Good day, and thank you for standing by. Welcome to the Q2 2021 Hecla Mining Company Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there’ll be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Anvita Patil. Thank you. Please go ahead.

Thank you, operator, and welcome, everyone. Thank you for joining us for Hecla’s second quarter 2021 financial and operational results conference call. I’m Anvita Patil, Hecla’s Assistant Treasurer. Our financial news results release that was issued this morning, along with today’s presentation, are available on Hecla’s website. On today’s call, we have Phil Baker, Hecla’s President and CEO; Lauren Roberts, Hecla’s Senior Vice President and Chief Operating Officer; and Russell Lawlar, Hecla’s Senior Vice President and Chief Financial Officer. Any forward-looking statements made today by the management team come under the Private Securities Litigation Reform Act and involve risks as shown on Slides 2 and 3, in our earnings release, and in our 10-Q and 10-K filings with the SEC. These and other risks could cause results to differ from those projected in the forward-looking statements. Reconciliations of non-GAAP measures cited in this call and related slides are also found in those documents. With that, I will pass the call to Phil Baker.

Thanks, Anvita. Good morning, everyone, and thanks for joining our call. Hecla this quarter has delivered near record results on many fronts. We reported our second highest revenues, gross profit, cash flow from operations, and adjusted EBITDA in our history, as we capitalize on higher commodity prices with our continued strong production and focus on cost management. We reported a record realized silver margin of $19.60 per ounce of silver, as silver was our dominant revenue contributor at 40% for the quarter. At Greens Creek and for the company, we’ve now lowered our cash cost and all-in sustaining cost guidance again for the year, and Lauren’s going to speak to that in a minute. Our financial position continues to strengthen along with it, our financial flexibility. Our cash position has increased almost 2.5 times from the prior year to $181 million as a result of our free cash flow generation. Our financial strength is not new to this quarter, and even for the past few years. This is now our 39th consecutive quarter of paying a dividend. The dividend that we just announced that we’ll pay in September will make it 10 years. We have now returned to shareholders $72 million in common dividends. In the first six months of 2021, we paid 16% of our free cash flow in dividends. As silver prices increase, shareholders have the ability to participate in the incremental free cash flow generation with our silver-linked dividend, while we simultaneously maintain our minimum dividend payment. Now, on the next slide, I want to take a moment to talk about ESG because we published earlier this quarter our 2020 sustainability report, which is entitled small footprint, large benefit. If you haven’t taken a look at this, I would encourage you to do so. Key to understanding Hecla’s ESG, and this is on the next slide, is the fact that our mines are very small, underground mines that have been the economic generator or driver of communities for generations. When I say small mines, I mean small tonnage. The large companies in our industry will mine as many tons in a day as we do in a year. When I say economic drivers for communities, we’ve been the largest private employer for 30-plus years at all three of our operations. Because we’re small, we use very little energy, and most of it is hydro. Our greenhouse gas emissions are extraordinarily low, and I think the best in the industry. In 2020, we produced almost 2.5 times more silver equivalent ounces per ton of emissions compared to peers. The amount of water we use per silver equivalent ounce is 63% of what an average person in the United States consumes in a day. When it comes to the environmental impact of Hecla, think small. But when you think about the social impact, think big, as the largest private employer in small towns with jobs that exist for generations. Earlier this summer, we had a summer intern who started with us, and he’s the fifth generation to work at Hecla. Shout out to Scott Hogamier and his son. The jobs that we provide are jobs that provide more than a living wage. These are jobs that sustain and build communities. Particularly during the pandemic, the Alaska Chamber recognized this and named our Greens Creek operation as the Large Business of the Year for the leadership work that we did in 2020 during the pandemic. It’s not just providing jobs; we support communities and special needs through multiple programs that we partially fund through our charitable foundation. Looking at safety, our culture is safety culture, which has permeated all of our operations, with Casa Berardi being awarded the Quebec/Maritime mine safety award. This is the first time in that mine’s 30-year history to win the award. Finally, the metals that we mine are essential in this transformation to renewable energy, and Hecla produces 40% of the United States’ silver. Our Montana assets host America’s third largest undeveloped copper deposit with significant silver resources, both metals that are key to green energy. With that, I’m going to pass it over to Russell to talk about the financial condition of the company.

Thanks, Phil. Turning to Slide 7, propelled by strong production and sales from our silver mining with higher prices, silver accounted for 40% of our revenues in the second quarter, followed by gold at 37%, while zinc and lead were 23%. Our operations produced 3.5 million ounces of silver at an all-in sustaining cost of $7.54 per ounce, resulting in a record margin of $19.60 per ounce. With production continuing to increase at Lucky Friday, Hecla accounted for more than 40% of the U.S. silver production in 2020. Gold production totaled 59,000 ounces at an all-in sustaining cost of $1,419 per ounce, for a cash margin of $406 per ounce. With these margins on both silver and gold, we expect to see continued strong free cash flow generation. As we turn to Slide 8, starting in the upper left-hand corner, we ended the quarter with $181.5 million in cash, an increase of $41.7 million over the first quarter of 2021. Moving to the right, with our increasing cash position, we delivered a net debt-to-adjusted EBITDA ratio of 1.2 times, well below our target of two times, while maintaining a liquidity position of $411 million. In the bottom left, you can see that our realized silver margins have continued to increase as costs are controlled, and byproduct credits drive the all-in sustaining costs down. Margins are now twice what they were a year ago and similar to the first quarter. This margin, combined with positive working capital management, translates into free cash flow. This is reflected in the chart at the bottom right quadrant, which shows that over the past 15 months, we’ve generated a total free cash flow of $175 million. If current prices continue, we expect to continue our free cash flow generation aided by low cost and high margins. With that, I’ll pass the call to Lauren to go through operations.

Thanks, Russell. I’ll start on Slide 10. At the Greens Creek mine, we produced 2.6 million ounces of silver and 12.9 million ounces of gold at an all-in sustaining cost of $0.68 per ounce for the quarter. The mine generated $63.5 million in free cash flow this quarter, the fourth highest since Hecla acquired full ownership of the mine, as it continues to benefit from higher silver, lead, and zinc prices. In the trailing 15 months, Greens Creek generated $255 million in free cash flow by operating safely and consistently throughout the pandemic. Our workforce is nearly 90% vaccinated, and we are taking measured steps to return to normal operations. We are lowering further the cash cost and all-in sustaining cost guidance due to byproduct credits, lower production costs, and more favorable smelter terms. Updated cash cost guidance for Greens Creek is lowered to negative $1 to $1 per ounce, and all-in sustaining costs are lowered to $3.25 to $4 per ounce. We also are increasing our gold production guidance to 43,000 to 45,000 ounces due to higher than modeled grades. Moving to Slide 11, Lucky Friday is now operating at historical production rates after a successful ramp-up in 2020. The mine produced 913,000 ounces of silver and generated positive free cash flow of $14 million in the quarter. We are tightening the cash cost guidance for the mine to $7.50 to $8.50 per ounce, and all-in sustaining costs are estimated at $14.25 to $16.25 per ounce. We remain on track to increase metal production to approximately 5 million ounces in 2023. No significant planned outlays are required to achieve this goal, as the increase is driven by improving grades as we mine deeper. We continue to test and optimize a new mining method, which better manages the seismicity and has the potential to increase productivity at the mine. Year-to-date, approximately 75% of the production has come from the new method. As with any change in method, there is a learning curve, but we are really encouraged by the results to date. At the Casa Berardi mine, shown on Slide 12, we produced 31,300 ounces of gold in the second quarter at an all-in sustaining cost of $14.34 per ounce. Our focus on optimizing production has delivered results as we continue to see higher throughput availability and recovery in the mill. While our production stayed strong, we saw higher costs in the second quarter due to costs associated with the increased volume, contractor costs related to maintenance and optimization activities in the mill, and higher underground mobile maintenance costs. We are increasing our production guidance to 128,000 to 132,000 ounces of gold for the year, and our updated cash cost guidance for the mine is $1,000 to $1,125 per ounce. All-in sustaining costs are expected to be in the range of $1,200 to $1,325 per ounce. We remain focused on reducing and optimizing cost at the mine after seeing the positive results on optimizing production and throughput. In the trailing 15 months, Casa Berardi has generated a positive free cash flow of $68.4 million, and our ongoing business improvement activities are expected to reduce costs and increase cash flow further over the next two years. With that, I would like to return the call to Phil.

Okay, let’s go to Slide 14. This slide takes the cost and production guidance that Lauren went through mine-by-mine and shows what it is on a consolidated basis for 2021 to 2023 regarding production. You can see how we’ve increased the gold production guidance to 191,000 to 198,000. We’ve lowered our consolidated silver cash cost and all-in sustaining costs guidance. So now cash cost guidance is between $1 and $2, and the all-in sustaining costs are estimated to be $9 to $11 per ounce of silver. At current prices, we expect to generate roughly $15 per ounce of free cash flow from our silver operations. We’re also increasing our gold cash costs and all-in sustaining costs at Casa Berardi slightly, as Lauren mentioned. Our capital expenditures are expected to increase slightly, reflecting the repurchases of royalties that were outstanding in Nevada and at Casa Berardi operations. These were put in place before Hecla owned these assets, and we did that in the second quarter. Earlier in the quarter, we announced an increase in our exploration expenditures to $40 million and pre-development to $8.5 million. We will update our exploration activities in early September. Before I open the line for questions, I just want to thank our employees for their commitment to safe operations during this pandemic and for delivering very strong operational and financial results. With that, operator, I’d like to open the line for questions.

Your first question comes from the line of Heiko Ihle with H.C. Wainwright.

Hey, Phil and team, thanks for taking my questions. I hope you guys are all staying safe and well.

We are.

Good. In the release, you talked about the lower treatment charges, and you’re one of the first to really put it black on white like that. That’s nice to hear miners talk about it, but it leads to just sort of a follow-up from an analyst’s point of view. In your all-in sustaining reconciliation, it looks like your TCs had gone from $23.2 million in Q4 2020 to $15.5 million in Q1 2021, and now $13.6 million. I assume the answer is yes, but just to make sure, are you seeing the same thing going forward in Q3 and beyond? Or are there actually even more improvements? I mean, these are very stark differences.

I’ll let Russell answer your question.

Yes, Heiko. Essentially what happened is a lot of our concentrated business sold at benchmark terms, and that gets negotiated on an annual basis. The treatment charge, especially for zinc concentrate, dramatically decreased from last year to this year. You’re seeing a large change, most notably at Greens Creek because it has quite a lot of zinc concentrate and concentrate is exposed to the zinc concentrate benchmark term. I would say for the rest of the year, we’ll likely see it kind of like what we’ve seen for the first half of the year with the exception. If you recall, in the first quarter, we highlighted there was one shipment that was made at better-than-normal terms. We highlighted that a quarter ago so that folks don’t carry that benefit forward. I would suggest we’ll see the treatment charges continue as if kind of the Q2 2021 rate essentially. There are also some concentrate parcels that are sold outside of the benchmark so it can – we may move a little bit based on that, but that’s kind of around numbers that should be roughly what we see in the future.

Got it. That actually helps you given that Q2 was lower, right?

And you can get a pretty good feel in the second half of the year from just looking at our guidance.

Yes. Fair.

Nevada seems to be making pretty decent progress with Hatter Graben at Hollister and then the exploration that you’re doing at Midas. Any idea how much money you’ve invested in the area this year thus far? And is there a breakdown of the money that has been spent in Nevada that you’re willing and able to provide even just a little bit of granularity? Well, yes, we can – Russell has done a little bit of work on that recently. So go ahead, Russell with what you were talking to me about.

Yes. Essentially from Nevada – the perspective of Nevada, we’re becoming cash flow neutral from the operational perspective. We’ve invested obviously at Hatter Graben, the development and the exploration. I’m thinking about maybe a quarter to a third of that is sort of the $40 million that we’ve guided here would probably be spent in Nevada. From an operational perspective, we’ll cover the costs that we have as well as some of the exploration costs that we will invest in Nevada from that perspective.

The point is, Heiko, with that cash flow negative that we generated early on in Nevada, we have recouped that with the exception of the expenditures that we’re now making in exploration and the ramp development. We’re pleased with how things have developed in Nevada.

Okay. And I promise Russell didn’t make me ask that question because he just worked on it. Just so you know. Okay, I’ll get back in queue. Thank you, guys.

Thanks, Heiko.

Your next question comes from the line of Mike Jalonen with Bank of America.

Well, good morning, Phil and Russell. I just had a question. Phil, great news on Greens Creek, workforce nearly 90% vaccinated. What about Lucky Friday and Casa Berardi, what are their rates at?

They’re quite a bit lower in the case of Casa; we’re in the process of vaccination. It’s really about the availability of the vaccine in Quebec. They’re working, they’re above 50% fully vaccinated, and it’s increasing. In the case of Lucky Friday, it’s not dissimilar to the national average, the U.S. national average.

Is that around 50%?

Yeah. When you consider vaccinations and people that have had COVID.

Oh, what kind of steps is Hecla taking to encourage Lucky Friday employees to get vaccinated?

Well, it’s been an ongoing education process—that’s the primary thing that we’re able to do. We have all the protocols that people have to take, and until we have further vaccination, it’s really difficult to remove those protocols. That’s one of the reasons why at Greens Creek, I think the vaccination rate is so high, as we had this quarantine period that people were required to get through with the vaccination rate as high as it is, we’re not having to do the same quarantine. Lauren, anything you want to add to this?

I would say at Lucky Friday, Mike, we’ve done some work to encourage folks just through making vaccinations available at the mine site. We’ve had anyone who does get vaccinated receive a small token of appreciation. We’ve gone through those steps. I would also say, and reiterate what Phil said, it’s pretty consistent with certainly Idaho average rates. We really haven’t seen any spike or material impact because of the controls we’ve put in place, and we would anticipate that to continue going forward.

Okay. Well, thank you for that and good luck.

All right. Thanks, Mike.

There are no further questions. I’ll turn the call over to Phil Baker.

Okay. Thanks very much. I just want to remind folks that we have the ability to do one-on-one calls with us. Hopefully, you saw that in the press release, and that’s open to just shareholders, analysts—anyone that’s interested in Hecla, we’d be happy to have these one-on-one calls. I look forward to hearing from you. If it doesn’t work out for today, you can certainly talk to Russell, and we can set something up for some time next week. Thanks, everyone. Have a good day.

This concludes today’s conference call. Thank you for participating. You may now disconnect.