Hecla Mining pany(HL) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for 2022 was $719 million, with a year-over-year decline attributed to lower silver prices and gold production [16] - Adjusted EBITDA for 2022 declined by$218 million due to lower revenue and inflation-driven costs [16] - Free cash flow generation from the three mines was approximately $110 million for the year [16] - The company ended the year with$105 million in cash and a net leverage ratio below the target of 2x [17] Business Line Data and Key Metrics Changes - Greens Creek produced 9.7 million ounces of silver in 2022, achieving record throughput of 2,500 tons per day in Q4 [20] - Lucky Friday reported silver production of 4.4 million ounces, with a 25% reduction in incident frequency rate and a 68% increase in ore production since 2016 [23][25] - Casa Berardi produced approximately 128,000 ounces of gold in 2022, with all-in sustaining costs of $1,825 per gold ounce, exceeding guidance due to inflationary pressures [28] - Keno Hill increased reserves by 33$10.25 to $11.50 after byproduct credits [45] Company Strategy and Development Direction - The company’s strategy focuses on large prospective land positions in the U.S. and Canada, with a commitment to silver production [11] - Investment in the Lucky Friday mine has led to a new mining method that is expected to double historic silver production [8] - The company plans to invest more than$30 million in exploration and predevelopment, particularly at Greens Creek [40] Management's Comments on Operating Environment and Future Outlook - Management believes the silver market will strengthen due to its role as an energy metal, with expectations for continued production growth [7] - The company anticipates setting new production records in 2023, 2024, and 2025 without significant capital investment [13] - Management expressed confidence in the exploration potential of the Keno Hill district, indicating a focus on development and ramp-up [33] Other Important Information - The company has a strong balance sheet, allowing flexibility in executing plans, including capital investments and exploration [17] - The acquisition of Alexco has led to increased costs but is expected to enhance the company's capabilities [56] Q&A Session Summary Question: Can you speak to the cadence of cost throughout the year? - Management indicated that capital spending is typically higher in Q2 and Q3 due to favorable weather conditions, and the lower cost guidance for Lucky Friday is attributed to higher production [51][52] Question: Do you have a target level for dividends in 2023? - The company maintains its dividend policy, with no anticipated changes in the near term, but has the ability to raise dividends as silver production increases [53] Question: What drove elevated costs in G&A and ramp-up costs? - Increased costs were primarily due to the acquisition of Alexco and higher incentive compensation accrued [56][58] Question: Can you clarify the production guidance for Keno Hill? - Management confirmed that there is no stockpiled material, but higher-grade material will be processed first, affecting production rates [60][61] Question: What is the expected capital spend across the four mines? - A normalized expectation for capital spend is estimated to be between $150 million to$170 million [62] Question: When will the Principal pit be operational? - The permitting process is ongoing, with ore expected to start being delivered around 2027-2028 [77] Question: What is the status of operations in Nevada? - The company is currently addressing unexpected water influx issues and is proceeding cautiously with investments in Nevada [81]