• Capital Investment: Approximately $40 million invested in Keno Hill during the year, with more than $14 million in the third quarter.
• Silver Production: Almost 600,000 ounces produced in the third quarter, totaling over 2.1 million ounces year-to-date.
• Net Cash Balance: $9 million net positive cash balance at quarter end.
• Net Leverage Ratio: Improved to 1.8 times from 2.3 times in the prior quarter.
• Cash Flow from Operations: Strong cash flows generated during the quarter.
• Capital Investment: Total capital investment of almost $55 million during the quarter.
• ATM Program Proceeds: Raised $57.3 million under the ATM program.
• Revolver Paydown: Paid down $49 million on the revolver.
• Silver-Linked Dividend: Cash used for dividend was $8.7 million.
• Revenue from Silver: 44% of revenue derived from silver.
• Greens Creek Production: 1.9 million ounces of silver produced in the third quarter.
• Greens Creek Revenue: $117 million in revenue for the quarter.
• Free Cash Flow from Greens Creek: $47 million generated in the third quarter.
• Lucky Friday Production: 1.2 million ounces of silver produced in the third quarter.
• Free Cash Flow from Lucky Friday: $23.2 million generated in the third quarter.
• Lucky Friday Insurance Claim: Completed $50 million claim, collecting remaining $14.8 million.
• Keno Hill Production: Approximately 600,000 ounces produced in the third quarter.
• Keno Hill Mill Downtime: Mill not operational for about 35 days due to permitting delays.

• Warning! GuruFocus has detected 6 Warning Signs with HL.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Hecla Mining Co (NYSE:HL) has a strong leadership team with the appointment of Rob Krcmarov as the new President and CEO, bringing extensive experience in the mining industry.
• The company has world-class assets with reserve lives extending over a decade, particularly at the Lucky Friday mine.
• Hecla Mining Co (NYSE:HL) is committed to innovation, having implemented advanced mining methods and integrated AI into drilling programs.
• The company has a strong focus on ESG practices, prioritizing safety and environmental stewardship, as demonstrated by their operations at Keno Hill.
• Hecla Mining Co (NYSE:HL) has significant exploration potential beyond its active mines, with projects like Midas and Aurora in Nevada and exploration in Montana.

Negative Points

• The company experienced unplanned maintenance at the Greens Creek mine, leading to lower production and increased costs.
• Lucky Friday mine faced higher maintenance costs and increased use of contractors, impacting overall costs.
• Keno Hill faced operational challenges due to permitting delays, affecting production and delaying the transition to a new mining method.
• The company has a high leverage ratio, which they aim to reduce, indicating financial constraints.
• Hecla Mining Co (NYSE:HL) is facing challenges in ramping up production at Keno Hill, with potential risks related to stakeholder relations and cost management.

Q & A Highlights

Q: Rob, congratulations on your new role. Can you share your strategic vision for Hecla, particularly in terms of geographic focus and metal production? A: Thank you, Lucas. Our strategy will focus on organic growth, maximizing the value of our extensive portfolio, and ensuring Keno Hill reaches optimal production and profitability. We plan to concentrate on Canada and the US due to permitting challenges and security risks in Mexico. Our focus will be on safe jurisdictions where we can ensure uninterrupted production and cash flow.

Q: How should investors think about capital allocation, especially with current metal prices? A: We are not comfortable with our current debt levels and will address this while ensuring Keno Hill and Casa Barati perform optimally. Investment in our operations, including exploration, remains a priority. We aim to balance building cash reserves with investing in our assets for organic growth.

Q: What are your observations on labor costs in the fourth quarter, and can you provide any granularity by asset? A: Labor costs, including contractors, are significant, accounting for about 55% at two of our mines. We expect contractor costs to decrease in the fourth quarter as construction projects conclude and we fill roles internally.

Q: With your background, do you foresee any changes in M&A strategy or capital allocation? A: M&A will be approached with clear criteria and thorough due diligence. We aim to focus on internal growth and maximizing the value of our existing portfolio before considering M&A. Our priority is ensuring our current assets perform optimally.

Q: Can you clarify the downtime at Keno Hill and the status of tailings capacity? A: The mill was offline for 35 days in the third quarter. We are expanding tailings capacity and expect to have over two years of capacity by year-end, allowing us to continue operations without weather-related constraints.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.