Hecla Mining Company

Company second quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star one again. I would now like to turn the conference over to Anvita Patel, Vice President, Investor Relations and Treasurer. Please go ahead.

Good morning, Regina, and thank you all for joining us for HECLA's second quarter 2023 financial and operations results conference call. I'm Anvita Patil, HECLA's Vice President of Investor Relations and Treasurer. Our financial results news release that was issued yesterday, 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 Lawler, Hitler 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 in 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 statement. Non-GAAP measures cited in this call and related slides are reconciled in the slides or the news release. I'd like to remind you, if you would like to have a call with the management, you can do so by using the link under the section Virtual Investor Event in our earnings release that was issued yesterday. With that, I will pass the call to Phil.

Thanks, Vida. Good morning, everyone. Thanks for joining our call. This second quarter was a good quarter for safety, production, cash flow, and starting changes at CASA. But maybe the most significant event of the quarter is the restart of the Kino Mill. Because when you combine that with what is happening at Greens Creek and Lucky Friday, I think that HECLA is now in another period of substantial growth in silver production reserves, and maybe even faster than what we had over the last five years. And if you look at slide four, you can see why I'm saying that, because what that shows is what we've done over the last five years. And the numbers for those five years are pretty remarkable, 27% growth in revenue, 79% growth in silver reserves, 37% growth in production, three-quarters of a billion of free cash flow from our three mines. And it's no longer a question that Green Street Mill can operate at 2,600 tons per day or maybe even 2,800 tons per day. It's now more of a question of whether we can maintain mining at that rate or even higher. And the lucky Friday, without the service hoist in the bunker, which is in operation this month and the fourth quarter respectively, is already producing about 20% more ore than 18 months ago and is at a 5 million ounce run rate. At the restart of Keno, we'll have our teething problems, but if you look, we have an exceptional district given the grade of the ore, the recoveries that we're experiencing, and the remarkable exploration success with continuous discovery of mineralization. So over the last five years, we had that 37% growth in production, and we expect 40% over the next three years and close to 20% growth just this year. We probably will also see growth in our reserves, more free cash flow generation, and I think all of this should result in share performance, positive share performance. Now, Heckler is a silver company with gold exposure, and we believe gold exposure will always be important to our portfolio for many reasons. It gives us diversification from the concentrate market. It hedges against silver's higher volatility, especially during recessions. It gives us scale to grow. And these are the reasons Casa Berardi is important to our portfolio. As we've indicated for the last year and a half, CASA has been impacted more than our other sites by inflation causing underground mining costs per ton to double. Underground grades have declined as we expected. And tailings construction costs are higher because it requires more buttressing. So while we are permitting the higher grade pits, we are moving quickly to mine only the 160-pit. Lauren's going to talk more about CASA in a moment. So now what I'd like to do is move to slide five for a few comments specifically on the quarter. I think it was a great second quarter, and I think the first half silver production is evidence of the point I started with, and that's that our silver production is growing even faster now. With this quarter, Lucky Friday produced 1.3 million ounces, and four out of the last five quarters we've produced more than 1.2 million ounces. And at that rate, Lucky Friday is close to being the 30th largest silver mine in the world. And just to put that in a context, in 2021, Lucky Friday was producing about 40% less than what it's doing now. And as I mentioned, we restarted the mill at Keno Hill, and the improvements we completed leading up to the restart are performing well. The secondary crushing circuit modifications are proceeding on schedule. The grade's better than modeled, and we anticipate being at full production by year end. And of course, all this performance was underpinned by Green Streak's consistent 2.4 million ounces of production and $36 million of free cash flow. Our all-in injury frequency rate was the lowest in the history of the company at 1.18, an accomplishment that reflects our focus on changing behavior and engineering out risk. And I think the best example of engineering Out risk is the UCB mining method, which puts miners in places that are safer doing safer tasks. We will be focused on how low the injury frequency rate can go at the lucky Friday. And Lauren, who's going to retire at the end of the year, will talk more about each property. Now, silver revenues are growing relative to gold. We're almost 45% for the quarter, and I think we'll likely have more than 55% of our revenues from silver by the end of the year. The silver operations have good cash flow generation, and if prices can strengthen a little bit, the second half should be even better, and Russell will have more on this. We maintained our consolidated silver production cost guidance, but we have adjusted the production cost guidance for cash variety and the production based on the impact of the wildfires and the fact that we're moving quickly to open pit only operations. And now I'll pass the call to Russell.

Thanks, Bill. I'll start on slide seven. HECWA has long been known as a leader among the silver miners and the largest U.S. silver producer. As we look at this slide, it is easy to see why, where over the past six months, the margin at our silver mines was 56%. And they've already produced more than $105 million of free cash flow this year, and we're excited to see what Keener Hill will add to this profile. Over the past three and a half years, the Greens Creek and Lucky Friday Mines have generated more than $560 million of free cash flow. This has allowed us to invest in exploration to grow our production in silver reserves, as well as acquire and invest in Keno Hill, which we anticipate will both add to our production profile and improve our balance sheet and debt metrics. This leads me to slide eight, where I'll discuss our first quarter revenue profile and balance sheet. Silver accounted for 40% of our revenues in the first half of the year, which continues to show the strength and consistency in our silver mine, with approximately 34% of our revenue coming from gold and 26% from base metals. We ended the quarter with $107 million of cash on our balance sheet and have liquidity of $219 million. We also monetized our zinc hedges for approximately $7.6 million as the zinc price declined to its lowest point in the second quarter since April 2020. The strength of our balance sheet and financial flexibility with a net leverage ratio of less than two times remains one of our most important objectives. As of the end of the quarter, we were slightly higher than our goal. This is primarily due to the suspension of mining operations in June at our Casa Verde mine due to Canadian wildfires, as well as our continued investment in Keno Hill. I expect that as we come into the third quarter, this will revert to being less than two times due to the production of both of these mines during the quarter. I'll now turn the call to Lawrence.

Thanks, Russell. Let me start by saying it's very satisfying that our succession and development planning have put us in a position to fill the VP ops role and to backfill that vacancy internally. Carlos and Chris have steady hands and will do a great job. As for me, I haven't hung up my spurs just yet. There's a lot to accomplish in the next five months. And with that, I'd like to turn the slide pan. Greens Creek, our cornerstone asset, turned in another solid quarter with production of 2.4 million ounces of silver and free cash flow of $36 million for a total of more than $73 million in free cash flow for the first half of 2023. Gold production rating strong at 16,000 ounces due to better grades than planned and improved performance in the gravity circuit. Cash cost for the quarter was $1.33 per ounce and ASIC per ounce was $5.34. Both metrics are slightly higher than the previous quarter, primarily due to a lower zinc byproduct credit due to lower zinc price. Capital spending was $8.8 million in the quarter for a total of $15 million for the year. Our expected capital spend at Greens Creek is now between $49 and $52 million for the year, which is a slight decrease over the previous guidance. We are increasing our gold guidance for Greens Creek and lowering our ASIC guidance because of the lower sustaining capital spend planned for the year. Moving to slide 11, Lucky Friday produced 1.3 million ounces of silver at an ASIC of $14.24 per ounce in the second quarter. This quarter marked the fifth consecutive quarter of silver production exceeding 1 million ounces, the highest quarterly production in the past 23 years, and a new safety record with an all-injury frequency rate of 0.52 at the end of June, a remarkable achievement. Capital spending at the mine was $16.3 million as we focused on two key projects, the service hoist, which was completed earlier this month, and the coarse ore bunker, which we anticipate completing by the fourth quarter. The service hoist is expected to de-bottleneck our production hoisting capacity, while the coarse ore bunker will decouple the mine and the mill by adding the capacity to stockpile ore for multiple days. Both projects are critical to achieving our production goal of 425,000 ore tons per year, the rate we expect to achieve by year end. Free cash flow generation for the first half of the year was $34 million, reflecting the mine's strong performance during the year. We are reiterating the production guidance, but increasing the cash cost guidance for 2023 to $4 to $4.70 per silver ounce, an all-in sustaining cost of $11.50 to $13 per ounce. This increase in cost guidance is due to higher labor costs of $2.5 million related to the wage increases in the new collective bargaining agreement, lower zinc byproduct credits because of lower zinc production and prices, higher sustaining capital related to the timing of mobile equipment deliveries, and increased development to achieve our throughput target. We're increasing the capital guidance to include higher sustaining and growth capital spend, which is primarily related to our two major demodelnicking projects. Moving now to slide 12, at Keno Hill we remain on track to achieve full production in the fourth quarter. We restarted the mill in the second quarter using lower grade stockpiled oil for the startup. The mill produced 184,000 ounces in the quarter while operating with a temporary portable crusher. The next milestone in the mill is to complete the secondary crusher improvements which we anticipate in the third quarter. We expect capital spend at the mine to be 47 to 49 million for the year, slightly higher than our initial guidance due to increased development and mill improvements. I'm encouraged by our progress at Keno Hill. While we have a limited sample size, the resource model is performing well through the second quarter. The mill to model reconciliation is showing slightly fewer tons at better grades for the same silver and lead content and more zinc. The improvements we made in the mill prior to restart including advancing the level of process control, are performing as expected. Silver recovery met and exceeded our target of 94%, and the concentrate quality is very good. We're looking forward to commissioning the upgraded secondary crushing circuit in the third quarter and expect it to improve the reliability and efficiency of that circuit. In the mine, we're going through the typical ramp-up learning curve. We've learned how to manage the ground in the primary development headings and are now working through the process in the ore headings. The bear zone is requiring more shotcrete than expected and that is being incorporated into the mining cycle. Our key underground infrastructure project should be completed in the third quarter and we look forward to a strong finish for the year. We are reiterating our production and cost guidance at more than 2.5 million ounces and an all-in sustained cost between 12.25 and 14.75 per ounce. I'm excited about the future keynote and expect the mine can produce up to 4 million ounces in 2024. On slide 13, the left-hand photo shows an excellent example of very high grades we're encountering in the bare vein. The photo's a little difficult to discern in the presentation, but you can see a lot of glena in there, and that's a 160-ounce space, which is pretty impressive. The right-hand slide shows our progress on the secondary crusher circuit, where we're replacing most of the components except the crusher itself. Turning to slide 14, Casa Brardy produced approximately 19,000 ounces of gold for the quarter at an all-in sustaining cost of $2,286 per ounce. Production was lowered due to wildfires in Abitibi, which caused access road closures for the majority of June. As Phil said in his comments, Casa Brardy has experienced declining head grades and an increase in cost pressure over the past several years. As noted in our technical report, Casa becomes an open-pit-only operation in the future. After careful evaluation, we decided to make some changes now to better prepare for that future. We conducted a scope by scope margin analysis of the remaining underground reserves and resources during the quarter. We concluded that the east mine did not yield attractive economics and closed it. For the west mine, the analysis showed attractive economics until about mid-2024. These changes put more production pressure on the 160 open pit, and we made the decision to begin the process of insourcing the mining there. We authorized the purchase of 16 million in surface mobile equipment, about 12 million of which has been delivered, and we are busy assembling it and training operators. As our crews ramp up and the balance of the equipment is received, we expect to take over all of the open pit mining by the end of 2024. Much of the waste rock being produced by the stripping is being directed to the construction of tailing cell seven this year and through calendar year 2026. We're adjusting our production cost guidance to reflect the changes. Previously, our plans modeled with the 160 pit combined with the underground production would act as a bridge until we get the permits to mine the higher grade open pits. With the changes I just described, it will not be possible to avoid a production gap, which we estimated about two years between 2028 and 2030. Once 160 is fully mined, we anticipate permitting it as our long-term tailings storage facility for the higher grade pits. Until then, we will build multiple raises on our existing cell seven tailings facility. In consultation with our engineer of record and independent review panel, we've determined that increasing the height of the facility will require us to build a substantial buttress for it. That capital has been reflected in our ongoing plans. I think the way that I think about CASA is in three phases. Over the next four years, we'll make some modest investments that are returned in the period to produce the remaining permitted reserves and resources. Then there will be a period of investment while we complete the permitting of the higher grade pits, invest in the infrastructure and equipment necessary to complete the transition to a fully surface operation and to expose the first door. Once the first door comes and that's expected in 2030, positive free cash flow generation falls quickly and then builds over the coming years. Before I pass the call back to Phil, I want to emphasize CASA's long reserve life and the significant expiration potential on a large land package on the CASA variety break. We're making the right decisions today to put CASA back on the path to free cash flow generation and a brighter future. With that, I'll pass the call back to Phil.

Thanks, Lauren. Turning to slide 15, we're reiterating our silver production and consolidated ASIC-guided With our changes at CASA, we're revising our three-year gold production and cost guidance for the year. Capital guidance is increasing to $225 to $235 million, mostly due to the increase at Lucky Friday and at Casa Verde, for the reasons that Lauren has explained. So I'd like to go to slide 16. And before I end my remarks, I want to emphasize the critical role that silver plays in the transition to renewable energy. Silver demand in photovoltaics was about 140 million ounces in 2022, and that's about 12% of total silver demand. In 2023, some technologies that are known as Topcon and HJT are expected to account for 80% of all the new photovoltaic manufacturing facilities. And these two technologies use 30 and 120% more silver, respectively. than the currently widely used PERC technology. So silver demand in solar is set to grow further as the transition to clean energy accelerates. And I'm not going to be surprised if 30, maybe even 40% increase in demand in silver per solar happens this year or next, raising solar to more than 15% of total silver demand. And if the economy slows, I'm confident that the commitment that's been made to renewable energy will cause the growth of silver and solar to continue. And so it seems inevitable that solar is going to swamp other silver demand categories with maybe the exception of investment demand. With that, Regina, I'd like to open the call to questions.

At this time, if you would like to ask a question, simply press star 1 on your telephone keypad. Our first question will come from the line of Lucas Pomatot with Canaccord Genuity. Please go ahead.

Hey, good morning, and thanks for taking my question. Just wondering about cash sobriety, you know, could you provide more color on how much you expect to invest in those three years that the mine is closed down? And over the next 18 months, because I think you had previously said it would cost 100 to 120 million to transition to open pit mining. Just wondering if that number is still valid, and if so, how much of that is baked into the survives capex guidance?

Yeah, the short answer is that number is still valid, and that was without stripping. And if you add the stripping costs and it's order of magnitude 200, $250 million. This is out in 28, 29, maybe a little bit in 30. And so it's not anything that's an immediate capital out like we are making some relatively small. The free cash flow of CASA does not cover all of the capital costs that we'll make in this year and next year, but it's a relatively small amount. I think each year it's $30, $40 million. And then the following years, it's free cash flow positive. And we'll

return that capital that we're investing in 23 and 24 over the you know 25 26 27 time frame 20 yeah those three years got it thanks and just one more from me you had talked in the past about how you were hesitant to shut down the mine just because of you know due to the sort of demand for labor in that area you know what are you planning on doing with those employees or how you're planning on retaining them, I guess?

Well, the need to retain employees is certainly something we want to do and something we want to... We're the largest private employer in the region, but the reality is that the mind has to be economic. We went through and looked very carefully at what stoves we could mine, made the determination of the need to shut down the east mine, and we'll mine the west mine stoves that are economic, and we'll have that workforce through that period of time, and then we'll move to open pit an only open pit mine. And so we'll have certainly some of those people that will transition into those roles. Lauren, what would you like to add to that?

So we've already begun that process of transitioning some of the underground workforce into the open pit roles. So a significant number of people that were displaced from the east mine are going into the new fleet that we purchased to operate the new fleet.

Got it. Thanks, guys. I'll get back in the queue.

Your next question comes from the line of Lucas Pipes with B Reilly. Please go ahead.

Thank you very much, operator. Good morning, everyone. Hi, Lucas. My first question is also on CASA and kind of thinking through the transition there. It was touched on a little bit in the prior question in terms of transitioning labor. Can you frame up what the net impact would be over the coming years and how you would manage that? And then is there kind of idle mine costs for the underground works following the exit from underground operations? Just trying to understand if there's anything we need to model longer term as it relates to the underground workings. Thank you very much for that.

So, Lucas, can you repeat your second question? I'm not sure I understood.

No. So, essentially, when you abandon the underground section of CASA, do you just pull the plug and walk away from the underground workings, or do you have remaining maintenance costs for the underground works, even as you don't actively produce underground anymore?

It does not sterilize the underground, and we will have to make a determine in the future as to, you know, what level of maintenance do we do on the underground. So, you know, stay tuned. We'll see where we come out on that. But, you know, certainly we will, what we will do, we'll attempt to maintain the ability to go back into that mine. underground, different price conditions, different cost environment. You know, the underground could be revived, plus exploration. We're continuing to drive the exploration drift to do further drilling to the west of where we're currently operating in the west mine. So stay tuned for that, and that will occur over the course of the coming year. You know, with respect to the employees, you know, the fact that we are such a large employer, the issue is not going to be, you know, having enough employees. It's the fact that we're having to reduce that number. But that will occur over the course of the coming year. And, you know, I think ultimately we end up with roughly half the... Go ahead. You have it, Lauren. Go ahead.

Yeah, so in terms of company employees, we started the year at about 650 company employees. And we're now down to about 522, just to put things in perspective. And over the course of the year, there aren't many more changes, honestly, normal attrition. The next change will come with the closure of the West Mine.

Got it. Thank you very much for the detailed responses. For my second question, I do want to stay on the labor topic. Phil, in the past, you had mentioned labor constraints, especially on the skilled side. And I wondered if you could give us an update from Queens Creek, Lucky Friday, Keno, how things are going on the labor front. and I'll leave it there for now. Thank you very much.

Sure, Lucas. You know, we can talk about, I guess, in general, and then maybe, Lauren, you can add if there's anything specifically. But in general, we've done a very good job of attracting the people that we need at the mines. You know, I think there's been a The turnover rate at the Lucky Friday, for example, has fallen to the sort of levels that we've seen in the distant past, you know, 10% or less sort of turnover rate. Frankly, the biggest issue we have is with the technical people, engineers, geologists. That's more of a challenge at the moment. You're always going to have difficulties with mechanics,

um you know very skilled miners but um we've done a pretty good job there where uh where we have some vacancies is really in the technical areas uh lauren yeah broadly i would say that uh what we're seeing it be less difficult to fill those roles over the past year than it was stated prior to not to say that there isn't still competition but we're pretty much at staffing levels everywhere and we're able to find folks and we supplement in terms of the skilled trades on contract when we need to, but it hasn't been a material impact to the business at this point.

We need more, we need schools to fill up more engineers and geologists, right?

That's exactly right. Yep. That's where the skill gap really is on the technical side. Because there's a bunch of gray hairs in HECWA, so we're doing all right with that.

I appreciate the caller, and I think I've mentioned before, I know what degree I will recommend to my children. So thanks again, and best of luck.

I hope they like Lucas.

Your next question will come from the line of Joseph Reger with Roth MKM. Please go ahead.

Hey, guys. Thanks for taking the questions. Kind of following on a little bit of the labor question, you know, with the shutdown of the East Mine, will there be any changes in the labor force at CASA in Q3? And also on the East Mine, will there be any charges taken for the closure of that?

The answer is no to both questions. We don't anticipate any additional steps labor-wise, nor is there an impairment charge.

Okay. And then compared to the February, I think, 2022 technical report you guys put out on CASA, how different will the mining rates be as you switch to a fully open pit in 2024? compared to what was in that document?

Fundamentally, there's really just two changes to that document. One is the underground production that's shown in there will not occur past 2024. And that was, I think, originally going to about 2030. And then there's additional capital that will be reflected. Otherwise, it's the plan that we have always had. Brian, anything to add? Russell, anything?

Let's say in terms of the immediate changes with the shortening of the underground, we are accelerating the 160 bit, which is why we purchased the equipment. And so for context, the acceleration is not massive. We go from, you know, circa 12 million tons moved this year to a little under 20 next year. So that's not a huge change. And then the following couple of years, the rate drops off and we'll be fully insourced at that point in time.

Okay. All right. Thanks for that there. On Keno, obviously, great to see it started up early. I think you guys were originally targeting Q3. But, you know, how confident are you guys in the full year guidance? Since you started early, is there any chance for upside to it? And, you know, are things going smoothly to start this quarter to achieve it?

We're, you know, we're confident in the guidance at this point, but it is a startup, and so you, you know, will be a function of what we see as the ability to put the times in the middle and what the grade is going to be and the recoveries. We certainly are learning as we go, but, yeah, there isn't anything that would cause us to say let's change something at the moment. Lauren?

Oh, nothing to add to that. That's correct.

Okay. Thanks, guys. I'll turn it over.

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

Hi, guys. Sorry to beat a dead horse, but I got a couple questions on CAS as well. You kind of indicated where you started the year on employment, where you are now. Can you give us a sense as of, like, say, 2025-ish, how many employees you'd expect to have? Is it still around just over 500 or would it be even lower?

It's sort of in that range that we would have. Because remember, we're insourcing the mining. So work that's done by contractors will be done by HECLA employees.

Okay. And then with respect to your reserves and resources now, is there going to be any reclassification of any of the ounces that fit in the underground categories into potentially open pit?

We're not going to open pit, but there will be a reclassification of reserves to resources from the underground. But it's relatively small. My recollection is it's 10 or 15% of the total. It's small.

1.7 million tons. It's not a big number. Okay. And in terms of what you're planning to mine with the future open pit, is that what we're seeing in the inferred resources right now?

Yeah, it's in the reserve. Yeah, it's in the reserve, and it's, you know, what, 3-gram material. So the current 160 pit is 1.7 grams, 1.8 grams, something like that. And so when we go into the principal and the Westmine Crown pillar pits, significantly higher grade and the strip ratio is particularly on the principal pit is quite attractive.

That was actually going to be one of my questions. Historically, you've had quite an elevated strip ratio. Can you give us just a general sense of what the life of mine average would be?

I don't remember that, but principal is about 7 to 1, and the West Mine Crown Pillar is a multiple of that. I don't remember what it is. 22 to 1. And that's in the technical report. Nothing has changed with respect to, you know, the timing of those pits are as described in the technical report. Really the big change in the technical report is the underground being shortened and the 160 pit being advanced and more capital for the cell seven, the buttressing at cell seven.

Okay. And the decision to move ahead with this, is there like a minimum IRR threshold that you're using to justify it? And at what silver price would that be done at?

Well, it's, you know, it's a gold asset, so.

Very gold, yeah.

Yeah, so the real decision in terms of the, big capital outlay really doesn't happen until 2027, 2028. Now, because between now and then, it is cash flow positive. So you just end up having those two years where you've got to make a capital outlay. And so while we expect that this will go forward. Certainly a different decision, conditions are different at that time, could be made. And the reason we expect to go forward is that's very high-crate, open-pit material. It's very economic. It's generating, according to the technical report, I want to say a billion dollars plus or minus free cash flow over the inclusive of the capital. So it's a very economic set of pits. The ultimate decision is made in 27-28. Okay.

Again, for any questions, please press star 1, and our next question will come from the line of Heiko Ehle with H.C. Wainwright. Please go ahead.

Hello, everyone. Sorry for in case I asked something that's been asked before. I got on a little bit later. I was on another call, so sincere apologies if that were to happen here. Can you provide some color? First time that happened to me on your call. Can you provide some color on the costs of labor, parts, and so on for your new mining operation in the Yukon? I mean, I think by now you'll have a pretty decent sample size for what actually transpired versus what you have modeled with output costs. Anything else that you think would be good to pass on to the analyst community with starting up operations that you maybe didn't expect, I don't know, availability of labor, bottleneck for parts, that kind of stuff?

Well, I guess the first thing I'll say, Heiko, is that we've been fortunate in that we've not had a huge turnover at Keno. There was a cadre of people there, and they wanted to be there. And it's a pretty cool place. And, you know, they recognize the sort of grades. We've been fortunate in that the turnover rate has not been that high, and we have been able to attract, you know, technical people to the site. Certainly the issue is it's a rotational schedule, so you've got to have basically twice as many people as you would need for, you know, an operation that does not have that rotation. And it's certainly in the UConn, but comp-wise, I think we're competitive. I don't, off the top of my head, can't tell you where it stands. Do you have any color, Lauren?

No, not from that perspective. I would say that we've really not had trouble staffing either minors or technical people.

The other thing is there's been some other operations that have closed down, and that actually has given us a supplement of quite a few folks, so the Minto operation.

That's quite helpful. Thank you. Moving on from that, I know everyone else was focused on CASA, at least on the questions that I heard. Can you walk us through your exploration plans for the bear zone versus the townside zone for the remainder of the year? Just when it comes to, you know, maybe meters and holes and even money spent.

So I'm sorry, which, it was muffled, which zones?

The bear zone versus the townside zone.

Okay. Well, you know, look, we have so many targets that it's... It's a challenge, and so there actually will be a drill that's now moved from those two zones to the chance vein, which is a little bit further afield. But we're getting great results. One of the things we're going to try to figure out is how we might drill in the winter. And, you know, should we be drilling in the winter? So I guess stay tuned for that. You know, our total spend in exploration for Keno Hill is 3.7 million. So we don't have a huge budget there. But it will expand if we start drilling in the winter. And plus we'll start to have access underground. We've got platforms that we're waiting to get access to, but we'll be getting access to those fairly quickly. So you'll see a little bit of drilling in the fourth quarter from the underground, but more drilling as a result of those underground platforms.

I wasn't going to ask this until you just brought it up, but what is the cost differential between winter drilling and summer drilling approximately?

I couldn't tell you other than it's more, and the big issue that they have is just managing the water because it gets so cold. Remember, it's minus 40, 50 degrees on occasion there. Having said that, we experienced that at CASA and we actually do all of the surface, not all of it, but almost all of it. Preferentially in the winter. Yeah, in the winter because of the swampy nature of that area. So we have the skills and the experience to do it. We just have not done it there. And I say we. Alexco did not do it there. But I think it's likely that you'll see us start to do some.

That's very helpful. Thank you. And I will get back to you.

Thanks, Heiko.

And with that, I'll hand the call back over to Phil Baker for any closing remarks.

Okay. Well, thanks very much, Regina. I appreciate the questions. You know, I hope that you'll think about the five years that we've, you know, last experienced and the accomplishments that we have had. Because I think we're in a position to, you know, see that same sort of experience where we see the growth. the dramatic growth in our silver production. And the fact that we have this silver production in the U.S. and in Canada is more meaningful today than it was five years ago. And we really have a group of people that is very capable. They like working for Hekla and working for a company that has the history and the expertise that we have where we're able to do things like the UCB method of mining at the Lucky Friday. So stay tuned. We're certainly available for questions. We have some time set up for analysts, shareholders, anyone who's interested to be able to talk to Lauren, Russell, or I, and so please make a request to be on one of those calls. And with that, have a good rest of your day. Thank you very much.

That will conclude today's conference call. Thank you all for joining. You may now disconnect.