Hecla Mining Company

Thank you for standing by. My name is Rochelle and I will be your conference operator today. At this time, I would like to welcome everyone to the first quarter 2024 Hekla Mining Company 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 followed by the number one on your telephone keypad. If you would like to withdraw your question, Press star one again. Thank you. I would now like to turn the call over to Anvita Patel. Please go ahead.

Good morning, Rochelle, and thank you all for joining us for HECLA's first quarter 2024 results conference call. I'm Anvita Patel, Vice President of Investor Relations and Treasurer. Our earnings release that was issued yesterday along with today's presentation are available on our website. On the call is Phil Baker, President and Chief Executive Officer, Russell Lawler, Senior Vice President and Chief Financial Officer, and Carlos Aguar, Vice President of Operations. Phil and Russell will make most of the presentation. Carlos, who's at CIMA Hill, will make a couple of comments. We will all be available to answer your questions. 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. Non-GAAP measures cited in this call and related slides are reconciled in the slides or the news release. I want 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. I will now pass the call to Phelps.

Thanks, Avita. Good morning, everyone. As you may know, I'm the chair of the Silver Institute, and I've volunteered for this position because of the world's growing need for silver. And so I'm going to actually start the call talking about silver because I'm just very excited about the role that silver has in the energy transition. And something I didn't really appreciate, which is the silver demand in India. So let's go to slide three. I can't overstate how remarkable 2023 was for solar energy and silver. New investment in renewable energy was about $675 billion, and of that, $393 billion, or almost 60%, was for solar. And that's a 12% increase over 2022, and it's a new annual record. And this investment should continue. Silver's photovoltaic, or PV, demand increased to 194 million ounces, and that's per the silver survey that was put out about four weeks ago. And that's about four times more than the demand 10 years ago. And photovoltaics now represents 16% of global silver demand. Silver photovoltaic demand has had about a 17% annual growth rate over the last five years. And in 2024, there should be another 40 million ounces for solar. So to put that into perspective, 40 million ounce increase is about the same as the total demand that you had for photovoltaics in 2013. And you'd need four new greens creeks and eight new lucky Fridays to meet it. Let's go to slide four. About two weeks ago, I attended the India Silver Conference where I learned five things. First, India's silver demand is pretty consistent at about 17% to 19% of global demand. You had a drop-off during the pandemic, but it has since come back. And as global demand grows, so does Indian demand. And Indians actually have to pay more for their silver because of 12% duties and taxes that they have. Now, that's going down 1% per year until it gets to 3%. So it's going to improve for them. February imports. set a monthly record of 77 million ounces. And if you take the first quarter in total, it exceeded all of the silver that was imported for the whole year in 2023. And what might be most surprising of all is the price of silver in rupee terms hit an all time high in April. And then finally, I learned the policy commitments the Modi government has made renewables, has made to renewables has really created a very large new market for solar. And that was a lot of the conversation at the Indian conference was how they move forward with solar. If you put the solar and the Indian demand together, it's about 35% of silver's global demand. And they are both growing. And the three-year deficit is now over 500 million ounces. And I expect more deficit this year and into the foreseeable future. Silver's fundamentals are unlike any time in its history. Now, turning to slide five, let me talk about HECLA and its role with the deficit. With the Lucky Friday back to full production and Kena Hill ramp up progressing, we are the fastest growing established silver company as a result of innovation and the efforts of our people. If you go back to 2010, we produced a total of 10 million ounces. Green's Creek produced seven. Lucky Friday produced three. This year's guidance is Green's Creek at around 9 and Lucky Friday at 5. That's a 40% increase without considering Keenan Hill. And it's not just production growth for the sake of growth. We have maintained a low-cost structure, in fact, the lowest in the industry. In 2010, Lucky Friday's cash costs were $3.76 per ounce. We're going to be around $2.50 to $3.25 this year. And this improvement is due to investments that we've made, the foreshaft, the patented UCB and innovation that we made, mining method, the service hoist, ore storage bunkers, and lots of other improvements. And over the same period, Green's Creek's costs have also remained consistently low. This year, we expect cash costs to be $350 to $4 and ASIC to be $950 to $1025. And Greens Creek has had growth in reserves. Since 2010, we've replaced 120 million ounces and added reserves to maintain a 13-year mine plan. When Greens Creek started its operations back in 1989, the mine had a seven-year reserve plan. I think Keno is going to be on the same path as these two mines, turning just like six. There's really three messages for this quarter. First, our silver operations are strong and consistent with Green Street delivering a solid quarter and Lucky Friday achieving full ramp up. Second, Keno Hills ramp up is going well and we're seeing incremental and steady improvements in the safety culture and in engineering risks out of the mine. Third, we see the first quarter as an inflection point with strong free cash flow from our established silver operations and proven performance at Keno and the insurance proceeds which we will use to deliver over the next 12 months. Finally, we expect to release our 2023 stateability report at our annual meeting May 17th. And we are again net zero in 2023 on scopes one and two, carbon emissions, where we've utilized UN-certified offset credits. And this year, instead of using credits, we are investing in research to sequester carbon in our operations. With that, I'll pass the call on to Russell.