Hecla Mining Company Price & Performance (HL)

Good morning, Kate, and thank you all for joining us for Hetler's fourth quarter twenty twenty four results conference call. I'm Andita Patil, Vice President of Investor Relations and Treasurer. And our earnings release that was issued yesterday along with our today's presentation are available on our website. On this call today, we have Rob Kichmiroff, President and Chief Executive Officer Russell Lawler, Senior Vice President and Chief Financial Officer Carlos Aguirre, Senior Vice President and Chief Operating Officer Kurt Allen, Vice President of Exploration and Matt Blackman, Vice President of Technical Services. At the conclusion of our prepared remarks, we will all be available to answer questions. Any forward looking statements made today by the management team come under the Private Securities Litigation Reform Act and involve risks as shown on Slide two, in our earnings release and in our 10 ks and 10 Q filings with the SEC. These and other risks could cause results to differ from those projected in the forward looking statements. Non GAAP measures cited in this call and related slides are reconciled in the slides or the news release. I want to remind you, if you would like to have a call with management, can do so by using the link under the section Virtual Investor Event in our earnings release that was issued yesterday.

I'll now pass the call to Rob.

Thank you, operator, and good morning, everyone. When I joined Heckler about three months ago, I began an intensive review of our operations and strategy I've now visited all but one of our mines. Actually, a winter storm delayed my trip to Kino Hill, which I'll visit in the next couple of weeks. And throughout these visits and my extensive engagement with employees, visitors and stakeholders I've developed a clearer vision for Heckler's Hecla. And some of the opportunities that are available to us. I guess what initially drew me to Heckler was its extraordinary legacy, one hundred and thirty four years as a leader in the silver industry, with high quality long life mines in premier jurisdictions. Now having seen our operations firsthand, I'm even more convinced of the company's potential. Our high quality long life mines in premier jurisdictions provide an exceptional foundation I have to say the caliber of our management team has really impressed me.

Our operating portfolio stands on three key pillars. Our cornerstone operations Greens Creek and Lucky Friday continue to deliver strong performance and robust cash flow. Kinahul represents our primary growth opportunity. Although its ramp up has been more challenging than I had initially thought. However, we have a clear strategy for achieving sustained profit of traction there. It will require time and strategic investment.

At Casa Berardi, we'd recognize that the mine hasn't yet realized the potential and during its acquisition. So while it has future potential, its capital requirements and management bandwidth consumption really led me to direct our team to evaluate all strategic alternatives to maximize shareholder value from this asset. [indiscernible] Looking ahead, focusing on four key strategic pillars and they're all underpinned by our commitment to ESG leadership. First, we're committed to achieving operational excellence through relentless improvement through implementing standard operating systems across all of the sites, investing in automation and advanced analytics, driving continuous improvement in cost control and building real time decision making capabilities. Second, we're optimizing our portfolio to maximize value. We've begun this with our strategic review of Casa Baradi and we're evaluating sensitive portfolio of exploration assets and investments to unlock value. So while organic growth at Keno Hill remains our primary focus, We're developing a strategic and disciplined M and A framework that leverages our core competencies create substantial value. Third, we're intensifying our focus on financial discipline and shareholder returns. We're implementing a rigorous capital allocation centered on free cash flow generation. And return on investment metrics with clear hurdle rates. This disciplined approach should strengthen our balance sheet and build financial flexibility flexibility and deliver consistent returns to our shareholders.

Fourth, our strategic focus on silver With the largest silver reserve base in North America and operations concentrated in Tier one jurisdictions, West strongly positioned to meet growing demand from green technology and renewable energy sectors. Our expanding footprint in these stable regions combined with our industry leading cost structure gives Heckler unmatched advantages in capturing new opportunities. While providing investors unparalleled security of assets, I think this distinctive market position really sets Hecla apart and warrants a premium valuation, particularly in today's complex and dynamic global environment. Course, these pillars is our unwavering commitment to ESG leadership in the mining industry, and our success depends on responsible environmental stewardship strong community partnerships and deepening relationships with First Nations and in fact all stakeholders. So let me highlight our achievements in 2024, which is detailed on Slide four. We delivered strong operational performance meeting our consolidated silver production and cost guidance, exceeding our gold production targets. Our strategic exploration program successfully maintained our silver reserve position the second highest in the company's history with particularly strong results at Kino Hill where reserves increased by 17%. We achieved record revenues in 2024 driven by higher metal prices and solid contributions from all four operating mines.

Most notably, our cornerstone assets Greens Creek and Lucky Friday generated $228,000,000 in free cash flow. And I think this robust performance enabled us to advance strategic investments in Keno Hills development, while implementing targeted improvements at Casa Berardi. And Russell will walk through the financial details in a moment. We've also evolved our approach to shareholder returns After careful consideration, we're maintaining our base annual dividend of $0.015 while supporting key priorities and that's investing in organic growth, strengthening our balance sheet and delivering reliable and sustainable shareholder returns.

I'll now hand the call over to Russell for a detailed financial review. Thank you, Rob. I'll start on Slide six. Our 2024 strategy delivered on three key objectives. Strengthening our balance sheet, reducing leverage and growing production. We achieved these goals despite operational challenges, which Carlos will detail later. Looking ahead to 2025, we're taking decisive steps to enhance our financial The key strategic decision was the elimination of our Silverlink dividend, While this wasn't an easy choice, we believe reinvesting in our organic growth opportunities will create substantially more shareholder value than dividend distribution. These freed up cash flows will also accelerate our deleveraging initiative. The strength of our core assets is evident in the $228,000,000 free cash flow generated by Greens Creek and Lucky Friday during the year. This performance continues their remarkable track record having delivered over $800,000,000 free cash flow This robust cash generation and associated EBITDA enabled us to significantly improve our net leverage ratio from 2.7 to 1.6 while simultaneously investing $215,000,000 of capital across our portfolio.

Over $900,000,000 during the year the 44% of that revenue coming from silver, 34% from gold and the remaining from base metal. Additionally, we received a small amount of revenue from copper during the year, the first time HEKLA has received revenue from copper and dec We also saw our realized price of silver appreciating nearly 23%, while our sustaining cost per ounce fully increased 11%. Helping our margin per silver ounce tube have expanded from 50% in 2023 to 54% in 2024.

This additional silver margin and higher revenue generated record adjusted EBITDA which continued to improve our net leverage ratio. As noted on this slide, we've made significant progress on strengthening our balance sheet and sheet and deleveraging the company. However, we're not satisfied with the progress made over time we've expect to delever fully from the revolver while also adding cash to our balance sheet. With the intention of bringing our net leverage ratio to And over a longer horizon, we expect to continue to reduce our debt on a gross basis to further free up cash flows to invest in organic growth within our operating portfolio. With our strong asset base and the growing silver demand, I'm confident that 2025 will prove to be another successful year in our investing in our assets and generating free cash flow. I'll now pass the call to Kirk. Thank you, Russell. [indiscernible] Greens Creek provides the stability and consistency in our cash flows and production.

The mine produced 1,900,000 ounces of silver in the fourth quarter and 8,500,000 ounces of silver for the year. Fourth quarter production was impacted by equipment issues and limited access to high grade high grade areas, but improvements in equipment and backfill rates in fourth quarter are expected to improve silver grades in early twenty twenty five. The mine operates across six zones and 45 areas yielding five payable metals and maintaining consistent annual silver production of 8,000,000 to 9,000,000 ounces. For 2025, production is projected to be between eight point one billion and eight point eight billion ounces Driven by planned main mine sequencing sequencing with lower precious metal grades and higher zinc content. Cost per ounce is expected to increase as it is impacted by higher labor cost, which is a trend we are seeing across all our operations and industry wide. And higher power costs as the hydropower utility that provides power to the mine undergoes maintenance and lower snowpack and precipitation levels fighting the use of diesel power for We are also increasing the capital guidance as we commence engineering and construction for the next dry stacked tail expansion to extend capacity through 02/1940. Our exploration program has sustaining the mines twelve year reserve life.

The mine generated $147,000,000 in free cash flow in 2024 contributed to its impressive $2,000,000,000 in free cash flow since production began in 1986.

With over thirty years of operational success, and substantial reserves ahead, The future of Green Street looks strong for continued growth. Moving to Slide 10, Lucky Friday had a record breaking operational year in 2024.

With the highest tonne of mine in mill, the most zinc produced in its eighty year history in the highest silver and lead production since February. Notably, these shipments were made while maintaining the best safety all injury frequency rate of 1.4 for a full production year.

The mine produced 4.98 ounces silver in 2024 with four delivering strong results of 1,300,000 ounces of silver produced at eleven eighty tons per day due to favorable mining sequence in Hayat grade. The all in sustaining cost for the year was $16.5 per ounce higher than guidance due to increased labor cost and contractor use.

However, contractor costs are expected to decrease in 2025 as positions continue to be filled. Free cash flow generation in 2024 was $82,000,000 including $50,000,000 from insurance receipts. As we look to 2025, we expect the mine to produce $4,700,000 to 5,100,000 ounces of silver. With all in sustaining costs similar to 2024.

The company's increasing plant capital investment to enhance the mine surface cooling infrastructure a key project to support consistent throughput as mining advanced deeper into the ore body over our seventeen year reserve life and to Hecla with the mind, zero discharge gold.

The mine's record setting performance after the 2023 secondary escape wave fire highlights the strong management team and their ability to navigate challenges second cornerstone operations, the mine is well positioned for another solid during 2025. With robust fresh cash flow, stable production, and ongoing improvements. This strategy combined with smart capital investment in a favorable geology positions the mine for long term success. Turning to Slide 11, Innerhill met its 2024 production guidance. Producing 2,800,000 ounces of silver despite facing operational and social challenges.

In fourth quarter, mill throughput averaged two fifty short tons per day, but production was impacted by a twenty five day melt shutdown related to the dry stack tailings facility permitting and ten days of power curtailments from Jukon Energy Corporation. Power constraints are expected to continue into first quarter and resolve mid-twenty twenty five when repairs to the hydroelectric turbine are scheduled for completion.

We have developed a clear two phases strategy to achieve sustaining profitable production at Kinga Hill.

The Phase one focuses on reaching and maintaining four forty short tons per day throughput by advancing critical infrastructure projects, including the cemented tailings back [indiscernible] water treatment facilities, dry stack tails, and mine development Despite permitting delays, these investments are key to future production growth. The Phase two targets increasing the throughput to approximately 600 short tons per day, which is crucial Four profitability at this remote operation due to the mine high fixed cost This phase requires additional interest Beyond technical execution, our success depends on continued to strain our partnership with First Nation in the Jucon government as a responsible long term partner. We are encouraged by the Yukon Premier's commitment to create efficiencies in the permitting process and support established mining partners.

We are seeing positive momentum in our partnership with Jukun government The Premier has demonstrated strong support through Working on allocating resources to address power infrastructure needs Working on developing a charter with major mines department.

Collaborate approach to operational [indiscernible] While challenge remains, including permitting for the Phase two expansion, positive momentum is building. For 2025, Kino Hills expects silver production of 2,700,000 to 3,100,000 ounces. And quarterly production costs of $15,000,000 to $17,000,000 dollars Production route is anticipated in 2026 as we approach Phase one target of four forty tons per day.

A significant milestone in 2024 was an increase of 17% in reserves to 65,000,000 ounces.

Highlighting the district's exceptional potential.

Kurt will elaborate on this exploration resource shortly. While we face certain challenges, our systematic approach to infrastructure development on the stakeholder relationships and growing resource base are building a solid foundation for Hecla Hills' long term success. Turning to Slide 12, Casavera already produced 87,000 ounces in 2024 At all in sustaining cost of $19.90 dollars per ounce. By mid-twenty twenty five, the mine will complete the transition to a surface only operation Focus on the 160 pit which is expected to improve economics and generate stronger free flow as the strip ratio decreases. Looking ahead, Casa Berardi's current production plan 2027 followed by a planned five year development period focusing on permitting infrastructure, the watering and pre stripping to develop two new open pits. The Principal and the West Mine Crown Taylor. While these future pits have significant free cash flow potential, the extended production gap has prompted the company to evaluate strategic alternatives for the asset. As announced previously in November. The review process is ongoing and an update will be later this year. I will hand the call over to Kurt to discuss our exploration results. Thank you, Carlos.

As you can see on Slide 13, since 2018, we have 99,000,000 silver ounces and increased our silver reserves by 49,000,000 ounces to $240,000,000 the second highest silver reserve in our one hundred and thirty four year history. As we mine more ounces every year, we are able to the silver reserve base through focused drilling. During the year, Keno Hill increased reserves by 17% Greens Creek nearly replaced mining depletion and Casa Berardi replaced production plus a small [indiscernible] Moving to Slide 14, our exploration efforts at Keno Hill continue to demonstrate significant potential through both underground and surface drilling campaigns. At the Bermingham Deep Target, we intercepted the widest silver bearing zone to date below the Northeast ore zone.

Evidence suggests proximity to a newly identified ore shoot where the structure appears to be controlled by an interpreted vein intersection, I'm really quite excited by these results.

At the Inca vein, we delineated over 800 feet of mineralized strike length Outstanding drill hole intercept results include 26.1 ounce per ton silver, 20.9% zinc, and significant indium credits. All were an impressive 14.3 feet width. These results further validate our exploration model and continue to demonstrate the district's exceptional mineral potential.

Slide 15 presents compelling evidence of our latest discovery at depth in the Birmingham system. The slide shows two key views.

A cross section of the Bear Vane system and a longitudinal section of the Footwall vein. Both sections are contoured to show silver grade times thickness values highlighting the robust nature of the mineralization. At the Birmingham Footwall vein, we've identified a significant new mineralized shoot that extends down plunge from high grade zones in the upper part of the vein. Runs parallel to the Arctic Fault and dramatically exceeds previous area. Intercepts received during the quarter show significant silver grades and widths in areas that were previously in as containing lower grade stringer mineralization and include up to 53.8 ounces per ton silver over 15.3 feet.

Our latest drill hole located 140 feet further to depth and a long plunge intercepted a wide zone of stream mineralization over 55 feet that contains two strong veins with Galena, sphalerite and variable amounts of tetrahedrite. While assays are pending for our latest intercept, the observed mineralization suggests further the structure remains open for expansion and significant potential for resource growth. These results continue to enhance our geologic understanding of the district, and reinforce our confidence in its substantial mineral potential. Each new intercept not only adds to our resource base, but also improves our structural interpretation of this incredibly well endowed district. And with that, I will pass the call back to Thanks, Good. As we look ahead to 2025 and our guidance on Slide 16, we anticipate our silver production profile to remain generally consistent with 2024. With production of 15,500,000 to 17,000,000 ounces, while gold production is anticipated to decrease as Casa Baradi transitions to only open pit mining. We anticipate a modest increase in consolidated cost per ounce driven by higher labor costs, both at Lucky Friday and Greens Creek, and power generation costs for a couple of months. Finally, our capital investments position us to maintain stable production at our core assets while advancing our growth initiatives.

Our capital spend should slightly increase compared to 2024 that's largely to sustain our production profile at Greens Creek and Lucky Friday. Or the Kino Hill and Casa Baradi, our investments are anticipated to bring future growth in production and flows. So with that, Kate, I'd like to open the call to questions.

We will pause first question comes from the line of Nick Gals with B. Riley Securities. Please go ahead.

Thank you, operator, and good morning, everyone. Guys, congratulations on the nice progress here in Q4.

My first question was that CASA Obviously, we're looking towards lower strip ratios and some stronger free cash flow in the second half. But wondering if you could outline the strategic review process and is there a targeted timeline in place? Would you look to an outright sale versus a stake sale? What are their considerations?

Thank you very much. Thanks for your question, Nick. We're looking at all options and that does include a potential divestment in whatever shape or form. We're also looking at really looking at improving our operating plans As you're aware, right now, we're anticipating about a five year hiatus between the completion of production from the F160 pit and the commencement of production at at the Princiapao Pit. That is a long lead time. And we don't really know what the gold prices are going to look like in five years out.

But at current gold prices, the Principal Pit actually produces some very, very healthy cash flows. So it's really a trade off between bringing value forwards through a potential divestment or or waiting it out improving our operating plans and looking at harvesting cash flows a little bit further down the road.

I expect we'll have a better, more coherent view in the second quarter.

Robert, I appreciate all that color.

Next question was just the net leverage ratio has declined pretty dramatically. Dramatically on the back of some stronger earnings. And I think I heard you reference a new target, but I just didn't quite catch it. So assuming metal prices continue to be robust and you're able to pay down the revolver How should we think about chances of increased capital returns and versus maybe building some additional dry powder for some of the organic growth opportunities you mentioned? Yes. Good morning, Nick. This is Russell.

As it relates to the new target, we what we've said in the past is that we have a ceiling essentially two times the net leverage ratio. We breached that ceiling We've been able to bring ourselves back in line where we're below that now, which and we've made significant progress on that deleveraging. We've always wanted to be under kind of a target of less than one time. So I don't think there's anything new there necessarily. I think we're just approaching our target. As it relates to cash generation, clearly getting off of the revolver, building some cash on the balance sheet will be one of our strategic priorities. But we also need to continue to invest in our business both the capital and you see that in the guidance that we put out yesterday. As well as the exploration because that is the future of our company. So there's a bit of a balancing act between building up paying off the revolver, building cash and as well as investing in our business. But I would suggest we would build up a cash balance while we're making those investments. And you saw us, we removed that Silverlink dividend because we do think that we have better opportunities internally than with the cash that we generate than we would Russell, thank you so much for all that detail.

One more if I could. What's the timeline for the maintenance of the hydropower utility How much did this change your cost guidance?

In general, in terms of timing, it will be sometime mid middle of this year. But we also see currently We actually are generating power at Greens Creek earlier this year and even currently now. So as a total, it's increased our cost about $5,000,000 from an as produced basis. Just to give you a sense kind of a sense of scale.

Got it.

Got it. Well, Russell, Robin, The entire team continued best of luck Thank you.

Your next question comes from the line of Joseph Riccardo with ROTH Capital Partners. Please go ahead.

Hey, guys. Thanks for taking the questions. And it's a a rough fresh air to hear words like return on capital investment instead of growth.

So on that note, The talk around casa is there a outcome that you would prefer You're talking about possibilities, but is there a preferred outcome Is an outright sale more favored because it's helping delever the balance sheet? Or is it something where if you were to sell it that kind of hurts production in the future. So you prefer to keep it. If we were presented with a compelling offer, an outright sale, we would use the proceeds to to continue to delever. That is important to us. The forecasting future cash flows, as I said, that's potentially more than five or seven years out. And while that's attractive right now, we'd be gambling on what the gold price would look like out then.

Yes, fair enough. And on that five year gap, I think you to be more like a three year gap. Is that just permitting that's pushed it back into the two? [indiscernible] [indiscernible] It's permitting. Permitting has been more challenging than our previous assumptions. And we are planning to go back on track, but that's the main reason is the permitting.

Okay. Fair enough. And then, over on Kino, With the power challenges to start the year, and I know Rob you haven't been there yet, but it's on the to do list. Any thoughts about what needs to change there to get the asset to be cash flow positive like are there any really big things you've already identified?

Yes. So the main thing is to continue our investments in the infrastructure. Right now we have a limit that's capped at four forty tonnes per day, but that's not really the endgame. We need to get to hundred tonnes per day, which and that's largely because of the high fixed cost that Carlos was talking about. So remote location the costs are higher than we anticipated.

Really the ultimate goal is 600 tonnes per day, but to get [indiscernible] we need to make the additional infrastructure investment so that's in the mill water treatment plant tailings power, camp space, all that sort of stuff and they all rely on new permits And so permitting has been a bit of a constraint. But we do see a pathway to getting to 600 tonnes per day. Okay.

And have you guys kind of run an internal trade off of potentially shutting it down temporarily until you get those permits? Versus continuing to operate it? [indiscernible] And if it makes sense to put it on care and maintenance and pick up the ball on another day, we'll certainly consider that. But right now, we've been encouraged by some of the discussions we've had with the Yukon government And again, if we expect to see continued delaying permitting, we'll reevaluate our position.

Okay. Thanks. I'll turn it over. But I have to say, I had been encouraged by some of the discussions with head and the reengagements with the Yukon government, not just the Premier, but the mining minister Yukon Power they will understand that we cannot be waiting indefinitely for permits.

Okay.

Thanks, Tracy. Your next question comes from the line of Kevin Ojalduran. Hey, Rob and team. Thanks for taking my question.

Picking up that Kino, kind of similar to the last one, but on the permits, what's right now your expected timing of receiving those permits? And then maybe once you do have those permits, what is the timing to get those Let me just start out by talking about the permit and then I'll defer to Carlos about the infrastructure. So want to back up a bit here, Kevin. We've made progress on the permitting, but the challenges do remain. We met with the Premier and his team in January and the Yukon government has acknowledged the need to keep the permitting on track and have responsible companies like Hecla He understands that we've been in business for one hundred and thirty four years and he understands that we've got a fantastic environmental record over at Greens Creek. And that we have the social license to be serious producers in the Yukon. And so that commitment is being demonstrated through several key initiatives. And so he's undertaken that we'll develop a charter with a major mines department There'll be an allocation of resources to address those power infrastructure needs. And really he instructed his department to have a more collaborative approach to finding some operational solutions and really try and create efficiencies in the permitting process for established operators.

Now obviously things had paused last year because of the heap leach failure at the Eagle Gold Mine, which we obviously don't own. And so while we're encouraged by this positive momentum in the partnership with the Yukon government, we're going to continue to engage with the First Nations And so permitting still remains a significant risk in getting to that 600 tonnes per day that which is the critical threshold to getting to profitable production But with the Premier's demonstrated support and he's encouraging words and the actions that Hecla be about to take, we believe that we should be making some steady progress towards our goals this year.

So related with projects, we are prioritizing the execution of projects in the next two years, which are now improved and sustained the Phase one, which is the four forty ton per day.

After that, of course, we evaluate which probably is going to take another two years to go up to the 600 tons per day mark. Okay, thanks. Appreciate the the color there. And maybe just on the cost at Kino, can you give us a sense of the proportion of fixed costs the cost you reported this quarter, what percentage roughly speaking do you consider fixed versus variable?

Yes. To give a specific percentage, it would be a challenging thing, but they are primarily fixed because if you think about the site itself, whether it be a remote operation, you've got you've got a charter, you've got a camp, you've got people rotating in and out, those sorts of things. And as a result, you will see higher fixed cost because of those And as Rob had mentioned, the way for us to overcome those will be higher throughput. Okay.

That makes sense. And then final one for me on the Lucky Friday CapEx. About how much of that is being allocated to the cooling project? Is that all the growth CapEx? And then then maybe as a follow on, how much of that is the mine development just in terms of trying to get a sense of kind of what the normalized capital spend would be on future years?

So the mine development of the Cefaya is close to $20,000,000 and the surface cooling system is like €13,000,000 for next year. So once we complete this project, in the next coming years, it's going to be a reduction in the capital for Lucky Friday.

Okay. Sounds good. Thanks for taking my questions. I'll pass it on to the next caller.

Thank you, Kevin. Your next question comes from the line of Heiko Al with H. C. Wainwright. Please go ahead.

Hey, Rob and team. Thanks for taking my questions.

Lucky Friday seems to be running pretty well on all cylinders here, but I mean ignoring the numbers for second, can you maybe provide a bit of color on what changes you expect to have at site in this quarter and beyond that could further improve efficiencies and production And maybe you could quantify how much you expect those individual factors to impact your production?

I mean, we're essentially halfway through Q1 at this point.

So, Hygo, it's a we're having a hard time hearing you on this end, but I think let me restate your question. You can tell me if I've got it right. Lucky Friday, you're right, Lucky Friday had a very good 2024, especially coming out of the fire we had. And we've mentioned on the call here that Hushman Group, I'll highlight, is a very good qualified group. So we do expect Lucky Friday to continue to be successful out in the future, kind of a base and consistency out in the future. I guess, what I'm a little bit I was struggling to pick up what your question was as it relates to what do we expect kind of in the near term of Lucky Friday?

Modify some of the efficiencies and production changes that we should expect to see in Q1 and maybe even beyond if you can? In other words, what is getting done and what has been getting done the last six weeks since the beginning of the year that may have not been impacted in the Q4 numbers? Hi, Go. This is Matt Blattman.

That's going to be a challenging one as you know as we go deeper and farther and farther away from our primary access, it's going to be harder and harder to efficiencies and improving costs. It's not to say they won't be there, but I don't think you're going to see quantum level changes. This is going to be continuous improvement slow, steady. Let's make sure this we see improvements from every change. And also remember, Lanky Friday hit record production this last year. It's going to be trying to beat your own record every year gets harder and harder.

In your press release, it states that the cost that Casa or the second half are going to be a little bit lower. But maybe just a bit of color where you expect to see us on a quarterly basis? And by then, by that, I mean sort of where should the analyst community model Q1 I guess, will be halfway through the quarter effectively tomorrow.

And maybe even Q2 versus the remainder of the year in in numeric terms and quantifiable terms?

Yes. Hi, Kiel. I'll start and Carlos can jump in and supplement where necessary. But clearly Casa Berardi right now is both an underground operation and a surface operation, right? And so mid year, what we expect for that underground to come to a completion because at that point, what we expect is that the surface of mine will be able to fill the mill. And when that happens, we'll remove the cost from the underground and then from the surface perspective, the stripping ratio will we're expecting that for that to come down as well. So as such, we should see less expenses from the surface. What I would say is that we don't give quarterly guidance and we don't do that on intentionally because as we do move through 2025, just like through 2024, things things change and we'll manage those as they come. And so as a result, I would say from a quantification standpoint, we wouldn't be able to give you any quarterly numbers necessarily, just that we would expect for the cost to come down in the second half of the year as we see that underground come and as we see the the surface expenses also be reduced as we see the strip ratio and the way solids come off and frankly those activities will be focused on the ore origin, the landline Is there anything you'd like to add?

Yeah. That's exactly right.

The two conditions is to need [indiscernible] We need to meet in the second half of the year. Which is the most significant is that the OpenPage is going to be capable to fit among the mill at maximum throughput.

I'll try to question a touch differently than If one goes to an open pit only operation, how long how many quarters of impact do you think It has for the cost savings to be fully reflected in the numbers.

So I would suggest as we see the underground come off, if we see the underground come off in the middle of the year, there will be some carry on expenses where we're determining how to go forward with the underground. And that would be continuing to keep it open for exploration, etcetera. Those decisions will continue to make. So I would say you'll probably see a fourth quarter that should be better than the third.

If you look at it from that perspective because there will likely be a few carry on costs as it relates to in the third quarter.

No, you got exactly where I was going with this. You very much.

Thank you.

Your next question comes from the line of John Tamezos with John Tamezos Independent Research. Please go Hey, Rob.

Good to see you on board.

Thank you.

As you're aware, the state of Montana passed a special purpose law related to your predecessor trying to delay the progression of Montanor and Rock Creek. Have you had a chance to meet with the Montana officials and what's the outlook for expediting those two projects? I've been admiring them my entire adult life.

Well, good question and you're right to admire them. I was immediately drawn to the Phenomenal Minerals Endowment 300,000,000 pounds of silver 3,000,000,000 pounds of copper at 0.7%. So the size of the prize has really got my attention for sure. Terms of the updates, we're basically going through a permitting strategy at the moment. So the Forestry Services Draft EIA for the Libya exploration project, that's in the final week of public comment. And there's been about 1,500 comments received And really the next steps, there's going to be thirty days for the Forest Service to respond to the comments. Then there's going to be a decision on the final EA issuance And if it's approved, then a fund fee will be issued and that will be followed by a forty five day injection period [indiscernible] thirty day objection response period. And depending on the nature of any objections received by the Forestry Service, The updated plan of operations for the project, it could be approved in Q3 I haven't met with them personally, but obviously we've had our team meeting with with the regulators frequently. So we're in that comment period at the moment, John. Concerning Casa Berardi, There's a great deal of Exploration activity, as you know, on the East West trend maybe extending from Cochrane and Detour mine in Ontario all the way toward Fenelen, Walbridge, other companies Maple Gold Mines, Astra has different projects Do you think in our lifetimes, there might be an major East West highway from Cochrane through the trend or North South highway To improve access which would lower the cost of operation at Casa Berardi Is it worth maybe idling the mine to wait for the better times when the neighbors catch up and it becomes a more thriving mining district?

It's an interesting concept. And if we continue to To hold Casa Baradi, we'd certainly welcome the outcome. I don't I don't really know, John. I don't know whether there'd be an infrastructure investment and who would do it and what the timing would be. But I certainly like the way you're thinking about it.

If I could ask one more and I'm not trying to take a [indiscernible] Planning a year or two ago But the camp in fixed costs at And the Yukon were well known before the of the stream Are the camp costs and the mining costs twice as much as expected? Also the silver price is better. Obviously like $10 an ounce. So it surprises me that we need 600 tons a day and that 400 tons today can't do the job. John, are again, I'll jump in and Carlos can supplement as well. But As we looked at the project, we knew that it would be a high fixed cost. I think that Ravi had made the comment too that the ramp up has has been more challenging than we expected. The infrastructure investment that we've that we've made and continue to make frankly, there's been some things that we that we are doing that we didn't realize that we needed to do. So I think from the cost perspective, yeah, that is one of the things that we Could have dialed in a bit better.

So the $10 announced good surprise on the silver prices and Keep in mind, we're we're still currently in that ramp up phase, right? So we're still currently building our infrastructure putting those types of things in. Certainly, the increase in the silver price is helpful. Right now, we're not even at that 400 tons a day. We have to get things in place for us to get the Okay.

Your next question comes from the line of Mike Parkin with National Bank. Please go ahead.

Thanks guys for taking my questions. You kind of touched on it with the Rock Creek in terms of the huge mineral endowment, Rob, are you thinking you want to kind of get your feet a little bit more wet on the exploration potential of the the American portfolio of exploration projects. Before you Hecla a review any potential sale there? It just seems you've got a plethora of projects and potentially a phenomenal market to be selling into.

Just your initial thoughts as you're a few months into the new role? Yes. Thanks for the question, Mike.

We're definitely not going to be throwing the baby out with the bath water here. And I do intend some time down in Nevada in the spring and summer when the rocks are exposed and stuff like that. And so I am excited by some of the opportunities Our exploration budget for this year, it is going to be constrained. And let me just explain that a little bit. So we've basically intentionally maintained our exploration spending below what I think are the industry averages for companies of our size.

And this is really a deliberate strategy and it's not a limitation. We've got a pretty robust pipeline of quality targets across our portfolio, many of them are in Nevada as you point out. But we're taking a fairly measured approach to exploration investment And it really comes down to strategic capital allocation. So you're aware that our mines have got really substantial existing mine life and that gives us the flexibility to time our exploration programs So given our current financial parameters, I guess, we prioritize the capital for other critical investments like Aquino Hill, but this doesn't diminish the quality of our exploration targets. I think the key point is that our exploration drilling levels they reflect careful capital allocation rather than any constraints on the opportunity And so as I said, we've got numerous high potential targets. And we'll systematically evaluate them as our capital priorities evolve But it's really a simple matter of optimizing our resource deployment in the current environment And I think that when we start generating more free cash flow, I think there's going to be a compelling argument for increasing our exploration investments and really advancing our best projects through Stage Gates and key decision points.

So yes, I'm quite proud about some of the projects in our portfolio. Are others that we've already identified that we probably won't be keeping But really the game as you know is to constantly upgrade the portfolio and not just have a cupboard full of dormant projects Great.

And then just recently, we've seen BC announced like a fast track permitting process. So you're getting any kind of indications that Quebec might adopt kind of something similar through their government that could possibly be a tailwind for cats with respect to the timeline there, if the future opens [indiscernible] I don't know the answer to that question, Mike. We are actually in the process of hiring a VP of sustainability.

And that person has extensive permitting experience and so we'll have a better answer for you fairly soon.

Great.

That's it for me guys. Thanks very much. Thanks, Mike.

I will now turn the call back to Rob for closing remarks.

Well, thanks everyone for joining us on this this call and we look forward to keeping you updated with our story as it evolves next quarter. Thanks and have a good day.

Ladies and gentlemen, that concludes today's call. Thank you, and have a great day.