Hecla Mining (HL) 9 May 192019 Q1 Earnings call transcript

Company Profile

Participants

Mike Westerlund	Vice President of Investor Relations
Phil Baker	President and CEO
Lindsay Hall	Senior Vice President and Chief Financial Officer
Larry Radford	Senior Vice President and Chief Operating Officer
Dean McDonald	Senior Vice President, Exploration
Jake Sekelsky	ROTH Capital Partners
Heiko Ihle	H.C. Wainwright
Cosmos Chiu	CIBC
Mark Mihaljevic	RBC Capital Markets
John Bridges	JPMorgan
Trevor Turnbull	Scotiabank
Adam Graf	B Riley
Matthew Fields	Bank of America Merrill Lynch

Call transcript

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Operator

Good day, ladies and gentlemen. And welcome to the First Quarter 2019 Hecla Mining Company Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder this conference call maybe recorded. introduce for to conference like would your today's host Mr. I Investor Hecla's Vice Westerlund, Relations. President Mike of Sir, you may begin.

Mike Westerlund

for XXXX very everyone, call. thank us and you welcome, first Thank much, and you Crystal. for results and operations financial Good morning, Hecla’s conference quarter joining

XX-Q, financial Vice Act Senior presentation Senior was Private to Chief Officer Vice this are Hall, CEO; constitute call, Hecla's included the On and market X. in releases Slide management release cause Chief beginning risks which Form forward-looking of available These morning release Form Radford, under detailed issued we that statements our today’s Baker, Litigation along on and with statements exploration news the and Senior team Lindsay under Officer; in those Larry in forward-looking as at XX-K, President the the President have yesterday law, results exploration Canadian and shown are forward-looking could projected presentation. the Vice Reform Financial McDonald, risks results goals, before today Our and and Any statements. President and on Operating Securities differ issued opened by securities President, and our the from likely include the projections come made Such earnings and and Phil forward-looking to in involve disclaimer Exploration. information Dean today’s website.

we call, this during non-GAAP measurements. addition, disclose In financial may

our accompanying site www.hecla-mining.com. You to nearest available presentation, can their the measurements which GAAP reconciliations is Web find in on measurements of at these

pass which disclosures we will as and you With call consider inferred in to we resources, to the to urge that Investors Baker. cautioned of such that mineral allowed only extract about our make our we’re or we produce. SEC, I that filings. disclose are the the Phil with filings legally our can expect are not reasonably and in deposits SEC use measured, terms and economically reserves, Finally, to indicated

Phil Baker

best Creek strongly grades. Thanks Mike. This few the start in the Sebastian well expected higher was the for from plan Green reflects of will XXXX assets started higher for to revenues, because in getting better. about of quarter This balance. Hello, well excellent our our expected last is moment. grades down Creek's last at cash producing did was mine recoveries. the just new each And of by years Hecla's everyone. silver and talking much ending technical because flows what our as I with want outlined San is in these all continue Friday year performance, as of Greens least year. quarterly as did we cash Lucky quarter operations line largely a it and new expected.

resolved that of now While expected a less, we issues to Casa Larry Berardi was combination to also going about. in talk some the is middle had produce

make property we off So deposit we bought two, production and by the let's of acquisition Nevada bought year-end. for very it drilling number and start Graben, position, consistency the to the one-ounce mines in mine is development it and exciting at potentially the the we world. to Creek of land the mine assets, headgrade Fire throughput get gold Hatter bought and could square some why and the the one, cut talk we thinking flow the provider Holister will we a large the cash Nevada. Number to the bought of for the hosted lower that about And increase the adjacent three, Nevada. When in XXX for that best holds we true. we largely Number bought gold position think miles land country thesis it of about three

manage in while amount things and has water the and of water, limited made issues to able consistent will dealing we some there's types. enough our a progress and been change. areas progress since but but are potential them. it, infrastructure the of as And Fire production, two conditions A while the we remain with determine year were out development were Fire large is ore not done they with certain decreased of reasons certain short it's while tonnage not enough. the plan of so we get enough. This in applicable dollars still equipment Creek when acquired as process been diligence, the we some in our advance best dealing characterization problems rate the getting lack making the of construct fast the in taken now we saw, is Characterization percentage the require Fire doing mill recognized And all answers a permit to to that quarter. with has that not The ago, types insurmountable, they when making access, the this quarters way similar material, to better original due first make if believe has enough worse. the tough to limits clearly we we We Creek. of of is progress afford today amount given the increased, challenges increased availability, water way have evaluating The not to the plan have by ongoing managing Creek last

making. the to over review, we’re Nevada do. stop how we This on the the just process both guidance more suspending going I’m and going the to we and and few of the So Larry weeks in short to really Nevada have will get there improve are or is we’re outcome economics reviewing the We're Lindsay we the operations until say. investment discipline maintaining can long-term. don’t really the for know we we determine next because both asking Since the to question are where our return the allocation. months

which services San discoveries and Sebastian update, issue Let detailed going is exploration on this more Dean on Wednesday, out detail new discoveries and a to oxide Berardi, mention our Casa underground me at near just in provide at moment. did more we

financial to review. Let for me pass this on a Lindsay

Lindsay Hall

Phil. Thanks,

we expecting months or March reported of same Nevada The ended XXXX, per applicable shareholders direct for In or net of year. at loss to of a common XX, the amounted in from million production three and stock primarily gross sold sales cost the ounces $XX.X be to Nevada, exceeded to the and plus of losses sales ore $XX.X and Casa million We're mining, $X.X Berardi. a period net of income last costs have $XX.X $X.XX net expense cost the of in million million both cost. variance other depreciation operations loss loss million With to $XX income result gross combination revenue of share the million is compared of $XX.X a our of piles $X.X of more operating million. production through

same cash line mill, in to lower shortfall XXXX. an was all-in credits a cash profit this in lower the due of XX% or than sustaining costs costs of loss higher to sold of per low $X,XXX the than -- cost at $XX.X increase variance temporary credits cash and the grades byproduct of variance the was revolved profit gold after in $X.XX, line as expectations noted. ounce year Companywide the being $X.XX after with the the to in of byproduct and Phil sustaining associated been gross being was last, and issues costs because other our have that Casa, ounces silver expectations and now anticipated which gross after $X.XX all-in our the shows At of was period with from and produced Casa [indiscernible]. issues So for previously the credits up about ounce XX% due where mining due byproduct Both quarter-over-quarter consistent. million gold for as $X,XXX negative and was discussed

nothing of mining the but of on The quarter spending amounted and by of to Nevada the the at credit flow higher use $XX $XX statement. a activities million under was approximately year. on million, offset hand million have cash cash mine other quarter to spend we our million $XX of slightly anticipated, resulting provided sites than higher the first $XX by of Turning in before than drawn so was Cash invested operations. net which financing cash was We end activities last at our in operating revolver.

reviewing we be operations have as well we throughout As we the forecasted operations stated, needs capital estimate. so the are maintaining will Nevada companywide rest our spend meet in our forecasted that our estimates, spending order to of and as

development our in with flexibility, that the we us, that earnings pass mindful We're available from needs and quarters be credit Nevada proactively options will callable high is syndicate reviewing why some a while of leverage are noted cash revenue XX%, gold Green positive to as to disclosures the operations. X, XX%, are about profitable and flows. can our our the always, I Nevada time. costs and to Creek we closing, a talk our the You supplier of covenants for headroom under not at and revolver On our operations. diversified the XX%. need flow. the have the yield to stream any ensure our third obtained you without we additional of we Larry over zinc see address now notes second maintain we to refinanced to ratios, also call operations. revenue generate cash that silver And lead In be refinancing at can combined and at and continues Slide at banking

Larry Radford

the in To into that quarter challenges would well. move more to detail Thanks, the Nevada like Lindsay. on bit I in begin then mentioned. with had I and we the we've what that wanted first on go went to a begin challenges with

in cut Although due was estimates actually drilling the development water lower grade showing Creek forecast, to shows being to off production our stokes forward-looking delayed definition following the low some our due to close and production some Fire inflow.

development To aggregate Fire developed years Nevada than you have are development headings can mining Slide for mine Creek will have the noted previously these -- the compensate for remnants were costs our rate few stopesat we we the the end, considerably To on see higher week. a demobilized we as what as by behind contractor issues schedule. on forecasted for Midas target resumed. X, next Although remains earlier. this

mine we revised a together which reduce have grade development. and this cut plan, addition, incorporates off put In higher

that and how production processing is the in of underway challenge this the is ore ore quarter estimate. ore. what was encounter refractory. This first in that in options are the the realized An to will our section future be determine was never mine in of we northeast determined ore the much the to investigation Another XXXX we

side the spring in for account into no on about Graben plus of was week. the is road that out flood development track washed available access taking On and Hatter a the access

You XX. progress see our on Slide

many point, recovery the mill on the than this which effect at expected dynamic was one the options all the lower plan of At gear a tons for principally pressure considering lower color and first were box XX. last due CIL a The month issues. was result which than XX. with throughput corrected are was of Image and replaced. planning of a record than with lower a on we lesser listed expected. to caused higher Casa XX% compensated having mill to level of in on higher a mine of In leach of Berardi lower improved the principally and this April under than throughput The The want challenged some due December, mentioned, And more grade, the of throughput sizing metric as by tank permutations the Nevada, lower more are this quarter, gearbox mines on Finally Slide change The some capacity these were consideration. of recovery issues. one-day higher failure was bit projected. the There has the issues was and to week of April April several largely I by on arsenopyrite. recovery little of the X,XXX pressure which was been in downstream provide expected

be occur test throughput. pre-crushing throughput in overall list to the hour million tons. ton tons second of approval the per was Berardi at day. The increase limit the as per demonstrated X.X in recover half you pre-crushing to XXXX, be of To we trend will raise conducted Berardi X,XXX XX year. This is metric Casa are that permit throughput coach we the can see increasing the budget. permit processed tons throughput annual Additions will soliciting permitted tons throughput, in approval mile to metric The considered to XXXX pre-crushing received day the the analyzed capital per the likely are level quarter and higher our Slide to first but for This processed ore part as ore. expected wasn't XX. also at X.X the million In to Casa at the ramp-up being in We of in to stockpile. from of

XX. ramping some a originally of Middle year Vein tailings to Cash construction. had flow Moving by mid unfolding drilling lowering progresses. because bad is ore This fall projected XXXX. we PEA out of expected to is we expected. production was ounce development of continue can on that San mine Sebastian as develop now on and With the flat is we Slide and the down in the per in Not story QX of Cost the as costs run success, to as finished XXXX. see ore recent for is finish combination as to our

prior and XX, Friday an pleased Idaho with salaried the can this with is obligation mainly cash safety tested Slide in photo years. of production pleased production expected Moving you Machine miner the restricted work zero the long-term of fabricating on burden Epiroc having our in and at half is past facilities in Sweden. in production showing year the vein is impact making in Epiroc's and of assembling in recent progress a the mine to remote We're Luck delivered its first increase test be XXXX. period to two by limited at XXXX over and injuries zero salaried with was the our up injuries the to see XX% especially staff due are staff. Friday, to Luck record

to all-in a produced ounces Slide Phil sales ounce. of of had mine higher continues credits Green of with recoveries. an an higher credits increase impress grades X.X Creek the As at quarter and in The $X.XX and byproduct after monthly was silver $X.XX excellent sustaining silver shows of ounce. and per recoveries. noted, a XX million cost after $XX million by-product cost The only cost silver cash

impact We are metal development. precious grades report, we which which produce technical now working precious are shipments also but to higher over in reducing pulling flow, and featured recent we will and the the was our Dean. higher seeing metals lower as call concentrates. zinc rich new grades, revenues metal base to forward mine means the plan, pass The lead, timing cash work of both could I

Dean McDonald

where release, with in mines quarter increasing and continued appendix aggressive for in with the in Thanks, future. programs the the sections was confirming resources of issued Larry. Hecla A first the the reserves potential our drill expanding on exploration at drilling we Wednesday. which are list provided is of

oxide drill series presumptions success At Slide in success we acquired the all connect results mineralization, slides Mines in the the considerable in Nevada. Mine. XXX West had and main left of will in outline we showing zones at at on next XXX is XXX may I and shown Mine mineralized Casa the are expanding Hollister defining the our new focus the As underground near and drilling West one those we've for of and and in fronts. few had year, Strong to of resources we in original XXXX. with the that XXX, as ultimately surface XX, along in East the particularly of the image the Berardi will the Casa zones underground trends said side high-grade the mine on of semi-continuous and a beginning XXX at and Creek expansion zones on the drilling resources Sebastian resources when Fire which Berardi, reserves and San of East

red upgrading in underground reestablished zones when Vein At Casa the series add near-term new arrows pits is number resources, last production. of Francine there XX, the zone. particularly oxide along shoots, potentially Slide San East year. is to Sebastian, Mine access defamation the as are show opportunity high-grade now was of along on find projections drilling But planned clearly shown Berardi to a underground of the there an the to As a

View Clementine the start provide drilling efforts resource in shown XX. half The is need of localized expect to when to to is we the The the to at in length the the surface of combination east in new a which to fault, veins of known and we to the west the there's drift XX, four are still to with then pods a drilling series the the our will the drilling the Overall, most high-grade Hatter Zeus, drill are Graben drilling about vein the year but Vein, Hollister, accelerating later is feet evident, resources longitudinal the targets. east. north. initiate be platforms South so Guard we of end surface planned where planned start, three This development define and upgrade identification lot near resulted mineralized to the expand Far Notice location new veins production. important good XX and the off drill and potential The Shack, can surface is the X,XXX , and surface new a in of XXX in near-term acceleration resource to we is Hollister Mine pushing urgently drilling across to mile southwest later are feet the confirm the between El exploration depth. spirals shows in move define of of Creek is May vein Fire in to to two, beginning. As of Gloria identify Slide located identified is And at mine. into the to high-grade oxide just plans a The drilling and has vein and Slide has we do. to mineralization evaluate current that and hard extensions. Toro shows This It a resources. strike shown mine along extend Slide the of of

to pass now will back I call Now Phil. the

Phil Baker

line operator, open the questions. that, for we'll With

Operator

[Operator Sekelsky you. from from Thank question Instructions] comes Jake Our ROTH Capital first Partners.

Your is open. line

Jake Sekelsky

now still trying sounds magnitude. It mean, to Hatter move if that as fair say? so, to around a you guess, to And like I Is With Creek. development review, forward the just Nevada with I'm operations centered get I on handle under more planned? it's expect Fire

Phil Baker

Well, this as one just Midas. Hollister operation integrated view realized we Fire Creek, that and

Having we to together. we'll and run that Hatter, we any some there's other. takes see necessary a one key if make at should said With it's combination adjustment not are so the to And there's all respect consider certainly of that, that it we'll where the acquired just those reason of Klondex. And element us.

I'm get least driving reluctant and see what in we to way. the to that really going do personally, stop to have there. do at So to drilling need in any be decline We there

Jake Sekelsky

the That's And timing And Understood. information any you Sebastian, the helpful. when from looking in [indiscernible] at the of guys then expect on we just to see some book studies San should do results have sample? net

Phil Baker

of that have done and Yes, we fourth We'll quarter. start evaluated. would book by the expect the sample

Operator

you. Thank

Our Wainwright. H.C. from Ihle next Heiko question comes from

line open. is Your

Heiko Ihle

mean, that it way going to ship bit little on for builds anticipated quite model year? all. to get the cash operations on the Can I money I Any this you're Quick how clarification at year? sounds not to much a needs what your a details bit to that's have even going it's idea this Jake stop. some was provide may answer for you like any saying.

Phil Baker

basis the for investment. that on make We really go want return that for the doing is is getting reason sure a forward the answer The we're to review.

will flow this we be the the to try have to you And neutral. started I be objective -- Nevada can't cash tell acquisition, was so when process, mean, objective I the

in. so still move the And we'll try to direction that's

Heiko Ihle

interview, when on gold-silver homepage in be to gold had happens capital and interested on the ratio through long -- were or asset mean, more enough. just that, giving acquisitions going the conceptually, the Building gold I the the I be and extra you link giving such as the forward? focusing a interview, in mentioned Fair your What hits interview. XX heavy in on And them you assets would would the more focus life. you Casa? mean, mine extra goals Phil, it you what obviously

So given to extent certain it happening you sounds to that West answers again into like the a put Mine interview the already Casa? and this is

Phil Baker

going we're to have. be when Well, the assets look, look at opportunity-driven you we

get. respect We will silver, with the line will silver certainly will you've fact what gold the silver see and we in said Having outperform that, very gold ratio optimistic we're what historically. results to that and seen more with that come

to we the to So and we're continue gold really change driven our we're have pivot not that be mines, we're a to balanced -- the view they continue going to We're by opportunities properties to focused. more be not the going to going what going that present. to have

Heiko Ihle

fix and from speaking at Lot are you or And Going really they to going for and your specifically serve current just might that such M&A? some recent the face at there and at answer Can time had might Klondex, these cash by given looking rates what here, acquisition of those well aren't assets right? you you just Casa more anything mean, And period. then hoppers Green cash cost looking looking maybe we for be your perspective your just you're be M&A, do the costs. current high discounts fertile aren't on said for developments. anything to we acquisitions of I costs NAV and as with the looking terrific cash color when IRR answer do again mines, you Creek like provide and

Phil Baker

makes much say latter do think not problematic very is. in unlikely using the do something envision disappointed we'll it won't our we're frankly it's I to acquire those shares in that else. And anything more just think share that to where I we -- it's price category. That's

but there that expect certainly guess next not we So thing if I -- sounds be. is it's will But it do. it'll surprises the to it's be something,

Operator

Thank you.

Our next question CIBC. from comes Chiu Cosmos from

open. is line Your

Cosmos Chiu

Could didn't Lindsay, relaxed. of they have I I mentioned press be on the is leverage, in release. the it which that or to relaxed? was first have help currently the of three? me that X.X from here. line you senior are interest X.X I convenient -- two credit. to How know me those I find Maybe maybe out, been questions that at few on able been A you you used so off guess coverage at

Phil Baker

in but statements it's goes relaxed Cosmos, and to -- second its moves has interest X.X quarter it been in in in debt-to-EBITDA financial I the from it's third the the X think down quarter moves and that the before second debt primarily -- to think I -- that quarter, then back XXXX.

… So

Cosmos Chiu

Okay. interest I think ratio, Lindsay you're because But as that well getting to on pretty not coverage the or close

Lindsay Hall

the on that we just It's the debt-to-EBITDA give of just that in bit flexibility. a ratio comfort us -- some room wanted

Cosmos Chiu

to needing in anticipate you credit believe, needing nothing is anticipate because that the next two on do do but line quarters? draw to you drawn I now, right that of on And draw

Lindsay Hall

use or shipments. months working -- those its and we is gotten the we Well, revolving we've on two where the final credit capital. three shipped to before Greens provide ore Creek payment Remember

has and that likely that will So will. been we drawing quarter-end? purpose. be it's used think for I that continue we over facility used Will to be

so sure in with all And to we make want we're that compliance covenants. just

Cosmos Chiu

rationales first one at maybe made happened, the in at actually improvement when not When and improvement Klondex. debt, I Klondex, bit was it ability of an it's first the the that a the of point there rating -- secured acquisition with on the was hence acquisition that think, to And then it senior maybe credit your cash rating. help behind of on And going credit generate in end, to in time. and you the you

Now with of how has changed? suspension the guidance, the that

Lindsay Hall

thought we at visit we're to certainly we'll where So, have agency, rating Graben. Nevada no, that cash think flow some to in I Hatter the use cash We acquiring anticipated flow Klondex. from when go we'd develop

them, of But So, And acquisition, where life the mark certainly look the obviously, in but the certainly, at they mean execution hurting visited rating the is, They're they we with is when risk what periods to from as to into integration reporting five over XXXX XX looking agencies. Klondex like bit subject the we're mine us plans rating there. can agencies, the XXXX what and as operations but everything. integrating the these of portfolio. gave And at we or said far assets is us said and Hecla time off they they've of what the these about to years. terms a assets, to the Nevada next in in them

visit one but go will we back the they rather back and we'll two them, short-term be So look cycles to they reporting just say. quarters. reporting of or whatever But than

Phil Baker

didn't. What us. we do upgrade they -- when didn't did they And they

Lindsay Hall

an gave us they Yes, of a bit upgrade.

Phil Baker

Okay.

Lindsay Hall

in look been in are for interest But may they to short-term long-term -- the long going do They've what of but cycle. Hatter, you term. more and more interested our be success to

Cosmos Chiu

debt, now, for is Lindsay going million in $XXX secured And on there that, of earlier, back part opportunity refinance. an to the as mentioned you you senior first my to question the here,

come refinance we've time this And as well. can talked I about previous in has penalties. calls without conference think you think any the where I

has even given the that get around hoping timeline what a refinance this and to Klondex were You suspension, guidance and maybe has to changed? happened time. soon Again,

Phil Baker

not an Well, a it's secured it's not -- it's not it's -- first and realize, unsecured.

Cosmos Chiu

Okay.

Phil Baker

$XXX million.

clearly, think we add? the opportunity do has to my we'll we the arrived. do I deck work going within We the Nevada. something before to to think still That year we're I anything need be see, do would to is Lindsay, to through would expect something expectation. mean, But current. what now in it's next

Lindsay Hall

will Nevada a really markets to you not maybe up how have come for or to that so. we're the Nevada with issue, this be the on bode mean around it's that on Nevada market. referring some and ensure is at us well the thus it's backed ready but -- quickly a long-term. we're, to what us back and the up give means bit, to to deal but I necessarily invest And determine it's go issue, and market open and look that Cosmos. so. through What issue, going we'll in high-yield us you see refinancing a said I choose we the to mine But in -- do to on But we decisions make that Nevada don't know the want comp getting much week bonds last as in the the to when going I'm in is basis. way to what of And we're

Cosmos Chiu

to and glad what reserve needing is, of you Spirals down the up the and by the you take of getting guess getting But or I'm trying some targeting do dependent brought idea to time. I review ounces drills looking that report the one at the And question resources. completion here you that the was Yes. you're there, have getting going QX. Nevada thought I from kind at perspective, my have? the issues, up could Nevada issues platforms, I'm comprehensive the now on improve drill And was that understand key

ounces you're going when my comprehensive down answer are that, we out? figure But question guess given have I So of fulsome is really in was could underground? to to be once QX. time what a Just you be that targeting terms of kind take to to again, a able comes going report? it that get completion some in Or some report out

Phil Baker

months. of I it or guess is the timing weeks

what we I every that's what determine has it the whether sort --- know, looking sure. we'll to to that take where as of results make way that don't for. see the we'll main us. not just able forward, to say the to is takes we I'm we're element QX are Whether decision doing need far changes But things So it need we've anticipate been will go we I And generated and or point on how make. you we -- be. it it But of take as when not, comprehensive, not

so going in to And proceed. reevaluate we're how to

Cosmos Chiu

on then question follow-up just that. maybe And -- one

you stopping In of at And terms the looking it alternatives be of best it'll wondering, at in that MD&A. used about the -- alternative? this and issues that's because different the given just I'm production -- review. you last that using I'm from stopping be Creek. would that one that I Fire comprehensive distraction the you've all And terms production talked I think Larry, essentially about all water think Creek, has would perspective. Fire the word in at And terms become talked terms a production would comprehensive in you're of in of while

Larry Radford

We yet. don't know

Phil Baker

Larry Right

Lindsay Hall

what issues, bit those for And mentioned, water sure -- of to means to processing things, I sorts understand but studying not I'm and we're going things. Yes, the those. take it's time a distraction alternatives as many of

to so time outcome, And we the production be could front to outcome that And only have of not understand us. could best possibly what an but is stop have in if to outcome have. that we it's the truly

Cosmos Chiu

me. from question last one maybe And

here, potentially back of the of terms Nevada, the write trigger of terms could review in suspension at this guidance the potential of down? some to In of accounting a kind

Phil Baker

we event. to will determination certainly Lindsay? required, there have triggering do, as whether a that's impairment an if is come to Yes, we a And we

Lindsay Hall

study the Yes. event No. what Go the like and all of entities reforecast through causes to trigger flows Phil the operating us says, cash not.

there's think would straight test and -- the in as to institute we so exploration. will forward of The pockets rvaluate terms that. equipment done plant different property So that's as much look not properties, one at is itself depletable impairment the

Creek we're of and will two years would million you're the around to that in the sensitive we'd we when that of price, that are the things this narrow maybe Creek would the at -- Those talking period going depletable we flows you purchase Fire value side, be three too be perhaps to. three-year $XX that. mine. we look the cash look to $XX the generated about that assets again, at those to million. coming from reserves evaluating terms That's something that But rollout some the over you down So and Fire next of really is look four

itself. but the price we're finalized something purchase is could And it on, impairment, in working we're diligently toward it not haven't there yet. We result but

Operator

Thank you.

Our next Capital from RBC comes question Mihaljevic Mark from Markets.

is line open. Your

Mark Mihaljevic

this some a to for evaluating the off. and primary you just some value, choices? the looking metrics long-term guess cash of flow looking exercise me this kick of looking I into the review? at you're -- you're focus from versus as walk these the kind metrics Can of are it through comprehensive for you your when as And you're

Phil Baker

in much to target. into clearly -- that it. think, try drivers destroys Nevada requires way -- do the a want long-term But that's the biggest not to to don't investment not That's we first have I that value.

really the between So resolved? that to Larry, those at things. be issues to to two can that? have it's looking add be various a And those we going how balancing anything

Larry Radford

covered think you I

Mark Mihaljevic

whether get kind Again, previously update had Okay. of just potential actually then talked following and in QX of for will leave an something guys opportunity? is that, up you could its potential as or that about you we evaluate that an with about, the mentioned you to that you on where announcement get and kind want third-party review? process processing are an Or thought this to something and

Phil Baker

are places there you We possible. the can It's take -- that ore. certainly

contemplating we're so And that.

presumably that that -- reduce overall. the we But will do know processors. be what that's going is dependent you therefore economics. If potential -- it's they And the make upon the of third-party do processing cost the don't -- -- negotiations to with improve

know we don't So how long might take. that

Mark Mihaljevic

you detail just Have you -- those little something give that … you conversations? with actually advanced negotiations? a where Is are more Can started on

Phil Baker

Yes.

have. We

Mark Mihaljevic

… Okay. And then

Phil Baker

have We where that's potential and -- it's serious certainly had conversations outcome feasible. a

Mark Mihaljevic

And How now? spending the are change would right are environment? to you weak I of a assets just where they you other cash price Nevada, prices your at as metal else silver up, following kind getting Okay. you obviously are neutral. comfortable kind in with at spending best then guess And profile in of

Phil Baker

guidance to we looking Yes. the We're spend gave. within that

starting that's the point. So

but where to need We are at we point. will we than that's evaluate do more any if this that,

Operator

Thank you. John from And our next comes Bridges question from JPMorgan.

open. is line Your

John Bridges

Does advancing confused you've you the say success? comment as stopped exploration which the the on a giving is heard are actually mean if to it? of waiting here. you're that And bit you -- the give permits, just of at that been demobilize water, you part what a color that some wondered I'm that in on us problems about you've contract. Nevada? bit exploration were on related terminals, We could the Just upbeat

Phil Baker

places the what our we're able so rate respect to the mine. With to we water, advance effectively Sure. water limited to that deal it the be able has go move forward Because with to done fast is in cannot enough its to that our down this on -- primarily That's of Spiral and really areas that down. slows talk those respect for lock to slows sort contractor. ability we'll mine the then in about it add anything in to out. has With

Larry Radford

limit. Well, water we are on expanding discharge permitted working our

of And some of -- water pretty innocuous. is some ores the sorry, the I'm

increase analyzing osmosis, going simple on fines. you and reverse me expensive want a discharge without or to So which an slow or to inexpensive. there development we're sensitive scenes on the looking a We're and process, behind now lot very There's of expense. go a at -- which lot using alternative Right we're work if water. is of the is could Do on the

John Bridges

Yes, go ahead.

Larry Radford

far Graben was always own hands. in and Hatter remains our our own development, As as people that

the was As at we'll the have -- work development we employees. on, Fire only take that own was our of to Portal that that contractor X on dedicated Creek, and the taken with

John Bridges

So is on? development work the carrying essential

Larry Radford

discussed. on. carrying we But review as It's it's also under

John Bridges

Okay.

thing leading to -- sort situation? cash the Is is is original what of it the the catalyst the water sort from flow? the which a difference on you some cash plan? have so, Or how flow, is this the gold a what different is in for is clarity that of And sort -- presumably

Phil Baker

water, enough to were when where water an And doing it, there infrastructure is element not certainly from it's is and due a it huge deal big diligence. was has grown it's the think, I of it. a where but we with amount of it adequate

we're for it's able fourth one. there there quarter the maybe And it dollar to performance would we're be tons is number that you you Larry, if spending. not think that mean, is than of first achieve. quarter-on-quarter, We had consistent look and two, the to improve part comes go of we want that we moved we you what really number were as seen that's would productivity pretty to amount be per anticipating the enough what So That's better to down for reason moving the have would in that. not do thought to opportunity the I getting tons we dollars would have relative And that quarter in and spent. productivity we're we contractor. removing an add?

Larry Radford

Yes. There's challenges we're trying upgraded. There been of to and definition certainly the inferred didn't drilling. it material with upgrade some get is that

Phil Baker

Yes. of -- the had That's we've what just surprises mean true. with some some inferred I vein XX

Dean McDonald

XX. Vein

Phil Baker

turned we that this had upgraded to and going We area was thought XX. be it dusters. into

Larry Radford

with inferred lose that conversion. too but winners you'd some, win on haven't that many So material, one some, we had would expect

John Bridges

Okay.

is plan team So in your your how of a how -- of does contractors And bring there? benchmark own to own productive that build the employees? your do against is one more sort and team

Larry Radford

enough the X I’d Well, equipment. one heading is of like only we to have Portal say heading many. out

take it We enough have to equipment on.

pushing And enough and function to this we it Phil of that of of And Hatter -- plan. on flow miners review have anticipate headings. will take really that really said, -- our We in anticipate it's exploration a current part be we As -- development cash Graben it's just prioritization forward.

John Bridges

Okay.

So protect refi? while the this you to to wanting cash really circles issue on flows not refi work and back the

Phil Baker

going material to lower the able cut-off increase our were the be -- able remember the to to throughput on the we be lower or able yes, and that the Well, cut-off available assumption was be so and have productivity, grade then to and acquisition us. increase improve grade to more through

not not And -- because to happen. has hasn't try been hadn't that's do more happened. okay. not that and to or than cash plan to to slightly plan add -- just just neutral. move negative. we're forward have that to under Larry? we Well, more Okay. always if What to a continue that under be need we do So that -- shows And we're have And slightly were it's able that closer it it Anything to flow been going objective through, given will working we the that happened? can't to Nevada net get neutral

Operator

Thank you.

Turnbull from Scotiabank. question Trevor comes next Our from

Your open. line is

Trevor Turnbull

which questions, and respects. for to a is. kind the review? in be if -- Where didn't did I hurdle understand, need a into this comprehensive it it turn and I do where some that with company it kind was John's And to ask the was was a going like, I of was some in you of the under-funded to it, struggling saw to heart sounds of -- obviously degree the think, that it anticipated Klondex, those wasn't respects water, opportunities that got opportunities

with of so cost contractors. just were a do When contractors productivity and the the or talked to look the -- from some respect they the away didn't just just terms kind that did get better to them of contractors. at curious got acquisition, factoring that the the better on costs or fruition? just productivity actually seem away you you could come And you in contractors cost that could bit about I'm were to in wondering and in cost I'm You've it factoring you weren't? was Or

Phil Baker

It's operate We effectively. the I'll use thought could an more absolutely we latter. example.

but where to then anticipating. identified were they we these One liner of were it and still And these and you had we did down putting the with much of have we made were the bed. upgrade big with the the we in as came that That inferred problem a problem were of We quickly road building we're not trying synthetic would fact the that need the back they to to as we in dealing we getting -- the And ribs pretty areas that as things tough. and -- anticipating getting we road the some in the this problem was with rate identified for. make couple advance in And didn't material. this where in get bogged that looking areas that that difference, upgrade.

you out. two Larry? -- less costs had And is how so, and you those really came things more it revenue had costs

Larry Radford

performance we contract foot per a contractors time on control grout look fair have it inherited I not -- but to and be get been there had has advancing which basis, was It's they've been to of periods where when basically the Yes, it. it at be not grouting. we -- there the where not water, to contractor, nonetheless, is it's want when from Klondex. this you're the we to to And mean

Trevor Turnbull

somewhat understand crews of versus kind it you It hindsight more contractors that your those could to thinking that owner maybe productive. I Okay. if was other seems crews? were the in get that of too aggressive own kind be maybe or wishful

Larry Radford

just It was Trevor, wasn't as well contractor. ours

the haven't ours seen productivity would. we from we thought We much as as

Trevor Turnbull

takes is just actual guess I the not -- reserves? that going to your much is that of right but What definition guess it goes or infill is the assuming to above to inferred through is but Again to in of you. that which future -- of question, internal life, The upgrade kind drilling the just the that how all kind in I a that that seems how drilling. probably mine punitive, and aggressive back kind if at much was to going kind too wipe out what think is -- the plan, for bit inferred is you plan reserve other come over of that of

Phil Baker

reason getting to those is questions. going the at answer you're to Trevor, the what Look, with those, we're review really

few months an don't over have we just I or that at question. and meaningful be I will that don't -- the answer the But know. course would answer weeks the I next moment. don't to really of So

Trevor Turnbull

much you point? us tell you kind of Were had looking you to [indiscernible] up how planned But can this at

Phil Baker

that's realized and Remember, provides mine for of -- We that year only the reserve it's about life. quite is a a half small.

the that the exploration just to this of Spiral stages we're that to that want able still hoping not XX key out the plan the to believe allow we be of And Creek, so we X, results us those and have We need add that? to like to in think that be. have success, hasn't we you -- place any. be to we're the to can need XX, to to needs a -- the Dean, drilling And we seeing areas get believed done. but in always Fire changed would do this. early It's -- we we still anything acquisition, that to need in drilling. And it's the that is acquisition

Dean McDonald

No.

drilling drilling call exploration no did weeks. mean at exploration at few Creek, done fact we've only Hollister. in the drilling. will of drilling that really has from drilling what We really Just a underground aspect Fire the start Exploration the exploration started, I I'd right. -- surface

that will We development more once Hatter Graben put has advanced.

So that. that to we haven't that upside we evaluate really anticipate, started

the And believe news good coming. so, is I

Trevor Turnbull

to have you, would Okay. XXXX been earlier Larry network, have clarification got more bit there Dean, just color. reference some done there going in a back poor And recovery? XXXX in maybe recoveries you you a similar was or of stuff tech by to I have some a was recoveries, some report showed or to way a like mentioned you an Klondex, Or of back go the very where one that if type refractory about just get not the them, on were talk of a same few that low that but just -- low situation which poor thought there treated couple. lot when assays that seeing otherwise very going recoveries, would Is to way? you're refractory kind

Dean McDonald

other seeing one rock host historically Those Well, ore, what's and is which so what we But that mixed now continue are is or type dominantly been we're store, what areas volcanics. -- to basalt, we're with a at that we're is discrete ore. mixed in where The mined. least the getting drill of very is the it type into to see basalt call is veins. starting

sulphides. mineralization is amorphous a discrete It's less the happens what It's clay more tenor And bit the alteration, changes. so of that veins.

in area recoveries grade. the terms continuity that's that we're so of And terms with to coming of

in technical report the zone probably And in style referenced mineralization type that of so, what it's rock we're that that And in terms the was you with. to in that's that coming transition mentioned. and

Trevor Turnbull

Okay.

Phil Baker

to having found it. and found how and we figure have is is that that we're do to then out so process -- out we where And the extent where

Operator

Thank you.

from Our next question Adam from comes B Riley. Graf

is line open. Your

Adam Graf

more Nevada. on Just one question

get exploration Hatter? far far Is there drilling crossing are And or to as in over guys guys the Hatter But prior Hatter? plans there. how just in think Graben, and there? that regards Portal any of the the faults in beaten are the the you were way to Hatter from Graben we've Have your water, long obviously very water I development at to horse. as along for you

Phil Baker

So speak. of being geotechnical drilled the hole that's we as have process we in a

X,XXX what feet right? Is think it's I long. that

Larry Radford

that Yes, right.

Phil Baker

so so good. And far

a them have. Let's that look see tell series fault, of it -- if is and, there faults you we -- of series far the how is -- slide, can at a is there we yes,

Adam Graf

Yes.

Phil Baker

the in exploration better but Shown release press diagrams,

Larry Radford

is we've any as us been exploration serious water holes have faults problems minor that far without answer there in previously seen. ahead of short the major we've crossed some And been nothing But no water. it's some that bigger as indications faults drilled, for of are

I [indiscernible] think put in we tried a to

Phil Baker

Yes. did. We

Larry Radford

a with We problem the I -- didn't actually was that get think. there hole,

So I either actually were right drift it. going Phil But hole we're soon that drilling mentioned, the drilling or excavating parallels that's geo-technical right in very mentioned now. now as be to didn't we're

at perched really but water So but been this nothing small point. anything, there's some indicates that maybe

Adam Graf

assets the own? then negotiations And progress update guys you Nevada, just quickly Lucky and/or on Friday any on the sorry, Montana that

Phil Baker

occurred a in meeting that has -- occurred I Lucky last, the This months. the in been over on there's So Friday that negotiations, is guess weeks. the have seven meeting meetings first three

to be table and meeting we another scheduled. we're the So pleased at have

have to So to put issue, there certainly we you the the we a we people to don't. ability put binary where have are it's -- need we discussions. them, The is problem either them need put when or

we're still come a We And I need it's do one to to new them. to Montana, With we say just continuing process. a that in go with needs biological with still negotiations government difficult But the glad come we're to through so it's -- respect we're compromise. reports. back hopeful And the and to we're to -- that.

are be for those finalized. we to waiting So

-- very that The the are things litigation justice the in those other grinds slowly United will in take States.

still through we're slow. it's just really so that and grinding process And

Adam Graf

less spend Montana? or more what's in Phil, the annual

Phil Baker

tailings reclamation. a -- It's outside facility the of this program And cover The of tailings million facility. will that Troy be of the closed completed year. during year dollars this few will the the be

Adam Graf

been at owners on be -- canceled just prior or will on previous one those thing for not? all what And with some for up the time deals renegotiation? streams future those assets the Montana, and last had up Have that

Phil Baker

course, one with none, respect two to the there But stream exists; there something company, were, companies was stream, is still And of company, With a that with to consider. No, the that's not renegotiation? is was a certainly any. there there planned. -- always different other

Operator

Thank you.

America of Fields from Our next Lynch. Bank Matthew question comes from Merrill

Your open. is line

Matthew Fields

a another when you all for lifting I cash -- you have to to that Nevada like important and the you Do seems to know there about around. And you on as it's of Lucky trying said you think It turn market then done. want will, open Friday try is focus up thinking to said approach hoping Just you it's do lot have asset to assets that you the two? market, three instead and generating of so cash and refinancing.

Phil Baker

Look, is and the have improved. consistently Casa. the message I assets of both those given core And Creek are assets have pretty Greens

the what with And so we should be … focused think on that's market

Matthew Fields

and So way a million asset? X shaft you non-core $XXX the spent home over on

Phil Baker

Casa. to that need set term, money At relationship same to and for up the we Greens it's mine the moment, the We not in have Creek long that and with new workforce. a as category the spent

We it than that longer think through even going years -- will to we XX because operate. think it's we're XX, a more see certainly be So that mine that. could

the it's right important to with get the workforce. So relationship

So we'll do that.

it's investors in today. the the it's non-core cash not for that sense flow generating So

making the of see the investment miner. we've And next the other of that The doing, been on be site that course, coming that we'll beginning thing remote year. at vein we'll is to

Matthew Fields

my just on part. quick then math And some

on bust revolver. If you cash access will have EBITDA, XXth? June covenant you'll or in through that about are you're neutral you revolver produce Are $XX that of your you million got after X.X your leverage otherwise assuming XQ, more flow you to confident to times

Phil Baker

Yes, the yes. is answer

Lindsay Hall

Yes, of course.

Phil Baker

we would access. have to made And sure we changes that's why the make

Operator

closing our turn Thank session back Phil you. remarks. to conclude over does for conference. question And to now the today's like answer conference for Baker I that and any

Phil Baker

Okay. participating the in thanks much very Well, for call.

questions, I. you. reach to any day. Thank further you Mike If good or a out have please Have

Operator

This in the may does today's Ladies participating program. thank a disconnect. you and wonderful gentlemen, you all conference. conclude have for Everyone And day.

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