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.