Hecla Mining (HL) 7 May 202020 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the Q1 2020 Hecla Mining Company Earnings Conference Call. At this time all participants are in listen-only mode. [Operator Instructions].

I would now like to hand the conference over to your speaker today, Mike Westerlund, Vice President of Investors Relations. Thank you. sir. ahead, go Please

Good Hecla’s and and first conference operator. joining operations you us call. for quarter morning, you, thank everyone for results Thank XXXX financial

Operating the was results President available Blair, are and Kurt Senior of Lauren President website. Officer; we Officer; this release and financial call, Hecla’s along Roberts, that Chief Exploration; today’s President Phil Our morning today’s Financial news on and before Director Senior Vice have Keith market On presentation CEO; opened, with Hall, Chief issued Allen, Vice and Baker, Geologist. Lindsay Chief

statements management like Slides release resources of XX-Q these and Private involve the today terms presentation and forward-looking non-GAAP Any Act documents. in as in the measures risks made the by earnings X team come and our Reconciliations Reform for Litigation the are XX-K. X under cautions on found and shown also in Securities in

pass that, the call will Baker. Phil to With I

joining on Thanks call. you’ve Mike. Good This our had calls with X. know been to Slide their going on that from different. managements I’m many morning, call calling home. everyone. have I And thanks participants for is start

calling rest are the because essential we our we business of follow hygiene and continue operate our home, Lindsay to in to from that’s from people can never and requirements done. they which our know have mining us been, closed. and have has is if an While office office people Idaho is said the social beginning distancing that safe needed

with us. in distance We’re between office the of feet here sitting six

our and pandemic activated not it Greens be mines quarantine Creek on facilities. operating had weeks we’ve have any currently production. for mine I two among separate month other Our mines, five months we’ve had workforce. of representing for at the our On At been operation. measures quarantined that mines our two any that are community. a one We not one not has in case COVID-XX mean we’ve plans the of also XX% our taken over appropriate the has and a will workforce of Island Sunday, allowed four and the our that protect

Our financial of of down. extension, the and revolver draw position to with bonds first refinancing an the the and the improved and $XXX quarter to XXXX significantly the was in expansion XXXX million

In addition, lead with of our a silver no assures and puts on upside bought we production. the gold and minimum zinc that price limit forward contracts insurance on and

did is, point of here? get that we’re is we shape in So all and the that how a good

bells to bonds those we to to should the go earnings conferences February go week second with whether a refinance and the debating President off alarm schedule keep January of when to due point closed a market have than we way that efficient were do preparing been last early BMO year more the It little Morgan of investors. very and Hecla, our away. XX, for Trump China We or the were JP would a US the in maturity to meet bonds went Coronavirus. Miami. On were normal travel Novel from February and At our of week

good we travel restrictions at was yield get, international idea wouldn’t market. China, would for didn’t would When any in high We knew how slowdown bad from that point the a things interrupted. traveling have cause but just China be that

sheet. went the fortify soon our our February, issued we as balance in could financials bond of to beginning order So market we at as to the

that. all results the know You of

Now before Hecla nothing and course of has pandemics one. like this faced

and the restrict participation protect beginning in March So PDAC the was first to to of our step we workforce the travel. at took cancel

the first leadership is in part our occurred. lives was aware in State because United case of so were the I virus, known some it where the of the think this we in States reason Washington

So the by company. across implemented pandemic XX, March we our plans had

the progressed where were we to issued, orders are our reaching we today. response increased and government virus As

where We strong also might at out quickly and very got were fixed around fix we risk, work it. able reviewed our either figured that supply we chain we we or had confirming supplies to were how that inventory we if a

to on We as to and new and also Expect go entered forward into zinc. insurance protection gold our and us we sell silver our forward. lead to continue earn

by we And reinforces and prepared the on Slide X. of Hecla chart and think outperformed the have operate importance XXXX that in. gold even in the down silver April outperformance you shows had has we’re and draft for you rest XX% X I jurisdictions how of response our has XX% XXXX. updated outperformance outperformed the we GDXJ like since So a if we see in this Hecla that

the to With industry essential. declare safety health as of and that industries mining able to declared critical a including was US they mid-March Idaho Alaska, and US, Nevada and mining record excellent be in mining states allowed

work be to the forward we’ll go they world. the the normal or miners times. not have But various they one of primary safely difficult challenges in world. operations have are Jurisdictions back the see operations in with operations after we’re down. us In in not currently jurisdictions to major having work. and The sell restart of and most shut let in to other compared are ability weeks more the are places that These in back corners companies to, confident have US straight industries’ go mine difference I’m Quebec and to normal for going times. as that

have give limit the at our are since Hecla production is and So we to and our in virus because of you that suspended guidance Lots companies processes can these X, of risk mining go to operations immediate we procedures Slide estimates the XX% of indefinitely. sites. have one see XXXX difference. able

have to our and in able change, workforce If community. ours that caveat. We ways course, of respond do update circumstances the we’ll are we a protect and

are that silver highlighted on estimates the in going to silver. I’m focus first

increased to in the just change lowered for slightly We and production cost raised cost guidance guidance the COVID-XX. smelting, the lower lead costs of have prices as the that we some have the range fact reflect zinc by-products have and and

spend to manage to capital We’re cash our a going flow. little about less XX%

Gold gold a to for to production is production Berardi half due to the highlighted in then about full estimated and a of to months because having we Casa and and need change a idle [ph] month two above almost being impact. in be rate is month The lower a month production. the also virus

in capital should reduction to able original AISC achieve be the With our guidance. we

expiration spending blue of of XX% aggregate the so expiration in is So XX% we’ve and the totaled spent far. as and about and can XX% the see capital you lower capital

in achieve can guidance. new activities in slowdown we’re QX the we confident With our

like the second from So a ramp flows last quarter year bit the Creek. continued particularly the cash and in increasing year, of up the in Lucky of the production Casa performance with and fourth Friday, Berardi Greens we full the see reaching half

will that be think innovate even other attractive opportunity improve. we think operations things that our and an and in learned. enhanced drive through not more talent do bring the we’ve we see going mines to to improved for less in we business. become really to we places like We Finally, can are office pandemic see change the the but communication our new cost, weather as expenses We platforms ours only G&A way opportunity to travel

will to out break where and seems to the an and in silver possibly this want gold gap. of price the follow think environment we All close

So time. it’s really very exciting

with onto the I’ll pass And that call Lindsay.

good I’m and Slide Phil X. morning, Thanks everyone. on

and million with $XX have million XXXX. We upgrades following of bonds line that replace of as million. busy some We on with the with of February full ended a issuing $XX good of period the $XXX conjunction second million half year bonds what both year and new received our I early new million cash refreshed In the of due credit call quarter for the next bond new in in three-year to eight-year maturing rating our our and revolving used $XXX well cash successful agencies. from we in of we’ve a $XXX was amount XXXX

reassuring the us. itself Our which the to for bonds climate mature years don’t current finds in eight world is in

silver price. leading for up along metal prices, gold realized the As also price with gold the and commodity we of along cash able XX% making climate silver from to in than gold with to any this to with the benefit and lower present. US asset quarter. at revenues produce company the ability substantially This positions weather may a the have our cost the current [ph] total been which in economic in are increases the producer diverse mix, substantial volatility

lower can of see $X earnings lower XXXX significantly to to Creek. $X as charges Slide pricing zinc the were By-product part TC/RCs of to of an increased There a compared the planned from our are the first and business On to X, normal due revenues quarter favorable million and of Greens our treatment that previous from Turning at the mines flows. for as impacts of increase benchmarks based negatively benchmarks. were the reported in primarily year’s which performed you are number market X, quarter. Slide cash financial contributed while most that the million, that operationally

low result shipment under the of as customer the recovered We shipment quarter for an above item not of our we some our derivative that However Also recover. effectively at end price hedged $X line average our gain the million as charges million a spot lead $X through priced working when unrealized the the have was that of as to is at performing mark-to-market. within income to statement treatment contracts relative is settled the quarter. put we contract the sitting as which is last we’re provisionally price the in

of contributed at the of a cash to of swing that normal million and alone the Creek business part Greens is there that $XX there’s So quarter. earnings negatively some

per approximately their credits due a product incurred Creek the pandemic. we cost costs the year the to as due ounce of half For treatment forecast reasons well after as COVID concentrate to by-products forecast increased rest by some other as result pricing for and Greens silver guidance and cash additional charges $X.XX to of these half

the flow week [indiscernible] closure. the some by We that $X and due didn’t government estimate As million. operate March for mandated cash of earnings reduced we to

be $X of $XX While had earnings worth will million quarters recorded is coming in XXX,XXX ounces good produced ounces of the lost, but another carbon the these at there’s and circumstances. which that the first various to news cash the in not did affect at is inventory so due so not Nevada The million, in cash they we end sold is quarter wasn’t flows. approximately the processed that, quarter quarter

the Lastly increase production revenues in the activities as will on to line cost million which be full the costs related with the mine These is the our amounted Lucky associated in in respectively restart expectations. to with Friday, $X.X the [indiscernible] later year. progresses

over is strike years. we can been anticipate opposed to the last the performance on being pleased very better cash and flows, we’ve mine experiencing negative We’re as strike two XXXX in the with for

Turning to Slide X.

we balance. and As with outstanding to million started with net earlier, the new We bonds, revolver reduce some balance $XXX I year quarter the that outstanding. no of $XXX we issued we $XX and of million the cash bond. In million leverage $XX of of million end $X used stated cash repaid with as million

in incurred we refinancing. of to conjunction with of some interest our one up fees $X.X doubling another million million addition expense $X In plus due month in refinancing the

a in while amounted interest of million nearly in paid paid for our of cash otherwise ensure expenses that operations of original at $XX which million expiration XX% To flow for the a included our position, bond provided have we expenditure quarter, early cash decrease to almost to the we announced reduction the the manage $XX would in from by positive invested our help cash today $X.X and been we year at prices. [indiscernible] guidance capital Cash redemption second million the remain mines. on capital

precious liquidity, been million the quarter turned our and in address revolver we drawing finds the drew must risk. quarter $XXX is end So all business operate operations simply mitigate down world itself under to acting the on circumstances liquidity currently, our position is million. the metals the We well. to bonds have cash are In revolver the performing to during to and these in at increase $XXX out -

we as So pandemic. we cautious through take from comfort this and that. We remain move

normal. to will to revolve reduce new look more certain the We withdrawals of become

We’re just being risk-averse.

and active to our upside. floor, in silver puts employed full cap programs the gold release provided forwards, future hedge lead we guidance and today. but press for Lastly, doesn’t to the We set production it the a on future and zinc prices And production. hedging

maintain significantly continue to that potential want We silver and to and upside. to this we strongly can believe our gold move exposure higher

to financial beneficial it been has when us we to program over use prudent. is hedging our to risk, and our Our operations continue believe history hedging we mitigate of

to turn With over it Lauren. that, I’ll

to few pandemic give an update minutes Lindsay. I projects spend how faring to underway. we’re asset during the have you, update want on Thank a each we to on various and

gratifying most record We XX. continues improve injury accomplishment. Slide XX% past that shows on remarkable and X.XX an First is safety the all see six to frequency rate as of our currently can you a over which decline years, have a

for the days and onto coming Admiralty they the quarantine everyone onto COVID-XX Creek, At two of our for then which is XX we’re gotten operations. days Early return for days this a go one XX-day its started the we Island through response XXX we’ve their XX without of with threat hotels Then goes for a mine family. XX reportable renting. Island. injury Everyone to of a in Greens the record work, in quarantine years

We directly impacting the risk operations. believe our this significantly virus of reduces the

are there otherwise. in course but And site associated procedure, they face comparison of costs has the challenge. as potential pale this the remains this together Morale the Of to good. with a team really in come consequences

redouble capture the review time we for site to aspects good safety we’re clean the how and seeing taking of efforts, our future. advantage We’re can the this up

our full production pandemic the XX,XXX government estimate Casa, from ramp return in work last subsequent up to we and operations which shutdown At inventory this production. then us we lower into ounces has expected. allow to convert to as due the impacted estimate gold gold as of cut has cost It the process year’s the and to higher pour flow, We in production. missed didn’t relate cash the March

our Underground stockpile operating Until there some mining are profile touching then roads is ore the been are and pit been normal ramping has restart May so production Hecla for up levels. open we pit milling operations reduced his of in personnel risk open and mining. gear large impact. and about XX contractor at The servicing processing up But XX% deferred from no pit open we’ve a have costs. and

we XX expected. has to cash pandemic increase QX in in flow ramp Friday what of XX to need on up our recalled employees, and improve we’re hire and the about slowed Members to completed. throughput and to recovery. on addition, earnest The see Lucky continues strike were workforce and the about these Slide when plan who In now. reductions in initiatives new no cost have been We resume we reliability expect and they’re

production was and the first In to quarter due the is the production back we’re down We year shaft bringing the low the on retraining COVID-XX The hoist take in see focus half quite in progresses as as The quarter, not the which workforce. and increasing XXXX-loading particularly was project completed on XX production X about upgrade mine delay the the schedule. pocket budget for the Number days. will mined. fourth

begin to forecast is June Now conclude to in in and July.

the the full year. show our by plans production of end still us rate Our achieving

progress to ways work improve solid to in seen We’ve find Nevada it. we as

opportunity to facilities. us we or Slide their stoping recovery Type ore to mining reducing also larger Type It X Creek’s X test establish Fire the should goal of for a Nevada a more with As announced gold agreement the of at gives you mines the sample an with scale, This bulk XX,XXX-ton one refractory process ore. unit XX, see long-hole rate gold cost. refractory can processing on of

lower over half processing cost mining and gold facilities bulk mines’ we Fire Nevada unit plants of benefit. plan closer stop sample processing as can expect to well, the our the not are be structure economic way Midas anytime, We double to XXXX. the scale larger with in they’re second at mill case. a to the options proves the we sample The cost if this because and risk to is This self-funding reduce work Creek’s bulk explore a low on

Most plan infrastructure X existing Type from conceptual a gold mine rights, measures the support per completed and be mine maybe manageable selective be silver. existing water-related ton half a from to inferred This study provide from through ounce bulk that analysis and resource the treatment and realizing of water half for may importantly, mining suggest per are of XXX,XXX rates XXXX. also the water control combination path favorable. Results to the developed study processing results appeared economic value this about being the ounce development permits and refine rates. used test to will adequate the hydrology They a approximately about the from ton a managing Inflow plan to grades which the recently of and conceptual resources. bulk and ton test

to and we did Sebastian And third a forward work moving Zone. issue can with copper. metallurgical we the proper be for continue San sequencing Zone yield at Hugh it except to More El necessary gap results. avoid San it solution saleable not not the will a production the time, be is, quick more will we evaluate underway produce this on had possible the whether for What hoped believe make we with testing and is concentrate do At At we a decision the Toro. Hugh continue Sebastian. in to

all would the closing, proud how In I to of I say our teams like at of operations. am

and asset greatest the manage our and pandemic by risks professionally are which of and protected we work. people it, how the again have the we ensured they communities demonstrated our once people in they Our

back the I’ll to Phil. call now over turn

we’re so XX. Thanks Lauren on and Slide now

And in we a $XXX,XXX last locations. it’s targeting contributed we’ve done with [ph] communities, For had $X that most of similar a we’ve operate very XX the we banks. that far of contribution to going foundation other have Juno committed to in. new to the over years million charitable food something so now

[ph]. Silver in private Valley and Juno [ph] then largest employer and Lasar the the We’re

lots of but So we also lots have responsibility. of support

the that taking to community. support we’re seriously So

take I questions. before note more One

is Meeting going Annual to and be May we’ll on virtual a and meeting presentation. a this stays everyone year Our safe it’s to ensure XX have

then a interesting to chance have after for you teams the with meeting also think the we’ll I ends. in call you’ll find of managers and have one-on-one

next days. press with details for So that the watch few the out in release our on

with that, So up I’ll to things operator open questions.

comes [Operator with of Instructions] Roth your Sekelsky Capital the first from line Jacob Partners. question

you’re looks year. XX% you spend reductions Can bit backing a down more where on us both you see this from? give capital the by like coming just It for

will do Greens it’s Lauren, see Sure, that reductions. any want primarily its Berardi Casa further him to Creek indication? these pretty straightforward and give you

over thing rather long more units. We run. replace some that don’t are impactful of might big not things Yes, major. the any nature, rebuild It’s underway. We it’s have capital projects equipment than nothing that

guidance. So cost the order edges in around it’s sustain our nibbling to

Okay, this have Nevada, data updates year? a Should just see going second or that you expect the And that’s is you we gold helpful. about program interim few more next on half [ph] a for into the talked to or over that then in sampling bit on. collection going quarters next internal

inferred there. trying to major have for we’re news make study economic early forward, things we up and forward as the we some have how an on things our plans Year, anticipate with quarter. third have of able at update. of second really think the We’ll more We’ll update I we what we’re resources of the have have formulate New quarter. doing that if to will in that’s be end move forward the the that end we to information at move probably is an we’ll that move an I on set what would

a It we forward As the move we we we add? pause, not have Nevada we’re work. said, when this that Lauren, going until to to confident. we clear can we’re when quickly plan started anything made said

very think. covered I Phil it well,

report mines and really earlier the what days. We the be the we’ll gold ore process plants that’s large start able our in to plants they’ll a will Nevada in are mining on Obviously, lot. and

to take us sometime expect in will until results processed to see the be accumulate it enough So to I so processing year. later wouldn’t

little this? do bit want why Nevada about would would to Lauren, talk gold a you

Sure.

a specifically were in So Nevada other companies they [ph]. sulfur a it. both displace good looking where State grades about quite they of process And costs. in they’re and couple want and selective of is aspects. they ore the high utilized gold for of process does But of they business One, their content for sulfur will want we supporting to have have The content independence Nevada those two, things. fuel

in fuel So on processing. of profit terms it make to costs. the it the they is then that displaces fact But advantageous them also the both

Okay, that makes sense.

program. potentially So by initial results preliminary out see of we could mine QX the gold

of of until results portion the it. won’t least, We in processing mining it. cost early At probably XXXX. from the have have the We’ll side

fair. see that’s Okay, you. to good It’s

that. to forward [Indiscernible]. Appreciated. Looking

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

right? Guys, can you hear me all

can Heiko. Yes, we

Thank Perfect. you.

in, Casa out my the beat you walk I But Berardi, of through had dial Sorry so can back got kicked it, me you to the steps take to to How us Current just call, Tyler just bottlenecks? operations long with there? maybe to everything restart that How estimates? resolved? your on it to how get compare does did long it take? undertook it assumptions your will apologies. And

comments and can make I’ll Heiko. few a through. run maybe Lauren Sure, you

we that you sure The looked exposed and tell workforce and were spent sort to had is back. areas Quebec were of - that some have and I of that back to coming we bringing the so would people not within very evaluating had that virus first we that people thing make aware virus been wanted the time at were that the prioritizing Heiko,

May, to that the how that thing. sure ramp to We’ll - of when him would so later until Lauren. order fewer We I - make Go sort back. people the we up had back sort we the also in a them arrive social we then and June. decision full not May final ahead, think middle and yet we bring the back of we maybe distancing of in facilities changed bring won’t made is we within I’ll people that early and initially And thing, see say that, have have contractor brought production

morning, Good Heiko.

plan. over the according a add it’s roughly so little week going far, a been ramp here to up and for we’ve back So to

Hecla level, working mine are As mentioned, normal cases that about from XX% working some personnel of from at site. staffing staff at in But number that our are Val-d’Or running XX% of terms or our the still in operating we’re included salaried to in the office. I home

We’re hitting marks. our

on schedule. pretty We’re up our ramp

rate say the our been would rotate little crews. But that at be several We’ve I middle. last through hitting going tonnage. bit run looking we or it’s the through as days to a bumpy

crews Phil which so in to they Some will more the from get can’t travel and the and have as our diverse full than I our rotation they manner those well. it’s up people. yet. people said, a to have comes back say coming back complement it because communities of to in of full others government a quite restrictions that But will mentioned range take of continues going workforce And relax far, some that’s would assuming communities

on pace good ramp We’re up we a by be and of should May. up the full production end

divided we’ve groups. into management And two the team also

segregated. kept teams management Right, so the we’ve

home that we had That in keep the and for of and whatsoever. and command events one two event number terms continuity cautionary that group, each from we’ve are function kind them staff, mine outbreak either measure, of far, have of Val-d’Or mines so are each but or half half office. of in number working them us protects at the in no it’s major got we’ve in a major some a we management So the and the the

weeks. this six about about up we about month a had think to ramp got a we’ve a for is, for and the shutdown So way

estimated aggregate six weeks impact. at Heiko, production In

living of been I’m little grasp I’m issues on the any because that mine Got is mean [indiscernible]. New to going bit. I on stuff obviously reopened the York. sanitation it. actually get getting that. a how Building here you very just this mean is to it’s trying a the that around equipment. any that need in And I fully sanitizers, process Mexico do maybe that’s impossible in jaded we covered I mean all mean first have I you is frankly gloves, lagging. because procure

chain it’s very a mentioned I the think And Heiko. demand process our Well at in a and inventory. as Right. situation, we early our supply look took Phil

some to to well transferred the around And chain and because of was things we pretty stocked internal another. And looked in and out than for places. meet things places One us. caught from the one PPE a supply most up we quickly the orders able our up sanitizer. we We beef supply were the have did access very has more have demand we’ve company bit in been and although

So we’re issue not there. any anticipating

So Heiko, it something supply, let you and I’ll I own have if my personal you. need me to send know

still FedEx’s here. work

in absolute quarantine, that. just, that or us just give an one savings meaningful you before gentleman so to And the a at the costs you have etc.? guys, during attendance, and then number of then given back estimate can is essential the in and that travel, get is you, last G&A for number Thank venture sorts? an do also QX You’re you. much. And appreciate and hotels [ph] And I your the Can Thank how stoppage Juno sustainable conference do is? you think you least it I there on queue. just guess just a the extrapolating how

Sure.

our we in how that. be couple and in up years two to the future with us through consider respect But a certainly to were out. comes cost some space, able to we we’re we’ll with to will offices quantify yet, leasing already opportunity our And permanently. of that the this provides we’re We that. So impact think might not still working we reduce looking office years. no travel reconfigure also G&A, are at And so, do

respect With the facilities. quarantine to

it’s it or course our a have month in in hotels activity, and the of reflective Juno industry have cost this so of We [ph]. order dollars our two that all magnitude is really quarters three we hurting in is million and of have total guidance. it, of a that’s The we well hotels and received of leased tourist community quarantine very so

good. so you, my much. safe. taking and Thank guys, stay Very for Thanks my questions

At turn Mr. conference the would like back Phil Baker. you. to I time Thank this to

you that than And sort thing we charges is, same ago. we are five we’re first ago out temporary, production said you operations. answer the the in Obviously, Okay, be call going that to Mike will And we took when and a material an you results the change year this four this of which we thanks rest the I which year have the year we very in is of some told is, questions. year, half is treatment like and available the run second year of fact the full of inventory, saw better is the half to hope year. of with much. this story had essentially the our I had the of a of some

So if Mike very of much. have questions. thanks hold you go I. or a Please

conference gentlemen, that and you today’s call. participating. for Ladies does conclude Thank

You may now disconnect.