Hecla Mining Company

Thank you for standing by. My name is Liz, and I'll be your conference operator today. At this time, I would like to welcome everyone to the second quarter 2025 HECLA 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 Mike Parkin, Vice President of Strategy and Investor Relations. Please go ahead.

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 Kritchneroff, President and Chief Executive Officer, Russell Lawler, Senior Vice President and Chief Financial Officer, Carlos Aguilar, Senior Vice President and Chief Operations Officer, Kurt Allen, Vice President, Exploration, Ann Vita Patel, 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 the slide to our cautionary statement slide, any forward-looking statements made today by the management team come under the Private Securities Litigation Reform Act, and it involve risks, as shown on the slide too. 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 three, 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 mind planning to drive efficiency gains throughout the organization. Our second pillar is portfolio optimization. Our Casa Barada 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 the path forward. I also want to address the recent acquisition activity in the sector. I believe the best opportunities to add value for shareholders is 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 discipline capital allocation, so 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 ATN to deliver $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's going to speak more on this in a moment. Fourth, we're committed to maintaining our silver market leadership. Our high-quality operations, averaging 14-plus year reserve lives, which is double the peer average, and they operate exclusively in low-risk jurisdictions. While we strive to achieve these pillars and while continuing to aim to be an ESG leader in the silver sector through environmental stewardship, through strengthening First Nations partnerships and maintaining safety excellence. Turning to slide four, I want to walk you through the strategic recalibration at Keynote Hill that really demonstrates our disciplined approach to value creation. Our focus on optimizing Keynote Hill is confirmed that it is a core asset capable of delivering strong returns, even at conservative middle price assumptions. The asset meets our investment hurdle rates at $25 per ounce silver and approaches self-financing capability at current middle 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. And this isn't about scaling back, it's about optimization. Through improved ore quality control, overbake reduction and cost control, this three-port 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 440 tonnes per day while maintaining the flexibility to expand when the conditions warrant it. As we turn to slide five, let me walk you through the compelling financial case for our 440 tonnes per day optimization at Kino 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, Kino Hill will deliver a 35% IRR over its reserved 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 the 1st, 2025 forwards. 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 cashflow generation in later years as the mine reaches its steady state production of 440 tonnes per day. And of course, ongoing exploration success could extend the mine life, which could further enhance the already attractive returns. I'll now discuss the median term outlook for Kino Hill and some of the major projects we'll undertake to deliver the asset into main plate capacity. Slide six outlines our systematic approach to ramping up Kino Hill to its optimized production level. Our production timeline demonstrates a measured the risk path from current operations to 440 tonnes per day, which we anticipate achieving in 2028. The key here is that we're building Kino Hill with a long-term future in mind rather than rushing the ramp up. And this approach allows for sustainable returns to our shareholders while ensuring that ESG excellence through our commitment to environmental stewardship and partnering with the local First Nations. And from an infrastructure perspective, our tailing storage facility will operate under phase two through 2028 when phase three 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've preserved valuable optionality. The infrastructure we're building can support expansion beyond this level should future conditions warrant. Meanwhile, our expiration programme continues to deliver consistently replacing depletion and growing our resource base. So what we're accomplishing at Kino 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 seven, 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 0.7 times. We generated cash from operations of over $160 million and record quarterly free cashflow 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 the sustaining costs of $5.19 per ounce. That's after byproduct credits. Casa Verades unit costs dropped by over $600 per ounce over the prior quarter. And Lucky Friday set a new quarterly milling record. On Greens Creek, strong performance here today. We made positive revisions to gold production and silver costs guidance, with a new guidance summarized in 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 nine, our capital allocation priorities center on strengthening our balance sheet, investing in our highest return opportunities across our portfolio, and maximizing free cashflow generation. As we focus on these priorities, we're investing in organic growth. Notably, this was Keno Hills' first positive free cashflow quarter under our ownership. We continue focusing on deleveraging, having improved our net leverage ratio to 0.7 times. And earlier this week, we initiated a partial redemption for $212 million of our senior notes. Additionally, we also repaid our investment Quebec notes, totaling $50 million Canadian from free cashflow in July. We're also progressing on portfolio optimization with the strategic review of Casa Berardi and disposal of an encore exploration property and an encore equity position. On the right-hand side of this slide, you'll note that our producing asset base generated over $100 million in free cashflow, 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, the silver ASIC of $5.19 per ounce after byproduct 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, which resulted in our net leverage ratio improving significantly from 2.7 times from 1.5 times last quarter. Turning to slide 11, our strategic approach to raising capital demonstrates prudent financial management, in which 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's solution versus traditional equity offerings, which have had discounts of more than 10% this year, whereas we executed the ATM at a price which is approximately 10% higher than the volume weighted average price for the quarter at a minimal cost to our shareholders. This plan 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, as well as strengthening the balance sheet. Our strong existing asset base provides us 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 would 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'll begin on slide 13. Drain's Creek continues to be our flagship asset, generating a strong pre-catch flow. The second quarter silver production was 2.4 million ounces, a 21% increase over the first quarter, with silver grade averaging 13.4 ounces per ton. Total cost of sale decreases 15% to just under $59 million. Our second quarter silver cash cost was negative $11.91 per ounce, and all sustaining costs were negative $8.19 per ounce, both after byproduct credits. Better than expected gold production and higher gold prices dropped through its 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 Drain's Creek, we maintain our silver production guidance, increased gold production guidance, and reduced cost guidance because we expect higher byproduct credits from gold. The table on slide 13 summarized the guidance for the mine. Turning to slide 14, Lucky Friday achieved a new quarterly middling record of over 114,000 tons, beating the first quarter record by 5%. We maintain consistent silver production of 1.3 million ounces, with grades of 12.5 pounds per ton. Total cost of sale decreased 4% to $42.3 million, with cash cost of $6.19 per ounce, and all sustaining costs 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 subterritorial production quarter of the year due to planet capital project that will impact hoist availability, which was anticipated in a February guidance. Lucky Friday guidance remains with no change. Turning to slide 15, Eno Hill Second Quarter silver production reached just over 750,000 ounces at a milling rate of just under 300 tons per day as we continue ramping to higher tonnage rates. Importantly, we delivered 2.7 million 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, Casablanca Arties showed significant cost improvements over the prior quarter. With both cash costs and only sustaining costs decreasing by more than 600 per ounce. Second quarter gold production increased 37% to just over 28,000 ounces driven by planet increases in both underground and surface upgrades. We expect the stripping ratio of the 160P to decline in the fourth quarter with our surface mining contractor completing demobilization. This will drive further cost reduction while maintaining full-milk capacity. Cash costs in the second quarter improved to $1,578 per ounce, and only sustaining costs to $1,669 per ounce. We expect to provide an update on a 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 barely 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 12 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 two 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 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 gold equivalent. Located within trucking distance of Midas' processing facilities, the large property shows extensive surface alteration and mineralization. The Hader-Graben resource anchors multiple high-grade expansion targets with additional potential at Santorania. 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 Kino Hill by prioritizing permitting and project execution. Second, we'll continue deleveraging through strong free cashflow generation. Third, we're establishing a capital allocation framework to ensure smart organic investment. And fourth, we're rationalizing our portfolio with the Casa Barati strategic review expected to conclude in the coming weeks. I now want to address, while I feel Tecla mining makes for a compelling investment opportunity. So please turn to slide 19. Tecla'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 seven years. This provides exceptional stability and long-term value creation potential and allows for 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 lives, they're also positioned in the US 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. Tecla offers investors substantial silver revenue exposure with about 45% of our nine-month 2024 revenue coming from silver, amongst the highest in our peer group. And 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. And 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 amongst mid-cap peers. And at 1.3 times NAV, which puts us at the low end of the peer range. The bubble sizes on this chart are equally important. They reflect jurisdictional quality, with larger bubbles indicating safer jurisdictions. And as you can see, Hecla's focus on safer jurisdictions is demonstrated by our bubble size relative to our peers. This undervaluation represents significant asset reevaluation upside as we shift capital towards high return projects, designed to unlock the true value of our mineral reserves and resources. And 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.

At this time, I would like to remind everyone in order to ask a question, please press star and the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line up Wayne Lam with TD Security, please go ahead.

Yeah, thanks. Morning guys. 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 us 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. And the main reason about it was the good execution. We had additional areas available to with better grades. And that was the main reason for

it. Okay, got it, thanks. And then maybe at Keno Hill, it seems like there's been quite a change in commentary quarter to quarter, maybe helped by the continued strength in metals prices. I guess last quarter, the commentary seemed to indicate that the 440 tons 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 getting, are you anticipating more ore from Birmingham or Flamin' Moth? Or just wondering what's driving the changes taking here?

Well, we started the year with, oh, thanks for your question. We started the year with just Birmingham. We've expanded the Flamin' Moth so we have a little bit more operational flexibility. We're also now focused on reducing overbreak, controlling dilution, ore control, all those sorts of things. Anything you wanna add, Carlos or Matt?

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

Okay, but you have enough capacity on the backend to get to the 440 tons 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 the number of your peers being able to de-lever 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 you, in conjunction with the elimination of the silver link 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?

Yeah, thanks Wayne. The idea behind that was both the silver link 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. And so we took the opportunity to reduce the debt so that we could increase the cashflow and reinvest in the assets. You heard Kurt talk about Nevada. We've owned Nevada for quite some time. 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 cashflow. So what we're looking to do is really generate consistent cashflow so that we can then reinvest those cashflows back into those areas that will benefit our investors the most.

Okay, great. Thanks for taking my questions and congrats on your quarter. Thank

you. Your next question comes from the line of Haika Ila. From HCU, please go ahead.

Hey Robin team, thanks for taking my questions.

Good morning

Michael. Ah, okay. At CASA you state in the release that the PITS 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 costs to haul that waste, please.

Hi, Hi Haika, 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 PITS is nearing the end of its mind line. So as you go down deeper in the PITS, your stripping ratio is just going to increase or improve geometrically as it goes down. So, you know, we started off the year somewhere around that 15 to 20 to one stripping. We're probably close to 10 to one at this point. And then you'll just see it completely decrease over the next 18 months until that last ton of ore that comes out is probably one to one. So, you know, 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.

Maybe I'll jump in just a little bit, right? Because, you know, clearly we don't give guidance on a quarterly basis. We've seen the stripping ratio go down as we've gone through the year. And that you see that come through in the economics. We expect as that stripping ratio will go down, we'll be able to reduce contract reliance, which we should see then a cost improvement from them. And, you know, as we look at the guidance that we provided, we expect to meet the annual guidance throughout the year. But, you know, clearly we don't give that quarter by quarter.

Fair enough. And then if the permitting process, oh, 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. So the biggest improvement we'll see is the, as we let the mining contractor go, we mine with our own fleet. That will help. But like I said, the haulage distances are just going to get more longer for us and not going to help.

Got it. And I get there as 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 costs, like the costs that you pay to get the sun, I assume are reasonably de minimis, correct?

I mean, permitting is not a, it's not a super world defined process. It takes time. There's review periods, there's backwards and forwards. What we've previously said is that there was going to be a five year permitting hiatus. And that would allow us towards the tail end of that. We would do some pre-stripping, some deep watering 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.

Cool, okay. I'll get back into you. Thank you.

Thank you, Michael.

And your next question comes from the line of Joseph Weir with Ross Capital. Please go ahead.

Hey guys, thanks for taking the questions. I guess, first one back on Keno, on the slide five from the presentation, it shows that the 440 tons per day, that the free cash flow increases starting pretty much in 2028. Is that driven by higher grades, lower capex, a combination thereof, just so we can model out that?

Yeah, Joe, I can jump in here. That's a combination of a few things. You do see some of the larger projects coming to an end at that point, so you see capital coming off to some degree. If you flip to the next slide, you will see that there is some projects that will have to obviously continue and will have to continue mine development and those types of things. So it's not that capital comes to an absolute halt, but it does. You know, as we complete the Kaley's batch-filled plant, there's some water treatment capacity, those types of things. When those things come to a completion, you do see the capital decrease. You also see the throughput. That throughput getting to 440 tons per day will scale up and get to that 440 tons per day kind of late in this decade is the anticipation. And so as a result, you see more throughput and therefore you would see 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?

Yeah, Greens Creek, we've talked about this. You know, the sales can be lumpy, right? Because we ship out essentially, generally once per month on a ship. And so depending on when you ship within the month, we had a shipment in June, but it was kind of earlier in the month of June. And compared to in March, it was later in the month of March. And so we just had an inventory buildup. And it really just comes down to when a ship would leave in September, whether we would have that inventory kind of remain stable or whether we would see a drawdown in inventory. Okay, but at some point it'll go out. It's not effective of, sorry, Joe, what was that?

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

Oh, yeah, absolutely. And, you know, we have to put together, you know, in one ship, you may have two or three different parcels going to two or three different customers. And so, you know, you're managing 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, et cetera. So it's a balancing act trying to get it all done. But we look at that and try to, you know, maximize, get as much revenue as quickly as possible. So, you know, it's not like we're sitting on it. Okay. All right, that's helpful.

Thanks, I'll turn it over.

Again, if you would like to ask a question, please press star, then the number one on your telephone keypad. Your next question comes from the line of Alex Charintou with National Bank Financial. Please go ahead.

Hey, good morning, guys, and congrats on the great quarter. Good to see all your operations firing all cylinders there. A couple of questions for me on Caps variety and Kino Hill. Maybe just starting with Kino Hill, I want to clarify your slide five. You've got, you know, free cash flow, undiscounted cash flow expectations at different silver prices. And they're saying 440 tons per day. Is that kind of assuming your gradual ramp up to 440? Or is that hypothetical assuming it was 440 and 26, 27, 28, et cetera? I'm just trying to… Maybe

we should have clarified that in that slide. That is a ramp up to 440 tons per day. We would get to that 440 tons per day later in the decade, 29 or 30 in this scenario, ramping up to that point. So, yeah, I appreciate the question because, you know, we should have clarified that on the slide.

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

Yeah. Well, you know, Carlos is sitting here with me too. So please fill in some of the details. But we do have to build some tailings over the next few years. And I think you see that on slide six. It's kind of laid out there. We're working on tailings batch fill plants now. And that will, you know, kind of come to the conclusion sometime next year. There's some additional water treatment that we have to put in. I think there's some waste storage, some other infrastructures and buildings and things like that.

Yeah. There are already investments related with power distribution upgrades. So in some of the produce I'm going to take over one year. And so there are significant upgrades in the infrastructure. And we are expecting to maintain similar level of investment for the rest of the decade. Okay.

And

then just

on the permitting, sorry, for dry site tailings, slide six shows that, you know, later in 2028, additional permitting capacity required. Is that capacity required just to maintain it at 440? So I guess my question is, come 2028, end of the year, what's the risk that that's kind of a hard stop unless if you don't have the permitting, permitted additional capacity or do you have a bit more room to keep going and kind of work on the permits?

I guess I'll take that one. So yes, you know, in 20, the end of 2028, we start to run into a capacity requirement. We need additional capacity for tailings. We do have some flexibility that once we have the cemented tailings plant constructed and operational, we have more opportunity to put more of the tailings underground, which then makes that surface capacity less of a risk. But yes, somewhere in 2029, we do have to have that permit in place. And it's already underway. We're already chasing that. So it does give us some room to work. And similarly, the waste production, there is a limit in our permit that says total tons of waste that we can mine. It's not a surface constraint. It's not any physical constraints in the permit. So that needs an expansion as well. And they hit about the same time frame. So that's part of the reason why you ramp up to 440 over a longer period. If you ramp up the mine to 440 very quickly and then run out of capacity, then you're shut down. That doesn't help anyone either. So it's all about balancing it all the pieces at once. Okay, that makes a lot of sense. Thanks.

And then just lastly, cassabarade. So, you know, gold prices are obviously quite high. Is there opportunity to, and it's, I guess, a similar question here on the tailings and permits. Is there opportunity to continue cassabarade even for another six or 12 months, you know, kind of lowering the cutoff, getting more tons through? Or is it, are there other constraints, whether it's permits or tailings or something like that, that kind of making, that's making end of 2027 a deadline?

Well, we started this year with a view of closing down the underground around May of this year. Obviously, gold prices have helped. And, you know, it's turning 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 cue to you guys made 49,000 ounces from that mine year to date. You know, you've kept guidance. So I guess my question is, you know, any upside to that number, or should we be kind of thinking that production will come down the second half of this year?

I guess I can jump in and ask that. You know, we're working through a strategic review right now. I would suggest, as Rob said in his comments early in the slide, we'll have something to talk about to the market in a few weeks. And at that point, we'll be able to answer that question. All right. Fair enough. Thanks.

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

Hey, Robin team. Thanks for taking my question and congrats on the quarter. Just going back one more time to Kino. On the ramp up there, can you give us any granularity on the trajectory of the throughput? Would it be like a more gradual increase to the 440 tons per day, or should we expect kind of more lumpy gains in throughput as you complete some of these infrastructure items?

It'll be a gradual ramp up. 2027 will probably be somewhere around about 330 tons per day from memory, and that's around about 75% of the permanent capacity. And then it'll continue to ramp up to 440. Yeah, that's,

yeah, they're backing to that. 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 maybe 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. Yeah, we expect to get a binding of no significant impact on our permit application and the objection period ended this week. So the Forest Service will work through that, but we would expect by, 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.

Just to remind you, this is primarily a copper asset, a copper equivalent grade of about .2% copper equivalent. I would say that it's probably not going to be core for us, and 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 thing because we see substantial value there to be realized.

Okay, great. That's it for me. Thanks, guys. Thank you,

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

Actually, I'll make some closing remarks, operator. Just before we wrap up, I do want to recap Heckler's value proposition. So unmatched jurisdictional security is something I've talked about. And so in an era of increasing geopolitical uncertainty, I think Heckler offers what others can't, complete operational stability. With 100% of our core assets in Canada and the US, we eliminate the regulatory surprises, the policy shifts, the security risks that plague some of our competitors in less stable jurisdictions. And so your investment is going to be protected by really the world's most reliable mining frameworks. You've got industry-leading silver exposure, and if you believe in silver's fundamentals, and you should, Heckler delivers peer-leading silver revenue exposure. And so while we do produce gold and lead and zinc, silver dominates our revenue matrix, revenue mix rather. And that percentage could increase further depending on the results of the strategic review of Casa variety. When silver moves, we should move more. And this concentrated exposure gives you high leverage to the metal with some very compelling supply-demand dynamics in the sector. You've got decades of visible production. Short mine lives create investment uncertainty, and our assets offer something rare. Multi-decade production visibility that extends well beyond typical investment horizons. Our long-life mines don't just offer returns next quarter, they provide sustainable production platform that's positioned to deliver value through multiple commodity cycles. And this isn't just speculating on finding tomorrow's ounces, it's ownership of proven long-term cashflow generation. And there's discipline capital allocation. While competitors chase expensive M&A deals in risky jurisdictions, we've deliberately stayed on the sidelines of the recent consolidation frenzy. Our strategy is clear, create value through the drill bit, not through the checkbook. Our proven exploration teams consistently delivered mine life extensions and new discoveries, and that's the most accreted form of growth. We're also built for all cycles. So our crown jewels, Greens Creek and Lucky Friday, they're not just mines, they're fortresses. These are low cost long-life assets that are projected to generate cash even in downturns. And that positions us to play offense when others are forced to play defense. So when the next cycle turns and distress assets flood the market, we expect to have a balance sheet that allows us to capitalize, while others perhaps struggle to find their higher cost operations in risky jurisdictions. And the bottom line really is that I think Hekla offers what smart investors seek, and that's jurisdictional certainty, industry-leading silver leverage, decades of production visibility, discipline management and cycle-proof assets. In a sector full of risks, our approach is to systematically eliminate the variables that destroy value while maximizing exposure to silver's upside. So not just another mining investment, it's a strategic position in the future of silver, backed by the stability that only the U.S. and Canadian assets can provide. So thanks for joining us today, and we look forward to updating you on our continued progress in delivering shareholder value through operational excellence and strategic execution. Have a great day, Abraham.

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