Hecla Mining (HL) 6 Aug 202020 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Q2 2020 Hecla Mining Company Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Mr. Mike Westerlund. ahead. go Please

financial This Investor operator. thank Westerlund, Vice quarter Hecla’s for conference Thank Good is morning of XXXX second Hecla's Relations. us and operations and President results joining call. you, for Mike and welcome you everyone,

and results Roberts, today's was those issued shown news could President risks our in CEO; SEC. and Any involve Phil President call, in Keith the the open, we before X this Slides results statements. this documents. on resource, and for cause available Lindsay term language release use that cited Vice to in These are presentation Operating Vice and made on Private Kurt Lauren and our our Reform Chief Chief Officer; and today's have Phil Financial Securities in to by will with cautionary and with and are Exploration; the release related earnings from Reconciliations of I Allen, pass Senior Act found President Hall, that, the Blair, our of Officer; and management slides financial morning come today Director market Our XX-K forward-looking along website. under projected of the risks Litigation in team of With the and Geologist. reserves Senior Chief On also non-GAAP these call Baker. filings forward-looking instead measures call XX-Q X statements differ Baker,

been we're it. new to is operating It's become reaction going this which for – the we've I’m X. speak And in pandemic, to to thanks everyone. morning, that be normal, Slide for and in we will Good prepared joining Mike. Thanks a clear call.

our have and operations. and workers, help communities, that the We protect the plans practices

have from in thanks colleagues made And see who all able mines our the at the and adjust out we've been go it what results, my second is. my to offices you quarter the to quarter As quickly. of

year COVID-XX, million the to higher quarter So with, were this more business, last flow of of or in silver essential to $XX we $XXX did higher an able million us repay cash declared of our free despite at combined first and revenues, enabling producing being we're we generate XX% prices revolver. than year,

Now I'm of quarter on on price, and focus on going I'm things: really let on Hecla the to going investment. an uniqueness first, Lindsay Lauren as the focus to and and the two just silver second,

the given growing gold monetary the So the negative especially stimulus, silver think the are prices are political U.S. the first physical we of uncertainty. dollar prices and prices, inevitable the backdrop higher. of of dollars on real higher and of continued trillions rates, And markedly weakness from stimulus

And relative and then gold generally, to the move have the even price to that of reasonable. silver saw gold of prices up the was silver so more. XXXX-XXXX, And XXXX, we approaching past price, even the But is of And price is, it goes gold price we silver prices the to saw starting at at I high ratio expect to so XXXX-XXXX. XX goes XXXX, the seen the experience, XXXX. again price declines remember. in it remember course, ratio the up are least in times gold. haven't seeing we we of see that clear XXXX we're XXXX XXX $XX the to gold these $XX the is again gold ratio gold/silver XXXX $X,XXX. when this XXXX, be go If to And and suggesting is that the would with XXXX more price significantly, $X,XXX by And higher, in in price half. And had a with of think is seen consistent where to bigger moves that's number What important gold/silver levels. gold when the silver

change silver have even the up while it to and gone There's price up reaction not And to want silver to everyone in lots of the of hasn't this seek additional most catch pandemic. result go They're I second normal. the not going to more expect which are policies the back to On going and for revenues, more parabolic, gone will us to to are that to reasons be governments negative pre-pandemic relative the up go a as be gold a regulated, So will past. cover. supply it Their is which relations the going think to negative. the that a is has to I like will in positive. tries thing unreasonable be agree are gold. to chain to a as will U.S. likely Labor going which be shortened,

than one does. is U.S. of known in buys producer in will to world, not the U.S. emphasize silver of mines company full only Hecla. we're capacity, one XX% few five these producer from doing, thinking of when the for we're Friday also should mines we forward-looking relevant and never silver is total. of more their because to produce three X% peers be think our next not the we are silver them We're the roughly operate it's produce all so next thinking than course the as to than silver from of primary when price. produce that the I'm all What reaches Peru, trying the in see such with about silver seven XX we're one we largest U.S. two-thirds while small not production, more produces U.S. The It's we're the mine Peru. producing but So strong percentage think XX% Mexico continue is much of and/or And remaining, dominates big that than I coming than, comes China. and two in either quarters. producers U.S. And of of silver about silver silver no three third to in about production about and the Mexico, silver world's years, all a States Peru, Hecla primary comments but There as this production. XXth diversified times just that United of miners. about the more almost – XX% X%. the mine companies few countries, all that that they're largest our important making countries it's a the the X% more the Lucky And China well The And recognized going silver more are Mexico

X% option U.S. fact, have – is of And relevant because scarce competitive, because best, lives its the third investor we of they're among have silver even Hecla investment much is unique costs it's the we that to that The scarcity. a the in world's not tenuous, so exposed when The and once It's the an U.S., are only a very mine only growing. of option. because mined one silver, strong. production the U.S. mine dollar really in the if even is scarce are is there's not low U.S.

XX finally, is projects scarcity far our going relative the diverted capital the with new invested an all the of XXX is should been been will recently production and of for government mines scarce makes silver are which are over modest. the that we dollar year, grow to structure have The into seen, that continue have the our be So scarce improve. investment combination of the so this, old requirements losses Hecla course because investment company's – U.S., the There's will assure we in future some XX long-life largely have largest a silver to flow Hecla resource cost years, we've tax silver our us in operation a as investors. future. the weaken opportunity reserve from to they've of to cash the The in unique the – coffers. capital because years for And by next future allow we’re not in last

the about as of brand investment vehicle. value Over Hecla I've the an years, talked

but think mentioned that in Hecla. XXXX was say many that silver they XXXX runs have I that about who that value, the story, dominant of or producer the in say it of into the to fact I I would was position not you realized invested brand the really people whole was silver has U.S. as the the may have I Hecla price running of that, the that

them pass talk to those so for And about to the Lindsay and two quarter. the call with Lauren things, onto I'll

and good start Phil, morning, Thanks, on X. Slide everyone. I'll

second $XX with noted, ending million cash the revolving Phil in quarter have on we and a million As $XX line of credit. strong drawn some

we the Quebec partner to of relationship going placement we a balance the million repay ensure risk us at notes. do July, we our determine the the Without pandemic we and credit invested plan how end we of affect value They have the Investissement now of on a sites. them. again private before at In to subscribing essentially until have mine of outset revolver been pandemic, recall by revolving the C$XX you to year. adequate operations for with As of that was being drew could line managed, in our Canadian down liquidity great the our

improving come debt-to-EBITDA makes uses be at ratio market when of very and our an Quebec lower funds Investissement eight the open rate future, the the into – year are than balance our sense, we times, net might bonds sheet. the repayment of purchases of it One to With X make of bonds. IQ funds interest bonds, with a well terms the and the notes comfortable as

to which particularly the with gold prices silver This benefit XX% positions strong and gold, also substantial our leading prices, realized in than to mix, able a XX% producer lower were we along diverse today. commodity the revenues with ourselves metal and quarter. silver margin cash available the silver a this in us, environment gold of to substantially silver the to the up find total company increasingly strong costs, with and we've been ability the significant As capture in and U.S. the commodity from the rising making produce asset

excess should flow to production the only see the free cash mind quarter Lucky costs reaches as end Friday X. that to full in for is eliminated. that generation the I've revenues of Turning year million, highlighted Slide are be by these $XX.X quarterly emphasize We

much hedging and price for all buy we'll on actual very a ounces. But derivative goes continue of XXXX, line this that been contracts amounts puts floor in a quarterly us queue statement. put production, to production and the saying to portion the silver Beginning for has of allow the million so provide programs the future in upside purchasing active past, they than those when puts base gold to the approximately beneficial environment. metals they prices to provided the are capture price, The loss were are the do our outlays we’ve future. Traditionally, in which our the included we gain and silver started in press and to the of lower prices information purchased June above basis, are to is gold silver importantly, in the for today. The hedged without floor our in in on us amounts positive future $X these income release million, we $X contracts in gold on have today. program Lastly, and of a

operations. you, financial With I'm to to quarter. this I'll So with over very turn we Lauren the it the And made now, talk to that, Lauren? over progress about happy

Thank you, Lindsay.

resident reliable the for a First everyone and most The technical mine job, as first SAG good. are over currently six the tell two this on setting, workforce cash operations many Island Unlike is pandemic complications job, of see expected, are loss and quarter. are operations XX we injury XX% grind last Greens without rent failure quarantine Access for their there are is At the day-to-day production remarkable however, one leading be after past circumstances pulling our XXX reduce while changes is employees as it frequency quicker are years the a change a the although is of caused the visited hotels services these that the and protection. from motor rate congratulate done situation mandated the has to adjust you Mine tests and COVID-XX to their is hat Admiralty required. as COVID-XX will X.XX, record a quarter. day Casa, Slide in safety are and years record of together the is during shutdown, a The my and and can shorten continue distractions Greens an returned dynamic to rapid response throughput the period remarkable, quarantine to the flow with results purpose. level high the on threat, must testing gaining the I the onto most to XX% in generation team not Casa by unique the families despite from not response job process pleased our gone XX well reportable We government year. when team. in we it's modify can I home, Creek, to strong and at pandemic operation. a in and face want of a to injury, allowed show it. the a Production quarantine managing have Residents our at the Casa normal all way in Early of be the this to is exemplary, I communities drawn us the X. everyone our for on I strong procedures they more COVID-XX the and come of mine continues we not to its week, grades Creek in to changes a on stress to operations XX, have thread off maintaining together are and to At started done. over going administered. than decline to days be we from Slide June could camp Casa plan which be which you many gratifying allowed underestimated. with managing which camp that

I'm on during beneficial come. years Friday slightly to to including is metal exercise, Slide production, our meaningful With it the well up improvements planned can like lot improvement say short-term fronts. a prices benefit is have make be the on we'll the This will many in quarters. mill to are improvement These in efforts, coming this that we’re instead back a an for pleased Stay and on note but Lucky mine XX that ramp high than opportunity not proceeding seeing in now. we especially are later times The now. to of continues tuned, more operation

the to accomplished additional hoist is little the three week proceeding it's this find that are place, made ahead tons. and on the Sweden in well year. budget work due improve production meets end are we mine, have this number in of Acceptance until our productivity I was through more workforce we the remarkable. And coming to we’re will we In topic We the changes by can Sweden countries travel reduced to after expected done about behind continue shaft requirements. in to Nevada, to It's was to from work quarter, mine, to pandemic, a XX% about project testing RVM initiatives will was say complicated completed ways we by The slowly meantime, contractors at us, the executed progress achieve year strike, machine We've on on tell full June, I and The of the work the quarters. the and during our restrictions real remain very easy in and multiple the as brought this increase plan COVID-XX. rate solid relying have expect on pursuing it. project With plan in on on overlook a from during the and two my project, two meaningful. long has the been you team. business to this it to upgrade a

can of be Slide you the collected see is XX, the this XX,XXX test have test we X Type targeted ore XX,XXX to bulk for that As recall sample tons third-party, on self-funding. expected with

forward modeled, view our from less far, how third-party seeing with which productivity So on agreement. Midas disseminated in standby, to We'll to far, Type ore costs performance than to Sebastian, metallurgical inflow, conditions, the plan we balance and fourth ore mill structurally and we expected. our than mining be composites and the all are good the expected line keep contract so San their to to controlled in third is water any idle grades should the a more what better the appears Initial was point hot of third-party change. is circumstances material XXXX, with ground are and in look be the the can quarter. conformed and unit At so the stop X the mining the plants, mill in quarter plan We of milling for processed good. produce by

to study of San acquired in XXXX. to regardless significant but We Sebastian continued there outcome use to given at operational has we expect to production be flexibility, production, the there. low The strategy return capital opportunities in we potential us GAAP investment a since it

of generated that veins We and great of minable It's closing, more. looking a postal have teams I have team right In will operations. cash say land and in Kurt future. substantial right Allen the package flows the the I'm and team the additional his would all find very that for our we I exploration expect here, proud that to like in code

are our pandemic the we to managing once call risks the Phil communities. people return demonstrated have the another professionals, and how true of Our and again I'll protect ensuring Baker. over they now one

Thanks, Lauren.

the open to line acknowledge Investor and well wish the we years call and with you eight that sure what just is he's news he'll is the go on for future. in He's near that this running our have questions, that can conference in doing him operator, friend almost With questions. to after last want we Hecla. Before of I leaving Mike's Mike Relations,

with Your Heiko Please from Wainwright. question. proceed question today line with the Ihle Instructions] comes your first of H.C. [Operator

Heiko doing? How It’s Wainwright. guys. is Hey from everybody

Good.

the Hey. and questions, whole taking plan on Thanks impact website of would it done. an pricing, of just and contracts using is right for your do quarter? cool your I the you for break of a think have current emergency COVID current it's pretty and year? so pretty be by kind, unique, to if derivative common, page well more you response remainder there, spot my on On And you the how right think what out website, going be the your

Heiko, impact the head, top do there's don't know, off the there. but if no that I Well, puts, our to respect we certainly of with can

– it's talking lead – the to with zinc. you're about respect really So really and

I'll you use that to $XX try the trend how and question differently. I I just million that, If off be? the this had am I line quarter, far going

of Well. that you Lindsay, do answering question, a because… way have

the Yes. the the puts, of because first with that put, of the with we you obviously from the they’re money, in price that in prices that the money, rising out the on on so it's million Heiko, quarter, as to $XX million as half money. the below if goes now that the first out we price they're of know strike because puts actual a reverse say, reversal the is quarter, $X the is of in recorded away puts have the

that put, put. you the happens because reversal of dropped, the for the that's of out goes as the of as know, it So away value prices of half million, $XX just nothing

buying we in Heiko or say the other $X a The million $X quarter is, of $XX million there's that amount puts. basically, million

base into watching hedging, but into on that. back maybe at few sales metal away more really so if can't that's after essentially June puts, trend million do, built the we already. carefully, $XX we're blind and we puts these come buy line gold that that So And which the the more we line silver but then and prices, market it'll a XXth, we bought goes

contracts anyways. financially on nothing a the queue, And liability derivative really sets the on haven't So on there offset getting us. – base any away the line settled you with in but set the mark-to-market yet, on going on terms that immaterial show up sheet we mark-to-market the our that programs, metal of up – balance forward of is there's sales in those the small liability

trend So million, $XX you can't obviously. line

Remote That's in then Vein Lucky that that's And Miner helpful. Friday, that Miner have you the – Vein a just clarification, for Sweden. stuck

You the oversee the on about in call talked this – it, stuff. you about you really – it without all could release, I can't just talked

you planned you Assuming towards it you whatever XXXX outlook? by. January impact actually receive it prior simply it it's your it call equipment fiscal by need pre-strike have Xst could production old not equipment, Or Would don't get you rates? and as the operational use or the the to day

Yes.

RVM increase modifications remember same a The where So to be mined way think have the would throughput. equipment, could people. improve our it, that have we mine able we the plans test always with is been to same RVM

in at in future, And over to we'll so our go, in and the continue not it's to it's then bring Friday, or then advance RVM we'll to the the Sweden, fundamental it when test Lucky it's production anytime in and XXXX we'll ready but plans. been it never

So up upside. is all, at us Lauren… not the it's delay holding

it. Got what That’s looking I was for.

Good Heiko, it’s Lauren. you, for Yes. morning,

plan exactly about we're and It your should upside our remote, it. XXXX what RVM. and strictly said on safety not think Phil long-term also we're on as viewed the optionality how be dependent don't To is machine rely monitoring but question as it. productivity upon on the plans I

get updates. we video weekly calls, have We

it's So is and made. we're ground, on but appreciate, we progress same you'll the quite are not the engaged staying as as being engaged being

Very you helpful. safe. all. Thank Stay

Thanks, Heiko.

next Fields of line Matthew question Bank the comes proceed Your York. with your of from with America, question. Please New

a your reasonably at Good I your premium your in you – I’m bonds luck to just pay a eight to why a – Mike. premium – next similar pretty five help me… year Hey significant Why Congratulations, just retire debt endeavors. rate? would in year debt future trading wondering par. with everyone. at are

just is when buying such let it We'll not and premium Matt. back high at a appropriate. you, buy interrupt So bonds appropriate me it's

won’t do So until the are we right. conditions that

can is for is limitation can either proceeds it there But see of use how the no Casa or on much the new general how I corporate know be a much purposes. Quebec limitation Berardi be and and I indenture on much And didn't in can how other? be for CapEx that investment the

a certain amount an commitment is to of at our with make amount plans. which at do to spend consistent Casa We a of Casa, capital capital

So do. to that to doing planned add? had Lindsay, we anything we're not anything not

there's restrictions Yes. no C$XX No, on million. the Matt,

And kind can Okay. you indenture you of want do makes that under your whatever with it proceeds basket RP looks too? those like

Yes. Correct.

Okay. for All thanks thanks luck. here. again, right, years very good Mike, much. And your all And

Your with next question of Please comes with question. line the Turnbull your Trevor from Scotiabank. proceed

just And Westerlund, to different as guys. somebody thank become to we're thanks just else. you that say dealing mentioned, It's wanted so to used Yes, very you be part hear, to as Mike with. well to talk company the have going to to of

your wondered for underground So on was bullion And Phil the these the I might from opening Generally, if might to pits. about up have of benefit get silver in how a wondering I and price in Hecla Hecla the my outlook. mines kind rise metal just from from comments due don't gold the opportunities perspective. development way sensitivity was project question just with And higher have open prices the to prices. perspective that following you

in prices otherwise to that opportunity, there them you San it had been even differently things where to an way Casa hadn't year the these at like do versus metal ago? open they're have the Sebastian then way at pits, are starting a is pit opportunities up past on open in some or a at due up you the and there underground open call to example, developed, in perhaps stuff? And Nevada, anything the is For of look

Yes.

generate So going look, lot a Trevor, more we're flow. free cash to

the sort of You that look margins have. at we

do more with margins, allows with do things as as So We'll exploration. cash those other us it make with to well flow, that it. investment

existing that we're position that it We close pay a where to to coming policy have policy in dividend a being the start will out.

Mexico. And number for Sebastian, is San Columbia, that a Quebec, that going British of assets of developing be Washington Colorado, that we that Durango, inventory have uses large have. different additional to part of margin Nevada, we State, there's So the

lots we've things yes, So of yes, of the got front answer in is us.

come And Is it mine there again, kind to more first? stopped anything open kind is kind of style. that San you used of of just life exploration to down Sebastian and or economically like on that dependent more pit working there back

exploration it – we comment on but more don't There's that Toro Kurt, yes, area well, why do El should the could that? South. the we to that think vein, whole you

and Toro for East, the Yes, there's lot veins. additional potential a certainly from the of West the El vein to

the vertical, you reverse saw going to the identified As And the probably and some doing. in it's to drilling a there. vein short resources continue figured that there. it release, out we're press circulation build work to new all get We've take

guys. Okay, great. Thanks

the will Mr. closing I And turn now to call back Baker for remarks.

an Okay. Well, tomorrow or Lindsay, up for have We've like if remind me. opportunity you'd with I'll thanks to calls just you set everyone. that a conversation Lauren for morning.

or Mike to You directly. us then, to our can call certainly for or find reach you calls encourage can would those you that in press release and out we I

Be day. thanks good So Have safe. a much. very

conference Thank participation. concludes And this today's call. for your you

may disconnect. now You