Hecla Mining pany(HL)2024-11-07 18:45Financial Data and Key Metrics Changes - Hecla Mining Company reported a net leverage ratio improvement to 1.8x from 2.3x in the prior quarter, driven by a $41 million increase in adjusted EBITDA and proceeds from the ATM program [17][24]. - The company generated strong cash flows, with a total capital investment of almost $55 million during the quarter, split between growth and sustaining capital [18]. - The realized price of silver was $29.77, leading to cash used for dividends amounting to $8.7 million [19]. Business Line Data and Key Metrics Changes - Greens Creek produced 1.9 million ounces of silver, with revenues of $117 million, despite lower production due to unplanned downtime [25][26]. - Lucky Friday produced 1.2 million ounces of silver, with year-to-date production at the highest level in 23 years, although production was lower quarter-over-quarter due to lower mill throughput [30]. - Keno Hill produced approximately 600,000 ounces in Q3, with year-to-date production of 2.1 million ounces, affected by a 35-day mill downtime [40][41]. Market Data and Key Metrics Changes - 44% of Hecla's revenue is derived from silver, with the company also generating a small amount of revenue from copper for the first time in decades [20][21]. - The company expects strong margins at Greens Creek and Lucky Friday, with an all-in sustaining cost per ounce providing a margin of 48% [23]. Company Strategy and Development Direction - The company is focused on organic growth and maximizing the value of its existing portfolio, particularly at Keno Hill, which is expected to follow a measured path to optimum production and profitability [58]. - Hecla aims to prioritize stakeholder outreach and environmental stewardship in the Yukon, with plans to strengthen community ties and advance permitting [52]. - The company is rationalizing its project portfolio to focus on those that can deliver near-term and medium-term value [82]. Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of safety, environmental compliance, and stakeholder support in achieving operational success [59]. - The company is committed to long-term investments in the Yukon, despite challenges, and expects to see results from these investments [92]. - Management indicated that while debt reduction is a focus, capital will also be allocated to ensure optimal performance of Keno Hill and Casa Berardi [62]. Other Important Information - The company has a culture of innovation, having implemented advanced mining methods and integrated generative AI into drilling programs [12]. - Hecla's exploration potential remains significant, with ongoing drilling activities at Keno Hill showing promising results [49]. Q&A Session Summary Question: Strategic positioning of Hecla - Management indicated a focus on organic growth and maximizing existing assets, particularly Keno Hill, while maintaining a presence in safe jurisdictions like Canada and the U.S. [58][60] Question: Labor costs in Q4 - Labor costs are expected to decrease as capital projects conclude, with internal labor accounting for approximately 45% of costs [69][70] Question: M&A plans - Management stated that M&A will be considered only from a position of strength, with a focus on internal growth and maximizing existing assets first [74] Question: Mill downtime at Keno Hill - The mill was offline for 35 days during Q3 due to permitting delays [77] Question: Tailings capacity expansion - The company plans to expand dry stack tailings capacity without being weather dependent [79] Question: Future updates on company direction - Management plans to provide a broader market update after site visits and a clearer understanding of operations [81] Question: Cost savings from mining method switch - Cost savings from the switch to a new mining method at Keno Hill are still being evaluated, with safety as the primary focus [90] Question: Dividend policy changes - The dividend policy remains under the Board's discretion, with a focus on providing exposure to silver [94]