Hecla Mining at John Tumazos Conference: Strategic Debt Reduction

On Tuesday, 07 October 2025, Hecla Mining Company (NYSE:HL) presented at the John Tumazos Very Independent Research Virtual Metals Conference 2025. The company highlighted its robust position as a leading silver producer in the U.S. and Canada, while also outlining strategic initiatives under new CEO Rob Krcmarov. Key areas of focus included debt repayment and improved capital allocation, with an emphasis on maximizing asset value. Despite the positive outlook, challenges such as achieving full capacity at Keno Hill were also discussed.

Key Takeaways

• Hecla Mining is the largest silver producer in the U.S. and Canada, with four producing mines.
• Strategic shift under new CEO Rob Krcmarov focuses on debt repayment and asset value maximization.
• The company achieved a net debt to last 12-month EBITDA ratio of 0.7.
• Greens Creek mine generated over $100 million in free cash flow in the first half of the year.
• Exploration and expansion efforts are underway in Nevada and Montana.

Financial Results

• Q2 2024 revenue composition: 41% from silver, 42% from gold, and less than 20% from lead and zinc.
• Debt reduced to $268 million by the end of Q2.
• Greens Creek mine produced 4.4 million silver ounces in Q2, with improved silver recoveries.
• Casa Berardi generated almost $32 million in free cash flow in Q2.
• The company raised $216 million to cancel approximately 45% of its 7.25% senior notes.

Operational Updates

• Greens Creek: Produced 4.4 million silver ounces in Q2, with a 9% improvement in silver recoveries since 2008.
• Lucky Friday: Expected to produce about 50 million ounces over the next decade.
• Keno Hill: Aims to reach a capacity of 440 tons per day, generating $2.7 million in free cash flow.
• Casa Berardi: Revised gold production guidance to 90,000 to 95,000 ounces.
• Safety initiatives include the Safety 365 program, maintaining an all-in injury frequency rate under two.

Future Outlook

• Production guidance: 15.5 to 17 million silver ounces and 140,000 to 150,000 ounces of gold.
• Midas mine restart is projected in five to seven years with a capital intensity of around $100 million.
• Increased exploration spending is anticipated in 2026.
• The Libby project in Montana contains significant silver and copper resources, potentially requiring a partnership due to its scale.

Q&A Highlights

• Casa Berardi retained due to increased gold prices and potential for significant cash flow.
• Focus at Keno Hill is on increasing tons mined rather than grade or recovery.
• Considering a partnership for the Libby project due to its size and potential capital expenditure over $1 billion.
• Open to copper financial structures to secure financing for the Montana project.
• M&A activities will focus on smaller, early-stage acquisitions.

For a detailed review of Hecla Mining’s strategic initiatives and financial performance, refer to the full transcript below.

Full transcript - John Tumazos Very Independent Research Virtual Metals Conference 2025:

John: Good afternoon. We’re so pleased that Mike Parkin has joined Hecla Mining Company as VP of Strategy and Investor Relations earlier this year. He’s a veteran of the Canadian street, familiar with mining and finance. There’s a generational change in management ongoing at Hecla. Mike, tell us all the progress, please.

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: Great. Thanks, John, and thanks for having us. It’s a great opportunity to tell our story. You should be able to see on your screen our latest presentation. It’s available on our website. If you want to skip back a page to see something, you can find it there. Forward-looking statements, I’ll let you read those at your leisure, but I hope you have the time to review those. I won’t be reading those verbatim. We’ve really kind of, you know, a very long history with Hecla Mining Company, 134 years, always focused in silver, always focused in, you know, North America and specifically the U.S. and Canada. You know, that’s not going to change. We’re here to stay. We’ve got phenomenal assets, and we’ll get into it in a sec.

As John mentioned, we do have a new CEO leading us, Rob Krcmarov, who came from Barrick, who spent, you know, decades there building up the value creation team, largely on exploration and just kind of initiatives around projects. He joined us not quite a year ago. As John mentioned, I was on the sell side recently, joining the company this past March. We’ve hired a few others, somebody to head up our permitting group, Patrick Malone. You can see his profile on our website. We’re adding, you know, sprinkling in some additional talent throughout the upper management to really make Hecla Mining Company a better company going forward. Our assets, we have four producing mines. You can see on your screen, our flagship is Greens Creek. It’s a silver, gold, lead, zinc, and actually got a little bit of copper payable coming out of this asset.

It’s off the coast of Alaska on an island. Our next most significant asset would be the Lucky Friday mine in northern Idaho. It’s fairly close to our head office in Coeur d’Alene, Idaho. It’s a silver, lead, zinc, and it’s got a long history. It’s been producing for about 80 years, and it’s got nearly two decades of reserve life ahead of it. It’s got about its best decade coming with some initiatives that we’ve executed in the recent years, which I’ll talk about. Our newest mine is Keno Hill. It’s a silver-focused mine up in the Yukon. It’s similar to Lucky Friday in terms of its metal mix, it being silver, lead, and zinc. Over in our eastern portfolio, we’ve got the Quebec Casa Berardi Gold Mine. It’s a combination open pit underground with a mill, produces a gold doré bar.

Quite a slew of projects that you see here, some of which probably are kind of being deemed non-core, and others are definitely core, and we’ll talk about a few of those today. We’ve also just seen a news release on our Libby exploration project in Montana, and we’ll talk about that a little bit as well. Why invest in Hecla? As I said, we’ve got a long history, and we’ve got a really long future ahead of us. Our average reserve life is 14 years for our four producing mines, which you see on the left-hand side of your screen there. The dark bars are the silver mines. The white bars are gold mines. You can see three of our mines are silver compared to Pan American, one of our peers, which has a lot more gold in their portfolio.

It really stands out that our reserve life is exceptional compared to our silver peers. We’re at about an average of 14 years, and the peer average is seven. The bars are rated also highest gross profit to least left to right. You can see that Greens Creek is kind of our cash-generating king asset there. If you like silver, Hecla is a great name to consider to invest in. About 40% of our Q2 revenue came from silver. It’s about flat versus where that exposure was in 2024 and on an annual basis. Not only that, but our portfolio of assets on all resources is also heavily focused in silver, as you can see on the Y-axis of this chart. We’re really focused to trying to bring that even higher. Another reason why you like Hecla or should like Hecla is jurisdiction.

We operate in some of the best jurisdictions in the world, where there’s good rule of law, very solid tax regimes. You know the cash flow is going to be there, and you know your assets are going to be there without significant interruption on a geopolitical or security basis. The size of this dot represents that geopolitical risk score, according to the Fraser Institute 2024 Policy Perception Index. Bigger is better. You can see we’re the biggest bubble on that chart versus our peer group. The footnotes explain how we get there. Price to NAV, we have improved. We kind of started the year trading in and around where Pan American was. We’ve had some tremendous share price performance in the back of our Q2 and into the early fall. We’re still trading at a bit of a discount to the overall average and on a price now.

What we really see here in the new management as an opportunity is on our resource value. On an enterprise value per silver equivalent ounce basis on total resources, we’re trading at about half of what Coeur is. It’s not because of jurisdiction. It’s not because of the quality of these assets. It’s simply a function that our capital allocation wasn’t ideal under old management. We’ve fixed that going forward. We’re refocusing dollars into our pipeline to surface this value and close that valuation gap. We’re already off to a good start this year, and you should expect further work to advance that pipeline in the new year. Also, because of this long reserve life, we’re also the lowest cost silver producer. Our heavy exposure to silver, our long reserve life in good jurisdictions, we’ve historically tended to trade at a decent premium on price to NAV.

If you go back to that peer chart, we’re trading at a premium to Pan American Silver, but still at a discount to Coeur Mining and First Majestic Silver, where on the last 10 years, we’ve historically traded at an average premium of 17%. Right now, we’re trading at a slight premium to a modest discount depending on the day. We still feel like there’s some room to go there. As we surface that value of the pipeline, we feel there’s good NAV per share growth, which could support the share price going higher. A little bit about how significant of a silver producer we are. We are the biggest silver producer in the U.S. and Canada, producing 13.4 million ounces of the U.S. silver production of 2024. Certainly, a bulk of the silver comes out of Mexico. That’s kind of the main region there.

That’s the upper left pie chart. We don’t have production there, but our assets are some of the best. In terms of grade, if you look at the right-hand side of the chart, or the right-hand side of the slide, the dots represent the grades, and the bars are the endowment of silver ounces on a silver equivalent basis. You can see that Keno Hill down near the bottom, that’s a similar mineral endowment as a couple of the assets that have just recently transacted, Los Gatos and Los Chispas. It has a much higher overall grade. Greens Creek, our cash machine, it’s got very good grade and a very large mineral endowment. Lucky Friday, you know, is certainly no slump either. It’s got a very good grade and a decent size mineral endowment.

As you know, we’ve kind of already talked about a large amount of our mineral endowment in terms of reserves sits in the U.S. or Canada. It’s two of the best jurisdictions for mining in the world. As I mentioned, we’re the lowest cost silver producer, averaging an AISC last year of about $13.06, well below the peer average, which makes up the rest of those sections of this chart. Our balance sheet has been a focus. We had not the highest financial leverage ratio versus the peers out there, but something that we felt uncomfortable leaving unchecked. In the second quarter, financials, we announced that we had completed an at-the-market financing to raise $216 million to cancel about 45% of our 7.25% senior notes. That’s brought our net debt to last 12-month EBITDA down to about 0.7.

That’s helped somewhat by the adjusted EBITDA, but certainly from growing cash flows, paying down a chunk of our debt, which we’re confident that the remainder of our assets can generate sufficient cash flow to deal with. Our message very much is on a debt repayment basis. The equity dilution is done. We’re not intending to raise more equity to address the remainder of that debt. I’ll talk to where some of that kind of cash flows could come from to help address that. Sorry. It wasn’t like a phone call in the middle of a presentation. On an ESG basis, we’re really focused on safety. We’ve got a good all-in injury frequency rate of under two. We’ve launched a program called Safety 365: Work Safe, Home Safe. That’s really helping bring that attention to working safely at our sites into focus.

Certainly, Keno Hill is our newest mine, so there’s a lot of work there to develop that culture around safety, but we’re making really good inroads there. The Safety 365 day involves a day where all senior management goes out to all the various sites to really anchor home the importance of working safe. Also, some really good stats in our sustainability report, which we filed earlier this year. Now getting into our operations, a little bit of history there. We’re running at around 4.5 million ounces in the second quarter, up from about 4 in the first quarter. We’re tracking very well to our silver production guidance for the year. Gold’s also seen a nice uptick in the second quarter from the first quarter. Again, you know, well positioned there.

We produce, you know, a decent chunk of lead and zinc, and I’ll kind of get into later in the presentation how much that means in terms of revenues. AISC, you’ll see on the silver cash costs, we’re actually negative on cash costs and just over $5 on a silver AISC. It’s on a byproduct basis. One of the biggest kind of wins we’ve had is the gold credit that we’re realizing at Greens Creek. That’s really helping to improve costs. Our gold division or the gold AISC and gold cash costs that you see on your slide there, that’s related to Casa Berardi. You’ve seen a really nice improvement quarter over quarter, a $600 improvement on both gold AISC and gold cash costs. We’re indicating to expect some further improvement on cost out of the gold division or specifically Casa Berardi in the fourth quarter.

Capital fairly consistent, but you do tend to see a little bit of an uptick in Q2 and Q3 due to the warmer months of our portfolio and that being associated with the construction season. On Greens Creek, as I mentioned, it’s our flagship asset. It generated $69 million of free cash flow in the second quarter, over $100 million in the first half. It’s tracking very well to guidance. It’s generated 4.4 million silver ounces versus guidance of 8.1 to 8.8 million in the second quarter. We also bumped up our gold production outlook for this asset to 50,000 to 55,000 ounces and lowered our cash costs on a combination of one, the expectation of higher gold production, but also the expectation of a better gold price being realized versus budget. It’s got a reserve life of about 12 years. It’s a home to a lot of innovation.

We’ve improved silver recoveries since 2008 by 9%. We’ve bumped up the throughput by about 25%. We’re being a little more focused on the quality of the tons coming out of the mine now, but still, you know, an absolute juggernaut of an asset. Since we’ve owned it, it’s generated over $2.2 billion of free cash flow by June 30, 2023. Quite an impressive asset. It’s got a long ways to go. This just speaks to a little bit around that improvement. Left-hand side of the screen, you’ll see the improvement in throughput over time. On the right side, it’s a mix of how we’ve improved silver and gold recoveries. Gold recoveries have actually improved even better than the improvement on the silver recoveries. We’re really benefiting from that this year with the elevated gold price as well as the silver price.

Skipping down to Idaho, Lucky Friday, our second best asset with a 17-year reserve life. Silver is the primary metal with significant lead and zinc byproducts. It generated, it’s not as big of a free cash flow generator this year. There’s a bit of a reinvestment there and some surface infrastructure and some other projects associated with tailings. We don’t have that sweet gold byproduct like we do at Greens Creek, but still, at these silver prices generating very healthy margins. Q3 was noted to probably be the weakest quarter for this asset all around these capital projects, specifically the surface cooling project. It takes away a little bit of hoisting capacity, but otherwise, it’s a fairly consistent producer right around 5 million ounces. It did just under 5 million in 2024. It’s tracking nicely to guidance this year.

In the upper right-hand side, you see that for the next decade, we expect about 50 million ounces or thereabouts, 5 million ounces a year. It’s got a long ways to go, and it should be a pretty consistent producer for us. One thing that’s really driven that is the adoption of underhand closed bench mining. This is an underground mine. This is a depiction of this new mining method here. The little bar chart kind of looking thing in the bottom right of your screen kind of walks you through how this mine progresses with a side view as well, just above it. It not only makes the mine safer, but it also makes it way more productive. The cycle of between setup, blast, and mucking was much more frequent before we adopted this new mining method.

Now, after the blast, which releases about 90% of the seismic energy in the first 24 hours, once the miners return into a safer working environment, they can muck out for about two weeks before having to set up the sequence again. It’s very efficient. That’s why you’ve seen this dramatic improvement in production from a little under 3 million ounces of silver a year to the current kind of run rate of around 5 million. That’s really the secret sauce to that success. Keno Hill, this is our newest mine. We’ve added a lot of disclosure on this one with our Q2. We felt the market didn’t fully appreciate what we saw. There is a lot of kind of doubt with this asset. If you go back to that slide that shows the grade, it’s 950 grams per ton silver equivalent.

Amongst the highest grade silver mine out there on a silver equivalent basis, it’s got a 16-year reserve life that keeps growing, even though this is still early days on this asset. It has not hit nameplate. It has not hit commercial production. It’s really new. We did probably rush it into production under old management. The idea was to kind of build it as we ramp it up. We’ve come across some problems, but we’re committed to finishing it off, as this line chart shows in the upper right-hand corner. As you get out to those years where the tons per day hit nameplate, at these kind of metal prices, it could be generating about $100 million of free cash flow annually.

Our acquisition price on this asset, which remember, it has a mineral endowment similar to some of these much more expensive deals that we’ve seen in the space, was around $120 million, and then tack on about another $80 million to get rid of a silver stream on it. Our all-in acquisition was about $200 million. It wasn’t quite done, but it’s self-financing. In a couple of years at full capacity, this thing can fully repay itself and then some. With a 16-year reserve life, it should be able to capture multiple bull markets. A great little asset. IRR at $30 silver is almost 40%. Even at $25, it’s 15%. It would still generate about $20 million of free cash flow at $25 silver. This is an asset that works in the good times and the bad, and that’s why we’re really committed to it.

Some questions have come about what are the First Nations like now that our neighbor, the Eagle Gold Mine, had a failure about a year ago. They like us. They like multi-asset, disciplined, executing companies that know what they’re doing. We also do a lot of reclamation work for the Canadian federal government that’s fully funded by the Canadian government in that area. That’s our ERDC program. We really are able to demonstrate to our partners, both government and First Nations and local people, that we know how to do it. We know how to do it right. We’re here for the long term, not the short term. Those relationships have really strengthened over the last year. Now, obviously, the path to profitability on a sustainable basis, yes, you know, kind of anything makes money at these kind of silver prices.

As you see there at the bottom of the Q2 column, we made about $2.7 million of free cash flow. Although we’re still building it, this thing’s actually making money for us. There is still some infrastructure to put in place to be able to support that 440 tons per day, short tons, or 400 metric tons per day on a, excuse me, on a sustainable basis, some permits to execute, but nothing that’s really, you know, hugely of concern to us in terms of a critical path function, especially the permits. We’ve also boosted up that permit team. We feel confident in the outlook for this asset going forward. It too will have a slightly weaker Q3 all around a power plant that supplies power to us through a third party doing some repairs that were planned in the third quarter.

It was captured in our original guidance, and it just means a slightly softer Q3 for this asset. Now, switching over to the gold division, Casa Berardi, it’s generating very solid free cash flow, almost $32 million in the second quarter. Gold prices continue to rise from there. This asset is kind of coming out of an investment phase in the open pit component of the story. If you recall, it’s both open pit and underground with a mill. The 160 pit, which is that little picture showing a part of it, has gone through a big waste removal campaign. We’re getting into a better waste-to-ore ratio, which means lower costs coming. We indicated those will kind of start to really show up in the fourth quarter of this year and continue to improve in 2026. It’s a combination of that. The underground’s fairly steady state.

It’s a bit of a higher cost component of the unit, but all in, you know, you’re looking at about an AISC of just under $2,000 an ounce. At these metal prices, you know, making great margins, good production. We’ve just revised up our guidance for this asset back in September to 90,000 to 95,000 ounces. We expect the underground to continue. This was an asset that we were running a strategic review on, but as the next slide indicates, gold prices have moved up about $1,000 an ounce, excuse me, from when we kicked off the strategic review.

Just to give you an idea of how somebody looking at this asset a year ago versus how they should look at it today, just the cash flow of running the underground to the end of this year, two more years of the open pit, that 160 pit, a year ago, you would have thought it would generate $140 million of cumulative free cash flow. At $4,000 gold, that now is $290 million. We were feeling that the market pricing of this asset through this process was heavily discounted to the reality of today. We opted to keep it and harvest this cash flow, which if you look back at where our debt is, just this non-core asset potentially could fully repay our remaining debt in just the next two and a bit years of operating it.

On top of this, our underground could continue out to the end of 2027, which would add further production at good margins, boosting all these lines higher. There’s some good opportunity here to, if we’re not going to get paid for it, harvest that cash and then potentially look to sell it down the line as a further dated kind of earlier stage project. We’re spending some exploration dollars this year. Greens Creek, about $9 million. Again, that’s our flagship asset. Keno, our newest mine, a little over $8 million. Interestingly, almost $5 million in Nevada. We’ll talk to that in a sec. Nevada is historical production for us, last producing about six years ago. Midas has a mill. It has a tailings facility. It has permits, and it has resources. We’re drilling there now. We’ve hit a new mineral structure that we announced in that Q2 earnings release.

We’re looking to provide a market and exploration update on that fairly shortly. Hollister is a stone’s throw away, easily truckable back to the Midas mill. It also has a resource. It does need a permit to discharge more water out of it. Fire Creek is refractory, maybe non-core to the portfolio. Aurora is past producing, longer dated, but very high-grade past production, like about an ounce per ton gold equivalent. Midas, Hollister, and Aurora are all historical production with a combination of gold and silver. We’re thinking that potentially the Midas restart could be five to seven years away and fairly low capital intensity, maybe around $100 million. That would be spread out over two to three years. This is an interesting area where we really see some potential significant value surfacing potential. We’ll probably be aiming to earmark a bigger exploration budget on this asset next year.

Just a little bit of detail around our Q2. You see that, you know, primarily focused on silver, 41% of our revenue, 42% from gold, and then, you know, less than 20% is lead and zinc. I mentioned copper. It’s just a really, you know, kind of a rounding error kind of component. It would make up less than 1%. Where our debt sits, it’s now sitting at $268 million at the end of Q2. In the Q2 release, you also note that we repaid from free cash flow our $50 million Canadian IQ notes. At the end of July, it was even down further. We did that early redemption on the notes in August. That kind of factors that in because the cash used to fund that was mostly raised by the end of June. There was a little bit that trickled into July.

You’d expect that to improve further with our Q3 results. It’ll be out in early November. A breakdown asset by asset in terms of our revenue mix. Cash costs, you see, you know, phenomenal improvement quarter over quarter, largely thanks to that gold byproduct at Greens Creek, good cost control at Lucky Friday. Those are the two making up these columns. As I mentioned, Keno Hill is yet to hit commercial production, so it doesn’t get factored into those numbers just yet. It has to, you know, kind of hit its stride before we start reporting cash costs for it. All four of our producing assets were positive free cash flow generating in the second quarter. That’s just a breakdown of our guidance. For the year, we’re expecting 15.5 to 17 million silver ounces, 140,000 to 150,000 ounces of gold on an equivalent basis.

If you’re comparing us to a gold company, right around 400,000 gold equivalent ounces. The summary of our AISC and then our capital spending. Capital, if you’re thinking about 2026, it’s probably going to be fairly similar, probably a little higher at Greens Creek as we start to invest in their tailings capacity, a little lower at Lucky Friday as we finish off that surface cooling. Keno, we’ve noted to be fairly steady state for the near term while we build out some of those permanent infrastructure projects. Casa Berardi, you know, fairly similar. The one thing we’ve kind of indicated is that the exploration spending is a bit low versus our peers, you know, as a relative to our revenue. You can probably expect that to bump up a bit in 2026.

I could talk about the silver market, but probably somebody else has, and it’s a pretty good, the one thing I would kind of focus on is this demand versus supply. If you combine them, you get the red line. We’ve seen a structural deficit in the supply of silver for, well, it’s expected to be the fifth year in the making this year, and that’s certainly helping support robust silver prices. As gold goes up too, there’s a pretty good outlook for the silver price. We like it, and we think potentially it could go higher from here. I guess, John, you want to switch over to questions?

John: Thank you very much. I turned off my mic because I was coughing a little bit. Everyone from the webcast is welcome to submit questions through the question box. It appears that Greens Creek and Lucky Friday are just humming along smooth. Is selling Casa Berardi financially challenging or impractical? Because a buyer, if they had debt financing, the banks might not, might require hedging or might forecast $3,000 gold or lower and spot’s $4,000, and you may as well just own it and enjoy it.

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: At the lower gold price a year ago, that kind of chart shows that at least in terms of how they may have been coming up with their value for this on the component that’s cash flowing today and expected to go out till 2027. There is a production hiatus for about five years, and then through permitting and development, the Principal Pit would kick on, and it would be like the next nearly decade of production on this asset. It is a fairly complex story to understand. That is why we opted to actually keep it and announce that in September. If you think about if this is the discount being applied to this portion of this asset, if something else was similarly getting discounted within the portfolio, you look at where some of the other comps are.

We’ve just recently seen a couple more big deals in the space where it seems like that discount isn’t as grand as what we were feeling. We opted to say, if we’re going to generate nearly $300 million of free cash flow, and if we extend the underground a couple more years, which certainly these metal prices support, we might put some collars on to ensure that viability, we could actually exceed $300 million, which could completely take care of our remaining debt. Then you’re selling a simpler story afterwards. It’s simply a permitting project. You could also have more interest in your price expectation on that as lower than the combined entity because you’ve sucked all the cash out of the near-term component of the story.

John: There actually could be more exploration and more potential than what’s on the books.

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: Yeah, and we’re actually looking, Rob, as I mentioned, and you mentioned you knew, I’ve known Rob for eons as well. He is really bringing a new lens to this company in terms of how to look at the portfolios, makeup, and the allocation and the potential. He’s very excited about Nevada. He’s obviously known Nevada extremely well through his time at Barrick and his association with the Gold Rush Discovery as well as Four Mile. Here, he’s seen potential of structures that have never been drill tested. This is probably an asset you’ll see us spend a little bit of money on next year on some early exploration work to flush out the potential. There’s also at these kind of gold prices, other levers we could potentially pull. The underground really, at $4,000 gold, has a very healthy margin. That could extend further.

We tend to not want to be like the old company and promise without doing our homework first. There are other things like it’s a pit. Is there a pit wall layback that could make sense to extend the open pit? The 160 pit is meant to be a tailings facility for the principal. If you made it even bigger, you’re just adding to your tailings capacity for that next project. There are different kind of levers to consider, but we need to do the work, the engineering, the financial analysis to decide what’s the best path forward for shareholders.

John: Did Keno Hill, is the challenge getting more tons mined and through the mill rather than grade or recovery?

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: Yeah, grade and recovery aren’t a huge focus, certainly not recovery. Grade to a point where you are putting in, you can see the upper right corner here, cemented tails batch plant. That’s being built this summer, and that’ll come online for next year. We’ll be transitioning to underhand mining. We’ll be working underneath engineered fills. It’ll make our mine, or there’s two mines there. There’s Flamin’ Moth and there’s Birmingham. Both will have this safer mining method adopted where you’re working underneath engineered fill. It’ll limit overbreak, so it’ll help with grade into the mill. Really, it’s around bringing up the infrastructure that allows you to take it up to 440 sustainably. You could potentially hit it now, but you could potentially run out of tailings capacity in 2027.

If you couldn’t get that facility’s next expansion completed in time, you could actually see a shutdown if you push the mine too hard today. That’s why it’s a bit about balancing that.

John: The mine’s output was restarted before enough investment and development was done to sustain the tons.

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: Yeah, if we continue construction for probably about another year before restarting it, you’d probably be in a better position. What also was a hindrance to us was that Eagle Mine failure. It did cause ancillary permits to stop being issued by the government. You know, it is the Yukon. You don’t have a 12-month construction window. That kind of was a further obstacle in terms of our success here. The grades there, the mine’s performing well. The mill performs well. It’s actually generating free cash flow. We’re committed to completing it. We just have to do it in a bit of a balanced order to make sure we don’t push any one component of it too hard and create a problem for ourselves while we’re kind of finishing off.

John: When you stated the reserves earlier in your presentation, that was for the four operating mines and excluded Montana, correct?

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: Yep. Montana is, oh yeah, I did actually, we didn’t address that. Go to slide 46. It’s got significant silver and copper. You can also see if you want to look at grades, if you go to slide, and I’m slide in the 60s. Here, there’s Libby. So you’re about 1.6 ounces per ton silver and about 0.7% copper. If you wanted to look at it as like a copper equivalent, it’d be about 1.22%. Pretty significant. This is an asset that, you know, we’ve just seen the FONSI issued by the U.S. Forest Service. There’s a press release on our website, you know, talking about that. It’s probably too big for us. This is a very large, you know, resource. You can see in tons, you know, we’re at 112 million tons. If you look at how that kind of stacks up to some of these other assets.

John: Oh, I lost my mouth. That’s the best project in the company.

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: Yeah, but it’s kind of too big to pay all the debt and be net cash and do it all yourself. I think having a partner would just help de-risk it for our shareholders and, you know, bring the capital required to put something like that into production into a bit more of a manageable state for us.

John: Assarco started up the Troy mine, which was an analogous silver copper ore body, a horizontal slab on your mountaintop as a room and pillar. It went probably deep. It ran almost 30 years. It was a very reliable mine. How much do you think, what scale of a mill do you think you have, and which of the two projects would you do first to feed the mill?

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: We’d probably do Libby first, just given it’s a little more advanced than Rock Creek. For the audience online, you basically, they’re fault offset, Rock Creek being the upper unit, Libby being the lower. One thing is there’s, and you’ll see in the news release, we actually think the fault that separates the two might not be eastern dipping. It might be western dipping. The mineralization might actually further extend there. That’s interesting because as you approach what we thought the fault was, the grade is ticking up. If the fault dips the other direction, the extension of the higher grade zone could be several hundred meters or yards bigger. There’s an added, by the previous owner there, the first steps, if we were to resume activity there, would be to dewater that, rehabilitate it, extend that, build out your drill bays, and then start doing additional drilling on this.

You could also confirm this whole thesis around the angle of the fault. In terms of scale, if you took that tonnage and just like, this is real back of the envelope, if you assume that you wanted it to support a 20-year mine life, divided that, took some conversion to reserve ratio and then took that, divided it by 20 and then by 365 days, it would be a fairly meaningful sized mill.

John: When you say fairly meaningful sized.

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: You’re still in Rock Creek above it, which you could bolt on.

John: Would a large mill be 10,000 ton a day, or what magnitude might it be?

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: Yeah, I think that math is about right. Just doing some real quick math. Yeah, somewhere maybe $12 million, $12.5 million. Depends on what converts into reserves, but you know, that is a fairly substantial sized mill.

John: The capital might be $500 million, $750 million, $1 billion, something like that?

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: We’re thinking it’d probably be north of $1 billion. That’s why, yeah, if it was a smaller chunk, you know, $500 million is probably something that Hecla could absorb financially. When you think about, you know, we generated over $100 million of free cash flow in Q2. If it’s over $1 billion, that’s where having a partner that also could be more interested in the copper. We’re thinking about ways to improve our silver exposure for investors. It’s about 40% silver, 60% copper. If we are somehow able to structure an agreement where we maintain exposure to a greater portion of that silver, you know, that could be a win-win for us in terms of remaining a top-tier silver, Canada and U.S. focused silver producer.

John: Are you FAST-41 designated by the federal government in Montana?

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: For this, not for Rock Creek. Rock Creek is not on that FAST-41. In fact, we actually have the most number of projects on the FAST-41 program. We have.

John: Libby is FAST-41.

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: Libby is, the tailings expansion at Greens Creek is, and the Aurora exploration project in Nevada is. We could start doing exploration on Aurora potentially as early as next year. We hopefully are able to start our tailings expansion project at Greens Creek next year. Libby’s already showing progress with the FAST-41, as the news release out last night indicated.

John: If current prices held and next year was a wonderful year, you’d have your debt pretty much paid off.

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: Yeah, by the end of next year at these metal prices, if you haven’t paid off your debt, you certainly would be sitting with a very robust cash balance that could be earmarked towards it.

John: It is very possible that as time passes, by the time you get permitted, you’re in a net cash position. I’m just dreaming out loud. If you financed a quarter of it from cash, a quarter of it from a royalty, a quarter of it with debt, and a quarter of it with stock, that would be a conservative structure.

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: Yeah, because our capital intensity really should not be highly elevated over the medium term. Our nearest new capital spend outside of growing exploration budgets could potentially be the restart of Midas, which is somewhere around $100 million. That wouldn’t be spent in just one year. That would be spent, it would certainly overlap two years, maybe even as much as three.

John: Let me just check the question box. We appreciate everyone’s attention and patience with the webcast. I don’t see anything. In terms of financial risk, would the company hedge copper, for example, to reduce risk in embarking on the Montana project?

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: We might. Historically, we’ve hedged lead and zinc. Right now, we’re only entertaining silver hedges, or not hedges, collars on a very short-term basis on Keno. You’re kind of 9 to 12 months out just to ensure this capital intense period relating to Keno is being covered so that we don’t have a disruption on that investment. Otherwise, we would never entertain, you know, hedging our silver in any manner, vanilla hedges or collars. Gold, you know, we might be opportunistic on gold collars relating to the component tied to the underground at Casa, just to ensure if we opted to support it going out till, you know, later years, putting in some collar structures to ensure, you know, a satisfactory return on invested capital is met.

For certain, like we’re not a copper company, so if there’s an opportunity to do something to help secure financing or de-risk the balance sheet with some form of a copper financial structure, we probably would entertain it.

John: Things are exciting. These metals prices recapitalize the company. Do you think the management team is sufficiently busy with your own projects in Montana, Nevada, Alaska, Colorado, Idaho, Washington, Keno Hill, Yukon, that you’re not looking to pick up grassroots exploration properties? You own a block of Dolly Varden Silver. Are you looking to pick up more projects and assets, or do you think the team is just working around the clock now?

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: That’s a good question. We’ve certainly, we’re the outlier in terms of major M&A this year. We’ve seen on the screen here the bubble chart shows all three of our peers have done a major transformative acquisition, and we have not. Frankly, we feel those acquisitions were expensive and, you know, helped by a robust metal price, but we tend to be a bit more conservative. Frankly, we see, as we’ve kind of hopefully communicated in this presentation, some tremendous potential within our own portfolio, Libby, Midas, Hollister, Aurora, to name a few.

I think if we do any kind of M&A, it will be, as you kind of hinted at, earlier stage, fairly low-cost acquisitions where the potential to add value for shareholders is there in spades with well-executed exploration that’s funded from cash flows and not dilutive funding that maybe a junior explorer has to dilute to raise capital. We’d be able to potentially absorb something like that and fund it from cash flows from our existing production base. That’s kind of how we’re thinking about it and really working on surfacing that value of our portfolio to get that valuation on an EV per ounce, trading more in line with our peer group.

John: I’m happy for all the progress. I’m happy that Rob joined the company. He’s a good man. We can see the debt repayment on the horizon quickly. You’re always doing God’s good work when you repay debt.

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: Frankly, that was kind of a decision of old management to have debt. We’re not really feeling there’s a need to hold debt for any reason. If we can pay it off and repurpose those interest payments towards exploration and value creation, that’s really the driving force of why we made a first kind of dent in it in the summer. We’re probably aiming to do a bit more, hopefully, in the next 12 months if metal prices remain robust.

John: Super. Mike, thank you for your time. Please send my regards to Anvita and Rob and the team.

Mike Parkin, VP of Strategy and Investor Relations, Hecla Mining Company: Will do. John, thanks for having me.

John: Thank you.

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