, and at the the environmental summer in exist – impact, about work had think employer – as So he’s of think that generations. big, largest this small summer earlier But who a fifth with to when we you for us that’s with it Hecla. jobs think comes the

are So this his more Year jobs partially Greens special that charitable that Alaska just programs foundation. did work jobs, communities And support that are jobs it’s Large provide XXXX that named that our we our and through the provide the Creek as shout we we operation fund in These Hogamier the during and needs wage. living than providing during out the sustain build through the communities. to recognized Scott Chamber And and not Business a particularly for of the we pandemic. jobs pandemic, son. leadership and the And multiple

to has with mine award. across Quebec/Maritime of Looking Casa at the is is being Berardi gone culture our win history safety the awarded, first that all in time award. culture, This XX-year operations safety safety, our mine’s

we with mine United the assets largest talk silver significant copper the the it green Russell and silver that host America’s condition third energy I’m of with Finally, the to undeveloped deposit States’ XX% renewable produces our financial keys are both metals are of company. over resources, to and going to pass to that about energy. that, to Hecla Montana transformation this essential in metals And

Russell Lawlar

Phil. Thanks,

from of our second strong XX% for the silver X, in at XX%, followed Turning higher gold and lead by by were revenues propelled zinc our sales XX%. prices, Slide mining quarter, to accounted production while with in a silver

sustaining U.S. ounces of of production of X.X more of silver increase at than $X.XX totaled of Gold ounce an per million in Friday, produced ounce, in Our XXXX. cost for resulting for cost record XX,XXX XX% per at silver per the to margin $X,XXX sustaining production $XX.XX continuing an Lucky accounted ounces all-in production operations ounce. Hecla ounce. a at cash margin With a $XXX per of all-in

gold, continued strong on see margins these both silver expect With we and generation. cash flow to free

cash, $XXX.X Slide quarter upper over the X, increase in we corner, the million we $XX.X million first an XXXX. of to in As left-hand ended of the starting quarter turn with

right our our debt-to-adjusted Moving to margins. combined total with while we with of X.X the past of chart well position prices position, in you below delivered into Lauren our current liquidity working providing can a of ratio times, left, million. and the margin continue two reflected XX times, to target $XXX call expect million which In bottom increasing With free I’ll bottom cash net of cash if the EBITDA over are through This generation operations. quadrant, flow the ago flow. generated low by to and the continued were cash months as what the the costs increase is have and similar to costs that, first are and the sustaining now all-in free that silver aided This margins go quarter. credits a twice to byproduct our see controlled drive we continue translates year to a they at we’ve $XXX high pass management cash shows realized down. right free of cost positive flow Margins capital

Lauren Roberts

I’ll full continues sustaining produced per benefit flow At at The $XXX the cash the ownership since consistently for prices. from cash the operating lead cost XX.X In generated higher XX pandemic. the of $X.XX fourth Creek trailing and and start of X.X ounce quarter, highest generated in million ounces the Russell Slide months, as Thanks, mine, in all-in the quarter. Greens throughout Greens million mine, by Creek Zinc of million it on flow XX. to million mine $XX.X free an silver acquired in safely of and gold free silver, ounces the Hecla we

vaccinated normal XX% to nearly and are we return measured to is steps workforce operations. Our taking

the sustaining to production costs due cost lowered more terms. negative to byproduct and favorable Updated to lower all-in Creek ounce $X smelter $X.XX guidance lowering $X cost credits, We cash per further per to are $X all-in are and lowered and cost is costs guidance ounce. cash for Greens sustaining to

to also to ounces higher than guidance to We XX,XXX due modeled grades. gold increasing are production XX,XXX

silver million Slide quarter. XX, successful ramp up Lucky production ounces operating XXXX. Moving the XXX,XXX produced free Friday cash is and to mine flow at rates generated positive in historical XX in a The after of of now

to estimated seven to mine production million sustaining driven We improving the X track ounces increase per to significant XXXX. goal $XX.XX to grade, are And approximately for is metal and in achieve outlays are remain $X.XX the we we cash to $XX.XX the as ounce per costs on all-in planned deeper. required by as guidance cost this mine increase ounce. No to tightening $X.XX at

ounces a method, approximately productivity shown potential results today. mine. XX, in gold seismicity of ounce. on were to and change the to at by the the continue cost Berardi We better increase quarter new a an but XX,XXX the the curve, come as has is method, from Casa there new at we test learning method all-in really XX% and any has per produced $XX.XX encouraged mine of the Year-to-date, the mining production in of sustaining Slide optimize second with we At which the manages

continue availability recovery delivered results focus mill. Our as in the to has we throughput optimizing production see on higher and

second to While optimization the stayed increased and and costs with costs. the our contractor the cost we volume, mill higher in costs higher saw due underground quarter maintenance mobile related associated strong, to activities production maintenance in

All-in ongoing $X,XXX of mine ounce. further With range next We results is and and XXX,XXX cash the expected throughput. generated seeing optimizing to to guidance and year. to the our Berardi trailing to $X,XXX and reduce are ounce. flow that, has to Phil. Casa activities our the are to for free per reducing costs after our years. the expected mine positive In cost are like at gold $X,XXX XX would the updated a to two production call remain improvement We guidance business cost be XXX,XXX return for cash ounces optimizing sustaining increasing the the flow positive $X,XXX costs of focused the $XX.X over I in on per increase to cash And production on million of months,

Phil Baker

takes let’s XXXX far as Okay, cost as a Slide production mine-by-mine XX. that Lauren consolidated is And and XXXX it went production. shows and to to through on the what this for go guidance basis

silver consolidated can cost guidance to cash our see So to you the guidance. how sustaining We’ve production gold XXX,XXX. increased we’ve and all-in XXX,XXX lowered costs,

so of sustaining be $X the and cash per between cost now the silver. $X, And $X estimated to and to guidance are ounce all-in costs $XX

we of So would generate prices expect cash flow at to from free operations. per $XX ounce our roughly silver current

We’re also and our Casa cash mentioned. Lauren Berardi slightly as costs increasing sustaining gold cost all-in at

to the were the and million did quarter. owned expenditures slightly, and announced at in Our Casa that operations. the increase Nevada $XX expected exploration place in pre-development in that to them capital these Hecla $X.X to assets. an quarter, increase expenditures were reflects million. and in we royalties And in we outstanding put our of Earlier second that These are repurchases before Berardi

to the the our before during being operational able deliver pandemic for thank want I We to And and September. open and I activities will they’ve exploration in just employees our line financial safe early to results. operations strong very had this commitment for questions, update

line I’d the open that so And questions. with for to operator, like

Operator

of Ihle [Operator Instructions] question Heiko line H.C. Wainwright. Your first from with the comes

Heiko Ihle

team, and taking Phil guys Hey, staying hope and well. thanks I all questions. safe you my for are

Phil Baker

We are.

Heiko Ihle

mean, going view. million $XX.X more are the to release, analyst’s million. black talked it is it, million QX it from QX and forward an I make the looks your you’re white are That’s nice beyond? that. in in a but on I like QX to XXXX, point from to just lower seeing first the of really assume $XX.X TCs gone you there sure, $XX.X improvements? the to your hear In like and sustaining of differences. all-in even and it actually miners treatment just but the In leads about Good. charges Or now XXXX of about thing in stark very follow-up had one talk same put reconciliation, are you these to yes, answer sort

Phil Baker

I’ll Russell your let answer question.

Russell Lawlar

zinc annual Essentially basis. this gets Heiko. last concentrate of is Yes, especially dramatically lot an year sold happened terms, business our The what at charge, a decreased concentrated for to on treatment and negotiated benchmark year. that from

most has because at and concentrate Greens you’re a Creek change is concentrate it the concentrate benchmark of And to notably zinc zinc quite exposed lot term. large so seeing a

of see year So half the the likely I year, like rest for we’ll seen of the would say we’ve for with the it of what exception. first kind the

there If kind at you we quarter recall, was better-than-normal of in one terms. shipment highlighted, was the made first that

should outside also it that’s bit some what can on that, can roughly are concentrate highlighted kind suggest in numbers carry based of so so of the quarter benefit see move rate And but be of – we if we’ll kind would ago that sold the essentially. a that a see that benchmark parcels I that we of around are There But future. kind that don’t folks QX treatment we the little kind of the so XXXX forward. continue as charges

Heiko Ihle

actually given was that helps QX right? Got it. lower, you That

Russell Lawlar

Well, mix versus that et the lead, such zinc yes. shifts I cetera. mean, concentrate as there’s factors

So be and there’s that there good. too factors should

Phil Baker

you a the And half in year feel get the good can second just pretty guidance. at of our looking from

Heiko Ihle

Yes. Fair.

Phil Baker

it’s in the And reconciliation.

Heiko Ihle

a to money you’ve then exploration the make this provide that decent able little you’re year is of pretty in the breakdown idea seems that Hollister Nevada the to much thus Graben Hatter even Nevada bit Midas. a spent at there invested at progress granularity? far? in just Any area a how that willing you’re money and with has doing Yes. and been And of

Phil Baker

he – work bit a has Russell yes, little of recently. Well, we that – on can can done

with Russell to talking about. were what ahead, me you go So

Russell Lawlar

probably $XX neutral guided perspective. exploration, thinking sort we’ve Yes. Essentially maybe the flow operational about of – third would becoming the that is quarter from at Nevada, a Nevada. the from and obviously we’re cash Nevada I the Graben, Hatter in invested of here perspective spend that say I’m to development of essentially would We’ve and a million the

as – of costs that that some the will perspective. we we that operational well we’ll perspective, so And Nevada costs in the exploration invest an will have from cover of kind as we from

Phil Baker

point expiration the in is cashflow we’re Heiko and early making recouped the on we exception we that Nevada, the expenditures So have development. the in that that generated with now with negative that of ramp

how with developed pleased have in we’re So things Nevada.

Heiko Ihle

Okay. he make I me ask And worked that Russell because it. promise question just didn’t on

you so Just know.

back Thank you, in queue. get guys. Okay, I’ll

Phil Baker

Thanks, Heiko.

Operator

question Bank next comes Mike [Operator of Jalonen Instructions] Your with America. line of

Mike Jalonen

had great workforce Casa their nearly and a Phil, Creek, news rates And at? Phil vaccinated. on Russell. morning, good Well, about Greens And I Friday what XX% just question. Lucky are and Berardi, what

Phil Baker

They’re vaccination. Casa quite Quebec. a in in case of process the of bit lower about we’re in really the It’s availability vaccine the of the

the U.S. And with increasing. that’s they’re national Friday, working, case it’s Lucky it’s they’re of not vaccinated average. XX% to the dissimilar average, fully so above In national and the the

Mike Jalonen

XX%? around Is that

Phil Baker

Yeah. When you consider that people vaccinations had COVID. and have

Mike Jalonen

get is employees Oh, what to Hecla vaccinated? Friday encourage kind steps of Lucky to taking

Phil Baker

Lauren, Greens we’re the rate And Creek, and to anything vaccination the reasons it’s remove then, protocols rate a that the is, with have this as of And one so a, that do to to do. have were at that required ongoing take as we thing able it’s until this? think same want have that’s Well, is quarantine. protocols. to period vaccination, further we high, why to we as to not to vaccination primary it had been people get it’s people really quarantine that’s difficult the education add the through an having we’re high I you those process, the all

Lauren Roberts

little encourage we’ve appreciation. at done bit had gets trinket say Lucky mine work site. and through available get would We’ve of who vaccinated, the vaccinations to folks at a does just Mike anybody a making some I Friday,

through and continue and it’s haven’t we anticipate spike would average So controls But of really those it, steps. we’ve rates. gone from Idaho also forward. reiterate would the consistent what say Phil said, to in place certainly I seen put pretty material the impact or that with we because we’ve going any And

Mike Jalonen

for good thank and you luck. Well, that Okay.

Lauren Roberts

All right. Mike. Thanks,

Operator

I’ll Phil no over are questions. Baker. turn the There further to call

Phil Baker

have Okay. the folks to call I – want Well, with us. much. do just we ability thanks that remind available to very one-on-one

that’s the analysts, just one-on-one hopefully release we’d saw and be these you Hecla, just interested calls. that to in open So in press that’s happy to shareholders, anyone have

hearing look certainly and for for can can And you forward today, next it I if talk doesn’t to so Russell you up out and we from something work to time some set week.

everyone. Have thanks So good day. a

Operator

for This today’s participating. call. conference you Thank concludes

now may You disconnect.