Hecla Mining Company ($HL)

Hello, everyone. Thank you for joining us, and welcome to Q1 2026 Hecla Mining Company Earnings Conference Call. [Operator Instructions] 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 Krcmarov, President and Chief Executive Officer; Russell Lawlar, Senior Vice President and Chief Financial Officer; Carlos Aguiar, Senior Vice President and Chief Operations Officer; Brian Erickson, Vice President of Operations; Kurt 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 2, 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 2 in our earnings release and in our 10-Q 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 Casa Berardi 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 Hecla, 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 3. Hecla 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 6 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 4. The Casa Berardi 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 Orezone and the deferred cash consideration. And we proved ourselves to do what we should be doing, directing our capital and management's attention towards our silver growth platform. And then on April 9, about 4 weeks ago, we redeemed our final $263 million of senior notes. So Hecla 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 Highrite 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 screened to have lower capital intensity than the conventional mine development, though that assessment remains subject to ongoing evaluation, particularly for the early-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 medium-term opportunities, I am 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 5. 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, everyone. 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 the quality of those margins reflects how the transformation of this business is showing up in the numbers. Turning to Slide 6. So Slide 6 puts our production outlook in perspective. We're guiding to 15.1 million to 16.5 million ounces of silver in 2026, a strong operational baseline. But what I want you to see is the trajectory 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 Liby project in Montana. But before we get to Midas, there are 2 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 Operations, he will 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 7. 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 and our sulfur blocks could grow the underground mineral reserve. The project is currently estimated to be low in capital intensity and could provide cash flow in about 2 years. We expect to provide another market update on this project in late '26, early '27. Second, Greens 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 tonnes 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 II 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 need to build a new mine from scratch. We'll have more to say on that -- more to say on that once the test works 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 3 highly compelling projects in the state that we're planning to advance this year through exploration and other work. Midas, the most advanced of the 3 is a historically high-grade silver operation, gold as well we acquired as part of the Klondex 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 -- operating model where ore sources from multiple regional properties, including the nearby Hollister project are transported to and processed through the existing 1,200 tonne 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 3x 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 in a restart. But let me be clear that the grades we're hitting the target is well below 1 million ounces of gold equivalent to get started. This targeted resource is expected to form the basis for a restart PEA. I'll now turn the call over to Carlos for the operations review.

Thank you, Brian. Before I walk 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 9, starting with Greens 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 AISC of negative $8.39 per ounce, both 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 operations was $131 million and free cash flow was $126 million, a very strong quarter. One thing worth highlighting operationally, Greens Creek set a record for underground backfill placement this quarter, placing nearly 164,000 tonnes, 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 AISC was $23.78 per ounce after by-product credits. Free cash flow was $49 million. On the operating side, throughput was up 10% over the prior quarter, although that was partially offset by 11% decline in the mill 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 the second quarter. On the surface cooling project, construction is 81% complete, and we are on track to finish by midyear. This is an important long-term investment. It's designed to expand cooling capacity over the mine's roughly 15-year reserve life, so we can continue mining safely and productively at depth. Turning to Slide 11. At Keno Hill, we produced nearly 0.5 million ounces of silver in Q1 and free cash flow was $15.3 million. I want to point out that this marks 4 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 2 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 mine it through a lower grade zone of the Birmingham deposit. The good news is both of those headwinds are behind us. We expect mill 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 double 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 during 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 derisked 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 nonnegotiable. As we move to investing in sustaining and growth capital where we see target returns in the 10% to 15% range, these investments are the lifeblood of our company and provide future value for further investment. We'll hear from Kurt 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 derisked 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 mines with long lives, low cost in 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 5 years, deals that diluted their shareholders by more than 50% in some cases. Hecla'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 a transformational year for Hecla's exploration program. We're investing $55 million in exploration and predevelopment, which is an all-time record. We've structured the programs across 3 priority areas, and I expect more and more activity across the 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 2 ounces per tonne gold equivalent and 7 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 tonne per day permitted mill on site, 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 DMC 476 returned 0.21 ounce per tonne gold, 1.6 ounce per tonne 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, 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. Price has been volatile year-to-date. That's the nature of this market, but the gold-to-silver ratio sits around 65:1 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. But what I do know is that Hecla, 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 6 attributes on this slide, legacy jurisdiction, silver focus, reserve life, project pipeline, cost structure, they're not just the 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 recognize 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.

Your first question comes from the line of Heiko Ihle from Wainwright.

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 circuit for the tailings reprocessing project. But I mean, are there things that maybe are not yet built into analyst models on a 3-year plan maybe?

Thanks for the question, Heiko. Not really. I mean we're 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 Carla spoke about. I mean that's a 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.

Your next question comes from the line of Wayne Lam from TD.

Maybe just curious at Keno Hill, can you remind us on what the permits are that are outstanding there that are limiting you from ramping up throughput? And 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 is going to happen there in a hurry. 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 B 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 Hill's permitting path involves 2 processes. First, we have to go through -- submit a project proposal to Yes, which is the Yukon Environmental Socioeconomic Assessment Board. We expect to do that by the year-end. Then -- yes takes about 12 months to complete its review, after which we'll submit 2 permit applications, the QML, which supports 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 2 West tailings from the regulators, which would allow us to expand the Phase 2 tailings. Then after that, waste rock potentially becomes a limitation under both the QML and the water license. We are -- so receiving these long-term permits in mid-2029 is critical to 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 the regulators to get some short-term relief until we receive those permit amendments.

Okay. So I guess, I know you guys have previously outlined a very gradual phase ramp-up there. So I guess there's no potential to kind of fast track the ramp-up of development on, say, Birmingham or Flame & Moth or some of the infrastructure items so that when you get the permits, you'd be in a 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 need you expose the more water you need to treat. 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 is really a bridge problem. It's not an asset problem. The reserves don't change. But 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, I'd note what we talked about earlier in this call, $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 40. On the 600 tonnes per day, that's -- and beyond, that's really a 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.

Okay. Understood. And then maybe just with the high-yield notes paid down, obviously, the balance sheet is in pretty great shape. Obviously, in a very different market, you guys have previously rolled back the Silverlink 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?

Thanks, Wayne. This is Russell. I can take that. 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, we do have a strong balance sheet, like you said, and we have deployed significant cash to debt redemption as compared to -- if you look at our peers, many of our peers have refinanced or kept the debt on the 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 how and what our return on investment strategy should be, our return on capital strategy should be. And so yes, 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.

Your next question comes from the line of Cosmos Chiu from CIBC.

Maybe my first question is a follow-up. Rob, in the MD&A, you mentioned that the 440 tonnes per day at Keno Hill is a medium-term target. But it sounds like -- what is medium term? It sounds like you might need the permit. So is medium term, 2029, you're not going to be able to hit the 440 tonnes per day until you get those permits sometime in 2029. Am I reading that correctly?

Yes. 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 at Greens Creek and maybe elsewhere as well, I saw that there was a bit of inventory buildup. 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 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 some of that inventory buildup yet. Lucky Friday sales were lower than production in Q1. So I guess, holistically, my question is what's causing the inventory buildup? When do you think you can kind of work through some of that through sales in subsequent quarters? And how long is that going to take?

Yes. Thanks, Cosmos. I'll take that question. And 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 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 accretive 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 we're making those decisions with a longer-term view than we have previously because of the lack of debt and the 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 -- and when that AR might be collected. But what I would say is that the accounts receivable that we had on our books as of the end of the quarter was really collected in the next 30 days mostly. We also see because we're concentrate producers, as the price of silver goes up, 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, monthly -- 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 want to ask my question before I get cut off by the operator here. And 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, again, to the extent that you can share with us, any potential sort of penalty element to 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 the circuit cost. I'm going to guess around net $40 million or something, $50 million.

Good starting point.

Yes.

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 concentrate market, my understanding is very, very strong, and that's why we're looking at it. And this unlocks potentially more reserves as well as contributes to revenue.

Yes. The only thing I'd like to add to that, Rob, 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 we would have to reel back because we have 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.

Yes. The other thing I forgot to mention is that it also reduces our reclamation liability. So multiple benefits here. We're very excited about this project and also the fact that it's low capital intensity in near term.

Yes. And then if you do get the go ahead for it sometime down the road, all these projects can happen concurrently, right? Like in terms of the tailings recovery, the high concentrate, again, not saying that in terms of timing, it's going to coincide exactly, but if that's the case, they can happen concurrently.

Spot on Cosmos. We are working on both streams. Yes. You're absolutely right. We're working on both streams. They're not going to all land at the same time. The pyrite con is obviously much shorter term. We still -- just to remind you, the tailings reprocessing, our Phase III 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 pilot plant potentially and then scaling up beyond that. That's earlier stage. It's probably not going to deliver for beyond the potential delivery of the pyrite, but we're working on both of them at the same time.

Your next question comes from the line of Alex Terentiew from National Bank.

Congrats again on another good quarter. Questions for you. Just -- I just want to follow up just on the Keno Hill. Sorry, can you guys hear me?

I can now, yes.

Okay. I'm not sure what happened there. Okay. My first question, just on -- I wanted to follow up on the Keno Hill. So to get to the 40, you're talking about mid-2029 to get those permits. You previously talked about slowly ramping going up over the next few years. Is that still the plan with that timing? Or should we just kind of assume more steady state until then?

Alex, this is Patrick Malone. Yes, 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 a steady state or in some cases, maybe slowing down a bit to make sure that we're maintaining capacity.

Okay. That's great. And the last -- sorry, my next question, I know you noted you're going to have some discussions with your Board on capital return strategy here. But you did mention also you have a share buyback in place. Is this something that you plan if you decided yet 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. No, that makes sense. Last question, if I may. Greens Creek had another really good quarter here, beat, I think, beat my numbers at least based on grade. And if you look at annual guidance, this was above 25% anyway. I don't know what the exact math was. But my question here is, -- was that in line with expectations, those better grades? Or do you see -- are there any planned downtime 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 line if you are getting better grades than expected?

We are reiterating our grade and our cost for Greens Creek, and we are expecting similar grades for the remainder of the year.

Your next question comes from the line of John Tumazos from John Tumazos Very Independent Research.

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 tonnes a day, half an ounce gold, 10:1 silver? Might the tonnes be more?

Thanks for your question, John. I would say it's almost certainly going to look different from the old Midas mine. So 2 things here. The -- the starting resource at Sinter, which I've flagged previously, is roughly between 180,000 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 1,200 tonnes per day. So that's what we have to play with. We're looking at potentially multiple ore sources from the center. We're also relooking at any potential remnant mining at Midas itself. That's a study that's underway. And you'll 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 going to look exactly like the previous Midas operation. The one thing that is constant is that there is a permanent limit on 1,200 tonnes per day for the mill.

I'm unfamiliar with Aurora. Could you tell us whether it's open pit heap leach 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 4 weeks ago. Now I heard Kurt talking very excitedly about Aurora in the past. And I had to work to get him focused on Midas, which he's also excited about. And when I went out there, like I get it, you walk around on the surface and there are historic open pits, historic undergrounds, -- there's veins like with incredible intensity that just run for kilometers. And Kurt's favorite target has never had a single drill hole in it. So Kurt, anything you want to add?

Yes. I think our targets that we have defined, they're underground minable 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 1:1 ratio. For the most part, it's high-grade gold, but there's associated high-grade silver with that as well.

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. Now that your balance sheet is very strong, is it possible to consider an acquisition? And if so, would it be limited to the U.S. and Canada? Most of the silver targets are in Latin America or spread around the world.

Yes. Good question. I would say one of the things that really differentiates us, and I pointed out in the opening slide is that we operate in safe jurisdictions. And so it's -- you've got to go where the silver is. And so the scarcity of primary silver deposits. We would consider other jurisdictions. But again, they have to be in relatively safe jurisdictions. So as a rule of thumb, anything in the top 1/3 of the Fraser Institute Index, we would do a proper analysis on we wouldn't accept it at face value and would understand those risks before we moved. So that's -- it is -- we would potentially go offshore anyway safe jurisdiction. On M&A, 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 scale alone, that doesn't create value. And I think Russell discussed the dilution that comes with doing M&A. It's an easy track to fall into and one we've consciously rejected. 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, we are going to be disciplined if and when we do M&A. It's really going to be about jurisdiction, 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 -- we also have to see a clear competitive advantage for us in operating the asset, whether that's district consolidation, whether it's leveraging existing infrastructure, our technical capability or exploration upside, whatever that is, we need to see a competitive advantage and financial returns. Obviously, as Russell talked about, we're going to hold ourselves accountable to that. So right now, the M&A environment is pretty active. There is competitive pressure to move. We understand that, but we're seeing what happens when companies acquire at a fear of missing out rather than conviction, and we're not going to do that. So we're not acquisition dependent for growth. Our internal pipeline is our main focus, but we'll obviously be opportunistic.

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 Krcmarov, President and CEO, for closing remarks. Please go ahead.

Thank you, Luke, and thank you all for your time and your questions this morning. This team has worked hard to get Hecla 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.