Hecla Mining Company

Hello, everyone. Thank you for joining us and welcome to Q1 2026 Heklam Mining Company earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. I will now hand the conference over to Mike Parkin, Vice President of Strategy and Investor Relations. Mike, please go ahead.

Thank you, Hillary. Good morning and thank you for joining us for HECLA's first quarter 2026 results conference call. I'm Mike Parkin, Vice President of Strategy and Investor Relations. Our earnings release that was issued yesterday along with today's presentation are both available on our website. On the call today with us is Rob Krichmarov, President and Chief Executive Officer. Russell Lawler, Senior Vice President and Chief Financial Officer. Carlos Igar, Senior Vice President and Chief Operations Officer. Brian Erickson, Vice President of Operations, Curt Allen, Vice President Exploration, Matt Blattman, Vice President Technical Services, as well as other members of our management team. At the conclusion of our prepared remarks, we will also be available for questions. Turning to slide two, cautionary statements. Any forward-looking statements made today by the management team come under the Private Securities Litigation Reform Act and involve risks as shown on slide two. in our earnings release and in our 10Q filing 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 both the slides and the news release. We've also published our 2025 sustainability report earlier this week, which is available on our website. Please note, as we discuss financial figures and projections throughout this presentation and in the earnings release, we are referring to our continuing operations unless otherwise noted. This reflects the sale of the Casperati operation that closed at the end of March. I will now pass the call over to Rob.

Thank you, Mike, and good morning, everyone. Before I get into the quarter, I want to take a moment to acknowledge where we stand as a company right now because I think the context matters. 18 months ago when I joined Heckler, this company carried nearly $550 million of net debt. Today we carry no long-term debt, none. That transformation and what it unlocks for shareholders is really what this call is about. So turning to slide three. Heckler enters the second quarter of 2026 in the strongest financial and strategic position in the company's recent history. As North America's premium silver producer, We've got six core attributes that really distinguish us from our peer group. A silver legacy stretching back to 1891, operations exclusively in the United States and Canada, peer leading silver exposure in both revenue and reserves, a reserve life roughly double that of our peer group, and a deep and advancing project pipeline. And also a cost structure that positions us as the lowest cost producer in our peer group. These all help to support our premium valuation and make us a premier destination for silver investors. Turning to slide four. The Casa Bradi sale in March was a deliberate, well-timed decision. We harvested the cash flows to that point, secured substantial value, including a 9.9% equity stake in Orzone and the deferred cash consideration, and we freed ourselves to do what we should be doing, directing our capital and management's attention towards our silver growth platform. And then on April the 9th, About four weeks ago, we redeemed our final $263 million of senior notes. So Heckler is now free of long-term debt for the first time in many, many years. We have a fully undrawn $225 million revolving credit facility and a cash balance that's building on strong operating performance in the silver market. What excites me is what comes next across the portfolio, from the Greens Creek pyrite concentrate circuit and tailings reprocessing project to the Midas restart opportunity in Nevada. We have a set of organic value creation opportunities that are compelling because of what they share in common. Each is screening to have lower capital intensity than a conventional mine development. Though that assessment remains subject to ongoing evaluation, particularly for the earlier stage project, that means the potential for robust returns on invested capital and real per share value creation. We believe in this value and we're working hard to unlock it. Beyond these near to median turn opportunities, I'm very excited about our 2026 exploration program, representing a near doubling of exploration investment from 2025, which could be the thing that reshapes the long-term picture of this company. Turning to slide five. The numbers of this quarter, they speak for themselves, and I'm proud of what this team has delivered. Revenue from continuing operations exceeded $410 million. That's up 13% from the prior quarter and double what we generated in Q1 2025. record adjusted EBITDA of $265 million and record consolidated free cash flow of $144 million with every single mine free cash flow positive, every one. We produced 3.9 million ounces of silver, roughly 3% more than the prior quarter. Cash costs are nearly negative $3 per ounce and all in sustaining costs below $10 per ounce. At today's silver prices, those are exceptional margins. And quality of those margins reflects how the transformation of this business is showing up in the numbers. Turning to slide six. So slide six puts our production outlook in perspective. We're guiding to 15.1 to 16.5 million ounces of silver in 2026, a strong operational baseline. But what I want you to see is the tricky beyond that. Our project pipeline supports a potential pathway to 20-plus million ounces annually, and that's driven by Keno's gradual ramp to 440 tonnes per day and the potential restart of MIDAS in Nevada. And beyond that, a potential Keno Hill expansion and possibly more growth from the Aurora and Hollister mines in Nevada, as well as the Libby project in Montana. But before we get to MIDAS, there are two near-term opportunities associated with our flagship Greens Creek mine in Alaska that I'm particularly excited about. And I want to make sure that they get the proper airtime today. So Brian Erickson, our VP of Operation, he'll give an overview on those and then give you an update on the MIDAS Restart project. So Brian, over to you.

Thanks, Rob. Turning to slide seven. First, I'll discuss the Greens Creek Pyrite Concentrate Circuit, which is a new project that we're introducing to the market. We're evaluating the feasibility and economic potential of developing a pyrite concentrate circuit at the Greens Creek Mill. If successful, this project would generate additional marketable concentrate stream, boosting overall silver and gold recoveries from the mill, while potentially reducing the mine's reclamation liability significantly. There's also additional upside through potential reserve expansion, as the inclusion of lower grade silver in our sulfur blocks could grow the underground mineral reserve. The project's currently estimated to be low in capital intensity and could provide cash flow in about two years. We expect to provide another market update on this project in late 26 or early 27. Second, Green's Creek tailings reprocessing project. We introduced this project to the market during our investor day this past January in New York. I want to be clear about where this sits today. We're still in the evaluation stage and we'll make a development decision once the test work is done. What makes this project compelling is what's sitting in the dry stack facility at the site. an estimated 10.4 million tons containing an estimated 50 million ounces of silver and nearly 600,000 ounces of gold, along with several other critical minerals. At year-end 2025 prices, the gross metal value of what's in the facility was approximately $6.8 billion. I stress gross value because that's before recovery rates, processing costs, and the capital required to actually extract the metal. We have a third-party partner advancing phase three metallurgical test work, which we expect to complete around mid-2026. That test work, along with confirming a suitable processing facility, is what will determine whether and how we move forward with this work. Early results have been encouraging, and the indications are that this doesn't require the kind of capital you'd need to build a new mine from scratch. We'll have more to say on that once the test work's in hand. On top of the potential cash flow, reprocessing the tailings has the added benefit of potentially reducing the mine's long-term reclamation liability, turning what is currently a liability into a source of value. Finally, the Midas Restart Project in Nevada. As you know, Nevada is considered one of the best jurisdictions in the world for mining, and we have three highly compelling projects in the state that we're planning to advance this year through exploration and other work. Minus, most advanced of the three, is a historically high-grade silver operation, gold as well, to be acquired as part of the Quondex transaction. It has fully permitted infrastructure that meaningfully reduces the capital required to bring the asset into a cash-flowing state. We're evaluating a hub-and-spoke model, an operating model where ore sources from multiple regional properties, including the nearby Hollister project, are transported to and processed through the existing 1,200-ton-per-day permitted mill. The site also has an adjacent permitted tailings facility with approximately 15 years of storage capacity. We've allocated $16 million to Nevada Exploration in 2026, more than three times last year's investment, and Kurt will give you an update on the latest drilling results in a moment. Our goal is to establish a resource big enough to warrant investment and a restart, but let me be clear, with the grades we're hitting, the target is well below a million ounces of gold equivalent to get started. This targeted resource is expected to form the basis for a restart PEA. And I'll turn the call over to Carlos for the operations review.

Thank you, Brian. Before I went through the mines, I should mention that we have reiterated our production and cost guidance for the year. You can find that summary on slide 22. Turning to slide nine, starting with Green's Creek, in the first quarter, the mine produced 2.2 million ounces of silver and 13,000 ounces of gold. Total cost of sales came in at $82 million with cash costs of negative nearly $12 per ounce and ASIC of negative $8.39 per ounce, bought after byproduct credits. Those are best-in-class numbers, and they reflect the strong byproduct revenue we are getting from gold, zinc, and lead. Cash flow from operation was $131 million, and free cash flow was 126 million, a very strong quarter. One thing worth highlighting operationally, Green's Creek set a record for underground backfill placement this quarter, placing nearly 164,000 tons, which is 16% above the 2025 quarterly average. That's a meaningful achievement because it gives us more operational flexibility and better ground stability as we move through the rest of the year. Turning to slide 10, Lucky Friday produced 1.2 million ounces of silver in Q1. Total cost of sales was 49 million. Cash costs were 12.07 per ounce. And ASIC was 23.78 per ounce, sold after byproduct credits. Free cash flow was 49 million. On the operating side, truckload was up 10% over the prior quarter. although that was partially offset by 11% decline in the mid-grade. That's a fairly typical outcome given the grade variability you naturally see at Lucky Friday, and we do expect average silver grade to improve in its second quarter. On the surface cooling project, construction is 81% complete, and we are on track to finish by mid-year. This is an important long-term investment It's designed to expand cooling capacity over the mines, roughly 15-year reserve lives, so we can continue mining safely and productively at that. Turning to slide 11, at Keno Hill, we produced nearly half a million ounces of silver in Q1, and free cash flow was 15.3 million. I want to point out that these marks four consecutive quarters of positive free cash flow at Keno Hill, demonstrating profitability at current throughput rates and silver prices. Production in Q1 was impacted by two things, reduced power supply from Yukon Energy Corporation due to the extreme cold weather that carried over from Q4, and lower silver grades as we mined through a lower grade zone of the Birmingham deposit. The good news is both of those headwinds are behind us. We expect milk rates to improve in Q2 as we move into higher grade areas and the power constraints have been resolved. With that, I will hand it over to Russell for the finance update.

Thank you, Carlos. As we turn to slide 13, let me take you through our financial results. As Mike noted in the cautionary statements, what I'm about to discuss is based on results from our continuing operations meaning that the impact from our sold asset Casa Berardi is excluded from these figures. The first quarter was record setting for a number of financial metrics. Revenue from continuing operations was more than $410 million, up 13% over the prior quarter and doubled the level from the first quarter of last year. Reflecting continued operational execution and significantly higher realized silver and gold prices, As you can see on slide 13, 73% of our revenues came from silver and all of that revenue came from either the United States or Canada. This fundamentally sets HECLA apart from peers in both categories and provides significant value to our shareholders. What is more important, though, is the return on these revenues. As you can see from the graphs on the bottom of the slide, we realized a margin of 90% of the realized silver price during the quarter, which is truly phenomenal. This margin translated to substantial free cash flow from all our mines which as expected was led by Greens Creek at nearly $126 million for the quarter. However, Lucky Friday was also impressive at almost $50 million, while Keno Hill generated $15 million, even though it's still in the ramp up stage. I'll speak more about how we'll allocate this capital in a couple of slides. Turning to the balance sheet, we ended the quarter with $588 million in cash and total debt of $266 million, resulting in a net cash position of $321 million. This is a significant strategic inflection point and a significant milestone. The chart on this slide in the upper right-hand corner illustrates just how dramatically this picture has improved in a fairly short period of time. As Rob mentioned, it's something that materially de-risks this company and adds substantial shareholder value. After quarter end, we redeemed our remaining $263 million of senior notes, leaving HECLA with no long-term debt for the first time in many years. We now carry a fully undrawn $225 million revolving credit facility with a $75 million accordion representing the strongest balance sheet in the company's recent history. Turning to slide 14, I'd like to turn our attention to what the entire suite of assets can do over time at different price decks. The chart you see on this slide has been updated for Q1 results and illustrates projected 2026 consolidated free cash flow across a range of silver and gold prices. At $100 ounce per silver and $5,500 ounce per gold, we project over $900 million of consolidated free cash flow for the full year. At price assumptions of about where we are today, $75 silver and $4,500 gold, we project over $700 million. This incredible cash generation capability provides substantial flexibility and strategic alternatives we'll discuss on the next slide. Our capital allocation framework on slide 15 reflects a disciplined, priority-ordered approach. Safety and environmental excellence comes first. It is the foundation of our license to operate. Investment in these priorities is non-negotiable. As we move to investing in sustaining and growth capital, where we see target returns in the 10 to 15 percent range, these investments are the lifeblood of our company and provide future value for further investment. We'll hear from Curt in a minute on exploration. However, our potential to add shareholder value through the drill bit is exceptional. We've increased our investment this year as we've de-risked our balance sheet, freed up cash flows, and would expect with success the potential to continue to increase these investments in the future. I discussed the balance sheet strength and deleveraging and the value this brings to our investors on the previous slide. However, we will continue to add cash to our balance sheet while maintaining high-quality investments in our business. Strategic investments are evaluated on return on invested capital and per share accretion basis. but do not come around often. And thus, we need to maintain a strong balance sheet to be able to make these investments when those opportunities arise. Additionally, considering our best-in-class minds with long lives, low cost, and the best jurisdictions, we don't feel rushed to make any strategic investments now, but we'll be in a position to do so when the time comes. And finally, shareholder returns round out the framework. With a debt-free balance sheet and record-free cash flow, we're focused on securing a cash balance capable of funding our project pipeline and surfacing value for our shareholders. And as we do so, we'll begin to consider capital return to our shareholders. We currently have a share repurchase plan which has been board approved for 20 million shares. I want to put that in context for a moment because I think it speaks to something that distinguishes HECLA from our peer group. Our peers have pursued growth aggressively through M&A over the past five years. Deals that diluted their shareholders by more than 50% in some cases. Hekla's share count has grown at a fraction of that rate. And the result? On every per share metric that matters, silver production, reserves, revenue, we rank first among our peers. We're the only silver producer in our peer group to have grown silver production per share over that period. That's the discipline we intend to carry forward. So as we accumulate cash, and if we see dislocation in our value versus the underlying fundamentals, we won't hesitate to deploy capital through buybacks as long as it meets our return on capital criteria. I'll now turn the call over to Kurt for the exploration update.

Thank you, Russell. Turning to slide 17, 2026 marks the transformational year for HECLA's exploration program. We're investing $55 million in exploration and pre-development, which is an all-time record. We've structured the programs across three priority areas, and I expect more and more activity across a number of sites as we move into the warmer months. At our producing assets, we're aiming to more than replace reserve depletion, and I'm very excited about our Nevada growth projects with drilling ongoing at Midas, starting up at Hollister in June, and at Aurora in July. The Aurora Gold and Silver project in western Nevada really has me most excited. It's earlier stage than Midas, but arguably carries the greatest long-term discovery potential. With historic grades averaging over two ounces per ton gold equivalent and seven drill ready targets now defined across the large land package, Aurora has the hallmarks of a district that has been underexplored rather than exhausted. And critically, Aurora has its own 600 ton per day permitted mill onsite, which means that if exploration delivers a compelling resource, the capital threshold to production is materially lower than a blank sheet development. While I have been to Aurora multiple times, Rob has recently visited the project, and we're both very eager to see our initial drill targets tested. Turning to slide 18. Our follow-up drilling on the center offset vein at Midas continues to build our understanding of this high-grade gold and silver system. Drill hole DMC476 returned 0.21 ounce per ton gold, 1.6 ounce per ton silver over 2.3 feet. extending the known vertical extent of narrow high-grade mineralization along the center offset structure to more than 500 feet. We've now defined the strike length of this structure over 1,350 feet and drilling will continue to step out to the southeast where the structure remains open as well as to the northwest. Two additional holes also intercepted parallel high-grade structures reinforcing the prospectivity of this area. We will be providing regular Nevada updates, exploration updates throughout 2026. I'll now turn the call back to Rob for closing remarks.

Thank you, Kurt. Let me start with the market because it really sets the stage for everything else. We recently, recently the World Silver Survey was released and it confirmed 2025 as the fifth consecutive year of supply deficit. with cumulative stock drawdowns now exceeding 700 million ounces since 2021. That's the kind of structural tightness that doesn't resolve overnight, and we're not seeing new mine supply coming online in any meaningful manner over the medium term. Prices have been volatile year to date. That's the nature of this market. But the gold to silver ratio sits around 65 to 1 today, well above the trough that we saw in the last silver bull market. And history tells us that ratio compresses as silver outperforms. We don't know exactly when that's going to happen, what i do know is that heckler debt free with record free cash flow and the best silver exposure in the sector is a really compelling way to be positioned for when it actually does the six attributes on this slide legacy jurisdiction silver focus reserve life project pipeline cost structure they're not just a list they're the result of deliberate choices made by this team over the past 18 months and i believe they represent a differentiated investment case that the market will increasingly recognise. Debt-free, record-free cash flow, clear organic growth pathway at low capital intensity. We're just getting started and I look forward to keeping you updated throughout the year. I will now ask the operator to open the line for questions.

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you're muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Heiko Ehle from Wainwright. Heiko, your line is now open.

Hey, good morning, Rob and team. How are you? Good morning, Heiko. Given the current commodity price environment, are there any longer-term capital projects that you are now more included to undertake at any of your currently operational sites, say in 2027 and beyond? You've mentioned a bit about the pyrite concentrate circuits and the tailing reprocessing project. But I mean, other things that maybe are not yet built into analyst models on a three-year plan, maybe?

Thanks for the question, Heiko. Not really. I mean, we've basically highlighted the projects that we are focused on in the next several years. Some of them are obviously shorter term, like the pyrite concentrate project, which Carlos spoke about. I mean, that's very near-term opportunity, perhaps coming on in the next couple of years. Beyond that, nothing really longer term unless we have spectacular success at Aurora.

Thank you for your question. Oh, yeah, that's fine. Thank you.

Thank you very much for your question. Your next question comes from the line of Wayne Lamb from TD. Your line is now open.

Hey, thanks. Morning, guys. Maybe just curious, at Keno Hill, can you remind us on what the permits are that are outstanding there that are limiting you from renting up throughput? If I recall, was that just on the back end capacity with the dry stack tailings? And just wondering, with the potential resolution of the Victoria Gold sales process recently announced, do you view that as maybe providing some visibility to permitting that would allow you to ramp up the mining rates there?

Thanks for your question, Wayne. On Victoria Gold, it doesn't really affect us. other than at some point when they're ready, they're going to be competing for a little bit of permitting bandwidth. But I don't expect anything's going to happen there in a hurry. You know, some of the outstanding issues there, the leakage that's still happening, that needs to be resolved. A robust relationship like the one we have with the First Nation, that needs to be established, all that credibility. So Vic Gold, I can't see that really affecting us in the short term. On the permits question, I have Patrick Malone. He's our VP of Sustainability. I'm just going to defer to him because he's been very heavily involved with him and his team, and he's built out a team there to assist us in our permitting endeavors. Patrick.

Thanks, Rob. So Keno Hills permitting path involves two processes. First, we have to go through submit a project proposal to YESA, which is the Yukon Environmental Socioeconomic Assessment Board. We expect to do that by the year end. Then yes, it takes about 12 months to complete its review, after which we'll submit two permit applications, the QML, which is a quartz mining license, and a water license for amendment. Those amendments are really about removing some of the long term constraints. Those constraints include constraints on waste rock, on tailings, and on water treatment, as well as some other things like power and camp space. We expect, our current estimate is that the amended permits could be received sometime around mid-2029, although of course there's variability around permitting. In the short term, between now and the time we receive those permits, there are a few constraints that continue to hold Keno Hill back. In the near term, we need approvals on our Phase II West tailings from from the regulators which would allow us to expand the phase two tailings uh then after that waste drop potentially becomes a limitation under both the the QML and the water license we are so receiving these long-term permits in mid-2029 is critical to our our long-term success we are running up against waste production limits and storage capacities in the near term But we're actively engaged with regulators to get some short term relief until we receive those permit amendments.

Okay, thanks. So, so I guess, you know, I know you guys had previously outlined a very gradual phase ramp up there. So I guess there's no potential to kind of fast track the wrap up of. You know, development on say, Birmingham or flame and Martha, or some of that infrastructure items so that. when you get the permits, you'd be in position to quickly accelerate to the 440 permitted rate or even 600 imminently?

The 440 rate, I mean, it's going to be a gradual ramp up. Again, it's a sequence of permits. In the meantime, we need to manage the water. So the more development you do, the more water you expose, the more water you need to treat. And so all these things are tied in. I can't see that there's really a way to meaningfully accelerate this project. I would say there are some risks with permitting, but I would think of any potential Let's call it a curtailment. It's really a bridge problem. It's not an asset problem. The reserves don't change. Obviously, if there is a delay, that's got time value of money impact on IRR. But we have a 16-year reserve life. We have very, very strong economics. Even at $30 silver, that doesn't go away. Our focus, again, is on that permitting work. That keeps us running. And again, note what we talked about earlier in the school, $15.3 million in free cash flow in Q1. And that's the trajectory that we're protecting. So really, it's really all about the permitting and getting ready to ramp up to 440. On the 600 tons per day and beyond, that's really future. That's going to require a whole new wave of capital investment and additional permitting. We're not focused on that. We're really focused on the here and now.

OK, I understand. Thanks. And then maybe just You know, with the high yield notes paid down, obviously the balance sheet is in pretty great shape. Obviously, in a very different market, you guys had previously rolled back the silver link dividend component. But just in the context of your peers now increasing capital returns and linking those returns to cash flows, is that something that we could see sometime soon with a similarly linked component given the cash generation projected ahead?

Russell Moore- Thanks, Dwayne. This is Russell. I can take that. You know, certainly in our prepared remarks, I mentioned that we are looking at capital returns, but what we do believe is that investment in our business brings better returns than it does in terms of shareholder returns. However, you know, we do have a strong balance sheet, like you said, and we have deployed significant cash to debt redemption as compared to, you know, if you look at our peers, you know, many of our peers have refinanced or kept the debt on their balance sheet. So, We have a little bit of a different strategy there to trying to return long-term shareholder value that way. But we will be discussing with our board, you know, how and what our return on investment strategy should be or return on capital strategy should be. And so, yeah, I would say stay tuned to that. We'll continue to discuss that with the market as time goes along, but we want to make sure that we adequately fund all of the growth opportunities that we have internally because that's really where the value is created in this business.

Thank you for your question. Your next question comes from the line of Cosmo Chu from CIBC. Your line is now open.

Hi, thanks, Rob and team. Maybe my first question is a follow-up. uh you know rob in the mdna you mentioned that the 440 tons per day at keno hill is a medium term target but it sounds like what what is medium term it sounds like you might need the permit so it's medium term 2029 you're not going to be able to hit the 440 tons per day until you get those permits sometime in 2029 am i reading that correctly

But yeah, that's Patrick pointed to a couple of key permits that we really need to get by 2029. And so until we get those that would.

It remains a challenge between now and the time we get our permit amendments that really unlocks the value and we're expecting that to be mid 2029.

Got it understood. And then maybe you know at. Greens Creek. and maybe elsewhere as well. I saw that there was a bit of inventory buildup. You know, there was inventory buildup last quarter. I think you're kind of working through it. For example, the silver and zinc is now kind of, you know, sales is equating to production, but precious metals, you're working it through, but it's still not completely, you haven't completely worked through, you know, some of that inventory buildup yet. Lucky Friday sales were lower than production in Q1. So I guess holistically, my question is, you know, What's causing the inventory buildup? When do you think you can kind of work through some of that, you know, through sales in subsequent quarters? And how long is that going to take?

Yeah, thanks, Cosmos. I'll take that question. And, you know, in terms of the inventory, good morning. In terms of the inventory and the accounts receivable, keep in mind at Greens Creek, we have our own deepwater port that we kind of control. So that's actually a huge strategic asset to us. But what that means is our shipments go out generally once a month, and they're very lumpy. And so just depending on when the ship leaves the port, you may have inventory that's sitting at the port, or you may have AR that's sitting in your accounts receivable. We, we do have opportunities to advance the receipt of accounts receivable, but when we take a look at it, especially with the balance sheet that we have, it's really. A creative to our investors for us just to wait and get those funds in the normal course of business. And so that's what you've seen probably more in the past, maybe year than you had previously is that, uh, we're making those decisions, uh, with a longer term view than we have previously because of the lack of debt and the. TAB, You know, less leverage that kind of thing, and so I would suggest it's really a timing difference and quarter to quarter it's going to be challenging to try to determine exactly when those ships will leave and when they will. TAB, And when that ar might be collected, but what I would say, and is that you know the accounts receivable that we had on our books. TAB, As of the end of the quarter was really collected in the in the next 30 days, mostly we also see because we're concentrate producers. As the price of silver goes up, you know, we'll settle those, the pricing on shipments will be a future month. So we see the value of the accounts receivable go up as well. So that's part of what you're seeing in accounts receivable. As it relates to Lucky Friday, we generally ship just on a monthly basis, or sorry, weekly basis. And therefore, it just kind of depends on when during the week the month falls as determines on what the AR or the inventory is.

Great. I'm going to ask my questions before I get cut off by the operator here. In terms of Greens Creek, it sounds like certainly very interesting in terms of different projects that you have in place. And it's good that you've announced the pyrite concentrate project as well. I guess my question is, in terms of return on invested capital, what kind of hurdle rate are you looking at in terms of some of these projects here, if you can share with us? And then in terms of the pyrite concentrate project, you know, again, to the extent that you can share with us any potential sort of penalty elements in that concentrate and what's the market like right now for that pyrite concentrate?

In terms of return on invested capital, we haven't isolated it for that particular project, but I would expect it would be very compelling just given that it's a fairly low capex project. I don't know what a circuit costs. I'm going to guess of around, Matt, $40 million or something, $50? Good starting point. Yep. And so I would expect the return on that investment to be really, really quite compelling. Again, our corporate target is 12% to 15%, and this will easily fit in that. With regards to the pyro concentrate market, my understanding is it's very, very strong, and that's why we're looking at it. And this unlocks potentially more reserves as well as contributes to revenue.

Yeah, the only thing I'd like to add to that, Rob, you know, in Cosmos, we've run these things internally, but we're very early in the process. So what I don't want to do is give a specific number that, you know, we would, we would have to reel back because we have to, we've got a lot of work left to do, but in the work that we've done and we look at the treatment charges that we're modeling, we're being conservative in terms of both the charge that we would pay as well as the refining charge for both gold and silver. and the payabilities. And even with those, what I would hope will be conservative, but maybe long-term treatment charges and refining charges, it's still very, very compelling. And so I think that's probably about all of the detail that we have right now until we are able to do a bit more work and really put a holistic study around it.

the other thing i forgot to mention is that it also um reduces our reclamation liability so um you know multiple benefits here we're very excited about this project and and also the fact that it's slow capital intensity in near term yeah and then and if you do get the go ahead for it uh sometime down the road all these projects can happen concurrently right like in terms of the tailings recovery the pirate concentrate again not saying that you know in terms of timing it's going to coincide exactly but you know, if that's the case, they can happen concurrently.

Spot on, Cosmos. We are working on both streams. Yeah, yeah, you're absolutely right. We're working on both streams. They're not going to all land at the same time. The pyroicons obviously are much shorter term. We still, just to remind you, the tailings reprocessing, our phase three testing is underway at the moment. The samples have arrived in the laboratory. If we get success on that, we'll update the market later on this year. The next stage would really be progressively scaling up to next to pilot plant potentially, and then scaling up beyond that. That's earlier stage. It's probably not going to deliver beyond the potential delivery of the pyrite con, but we're working on both of them at the same time.

Great. Thanks, Rob, Russell, and team for answering all my questions. That's all I have. Thank you. Thanks.

Thanks for your questions, Cosmos.

Your next question comes from the line of Alex Tarantiu from National Bank. Alex, your line is now open.

Yeah, good morning, and congrats again on another good quarter. Questions for you. I just wanted to follow up just on the keynote hill. Sorry, can you guys hear me? I can now, yeah. Oh OK, I'm not sure what happened there. OK, it's my first question just on. I want to follow up on the Kino Hill. So to get to the 440 you're talking about, you know, mid 2029 to get those permits. You previously talked about slowly ramping one up over the next few years. Is that still the plan with with with that timing or should we just kind of assume you know more more steady state until then?

Hi Alex, this is Patrick Malone. James Meeker- yeah I think we're looking at more steady state some of that will be dependent on ongoing discussions with the regulators trying to provide a short term relief, but I think you can expect steady state or, in some cases, maybe slowing down a bit to to make sure that we're maintaining capacity. James Meeker- Okay that's great thanks.

James Meeker- And the last answer my next question, you know I know you, you know that you're going to have some discussions with your board on on capital return strategy here but. You know, you did mention also you have a share buyback in place. Is this something that you plan if you decide to have a program buy in place or just be a bit more opportunistic? Or how are you approaching that scenario?

I would suggest we need to discuss that with our board and ensure that we're all aligned on a holistic strategy. But I would also suggest that any investments that we do make from a shareholder return perspective still have to meet the return on investment criteria that we've outlined for investments that we make in our business as well. So we'll be looking at it from that perspective. Okay. All right. Now that makes sense.

Last question, if I may. Greens Creek had another really good quarter here, you know, beat the I think be my numbers at least based on grade. And you know, if you look at annual guidance, this was, you know, above 25%. Anyways, I don't know if the exact math was, but my question here is it was that in line with expectations of those better grades or you know, do you see are there any planned, you know, downtimes or lower grade phases that we could expect for the rest of the year? Just kind of wondering, is there room for the guidance to possibly even be improved a little on that mind if you are hitting better grades than expected?

We are rating our grade and our cost for green streak and we are expecting similar grades for the remaining of the year.

Okay. All right, that's good to see. Thank you. All right, guys, that's it for me. Thank you. Thank you.

Thank you for your questions. Your next question comes from the line of John from John very independent research. Your line is now open.

Thank you for taking my question. How should we compare the new Midas mine to the old one that Dr. Ken Snyder and the team started up? Should we think of it as 500 tons a day, half an ounce gold, 10 to 1 silver? Might the tons be more?

Thanks for your question, John. I would say it's almost certainly going to look different from the old Midas mine. So two things here. The starting resource at CINSA, which I've flagged previously, is roughly between 180 to 200,000 ounces at very high grades. It is a narrow ore body. The extensions that Kurt and his team have found are, again, narrow and very high grade. The mill is rated at 1200 tonnes per day. So that's what we have to play with. We're looking at potentially multiple ore sources from the centre. We're also re-looking at any potential remnant mining at Midas itself. That's a study that's underway. And you recall that Midas was closed at a significantly lower gold price than where we are today. So there's potentially some wins there. So I guess what I'm saying, John, is that we have potentially multiple ore sources and it's not gonna look exactly like the previous MIDAS operation. The one thing that is constant is that there is a permitted limit on 1200 tons per day for the mill.

Thank you. I'm unfamiliar with Aurora. Could you tell us whether it's open pit heat bleach target what the range of grades might be, whether it's got much silver in it, or whatever we know thus far about Aurora.

Thanks for that. I'm going to ask Kurt to chip in in a minute, but I have to say, as Kurt pointed out, I went out to Aurora about four weeks ago. Now, I'd heard Kurt talking very excitedly about Aurora in the past, and I had to work to getting focused on Midas, which he's also excited about. And when I went out there, like I get it now, you walk around on the surface and there are historic open pits, historic undergrounds. There's veins with incredible intensity that just run for kilometres. And Kurt's favourite target has never had a single drill hole in it. So, Kurt, anything you want to add?

Yeah, I think our targets that we have defined, they're underground mineable targets. We're not focused on open pit mineralization there at this point. There has been open pit mining there at Aurora in the past, but we're really focused on high grade underground mineable targets. Really excited about this project.

Is it gold only or is it gold and silver?

It's gold and silver, probably a one-to-one ratio. For the most part, it's high-grade gold, but there's associated high-grade silver with that as well.

Thank you. If I could ask one more. Core and Pan Am each made large silver acquisitions in Mexico. I know we're sticking to the U.S. and Canada acquisitions, now that your balance sheet is very strong, is it possible to consider an acquisition? And if so, would it be limited to the US and Canada? Most of the silver targets are in Latin America or spread around the world.

Yeah, good question. I would say one of the things that really differentiates us, and I've pointed out in the opening slide, is that we operate in safe jurisdictions. And so it's You know, you've got to go where the silver is, and so, you know, there's scarcity of primary silver deposits. We would consider other jurisdictions, but again, they'd have to be in relatively safe jurisdictions. So as a rule of thumb, anything in the top third of the Fraser Institute Index, we would do a proper analysis on. We wouldn't accept it at face value and wouldn't understand those risks before we moved. So that's... We would potentially go offshore, in a safer jurisdiction on M&A you know we've outlined our organic growth project that's really what we're focused on obviously we continue to look at opportunities you never stop looking in this business but we're not really interested in getting bigger for its own sake so you know scale alone that doesn't create value and I think Russell discussed the dilution that comes with doing M&A you know it's an easy trap to fall into and one we've consciously rejected but Again, what we're really focused on is long-term shareholder value creation on a per share basis. And that governs all the decisions that we make. So again, you know, we are going to be disciplined if and when we do M&A. It's really going to be about jurisdiction, you know, safer jurisdictions, precious metals focused with a strong, strong silver bias, exceptional gold assets we will consider, but only if they're compelling cash generators that would really fund really our overall silver strategy, but silver first. Would also have to see a clear competitive advantage for us in operating the asset, whether that's, you know, district consolidation, whether it's leveraging existing infrastructure, our technical capability or exploration upside, whatever that is, we'd need to see a competitive advantage and financial returns. Obviously, as Russell talked about, we're going to hold ourselves accountable to that. So, you know, right now the M&A environment is pretty active. There is competitive pressure to move. We understand that, but we've seen what happens when Stephen DeRieve- Companies acquire out of fear of missing out, rather than conviction and we're not going to do that so we're not acquisition dependent for growth internal pipelines, our main focus, but will obviously be opportunistic.

Stephen DeRieve- Thank you and congratulations. Stephen DeRieve- Thank you.

This completes the time allocated for questions. If you have additional questions, please reach out to Mike Parkin via the Contact Us link on the website. I will now turn the call back to Rob Krichmarov, President and CEO, for closing remarks. Please go ahead.

Thank you, Hilary, and thank you all for your time and your questions this morning. This team's worked hard to get Hekla to this point. debt free, cash generative and with the best silver exposure in the sector. The fundamentals are with us and we're just getting started. So have a great day, everyone. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.