Hecla Mining Co/De/ Q2 FY2025 Earnings Call

Thank you for holding. My name is Liz, and I will be your conference operator today. I would like to welcome everyone to the Second Quarter 2025 Hecla Mining Company Earnings Conference Call. I will now turn the call over to Mike Parkin, Vice President of Strategy and Investor Relations. Please proceed.

Thank you, operator. Good morning, and thank you all for joining us for Hecla's Second Quarter 2025 Results Conference Call. I am Mike Parkin, Vice President, Strategy and Investor Relations. Our earnings release that was issued yesterday, along with today's presentation, are available on our website. On today's call are Rob Krcmarov, President and Chief Executive Officer; Russell Lawlar, Senior Vice President and Chief Financial Officer; Carlos Aguiar, Senior Vice President and Chief Operations Officer; Kurt Allen, Vice President, Exploration; Anvita Patil, Vice President, Finance and Treasurer; and Matt Blattman, Vice President, Technical Services. At the conclusion of our prepared remarks, we will be available to answer questions. Turning to Slide 2. Our cautionary statement slide. 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 2. In our earnings release and in our 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 will now pass the call over to Rob.

Thank you, Mike, and good morning, everyone. Turning to Slide 3. Our strategic vision remains focused on four key pillars grounded in ESG leadership that position Hecla for sustainable value creation. The first pillar is operational excellence. We're starting to implement semi-automation and advanced analytics across our operations. We're standardizing our systems and processes and improving mine planning to drive efficiency gains throughout the organization. Our second pillar is portfolio optimization. Our Casa Berardi strategic review has progressed well, and I'm pleased to report that we should be in a position to update the market in the coming weeks on a path forward. I also want to address the recent acquisition activity in the sector. I believe the best opportunities to add value for shareholders are through deals that focus on earlier-stage assets versus acquisitions of well-defined producing assets that are already being fully valued in the market. So while we will continue to evaluate potential opportunities as any prudent management team should, at this time, we see more compelling value surfacing opportunities within our own robust project pipeline. Our third pillar focuses on disciplined capital allocation, prioritizing high-return projects while strengthening our balance sheet. We're structuring our framework to prioritize free cash flow generation with clear return on invested capital targets. This means that every dollar we deploy must meet analytically derived return hurdles. Our effective execution on the ATM to delever $212 million of the $475 million long-term debt while minimizing shareholder dilution is a reflection of our capital allocation strategy in meeting these goals, and Russell is going to speak more on this in a moment. Fourth, we're committed to maintaining our silver market leadership. Our high-quality operations averaging over 14-year reserve lives, which is double the peer average, operate exclusively in low-risk jurisdictions. While we strive to achieve these pillars, we're also continuing to aim to be an ESG leader in the silver sector through environmental stewardship, strengthening First Nations partnerships, and maintaining safety excellence. Turning to Slide 4, I want to walk you through the strategic recalibration at Keno Hill that demonstrates our disciplined approach to value creation. Our focus on optimizing Keno Hill has confirmed that it is a core asset capable of delivering strong returns, even at conservative metal price assumptions. The asset meets our investment hurdle rates at $25 per ounce silver and approaches self-financing capability at current metal prices. The key strategic decision was revising our production target to 440 tonnes per day, down from the original 550 to 600 tonnes per day baseline. This isn't about scaling back; it's about optimization through improved ore quality control, overbreak reduction, and cost control. This throughput level delivers superior returns while preserving our expansion optionality. We've identified mining capacity as the primary near-term production constraint, and we have high confidence in achieving our target through systematic capital deployment, including cement and tailings plant construction, waste dump upgrades, mine development programs, tailings capacity expansion, and water treatment infrastructure enhancements. This measured approach gives us high confidence in achieving our target of 440 tonnes per day while maintaining the flexibility to expand when the conditions warrant. As we turn to Slide 5, let me walk you through the compelling financial case for our 440 tonnes per day optimization at Keno Hill. The economics here are particularly strong. Looking at the table in the upper left of the slide, at $30 silver, a significant discount to current spot prices, Keno Hill will deliver a 35% IRR over its reserve mine life. This return profile is well above our investment thresholds and demonstrates the potential quality of this asset. Even under our conservative case at $25 per ounce silver, the project would generate a solid 15% IRR from January 1, 2025, onwards. The 16-year reserve life provides another strategic advantage. This longevity has the potential to capture value through multiple metal cycles. As illustrated by the red line on the chart, we expect there is the potential for particularly strong free cash flow generation in later years as the mine reaches its steady-state production of 440 tonnes per day. Ongoing exploration success could extend the mine life, which could further enhance the already attractive returns. I'll now discuss the medium-term outlook for Keno Hill and some of the major projects we'll undertake to deliver the asset into nameplate capacity. Slide 6 outlines our systematic approach to ramping up Keno Hill to its optimized production level. Our production timeline demonstrates a measured de-risked path from current operations to 440 tonnes per day, which we anticipate achieving in 2028. The key here is that we're building Keno Hill with a long-term future in mind rather than rushing the ramp-up. This approach allows for sustainable returns to our shareholders while ensuring ESG excellence through our commitment to environmental stewardship and partnering with local First Nations. From an infrastructure perspective, our tailings storage facility will operate under Phase 2 through 2028, when Phase 3 will seamlessly take over. This sequencing aligns with our waste storage capacity and existing permitting framework, diminishing the risk of potential bottlenecks. Now while our analysis confirms that 440 tonnes per day meets our return thresholds even at conservative silver price assumptions, we have preserved valuable optionality. The infrastructure we're building can support expansion beyond this level should future conditions warrant. Meanwhile, our exploration program continues to deliver consistently by replacing depletion and growing our resource base. What we're accomplishing at Keno Hill is systematic de-risking while advancing the project towards sustainable, profitable production. With each milestone we achieve, we're increasing our confidence in the project's potential to deliver meaningful returns to our shareholders. As with any development project, execution remains key. Turning to Slide 7. The second quarter delivered exceptional results across multiple metrics. On the financial side, we achieved record sales of $304 million, net income applicable to common shareholders of nearly $58 million, and record adjusted EBITDA of $133 million, improving our net leverage ratio to 0.7x. We generated cash from operations of over $160 million and record quarterly free cash flow of $104 million. Operationally, we produced 4.5 million ounces of silver and nearly 46,000 ounces of gold. Our silver operations delivered cash costs of negative $5.46 per ounce and all-in sustaining costs of $5.19 per ounce. That's after byproduct credits. Casa Berardi's unit costs dropped by over $600 per ounce compared to the prior quarter, and Lucky Friday set a new quarterly milling record. On Greens Creek, strong performance year-to-date led us to make positive revisions to gold production and silver cost guidance, with the new guidance summarized on Slide 24 in the appendix of this presentation. I'll now hand the call over to Russell for a detailed financial review.

Thank you, Rob. Turning to Slide 9. Our capital allocation priorities center on strengthening our balance sheet, investing in our highest return opportunities across our portfolio and maximizing free cash flow generation. As we focus on these priorities, we're investing in organic growth. Notably, this was Keno Hill's first positive free cash flow quarter under our ownership. We continue to focus on deleveraging, having improved our net leverage ratio to 0.7x. Earlier this week, we initiated a partial redemption for $212 million of our senior notes. Additionally, we also repaid our investment Quebec notes totaling CAD 50 million from free cash flow in July. We're also progressing on portfolio optimization with strategic reviews of Casa Berardi and the disposal of a non-core exploration property and a non-core equity position. On the right-hand side of the slide, you'll note that our producing asset base generated over $100 million in free cash flow, a new quarterly record with all four mines contributing to this total. Moving on to Slide 10. Silver made up 41% of our consolidated revenue with gold increasing to 42% based on the performance of Casa Berardi and Greens Creek, in addition to the increase in the price of gold, while base metals made up the remaining 17%. With the increase in the silver price, we've also seen an expansion in our margins, which grew from 65% last quarter to 85% this quarter, with silver all-in sustaining costs at $5.19 per ounce after by-product credits. I'll discuss the details more on the next slide, but in addition to the performance of our operations, we took steps during the quarter to improve our balance sheet, resulting in our net leverage ratio improving significantly from 2.7x to 1.5x last quarter. Turning to Slide 11. Our strategic approach to raising capital demonstrates prudent financial management, as we utilized our ATM facility to raise funds for a partial redemption of the senior notes. We chose the ATM facility to execute this capital raise to minimize shareholder dilution versus traditional equity offerings, which have had discounts of more than 10% this year, whereas we executed the ATM at a price that is approximately 10% higher than the volume-weighted average price for the quarter at a minimal cost to our shareholders. This planned debt reduction lowers our overall future interest expense by about $16 million on an annual basis. We anticipate the interest savings will be reinvested to accelerate value-creating activities, including investment in our operations, expanded exploration programs, and strengthening the balance sheet. Our strong existing asset base provides us with confidence in our ability to service the remaining debt, even apart from using the proceeds from any potential asset sales and fund growth initiatives while maintaining operational flexibility. So going forward, we will prioritize other means for debt reduction before issuing more equity. I'll now turn the call to Carlos to discuss the details of our operations.

Thank you, Russell. I will begin on Slide 13. Greens Creek continues to be our flagship asset, generating strong free cash flow. The second quarter silver production was 2.4 million ounces, a 21% increase over the first quarter, with silver grades averaging 13.54 ounces per tonne. Total cost of sales decreased 15% to just under $59 million. Our second quarter silver cash costs were negative $11.91 per ounce and all-in sustaining costs were negative $8.19 per ounce, both after by-product credits. Better-than-expected gold production and higher gold prices drove Greens' strong cost performance over the prior quarter. The operation generated over $75 million in operating cash flow and $69 million in free cash flow. For Greens Creek, we maintained our silver production guidance, increased gold production guidance, and reduced cost guidance because we expect higher by-product credits from gold. The table on Slide 13 summarizes the guidance for the mine. Turning to Slide 14. Lucky Friday achieved a new quarterly milling record of over 114,000 tons, beating the first quarter record by 5%. We maintained consistent silver production of 1.3 million ounces with grades of 12.5 ounces per tonne. Total cost of sales decreased 4% to $42.3 million, with cash cost of $6.19 per ounce and all-in sustaining cost of $19.07 per ounce. The operation generated $20.7 million in operating cash flow and nearly $5 million in free cash flow. We expect the third quarter to be our softer production quarter of the year due to planned capital projects that will impact hoist availability, which was anticipated in our February guidance. Lucky Friday guidance remains with no change. Turning to Slide 15. Keno Hill's second quarter silver production reached just over 750,000 ounces at a milling rate of just under 300 tonnes per day as we continue ramping to higher tonnage rates. Importantly, we delivered $2.7 million in free cash flow in the second quarter, our first positive free cash flow quarter under Hecla ownership. The operation remains in pre-commercial production as the ramp-up continues and capital projects are executed. The cemented tailings plant construction work is progressing well, and we expect completion at the year-end. On Slide 16, Casa Berardi showed significant cost improvements over the prior quarter, with both cash costs and all-in sustaining costs decreasing by more than $600 per ounce. Second quarter gold production increased 37% to just over 28,000 ounces, driven by planned increases in both underground and surface ore grades. We expect the stripping ratio of the 160 pit to decline in the fourth quarter, with our surface mining contractor completing the mobilization. This will drive further cost reduction while maintaining full mill capacity. Cash costs in the second quarter improved to $1,578 per ounce and all-in sustaining cost to $1,669 per ounce. We expect to provide an update on our strategic review process in the coming weeks. I will now pass the call to Kurt.

Thanks, Carlos. Turning to Slide 17, I will give an update on the activities going on in Nevada. Historically, Midas produced 2.2 million ounces of gold and 27 million ounces of silver at exceptional grades. With a fully permitted mill, ample tailings capacity, and 30,000 acres explored, Midas offers potentially transformative upside. The 2020-2021 Sinter Discovery containing 169,000 ounces of gold and inferred resources hints at a larger untapped system. Active drilling is delivering results. Seven of twelve planned holes are completed and have yielded two new gold-bearing structures with visible gold. This is not from infill drilling or incremental extensions, but from areas located over 2 miles from the existing underground development and dense drilling, and that really is what makes this particularly exciting. These potentially emerging discoveries, combined with widespread mineralization indicators throughout the area, support the potential for a significant new deposit. A recent draft engineering assessment confirms the mill remains in good condition, requiring only modest capital to restart. Hollister was historically ranked as North America's third highest-grade underground gold mine, producing 0.5 million ounces of gold equivalent. Located within trucking distance of Midas' processing facilities, the large property shows extensive surface alteration and mineralization. The Hatter Graben resource anchors multiple high-grade expansion targets with additional potential at Santorini. Both assets feature proven high-grade production history, existing infrastructure eliminating major capital needs, and vast unexplored potential. With that, I'll turn it back to Rob.

Thanks, Kurt. Turning to Slide 18. Our 2025 strategy focuses on four key themes. First, we're focused on creating long-term value at Keno Hill by prioritizing permitting and project execution. Second, we'll continue deleveraging through strong free cash flow generation. Third, we're establishing a capital allocation framework to ensure smart organic investment. And fourth, we're rationalizing our portfolio with the Casa Berardi strategic review expected to conclude in the coming weeks. I now want to address why I feel Hecla Mining makes for a compelling investment opportunity. So please turn to Slide 19. Hecla's competitive advantage is evident in our industry-leading reserve mine life. Our average reserve mine life of 14 years is double the silver industry peer average of just 7 years. This provides exceptional stability and long-term value creation potential, allowing us to invest in these operations under the belief that we have more than a decade to earn a return on those investments. But not only do our mines have world-class mine life, they're also positioned in the U.S. and Canada, which gives us the best jurisdictional risk ranking of any of our peers. Moving on to Slide 20. We see another reason to own Hecla shares and what makes our portfolio unique. Hecla offers investors substantial silver revenue exposure, with about 45% of our 9-month 2024 revenue coming from silver, amongst the highest in our peer group. This calculation includes recent peer transactions on a pro forma basis. Our silver exposure has remained strong, with second quarter results showing 41% of revenues from silver sales. Our asset portfolio is heavily focused on silver, with both revenues and resources concentrated in this precious metal. Finally, on Slide 21, we compare Hecla to our immediate peer group on core valuation metrics. We believe Hecla represents the best value investment in the mid-cap silver space. We trade at approximately $1.60 per silver equivalent ounce of total resources, the lowest among mid-cap peers and at 1.3x NAV, which puts us at the low end of the peer range. The bubble sizes on this chart are equally important, as they reflect jurisdictional quality with larger bubbles indicating safer jurisdictions. Hecla's focus on safe jurisdictions is demonstrated by our bubble size relative to our peers. This undervaluation represents significant asset reevaluation upside as we shift capital toward high-return projects designed to unlock the true value of our mineral reserves and resources. I'm confident that over time and through continued execution, our true value will be better reflected in our share price. With that, operator, I'd like to open the call to questions.

Your first question comes from the line of Wayne Lam with TD Securities.

Maybe at Greens Creek, congrats on a good quarter there operationally. Just wondering what was driving the higher grades and the outperformance there in the quarter? Was that a function of positive reconciliation? Or were those higher grades anticipated as part of the mine plan? And then just wondering maybe if there's potential for that to kind of continue here? Or should we expect a bit of a reversion in the back half of the year?

So we are expecting to continue with similar grades for the remainder of the year. The main reason is good execution. We had additional areas available that had better grades, and that was the main reason.

Okay. Got it. And then maybe at Keno Hill, it seems like there's been quite a change in commentary quarter-over-quarter, maybe helped by the continued strength in metals prices. I guess last quarter, the commentary seemed to indicate that the 440 tonnes wasn't sustainable given the confines of the current permit constraints. So just wondering what's changed there that would enable you to reach that target? Are you anticipating more ore from Birmingham or Flame & Moth? Or just wondering what's driving the change in thinking here?

Well, we started the year with just Birmingham. We've expanded the Flame and Moth so we have a little bit more operational flexibility. We're also now focused on reducing overbreak, controlling dilution, and ore control, all those sorts of things. Anything you want to add, Carlos, on that?

It's just the proper balance between capital execution, permitting, and space for growth. So we are trying to balance all the components, and that's it.

Okay. But you have enough capacity on the back end to get to the 440 tonnes given the current permit constraints?

We won't be getting there this year. That will still take some time, but we do expect to see an increase next year.

Okay. Okay. And then maybe just one last question for me. Maybe on the debt. Just wondering in the context of record prices and a number of your peers being able to deleverage organically and buy back some stock. Did you guys feel as though the portfolio is not positioned to where the current operations would be able to service that debt? And then maybe just wondering if viewed in conjunction with the elimination of the Silver-Linked Dividend, has the capital allocation strategy changed here? Or just wondering why you felt the need to retire a large amount of the notes with quite a bit of term left on the debt?

Yes. Thanks, Wayne. The idea behind that was both the Silver-Linked Dividend and the interest that leaves the company to service the debt; those funds would be better served by our investors to be invested in our operations and in the opportunities that we have within our portfolio. So we took the opportunity to reduce the debt so that we could increase the cash flow and reinvest in the assets. You heard Kurt talk about Nevada. We've owned Nevada for quite some time, and we've been high on Nevada for quite some time. But the exploration there has been kind of in fits and starts as we've had cash flows. So what we're looking to do is really generate consistent cash flow so that we can then reinvest those cash flows back into those areas that will benefit our investors the most.

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

At Casa, you state in the release that the pit stripping ratio is expected to decline in the fourth quarter of this year, and that should be further reducing your costs. Two-part follow-up to that. First of all, we're halfway through Q3 next week. Can you provide a bit of color on what we should model for this quarter? And then maybe also quantify the improvements in the stripping ratio that you expect to see in Q4 and your current cost to haul that waste, please?

Heiko, this is Matt Blattman. There's a lot of pieces that are moving here, but one of the primary factors for the decrease in stripping ratio is the pit nearing the end of its mine life. As you go down deeper in the pit, your stripping ratio will just improve geometrically as it goes down. We started off the year somewhere around a 15:20:1 stripping. We're probably close to 10:1 at this point. And then you'll just see it completely decrease over the next 18 months until that last tonne of ore that comes out is probably 1:1. So we're probably looking at something like a 10% decrease before the end of the year, but it's just going to go slowly until we reach the end.

And maybe I'll jump in just a little bit. Right? Because clearly, we don't give guidance on a quarterly basis. We've seen the stripping ratio go down as we've progressed through the year, and you see that come through in the economics. We expect that as the stripping ratio will go down, we'll be able to reduce contract reliance, which we should subsequently see cost improvements from that. We expect to meet our annual guidance throughout the year. But clearly, we don't give that quarter-by-quarter.

Fair enough. And then the permitting process or the cost to haul the waste, any color on that?

I wouldn't expect a dramatic change. I mean, as we go deeper, the distances are going to get farther. The biggest improvement we'll see is as we let the mining contractor go and mine with our own fleet, that will help. But like I said, the haulage distances are just going to get longer for us and not going to help.

Got it. And I get there is a strategic review process here. But I mean, with the permitting process for the new pits at Casa, how much time should we mentally be looking at for that to happen? And maybe just cash cost, like the costs that you pay to get this done, I assume are reasonably de minimis, correct?

Permitting is not a super well-defined process. It takes time. There are review periods, and there are backwards and forwards. What we've previously said is that there was going to be a 5-year permitting hiatus, and that would allow us towards the tail end of that. We would do some pre-stripping, some dewatering, and so on and so forth, getting ready. That's all we can say. We can't be much more specific than that at this point.

Your next question comes from the line of Joseph Reagor with ROTH Capital.

I guess first one back on Keno. On Slide 5 in the presentation, it shows that at the 440 tonnes per day, the free cash flow increases starting pretty much in 2028. Is that driven by higher grades, lower CapEx, or a combination thereof, just so we can model that out?

Joe, I can jump in here. It's a combination of a few things. You see some of the larger projects coming to an end at that point, so we expect some capital reduction. If you flip to the next slide, you'll see that there are some projects that will have to continue. We'll still have to continue mine development and those types of things, so it's not that capital comes to an absolute halt. As we complete the tailings batch fill plant and there are some water treatment capacity, those types of things, when those things come to a completion, you do see capital decrease. You'll also see throughput getting to 440 tonnes per day will scale up towards the end of the decade. So as a result, you should expect higher ounce production as well.

Okay. That's helpful. And then over at Greens Creek, it looks like it could have been an even better quarter. I mean, it was already a pretty good quarter for the mine, but it could have been a better quarter if not for maybe some concentrate that didn't get shipped out in time to count it. And should we expect that to get sold next quarter?

Yes, we've mentioned Greens Creek before. Sales can vary because we ship roughly once a month. The timing of shipments within the month can affect inventory levels; for example, we had a shipment in June early in the month and a later one in March, which led to an inventory buildup. It ultimately depends on when a shipment departs in September, which will determine if the inventory stays stable or decreases. Sorry, can you repeat that, Joe?

But at some point, it will be sold. It's just not necessarily going to show up in Q3, it's just eventually going to show up.

Yes, absolutely. We have to put together in one ship; we can have two or three different parcels going to two or three different customers. So we manage that process trying to both manage the inventory on site as well as getting ships in and out based on tides and light and when customers need it, etc. So it's a balancing act trying to get it all done. But we look at that and try to maximize revenue as quickly as possible.

Your next question comes from the line of Alex Terentiew with National Bank Financial.

Congrats on the great quarter. Good to see all your operations firing on all cylinders there. A couple of questions for me on Casa Berardi and Keno Hill. Maybe just starting with Keno Hill, I wanted to clarify your Slide 5; you've got free cash flow undiscounted cash flow expectations at different silver prices. And they state 440 tonnes per day. Is that kind of assuming your gradual ramp up to 440? Or is that hypothetical, assuming it was 440 in '26, '27, '28, etc.? I'm just trying to clarify.

Maybe we should have clarified that in that slide. That is a ramp-up to 440 tonnes per day. We would get to that 440 tonnes per day later in the decade, 2029 or 2030 in this scenario, ramping up to that point. So yes, I appreciate the question as we should have clarified that on the slide.

Okay. Okay. That makes sense. I figured that was probably the case, but yes, I wanted to check. And then just kind of related there, and I know somebody asked this earlier or a variation of it. Just on the capital side, I could kind of use that chart to help calibrate. But you noted a few things are coming off. Any big spending that we could kind of think about over the next two years to get to that $440 rate? Any major investments that have to be done?

Yes. Carlos is here with me, so he can provide additional details. We need to build some tailings over the next few years, which is outlined on Slide 6. We are currently working on the tailings batch fill plant, and that is expected to be completed next year. Additionally, we need to implement some water treatment, waste storage, and other infrastructure and buildings.

Yes, there are investments related to power distribution upgrades. So some of the projects are going to take over a year. Significant upgrades in the infrastructure are expected to maintain a similar level of investment for the rest of the decade.

Okay. Regarding the permitting for dry stack tailings, does the additional permitted capacity required in 2028 shown on Slide 6 only serve to maintain it at 440? I'm curious about the risk of a hard stop in 2028 if we don't secure the additional permitted capacity. Do we have some room to continue and work on the permits?

I guess I'll take that one. By the end of 2028, we will start to face a capacity requirement, needing additional capacity for tailings. Once the cemented tailings plant is built and operational, we can put more of the tailings underground, which helps reduce the risk of surface capacity issues. However, we need to have that permit in place by around 2029, and we are already working on it. This gives us some flexibility. Additionally, there is a limit in our permit regarding the total tonnes of waste we can mine, which is a physical constraint rather than a surface constraint. This permit expansion also aligns with the same timeframe, which is part of the reason for the gradual ramp-up to 440.

That makes a lot of sense. Lastly, regarding Casa Berardi, given the high gold prices, is there an opportunity to continue operations there for another 6 or 12 months by lowering the cutoff and processing more tonnes? Or are there constraints, such as permits or tailings, that would make the end of 2027 a deadline?

We started this year with a view of closing down the underground around May of this year. Obviously, gold prices have helped, and it's turned out to be an increasingly valuable asset. We've now extended the underground to at least the end of the year, and then we'll just see where gold prices are.

Okay. Okay. And last one here on Casa. Obviously, a very strong Q2. You've made 49,000 ounces from that mine year-to-date. You kept guidance. So I guess my question is, is there any upside to that number? Or should we think that production will come down in the second half of this year?

I guess I can jump in and answer that. We're working through a strategic review right now. As Rob mentioned in his comments earlier in the slides, we'll have something to share with the market in a few weeks. At that point, we'll be able to answer that question.

Your last question comes from the line of Kevin O'Halloran with BMO Capital Markets.

Congrats on the quarter. Just going back one more time to Keno. On the ramp-up there, can you give us any granularity on the trajectory of the throughput? Would it be a more gradual increase to the 440 tonnes per day? Or should we expect kind of more lumpy gains in throughput as you complete some of these infrastructure items?

It will be a gradual ramp-up. By 2027, we expect to reach around 330 tonnes per day, which is about 75% of the permitted capacity. After that, we will continue to increase to 440 tonnes. That's the plan.

Okay. Great. That's helpful. And then just final question for me, shifting to the Montana assets. Can you remind us what your current thinking is on how to advance those? I think you've previously been looking at a few options like bringing in a partner versus advancing it yourself. Is there any updates on your thinking there?

Not really. Our focus has really been on completing the Casa review. I have Dave Schenker here with me. We're basically in the final stages of the review period. In fact, I think that finishes next week. Can you fill us in, Dave?

Sure. Yes. We expect to get a finding of no significant impact on our permit application, and the objection period ended this week. The Forest Service will work through that, but we expect by I'd say, October timeframe, that we would have that plan of operations approved, which would allow us to begin to rehab the added in the portal and to begin the exploration work at that project. So we'll see what happens with the objection period.

This is primarily a copper asset, with a copper equivalent grade of about 1.2%. I would say that it's probably not going to be core for us, so we would be receptive to someone who's going to have a copper focus coming in and partnering with us. We do definitely want to participate in the upside on this because we see substantial value to be realized.

And that concludes our question-and-answer session. I will now hand over the call to Mike Parkin for closing remarks.

I'll make some closing remarks. Before we wrap up, I want to recap Hecla's value proposition. We offer unmatched jurisdictional security, especially in an era of increasing geopolitical uncertainty. Hecla provides complete operational stability with 100% of our core assets located in Canada and the U.S., eliminating regulatory surprises, policy shifts, and security risks that can affect competitors in less stable regions. Your investment will benefit from some of the most reliable mining frameworks in the world. We have industry-leading silver exposure. If you believe in silver's fundamentals, and you should, Hecla provides peer-leading silver revenue exposure. While we also produce gold, lead, and zinc, silver significantly dominates our revenue mix, and this could increase further depending on the results of the strategic review of Casa Berardi. When silver prices rise, our performance will likely improve even more. This concentrated exposure gives you high leverage to the metal during favorable supply-demand dynamics in the sector. We have decades of visible production. Short mine lives create investment uncertainty, but our assets offer something rare: multi-decade production visibility that extends well beyond typical investment timeframes. Our long-life mines not only yield returns next quarter; they offer a sustainable production platform that delivers value through multiple commodity cycles. This is not merely about speculating on future resources; it's about owning proven long-term cash flow generation. We have disciplined capital allocation. While competitors pursue expensive mergers and acquisitions in risky jurisdictions, we have intentionally stayed out of the recent consolidation frenzy. Our strategy focuses on creating value through exploration, not acquisitions. Our exploration teams consistently achieve mine life extensions and new discoveries, which is the most effective way to grow. We are also prepared for all market cycles. Our flagship mines, Greens Creek and Lucky Friday, are not just ordinary mines; they are robust, low-cost, long-life assets projected to generate cash even in downturns, enabling us to act decisively when others need to be cautious. When the next cycle turns and distressed assets become available, we expect to have a strong balance sheet that allows us to take advantage of opportunities while others may struggle with their higher-cost operations in risky areas. Ultimately, I believe Hecla provides what informed investors desire: jurisdictional security, industry-leading silver leverage, decades of production visibility, disciplined management, and resilient assets against market fluctuations. In a sector filled with risks, our approach is to systematically minimize variables that reduce value while maximizing exposure to silver's potential. This isn't just another mining investment; it's a strategic position in the future of silver, which is backed by the stability that comes from operating in the U.S. and Canada. Thank you for joining us today, and we look forward to updating you on our ongoing efforts to deliver shareholder value through operational excellence and strategic execution. Have a great day, everyone.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.