Hecla Mining Company

Good day and thank you for standing by. Welcome to Q1 2022 HECLA Mining Company Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your phone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your first speaker today, and Vita Patel. Please go ahead.

Thank you, operator, and welcome, everyone. Thank you for joining us for HECLA's first quarter 2022 financial and operations results conference call. I'm Anvita Patel, HECLA's Vice President of Investor Relations and Treasurer. Our financial results news release that was issued this morning along with today's presentation are available on HECLA's website. On today's call, we have Sel Baker, HECLA's President and CEO, Lauren Roberts, Heckler Senior Vice President and Chief Operating Officer, and Russell Lawler, Heckler 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 two and three in our earnings release and in our 10-K and 10-Q 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 found in the slides or news release. With that, I will pass the call to Phil.

Thanks, Invita. Good morning, everyone, and thank you for joining our call. Looking at slide four, the world is experiencing a combination of risks and events which we haven't seen for quite some time. Inflation is the highest in more than 40 years. You have the Russian-Ukrainian War, 100-plus oil prices, rising interest rates, supply chain disruption, shortage of skilled workers, and of course, the continuing pandemic. As we consider these events, we remember that HECLA is a 130-year-old company that has weathered world wars, the Great Depression, recession, the Spanish flu, the 1970s oil embargo. So as we look at today's challenges, we have perspective to navigate these times successfully. And why can we navigate them? The first reason is because we operate in the best jurisdictions in the world, namely in the U.S. and Canada. And if you look at the specific states and provinces we are in, the Fraser Institute ranks all of them in the top ten regions for investment. And we're not just in these places. We are the largest silver miner in the U.S., producing about 40% of all the silver mined, and we're also a substantial gold producer in Quebec. Second, inflationary pressures and costs in capital are impacting everyone. However, our mines are not large consumers of capital, and as mature operations with decades of prior investment, sustaining and even growth capital are modest. We anticipate investing slightly more capital than normal at the lucky Friday, maybe $20 million more as we equip our new mining method to optimize it. We'll also see some pressure on our operating costs, mostly at Casa Berardi due to the volume of material it mines and processes relative to our other mines. However, we are proactively managing the risk, and we believe we can successfully navigate it. And Lauren's going to touch on this later in the call. But probably the most important differentiator of HECLA in costs from other silver producers are the revenues from our byproducts, zinc and lead. We are the United States' third largest producer of zinc and lead, The byproduct credits from this revenue appear to be offsetting the inflationary pressure. Third, we operate the best silver mines in the world. Our consolidated all-in sustaining cost was less than $8 per ounce, or a 70% margin of about $17 per ounce, so very low cost. Not only that, our silver mines have very long mine lives with more than 14 years, and that doesn't include resource conversion or exploration potential. And our reserve base is the largest in the United States. Fourth, each mine, again, has generated free cash flow for the quarter. In fact, this is HECLA's, on a consolidated basis, our eighth consecutive quarter of free cash flow generation. That's $232 million of free cash flow over the last eight quarters. And when I look back over the last six years, we've generated positive free cash flow in all but one year. All of these factors culminate in a strong operational and financial quarter, allowing us to return 21% of our free cash flow to shareholders during the quarter and positions us for strong performance in these times. With that, I'd like to pass the call to Russell.