Hecla Mining Company (HL) Earnings Call Transcript & Summary

Hello. I'm Phil Baker, President and CEO of Hecla Mining Company. Thanks for joining me as I discuss Hecla's 2021 third quarter, which was another quarter of solid financial performance. The performance starts with the revenues that led to free cash flow generation of $15.6 million, which makes for the eighth quarter out of the past 9 of generating free cash flow, and that was a total of $237 million over those 9 quarters. This is strong and consistent cash flow generation, and it's given us the financial strength and flexibility by putting $190 million of cash on the balance sheet and approximately $420 million of liquidity. As a result, Hecla was able to provide significant returns of capital to shareholders in the form of dividend payments. Year-to-date, we've returned 20% of our free cash flow to shareholders and 13% in the last 6 quarters. And this is going to be the 40th consecutive quarter of dividend payments. We've now paid $78 million in common dividends since 2011 when our dividend policy was first adopted. One of the unique aspects about Hecla is that we are 130 years old, and yet we continue to innovate and improve. We've been working to improve the operational consistency at Casa Berardi for a number of years now. And I'm happy to see this hard work paying off with record throughput of nearly 400,000 tons for the quarter, which is over 150% more tons than the third quarter in 2013. That was the year we acquired Casa. Since that time, we've recommissioned the East Mine. At the same time, we've expanded the operation to include numerous open pits and continually have extended the mine life. I highlight these facts not only to give credit for the good work accomplished at Casa Berardi but also to highlight the culture of improvement and innovation that drives the long-term value of our mines. Further evidence of this culture is our new mining method at the Lucky Friday, which we're calling Underhand Closed Bench. It's shown very positive results in controlling seismicity. Now this new mining method was developed as a result of another example of Hecla's commitment to innovation, and that was the development of the Remote Vein Miner or RVM. To prepare the mine to receive the RVM, we were completing destress blasting in order to have the mine go in without having seismicity issues. But we determined this blasting method could be optimized in a way to be a new and more efficient method of mining. In fact, this method of mining is so new that we have a patent pending. Now the RVM has been developed and constructed, and we will deploy it to another property because this new mining method is better at controlling seismicity, which is really a very important element of the safety of the mine. And speaking of safety, I want to give credit to our operations teams for their continued commitment to health and safety of our employees. We have achieved a company-wide all injury frequency rate of 1.63. Now we are tweaking our production and cost guidance slightly. We have increased gold production guidance, and we're affirming silver cost guidance, and we're reducing silver production guidance slightly to reflect Greens Creek's third quarter production and increasing Casa Berardi's all-in sustaining costs. Now let me finish off with a focus on ESG. The way Hecla has approached ESG is to make a real difference to our environment, for our employees, the communities we operate in and for shareholders. First, the environment. I'm proud of the fact that we are probably the lowest absolute emission per dollar revenue of any mining company, and we have invested enough in carbon offset credits to be net 0 for Scope 1 and 2 in 2021. And I suspect there are a few mining companies that can say they are net 0 for these scopes. And we expect to be net 0 again next year. Second, employee. I'm also proud of the way we treat our employees, who not just have a living wage that are generally among the highest-paid workers in their communities. And for our U.S. employees, we have benefits such as health care that's best-in-class. And we have a traditional pension that gives workers a defined benefit in addition to a 401(k). In our communities, we've had these mines operate for almost 2 full generations and as the largest private employer. So the community and the mines have been real active in their engagement because the community is largely a part of the mine. And finally, Hecla has about 80,000 shareholders. Roughly half are institutions; half, individuals. And at Hecla, the Board governs the business, thinking about how to align management's interests to those of all the shareholders. I think we do a pretty good job of that. Thanks for watching. If you have questions about the quarter, silver or how Hecla operates, please reach out to us on our website, heclamining.com.