Hecla Mining Company Q4 FY2025 earnings call

• Pillars: Legacy and longevity (oldest NYSE mining company, protects value through cycles); top jurisdictions (mines in best and safest North American jurisdictions); silver focused (deliberate choice to build peer-leading silver exposure. - Outcomes: Portfolio value surfacing (pending sale of Casa Berardi as example); operational excellence (relentless focus on core asset optimization, safety and sustainability as foundation); investment discipline (strict capital discipline with target ROIC thresholds); organic growth (disciplined exploration programs, e.g., Nevada exploration. - 2025 financial records: Record revenue, profitability, adjusted EBITDA; substantial deleveraging, total debt $276 million, gross debt to adjusted EBITDA ratio 0.4x, operating cash flow $563 million, free cash flow $310 million. - Operational achievements: Greens Creek, Lucky Friday, Keno Hill all had strong production; Lucky Friday surface cooling project 79% complete, on track for mid-2026 completion; Keno Hill achieved first full year of profitability and positive free cash flow. - Exploration: Nevada platform has promising drill results; Greens Creek added silver ounces through definition drilling; Lucky Friday nearly replaced reserves; 2026 exploration budget $45 million to $55 million, heavily weighted towards Nevada and near-mine opportunities.

In 2025, Hecla had record revenue of $1.4 billion, record net income applicable to shareholders of $321 million or $0.49 per share, and record adjusted EBITDA of $670 million. Silver is the strategic anchor. Greens Creek produced 8.7 million ounces of silver in 2025 with AISC under negative $2 per ounce after by-product credits. Lucky Friday delivered record production of 5.3 million ounces of silver in 2025. Keno Hill achieved new record production of over 3 million ounces in 2025 and first year profitability and positive free cash flow under Hecla ownership. In Q4 2025, Greens Creek produced 2 million ounces of silver with AISC under $3 per ounce after by-product credits, generating $102 million in operating cash flow and nearly $80 million in free cash flow. Lucky Friday produced 1.3 million ounces of silver in Q4 2025 with AISC under $26 per ounce after by-product credits, generating $57 million in operating cash flow and over $33 million in free cash flow. Keno Hill produced 597,000 ounces of silver in Q4 2025, generating $33 million in operating cash flow and over $17 million in free cash flow. Silver accounted for 59% of Q4 2025 revenue, and excluding Casa Berardi, silver exposure is expected to increase to approximately 73%.

• 2026 silver production outlook: 15.1 million to 16.5 million ounces with credible pathway to 20 million ounces over medium term. - Keno Hill: Guided to 2.9 million to 3.2 million ounces of silver production in 2026 with capital investment of $61 million to $66 million. - Greens Creek: Projecting 7.5 million to 8.1 million ounces of silver and 51,000 to 55,000 ounces of gold in 2026 with AISC guided to nearly 0 after by-product credits. - Lucky Friday: Guided to 4.7 million to 5.2 million ounces of silver production in 2026 with AISC of $23.50 to $26 per ounce after byproduct credits. - Bar chart shows projected cash flows across silver and gold price scenarios, with Hecla having best leverage to silver prices compared to peers, and at $75 silver and $4,500 gold, forecast cash flows of about $600 million, growing to about $850 million at $100 silver and $5,500 gold, with nearly 70% of revenue tied to silver sales at these scenarios.

• Any forward-looking statements involve risks as shown in earnings release and 10-K filings with the SEC, which could cause results to differ from projected in forward-looking statements. - Weather and operational issues could impact production, e.g., significant weather in Abitibi affected January production at Casa Berardi. - Uncertainties in exploration results and the success of project development, such as the timing and outcome of Midas exploration and development. - Fluctuations in metal prices could affect revenue and cash flows.

Q: Exploration at Keno Hill, anything you've seen there that was maybe a bit unexpected, better or worse than internal plans so far this year? And building on all of that, the costs -- the ongoing costs of exploration per meter so far this year, how has pricing been? And what are you sort of modeling out for the remainder of the year, please?

A: Kurt Allen said they've intercepted a new high-grade ore shoot off the deep Birmingham, which is open for expansion and a focus this year. Budget for Keno Hill this year is $13 million, direct drilling costs on the order of USD 180 to USD 190, but he'd check the exact number.

Q: On Casa, and I went through the press release that you guys issued earlier today again. Just to be clear, you're getting all cash flows from Casa through the closing date, correct? There won't be any backdating or anything. I mean, with gold above $5,000 again as of today, obviously, there's real money to be made every single hour.

A: Russell Lawlar said they'll get cash flows through closing, and then the structure of the deal will bring further cash flows.

Q: Maybe my first question is an accounting question, again, on Casa Berardi. I'm just wondering about the accounting -- sort of treatment accounting impact that could come from Casa. I realized or I kind of looked at the cost for Q1, your guidance, gold cost guidance, and I saw that it's actually higher now. It's only 1 quarter's worth of Casa. So does that feed into your earnings? How does that impact earnings? And the second part is, will you be looking to book some type of gain on the transaction? I forget what the book value might be. And then overall, what's the timing of some of these accounting transactions?

A: Russell Lawlar said in terms of guidance, they took an estimate through the first quarter as they expect to close the deal sometime in the first quarter. January's production at Casa was lower than estimated due to weather, so cost per ounce is higher. Casa Berardi will be held for sale in Q1, so impacts will be separated in financial statements. They're working through fair value process for the transaction, and likely to see a loss on the transaction versus a gain.

Q: Maybe my second question is on strategy. And Rob, it's good to hear that you're going to be silver focused, looking to be the premier silver company and looking to redeploy some of those proceeds coming from Casa into growing your silver sort of portfolio. But again, I guess my question is, if I look at your exploration budget, a big chunk of it is heading to Nevada, which is more gold-rich. You do have some longer-term exploration assets, including in the Silver Valley, also San Juan Silver, but that's, again, longer dated. So I guess my question is, if you can walk us through your thinking behind how you can continue to grow your silver production, your silver focus? And do you need to look externally, and I think you answered that question, but I'll ask you anyways, do you need to look externally to really unlock the full silver potential of Hecla?

A: Robert Krcmarov said they need to continue to grow their silver portfolio. They've tasked Kurt with establishing a project generation and new business group to get into new silver districts early, monitor competitor intelligence, and consider M&A as an option. Kurt Allen added they've recruited someone with experience for the program.

Q: Just a couple of questions from me. First, on Lucky Friday. Your cooling -- surface cooling project should be done as you're seeing here midyear. I'm just wondering kind of longer term, with this project being completed, opportunities to reduce costs here. How does this kind of factor into the long-term plan? I mean, Rob, you made a comment about optimizing Lucky Friday as another venue of potential upside longer term. So just kind of wondering how this project factors into the long-term potential of the mine?

A: Robert Krcmarov said the surface cooling project is for health and safety, setting foundation for future, and when workers are comfortable, they're more productive. Carlos Aguiar added it's part of the optimization plan with continuous improvement opportunities.

Q: Another question just on Midas. Obviously, the stuff you guys have going on there in Nevada is pretty exciting. I mean you've got the good infrastructure, some really high-grade intercepts. I know this is a -- I wouldn't call it long term, but a longer-term plan anyways. Can you just kind of remind me or refresh me over the next 1 to 2 years, what can we expect to see there in terms of your guys' plans to move that forward?

A: Robert Krcmarov said it hinges on building up a critical mass of high-grade resources to get it back into construction. They have new discoveries, and focus this year is on exploration with studies in parallel. Matt Blattman added they need to collect geotechnical, metallurgical, and hydrogeologic data.

Q: Could you refresh us on the capacity tons per day of the Midas mill, what you think the initial throughput would be, whether you can fill it up and whether the grades would compare to back in the heyday, something like 10 grams gold, 10 ounces of silver per ton?

A: Robert Krcmarov said the permitted capacity of the Midas mill is 1,200 tons per day. It's too early to say on initial throughput and grades as they're in early discovery stages.