Hecla Mining Q2 2025 Earnings Report

Hecla Mining EPS Results

• Actual EPS: $0.08
• Consensus EPS: $0.05
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: $0.02

Hecla Mining Revenue Results

• Actual Revenue: $304.03 million
• Expected Revenue: $248.93 million
• Beat/Miss: Beat by +$55.09 million
• YoY Revenue Growth: +23.80%

Hecla Mining Announcement Details

• Quarter: Q2 2025
• Date: 8/6/2025
• Time: After Market Closes
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 10:00AM ET

Hecla Mining (NYSE:HL), together with its subsidiaries, provides precious and base metal properties in the United States, Canada, Japan, Korea, and China. The company mines for silver, gold, lead, and zinc concentrates, as well as carbon material containing silver and gold for custom smelters, metal traders, and third-party processors; and doré containing silver and gold. It flagship project is the Greens Creek mine located on Admiralty Island in southeast Alaska. Hecla Mining Company was incorporated in 1891 and is headquartered in Coeur d'Alene, Idaho.

Hecla Mining Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record Q2 results delivered $300 M in sales, $133 M adjusted EBITDA, and $104 M free cash flow, driving net leverage down to 0.7x.
• Positive Sentiment: Hecla redeemed $212 M of senior notes via an ATM offering and repaid C$50 M of Quebec notes, reducing annual interest expense by ~$16 M.
• Positive Sentiment: Keno Hill’s production target was optimized to 440 tpd, with a projected 35% IRR at $30/oz and 15% IRR at $25/oz, supported by planned infrastructure upgrades.
• Neutral Sentiment: The strategic review of Casa Berardi is in its final stages, with cost improvements of over $600/oz and an update expected in the coming weeks.
• Positive Sentiment: Exploration at Nevada’s Midas and Hollister projects uncovered new high‐grade structures and confirms existing mill infrastructure can be reactivated with modest capital.

Presentation

[Operator]

Thank you for standing by. My name is Liz, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter twenty twenty five Hecla Mining Company Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

[Operator]

Thank you. I would now like to turn the call over to Mike Parkin, Vice President of Strategy and Investor Relations. Please go ahead.

[Mike Parkin, VP - Strategy & IR at Hecla Mining Company]

Thank you, operator. Good morning, and thank you all for joining us for Hecla's second quarter twenty twenty five results conference call. I am Mike Parkin, Vice President, Strategy and Investor Relations. Our earnings release that was issued yesterday along with today's presentation are available on our website. On today's call are Rob Kirchmarov, President and Chief Executive Officer Russell Lawler, Senior Vice President and Chief Financial Officer Carlos Aguilar, Senior Vice President and Chief Operations Officer Kurt Allen, Vice President, Exploration Anvita Patel, Vice President, Finance and Treasurer and Matt Blatman, Vice President, Technical Services.

[Mike Parkin, VP - Strategy & IR at Hecla Mining Company]

At the conclusion of our prepared remarks, we will be available to answer questions. Turning to Slide two, our cautionary statement slide. Any forward looking statements made today by the management team come under the Private Securities Litigation Reform Act and involve risks as shown on the Slide two. In our earnings release and in our 10 Q filings with the SEC, these and other risks could cause results to differ from those projected in the forward looking statements. Non GAAP measures cited in this call and related slides are reconciled in the slides or the news release. I will now pass the call over to Rob.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

Thank you, Mike, and good morning, everyone. Turning to Slide three. Our strategic vision remains focused on four key pillars grounded in ESG leadership that position Hecla for sustainable value creation. The first pillar is operational excellence. We're starting to implement semi automation and advanced analytics across our operations.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

We're standardizing our systems and processes and improving mine planning to drive efficiency gains throughout the organization. Our second pillar is portfolio optimization. Our Casa Berada strategic review has progressed well, and I'm pleased to report that we should be in a position to update the market in the coming weeks on a path forward. I also want to address the recent acquisition activity in the sector. I believe the best opportunities to add value for shareholders is through deals that focus on earlier stage assets versus acquisitions of well defined producing assets that are already being fully valued in the market.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

So while we will continue to evaluate potential opportunities, as any prudent management team should, at this time, we see more compelling value surfacing opportunities within our own robust project pipeline. Our third pillar focuses on disciplined capital allocation, so prioritizing high return projects while strengthening our balance sheet. We're structuring our framework to prioritize free cash flow generation with clear return on invested capital targets. This means that every dollar we deploy must meet analytically derived return hurdles. Our effective execution on the ATM to deliver $212,000,000 of the $475,000,000 long term debt, while minimizing shareholder dilution, is a reflection of our capital allocation strategy in meeting these goals, and Russell is going to speak more on this in a moment.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

Fourth, we're committed to maintaining our silver market leadership. Our high quality operations averaging fourteen plus year reserve lives, which is double the peer average, and they operate exclusively in low risk jurisdictions. While we strive to achieve these pillars and while continuing to aim to be an ESG leader in the silver sector through environmental stewardship, through strengthening First Nations partnerships, and maintaining safety excellence. Turning to slide four, I want to walk you through the strategic recalibration at Keno Hill that really demonstrates our disciplined approach to value creation. Our focus on optimizing Keno Hill has confirmed that it is a core asset capable of delivering strong returns even at conservative metal price assumptions.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

The asset meets our investment hurdle rates at $25 per ounce silver and approaches self financing capability at current metal prices. The key strategic decision was revising our production target to four forty tonnes per day, down from the original five fifty to 600 tonnes per day baseline. And this isn't about scaling back, it's about optimization Through improved ore quality control, over break reduction and cost control, this throughput level delivers superior returns while preserving our expansion optionality. We've identified mining capacity as the primary near term production constraint, and we have high confidence in achieving our target through systematic capital deployment, including cement and tailings plant construction, waste dump upgrades, mine development programs, tailings capacity expansion, and water treatment infrastructure enhancements. This measured approach gives us high confidence in achieving our target four forty tonnes per day while maintaining the flexibility to expand when the conditions warranted.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

As we turn to Slide five, let me walk you through the compelling financial case for our four forty tonnes per day optimization at Keno Hill. The economics here are particularly strong. Looking at the table in the upper left of the slide, at $30 silver, a significant discount to current spot prices, Keno Hill will deliver a 35% IRR over its reserve mine life. This return profile is well above our investment thresholds and demonstrates the potential quality of this asset. Even under our conservative case at $25 per ounce silver, the project would generate a solid 15% IRR from 01/01/2025 forwards.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

The sixteen year reserve life provides another strategic advantage. This longevity has the potential to capture value through multiple metal cycles. As illustrated by the red line on the chart, we expect there is the potential for particularly strong free cash flow generation in later years as the mine reaches its steady state production of four forty tonnes per day. And of course, exploration success could extend the mine life, which could further enhance the already attractive returns. I'll now discuss the medium term outlook for Keno Hill and some of the major projects we'll undertake to deliver the asset into nameplate capacity.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

Slide six outlines our systematic approach to ramping up Keno Hill to its optimized production level. Our production timeline demonstrates a measured de risk path from current operations to four forty tonnes per day, which we anticipate achieving in 2028. The key here is that we're building Keno Hill with a long term future in mind rather than rushing the ramp up. And this approach allows for sustainable returns to our shareholders while ensuring that ESG excellence through our commitment to environmental stewardship and partnering with the local First Nations. And from an infrastructure perspective, our tailing storage facility will operate under phase two through 2028, when phase three will seamlessly take over.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

This sequencing aligns with our waste storage capacity and existing permitting framework, diminishing the risk of potential bottlenecks. Now while our analysis confirms that four forty tonnes per day meets our return thresholds, even at conservative silver price assumptions with preserved valuable optionality. The infrastructure we're building can support expansion beyond this level should future conditions warrant. Meanwhile, our exploration program continues to deliver consistently replacing depletion and growing our resource base. So what we're accomplishing at Keno Hill is systematic derisking, while advancing the project towards sustainable profitable production.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

And with each milestone we achieve, we're increasing our confidence in the project's potential to deliver meaningful returns to our shareholders. As with any development project, execution remains key. Turning to Slide seven. The second quarter delivered exceptional results across multiple metrics. On the financial side, we achieved record sales of $3.00 $4,000,000 net income applicable to common shareholders of nearly $58,000,000 and record adjusted EBITDA of $133,000,000 improving our net leverage ratio to 0.7 times.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

We generated cash from operations of over 160,000,000 and record quarterly free cash flow of $104,000,000 Operationally, we produced 4,500,000 ounces of silver and nearly 46,000 ounces of gold. Our silver operations delivered cash costs of negative $5.46 per ounce and all in sustaining costs of $5.19 per ounce. That's after byproduct credits. Casa Berardi's unit costs dropped by over $600 per ounce over the prior quarter, and Lucky Friday set a new quarterly milling record. On Greens Creek, strong performance year to date, we made positive revisions to gold production and silver cost guidance with the new guidance summarized in slide 24 and the appendix of this presentation.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

I'll now hand the call over to Russell for a detailed financial review.

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

Thank you, Rob. Turning to slide nine. Our capital allocation priorities center on strengthening our balance sheet, investing in our highest return opportunities across our portfolio and maximizing free cash flow generation. As we focus on these priorities, we're investing in organic growth. Notably, this was Keno Hill's first positive free cash flow quarter under our ownership.

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

We continue focusing on deleveraging, having improved our net leverage ratio to 0.7 times. And earlier this week, we initiated a partial redemption for $212,000,000 of our senior notes. Additionally, we also repaid our investment Quebec notes totaling $50,000,000 Canadian from free cash flow in July. We're also progressing on portfolio optimization with strategic review with the strategic review of Casa Berardi and disposal of an encore exploration property and a encore equity position. On the right hand side of the slide, you'll note that our producing asset base generated over $100,000,000 in free cash flow, a new quarterly record with all four mines contributing to this total.

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

Moving on to slide 10, silver made up 41% of our consolidated revenue with gold increasing to 42% based on the performance of Casa Berardi and Greens Creek in addition to the increase in the price of gold, while base metals made up the remaining 17%. With the increase in the silver price, we've also seen an expansion in our margins, grew from 65% last quarter to 85% this quarter with silver AISC at $5.19 per ounce after byproduct credits. I'll discuss the details more on the next slide, but in addition to the performance of our operations, we took steps during the quarter to improve our balance sheet, which resulted in our net leverage ratio improving significantly from 2.7x from 1.5x last quarter. Turning to Slide 11, our strategic approach to raising capital demonstrates prudent financial management in which we utilized our ATM facility to raise funds for a partial redemption of the senior notes. We chose the ATM facility to execute this capital raise to minimize shareholder dilution versus traditional equity offerings, which have had discounts of more than 10% this year, whereas we executed the ATM at a price which is approximately 10% higher than the volume weighted average price for the quarter at a minimal cost to our shareholders.

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

This planned debt reduction lowers our overall future interest expense by about $16,000,000 on an annual basis. We anticipate the interest savings will be reinvested to accelerate value creating activities, including investment in our operations, expanded exploration programs as well as strengthening the balance sheet. Our strong existing asset base provides us confidence in our ability to service the remaining debt, even apart from using the proceeds from any potential asset sales, and fund growth initiatives while maintaining operational flexibility. So going forward, we would prioritize other means for debt reduction before issuing more equity. I'll now turn the call to Carlos to discuss the details of our operations.

[Carlos Aguiar, SVP & COO at Hecla Mining Company]

Thank you, Russell. I'll begin on Slide 13. Grange Creek continues to be our flagship asset generating a strong free cash flow. The second quarter silver production was 2,400,000 ounces, a 21% increase over the first quarter with silver grades averaging 13.4 ounces per ton. Total cost of sale decreased 15% to just under $59,000,000 Our second quarter silver cash costs were negative $11.91 per ounce and all sustaining costs were negative 8.19 per ounce, both after byproduct credits.

[Carlos Aguiar, SVP & COO at Hecla Mining Company]

Better than expected gold production and higher gold prices drove the recent strong cost performance over the prior quarter. The operation generated over $75,000,000 in operating cash flow and $69,000,000 in free cash flow. For Greens Creek, we maintain our silver production guidance, increased gold production guidance and reduced cost guidance because we expect higher by product credits from gold. The table on Slide 13 summarize the guidance for the mine. Turning to Slide 14, Lucky Friday achieved a new quarterly milling record of over 114,000 tons, beating the first quarter record by 5%.

[Carlos Aguiar, SVP & COO at Hecla Mining Company]

We maintain consistent silver production of 1,300,000 ounces with grades of 12.5 ounce per ton. Total cost of sales decreased 4% to $42,300,000 with cash cost of $6.19 per ounce and all in sustaining cost of $19.07 per ounce. The operation generated $20,700,000 in operating cash flow and nearly $5,000,000 in free cash flow. We expect the third quarter to be our softer production quarter of the year due to planned capital projects that will impact hoist availability, which was anticipated in our February guidance. Lucky Friday guidance remains with no change.

[Carlos Aguiar, SVP & COO at Hecla Mining Company]

Turning to Slide 15. Inno Hills second quarter silver production reached just over 750,000 ounces at a milling rate of just under 300 tons per day as we continue ramping to higher tonnage rates. Importantly, we delivered $2,700,000 in free cash flow in the second quarter, our first positive free cash flow quarter under Hecla ownership. The operation remains production as the ramp up continues and capital projects are executed. The cemented tailings plant construction work is progressing well and we expect completion at the year end.

[Carlos Aguiar, SVP & COO at Hecla Mining Company]

On Slide 16, Casa Berardi showed significant cost improvements over the prior quarter with both cash cost and all in sustaining cost decreasing by more than $600 per ounce. Second quarter gold production increased 37% to just over 28,000 ounces driven by planned increases in both underground and surface ore grades. We expect the stripping ratio of the 160P to decline in the fourth quarter with our surface mining contractor completing the mobilization. This will drive further cost reduction while maintaining full mill capacity. Cash cost in the second quarter improved to $15.78 dollars per ounce and all in sustaining cost to $16.69 dollars per ounce.

[Carlos Aguiar, SVP & COO at Hecla Mining Company]

We expect to provide an update on our strategic review process in the coming weeks. I will now pass the call to Kurt.

[Kurt Allen, VP - Exploration at Hecla Mining Company]

Thanks Carlos. Turning to Slide 17, I will give an update on the activities going on in Nevada. Historically Midas produced 2,200,000 ounces of gold and 27,000,000 ounces of silver at exceptional grades. With a fully permitted mill, ample tailings capacity and 30,000 acres fairly explored, Midas offers potentially transformative upside. The twenty twenty-twenty twenty one Sinter discovery containing 169,000 ounces of gold and inferred resources hints at a larger untapped system.

[Kurt Allen, VP - Exploration at Hecla Mining Company]

Active drilling is delivering results. Seven of 12 planned holes are completed and have yielded two new gold bearing structures with visible gold. This is not from infill drilling or incremental extensions, but from areas located over two miles from the existing underground development and dense drilling, and that really is what makes this particularly exciting. These potentially emerging discoveries combined with widespread mineralization indicators throughout the area support potential for a significant new deposit. A recent draft engineering assessment confirms the mill remains in good condition, requiring only modest capital to restart.

[Kurt Allen, VP - Exploration at Hecla Mining Company]

Hollister was historically ranked as North America's third highest grade underground gold mine, producing 500,000 ounces of gold equivalent. Located within trucking distance of Midas' processing facilities, the large property shows extensive surface alteration and mineralization. The Hatterbraben resource anchors multiple high grade expansion targets with additional potential at Santorania. Both assets feature proven high grade production history, existing infrastructure eliminating major capital needs and vast unexplored potential. With that, I'll turn it back to Rob.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

Thanks, Kurt. Turning to Slide 18. Our 2025 strategy focuses on four key themes. First, we're focused on creating long term value at Keno Hill by prioritizing permitting and project execution. Second, we'll continue deleveraging through strong free cash flow generation.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

Third, we're establishing a capital allocation framework to ensure smart organic investment. And fourth, we're rationalizing our portfolio with the Casa Berardi strategic review expected to conclude in the coming weeks. I now want to address what I feel Tekla Mining makes for a compelling investment opportunity. So please turn to Slide 19. Pekla's competitive advantage is evident in our industry leading reserve mine life.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

Our average reserve mine life of fourteen years is double the silver industry peer average of just seven years. This provides exceptional stability and long term value creation potential and allows for us to invest in these operations under the belief that we have more than a decade to earn a return on those investments. But not only do our mines have world class mine lives, they're also positioned in The US and Canada, which gives us the best jurisdictional risk ranking of any of our peers. Moving on to Slide 20, we see another reason to own HECLR shares and what makes our portfolio unique. HECLR offers investors substantial silver revenue exposure with about 45% of our nine month twenty twenty four revenue coming from silver, amongst the highest in our peer group.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

And this calculation includes recent peer transactions on a pro form a basis. Our silver exposure has remained strong, with second quarter results showing 41% of revenues from silver sales. Our asset portfolio is heavily focused on silver, with both revenues and resources concentrated in this precious metal. And finally, on slide 21, we can play Hecla to our immediate peer group on core valuation metrics. We believe Hecla represents the best value investment in the mid cap silver space.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

We trade at approximately 1.6 per silver equivalent ounce of total resources, the lowest amongst mid cap peers, and at 1.3 times NAV, which puts us at the low end of the peer range. The bubble sizes on this chart are equally important. They reflect jurisdictional quality with larger bubbles indicating safer jurisdictions. And as you can see, Hecla's focus on safe jurisdictions is demonstrated by our bubble size relative to our peers. This undervaluation represents significant asset reevaluation upside as we shift capital towards high return projects designed to unlock the true value of our mineral reserves and resources.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

And I'm confident that over time and through continued execution, our true value will be better reflected in our share price. With that, operator, I'd like to open the call to questions.

[Operator]

Your first question comes from the line of Wayne Lam with TD Securities. Please go ahead.

[Wayne Lam, Director - Mining Research at TD Securities]

Yeah. Thanks. Good morning, guys. Maybe at Greens Creek, congrats on a good quarter there operationally. Just wondering what was driving the higher grades and the outperformance there in the quarter.

[Wayne Lam, Director - Mining Research at TD Securities]

Was that a function of positive reconciliation or were those higher grades anticipated as part of the mine plan? And then just wondering maybe if there's potential to kind of continue here or should we expect a bit of a reversion in the back half of the year?

[Carlos Aguiar, SVP & COO at Hecla Mining Company]

So we are expecting to continue with similar rates for the remainder of the year. And the main reason about it was the good execution. We had additional areas available to with better grades and that was the main reason for.

[Wayne Lam, Director - Mining Research at TD Securities]

Okay, got it. Thanks. And then maybe at Quito Hill, it seems like there's been quite a change in commentary quarter over quarter, maybe helped by the continued strength in metals prices. I guess last quarter, the commentary seemed to indicate that the four forty tons wasn't sustainable given the confines of the current permit constraints. So just wondering, you know, what's changed there that would enable you to reach that target?

[Wayne Lam, Director - Mining Research at TD Securities]

Are you getting are you anticipating more ore from Birmingham or Flaming Moth? Or just wondering what's driving the change you're thinking here?

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

So we started the year with thanks for your question. We started the year with just Bermingham. We've expanded the flame and mop, so we have a little bit more operational flexibility. We're also now focused on reducing over break, controlling dilution, ore control, all those sorts of things. Anything you want to add, Carlos, or Matt?

[Carlos Aguiar, SVP & COO at Hecla Mining Company]

And and it's just the proper balance between capital execution, permitting, and a space for growth. So we are trying to balance the other component and that's it.

[Wayne Lam, Director - Mining Research at TD Securities]

Okay. But you have you have enough capacity on the back end to get to the 440 tons given the current permit constraints?

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

We won't be getting there this year. That will still take us up some time, but we do expect to see an increase next year.

[Wayne Lam, Director - Mining Research at TD Securities]

Okay. And then maybe just one last question for me. Maybe on the debt. Just wondering in the context of record prices and the number of your peers being able to delever organically and buy back some stock, Did you guys feel as though the portfolio is not positioned to where the current operations would be able to service that debt? And then maybe just wondering if you'd, in conjunction with the elimination of the Silverlink dividend, Has the capital allocation strategy changed here?

[Wayne Lam, Director - Mining Research at TD Securities]

Or just wondering why you felt the need to retire, a large amount of the notes with quite a bit of term left on the debt?

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

Yeah. Thanks. Thanks, Wayne. The the idea behind that was both the Silverlink dividend and, you know, the interest that leaves the company to to service the debt. Those funds would be better served by our investors to be invested in in our operations and in the opportunities that we have within our portfolio.

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

And so we took the opportunity to, you know, reduce the debt so that we could increase the cash flow and reinvest in in the assets. You heard Kurt talk about Nevada. We've we've owned Nevada for quite some time. We've been high on Nevada for quite some time. But the exploration there has been kind of in fits and starts as we've had cash flow.

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

So what we're looking to do is really generate consistent cash flows so that we can then reinvest those cash flows back into those areas that will benefit our investors the most.

[Wayne Lam, Director - Mining Research at TD Securities]

Okay. Great. Thanks for taking my questions and congrats on a good quarter.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

Thank you.

[Operator]

Your next question comes from the line of Heiko Ihle from H. C. Wainwright. Please go ahead.

[Heiko Ihle, MD - Senior Metals & Mining Analyst at H.C. Wainwright & Co.]

Hey, Rob and team. Thanks for taking my questions.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

Good morning, Michael.

[Heiko Ihle, MD - Senior Metals & Mining Analyst at H.C. Wainwright & Co.]

Perfect. At CASA, you state in the release that the pit stripping ratio is expected to decline in the fourth quarter of this year, and that should be further reducing your costs. Two part follow-up to that. First of all, we're halfway through Q3 next week. Can you provide a bit of color on what we should model for this quarter?

[Heiko Ihle, MD - Senior Metals & Mining Analyst at H.C. Wainwright & Co.]

And then maybe also quantify the improvements in the stripping ratio that you expect to see in Q4 and your current cost to haul that waste, please?

[Matt Blattman, VP - Technical Services at Hecla Mining Company]

Heiko, this is Matt Blattman. There's a lot of pieces that are moving here, but one of the primary factors to the decrease in stripping ratio is that pit is nearing the end of its mine life. So as you go down deeper in the pit, your stripping ratio just going to increase or improve geometrically as it goes down. So we started off the year somewhere around that 15 to 20 to one stripping. We're probably close to 10 to one at this point.

[Matt Blattman, VP - Technical Services at Hecla Mining Company]

And then you'll just see it completely decrease over the next eighteen months until that last ton of ore that comes out is probably one:one. We're probably looking at something like a 10% decrease before the end of the year, but it's just going to go slowly until we reach the end.

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

Maybe I'll jump in just a little bit, right, because you know, clearly, we don't give guidance on a quarterly basis. We've seen the stripping ratio go down as we've gone through the year, and that you see that come through in the economics. We expect as that stripping ratio will go down, we'll be able to reduce, contractor reliance, which we should see then a cost improvement from that. And, you know, as we look at, the guidance that we provided, we we expect to meet the annual guidance throughout the year. But, you know, clearly, don't give that quarter by quarter.

[Heiko Ihle, MD - Senior Metals & Mining Analyst at H.C. Wainwright & Co.]

Fair enough. And then the permitting process of the cost to haul the waste, any color on that?

[Matt Blattman, VP - Technical Services at Hecla Mining Company]

I wouldn't expect a dramatic change. I mean, as we go deeper, the distances are gonna get farther. So the biggest improvement we'll see is the as we let the mining contractor go, we mine with our own fleet. That will help. But like I said, the haulage distances are just going to get more longer for us and not gonna help.

[Heiko Ihle, MD - Senior Metals & Mining Analyst at H.C. Wainwright & Co.]

Got it. And I get there is a strategic review process here, but I mean, with the permitting process for the new pits at Casa, how much time should we mentally be looking at for that to happen? And and maybe just cash cost, like the cost that you pay to get the sun, I assume, are reasonably de minimis. Correct?

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

I mean, permitting is not a it's not a super well defined process. It takes time. There's review periods. There's backwards and forwards. What we previously said is that there was going to be a five year permitting hiatus, and that would allow us towards the tail end of that.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

We would do some pre stripping, some dewatering and so on and so forth getting ready. That's all we can say. We can't be much more specific than that at this point.

[Operator]

And your next question comes from the line of Joseph Rieger with ROTH Capital. Please go ahead.

[Joseph Reagor, MD - Senior Research Analyst at Roth Capital Partners, LLC]

Hey, guys. Thanks for taking the questions. I guess, first one back on Kino. On the Slide five from the presentation, it shows that it's a four forty tons per day that the free cash flow increases starting pretty much in 2028. Is that driven by higher grades, lower CapEx, a combination thereof, just so we can, you know, model out that?

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

Yeah. Yeah. Joe, I'll I can I can jump in here? It's a combination of a few things. You you do see some of the larger projects coming to an end at that point, so we do see capital coming off to some degree.

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

If if you flip flip to the next slide, you you will see that there is some projects that will have to obviously continue and will have to continue mine development and and those types of things. So it's not the capital comes to an absolute halt, but it does you know, as we complete the tailings batch build plant, there's some water treatment capacity, those types of things. When those things come to a a completion, you do see the capital decrease. You also see the throughput. That that throughput getting to 440 tons per day, will scale up and get to that 440 tons per day kinda late in this decade is the anticipation.

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

And so as a result, you see more throughput, and therefore, you would see higher ounce production as well.

[Joseph Reagor, MD - Senior Research Analyst at Roth Capital Partners, LLC]

Okay. That that's helpful. And then over at Greens Creek, it looks like, you know, it could have been an even better quarter. I mean, it was already a pretty good quarter for the mine, but it could have been a better quarter if not from maybe some concentrate that didn't get shipped out in time to count it. And should we expect that to get sold next quarter?

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

Yeah. Greens Creek, we we have talked about this. You know, it's, the the sales can be lumpy. Right? Because we ship out, essentially, generally once per, month on a ship.

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

And so depending on when you ship within the month we had a shipment in June, but, it was kind of earlier in the month of June. And compared to in March, it was later in the in the month of March, and so we just had an inventory buildup. And it really just comes down to, when a ship would leave in September, whether we would have that inventory, kind of remain stable or whether we would see a drawdown in inventory. Sorry, Joe. What was that?

[Joseph Reagor, MD - Senior Research Analyst at Roth Capital Partners, LLC]

But at some point, it it'll be sold. It's just it's not necessarily going to show up in q three. It's just eventually gonna show up.

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

Oh, yeah. Absolutely. And, you know, it's a you know, we we have to put together you know, in one ship, you may have, two or three different parcels going to two or three different customers. And so, you know, you're managing that process trying to both manage the inventory on-site, as well as, getting ships in and out based on tides and and and light and when customers need it, etcetera. So it's a it's a balancing act trying to get it all done, but we we look at that and try to, you know, maximize, get as much revenue as quickly as possible.

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

So, you know, it's not like we're sitting on it.

[Joseph Reagor, MD - Senior Research Analyst at Roth Capital Partners, LLC]

Okay. Alright. That's helpful. Thanks. I'll turn it over.

[Operator]

Your next question comes from the line of Alex Jarantu with National Bank Financial. Please go ahead.

[Alex Terentiew, Director - Equity Research Analyst at National Bank Financial]

Hey, good morning, guys, and congrats on the great quarter. Good to see all your operations firing on all cylinders there. A couple of questions for me on Casa Berardi and Keno Hill. Maybe just starting with Keno Hill, I wanted to clarify, your Slide five, you've got free cash flow and discounted cash flow expectations at different silver prices. And they're saying four forty tonnes per day.

[Alex Terentiew, Director - Equity Research Analyst at National Bank Financial]

Is that kind of assuming your gradual ramp up to four forty? Or is that a hypothetical assuming it was four forty in '26, '27, '28, etcetera? I'm just trying to

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

No. Maybe we should have clarified that in that slide. That is a ramp up to four forty tonnes per day. We would get to that four forty tonnes per day later in the decade, '29 or 30 in this scenario, ramping up to that point. So, yeah, I appreciate the question because, yeah, we should have clarified that on the slide.

[Alex Terentiew, Director - Equity Research Analyst at National Bank Financial]

Okay. Okay. That that makes sense. I figured that was probably the case for you, I wanted to check. And then just kind of related there, and I know somebody asked this earlier or a variation of it.

[Alex Terentiew, Director - Equity Research Analyst at National Bank Financial]

Just on the capital side, you know, I I could kinda use that chart to help calibrate, but, you know, you noted a few things are coming off. Any big spending that we could kind of think about over the next two years to kinda get to that $4.40 rate? Any major investments that have to be done?

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

Yeah. Well, know, Carlos is is sitting here with me too, so please fill in some of the details. But we we do have to build some tailings over the next few years, and I think you see that on slide six. It's kind of kind of laid out there. We're working on tailings batch fill plants now, and and that will, you know, kind of come to a conclusion sometime next year.

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

There's some additional water treatment that we have to put in. I think there's some waste waste storage, some in other infrastructures and buildings and things like that.

[Carlos Aguiar, SVP & COO at Hecla Mining Company]

Yeah. There are our investments related with power distribution upgrades. So it's and some of the projects are gonna are gonna take over one year. And so there are significant upgrades in the infrastructure, and we are expecting to maintain similar level of investment for the rest of the decade.

[Alex Terentiew, Director - Equity Research Analyst at National Bank Financial]

Okay. And then just on the permitting sorry, for dry stack tailings, Slide six shows later in 2028 additional permitted capacity required. Is that capacity required just to maintain it at four forty? So I guess my question is, come 2028, end of the year, what's the risk that that's kind of a hard stop unless if you don't have the permitting permitted additional capacity? Or do you have a bit more room to to keep going and and kind of work on the permits?

[Matt Blattman, VP - Technical Services at Hecla Mining Company]

I guess I'll take that one. So yes, in '20 the 2028, we start to run into a capacity requirement. We need additional capacity for tailings. We do have some flexibility that once we have the cemented tailings plant constructed and operational, we have more opportunity to put more of the tailings underground, which then makes that surface capacity less of a risk. But, yes, somewhere in '29, we do have to have that permit in place, and it's already underway.

[Matt Blattman, VP - Technical Services at Hecla Mining Company]

We're already chasing that. So it does give us some room to work. And similarly, the waste production, there is a limit in our permit that says total tons of waste that we can mine. It's not a surface constraint. It's not any physical constraints in the permit.

[Matt Blattman, VP - Technical Services at Hecla Mining Company]

So that needs an expansion as well, and they hit about the same time frame. So that's part of the reason why you ramp up to four forty over a longer period. If you ramp up the mine to four forty very quickly and then run out of capacity, then you shut down. That doesn't help anyone either. So it's it's all about balancing all the pieces at once.

[Alex Terentiew, Director - Equity Research Analyst at National Bank Financial]

Okay. That makes a lot of sense. And then just lastly, Casa Berardi. Gold prices are obviously quite high. Is there opportunity to and I guess a similar question here on the tailings and permits.

[Alex Terentiew, Director - Equity Research Analyst at National Bank Financial]

Is there opportunity to continue Casa Verde even for another six or twelve months, kind of lowering the cutoff, getting more tonnes through? Or is it or there are other constraints, whether it's permits or tailings or something like that, that kind of making that's making 2027 a deadline?

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

Well, we started this year with a view of closing down the underground around May. Obviously, gold prices have helped, and it's turning out to be an increasingly valuable asset. We've now extended the underground to at least the end of the year, and then we'll just see where gold prices are.

[Alex Terentiew, Director - Equity Research Analyst at National Bank Financial]

Okay. And last one here on Casa. Obviously, very strong Q2. You guys have made 49,000 ounces from that mine year to date. You've kept guidance.

[Alex Terentiew, Director - Equity Research Analyst at National Bank Financial]

So I guess my question is any upside to that number? Or should we be kind of thinking that production will come down the second half of this year?

[Russell Lawlar, Senior VP & CFO at Hecla Mining Company]

Any upside to guidance? I guess I can jump in and and ask that. You know, we're we're working through a strategic review right now. I I would suggest, as Rob said in his comments early in the slide, we'll have something to talk about to the market in a few weeks. And at that point, we'll be able to answer that question.

[Alex Terentiew, Director - Equity Research Analyst at National Bank Financial]

All right. Fair enough. Thanks.

[Operator]

Your last question comes from the line of Kevin O'Harajan with BMO Capital Markets. Please go ahead.

[Kevin O’Halloran, VP & Equity Research Analyst at BMO Capital Markets]

Hey, Rob and team. Thanks for taking my question and congrats on the quarter. Just going back one more time to Keno. On the ramp up there, can you give us any granularity on the trajectory of the throughput? Would it be like a more gradual increase to the four forty tonnes per day?

[Kevin O’Halloran, VP & Equity Research Analyst at BMO Capital Markets]

Or should we expect kind of more lumpy gains in throughput as you complete some of these infrastructure items?

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

It'll be a gradual ramp up. 2027 will probably be somewhere around about three thirty tons per day from memory, and that's around about 75% of the permanent capacity. And then it'll continue to ramp up to four forty. Yeah. That's yeah. There's nothing to add. That's the plan.

[Mike Parkin, VP - Strategy & IR at Hecla Mining Company]

Okay. Great. That's helpful. And then just final question for me shifting to the Montana assets. Can you remind us what your current thinking is on how to advance those?

[Mike Parkin, VP - Strategy & IR at Hecla Mining Company]

I think you've previously been looking at a few options like maybe bringing in a partner versus advancing it yourself. Is there any updates on your thinking there?

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

Not really. Our focus has really been on completing the CASA review. We're I have Dave Shenko here with me. We're basically in the final stages of the review period. In fact, think that finishes next week. Can you fill us in, Dave?

[David Sienko, SVP, General Counsel & Corporate Secretary at Hecla Mining Company]

Sure. Yes. We expect to get a finding of no significant impact on our permit application in the objection period ended this week. So the Forest Service will work through that, but we would expect by, I'd say, October time frame that we would have that plan of operations approved, which would allow us to begin to rehab the adit in the portal and to begin the exploration work at that project. We'll see what happens with the objection period.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

So this is just to remind you, this is primarily a copper asset, copper equivalent grade of about 1.2% copper equivalent. I would say that it's probably not going to be a core for us, and so we would be receptive to someone who's going to have a copper focus coming in and partnering with us. We do definitely want to participate in the upside on this thing because we see substantial value there to be realized.

[Kevin O’Halloran, VP & Equity Research Analyst at BMO Capital Markets]

Okay. Great. That's it for me. Thanks, guys.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

Thank you, Kevin.

[Operator]

Thank you. And that concludes our question and answer session. I will now hand over the call to Mike Parkin for closing remarks.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

Actually, I'll make some closing remarks, operator. Just before we wrap up, I do wanna recap Hecla's value proposition. Unmatched jurisdictional security, it's something I've talked about. And so in an era of increasing geopolitical uncertainty, I think Hecla offers what others can't, complete operational stability. 100% of our core assets in Canada and The US, we eliminate the regulatory surprises, the policy shifts, the security risks that plagues some of our competitors in less stable jurisdictions.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

And so your investment is going to be protected by really the world's most reliable mining frameworks. You've got industry leading silver exposure, and if you believe in silver's fundamentals, and you should, Hecla delivers peer leading silver revenue exposure. And so while we do produce gold and lead and zinc, silver dominates our revenue matrix and revenue mix rather, and that percentage could increase further depending on the results of the strategic review of Casa Berardi. When silver moves, we should move more, And this concentrated exposure gives you high leverage to the metal with some very compelling supply demand dynamics in the sector. You've got decades of visible production.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

Short mine lives create investment uncertainty, and our assets offer something rare, multi decade production visibility that extends well beyond typical investment horizons. Our long life mines don't just offer returns next quarter, they provide a sustainable production platform that's positioned to deliver value through multiple commodity cycles. And this isn't just speculating on finding tomorrow's ounces. It's ownership of proven long term cash flow generation. And there's disciplined capital allocation.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

While competitors chase expensive M and A deals in risky jurisdictions, we've deliberately stayed on the sidelines of the recent consolidation frenzy. Our strategy is clear, create value through the drill bit, not through the checkbook. Our proven exploration teams consistently delivered mine life extensions and new discoveries, and that's the most accretive form of growth. We're also built for all cycles. So our crown jewels, Greens Creek and Lucky Friday, they're not just mines, they're fortresses.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

These are low cost, long life assets that are projected to generate cash even in downturns, and that positions us to play offense when others are forced to play defense. So when the next cycle turns and distressed assets flood the market, we expect to have a balance sheet that will allow us to capitalize while others perhaps struggle to find their higher cost operations in risky jurisdictions. And the bottom line really is that I think HECLA offers what smart investors seek, and that's jurisdictional certainty, industry leading silver leverage, decades of production visibility, disciplined management and cycle proof assets. In a sector full of risks, our approach is to systematically eliminate the variables that destroy value while maximizing exposure to silver's upside. So not just another mining investment, it's a strategic position in the future of silver backed by the stability that only The U.

[Rob Krcmarov, Director, President & CEO at Hecla Mining Company]

S. And Canadian assets can provide. So thanks for joining us today, and we look forward to updating you on our continued progress in delivering shareholder value through operational excellence and strategic execution. Have a great day, everyone.

[Operator]

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Participants

Executives

• Mike Parkin, VP - Strategy & IR
• Rob Krcmarov, Director, President & CEO
• Russell Lawlar, Senior VP & CFO
• Carlos Aguiar, SVP & COO
• Kurt Allen, VP - Exploration
• Matt Blattman, VP - Technical Services
• David Sienko, SVP, General Counsel & Corporate Secretary

Analysts

• Wayne Lam, Director - Mining Research at TD Securities
• Heiko Ihle, MD - Senior Metals & Mining Analyst at H.C. Wainwright & Co.
• Joseph Reagor, MD - Senior Research Analyst at Roth Capital Partners, LLC
• Alex Terentiew, Director - Equity Research Analyst at National Bank Financial
• Kevin O’Halloran, VP & Equity Research Analyst at BMO Capital Markets