Hecla Mining Company (HL) Q1 2016 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Q1 2016 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 follow at that time. [Operator Instructions] I would now like to introduce your host for today's conference, Mr. Mike Westerlund. Sir, you may begin.

Thank you, operator. This is Mike Westerlund, Hecla's Vice President of Investor Relations. Welcome everyone and thank you for joining us for Hecla's first quarter 2016 financial and operations results conference call. Our financial results news release that was issued this morning before market opened, along with today's presentation, are available on Hecla's Web-site. The Web-site provider is having some technical issues putting it up but it is on the Web-site under the Upcoming Events tab. You'll be able to click on it there. On today's call, we have Phil Baker, Hecla's President and CEO; Jim Sabala, Senior Vice President and Chief Financial Officer; Larry Radford, Hecla's Senior Vice President, Operations; and Dean McDonald, Senior Vice President, Exploration. Any forward-looking statements made today by management team come under the Private Securities Litigation Reform Act and constitute forward-looking information under Canadian securities law as shown on Slide 2. Such statements include projections and goals which are likely to involve risks detailed in our Form 10-K, Form 10-Q and in the forward-looking disclaimer included in the news release and at the beginning of this presentation. These risks could cause results to differ from those projected in the forward-looking statements. In addition, in our filings with the SEC, we are only allowed to disclose reserves which are mineral deposits that we can economically and legally extract or produce. Investors are cautioned about our use of terms such as measured, indicated and inferred resources and we urge you to consider the disclosures that we make in our SEC filings. With that, I will pass the call to Phil Baker.

Thank you. Hello everyone. When I think about the first quarter, I see the strategy of our past few years is paying off. We have focused on growing reserves that will allow us to grow production. So we've not been under-investing and sustaining capital or delaying investing in projects that are going to generate high returns or extend the mine lives. So we began 2016 with the 10th consecutive increase in silver reserves, 175 million ounces, the most in our 125 year history. On this growing reserve base, we've been growing production over the last three years, and last year we had the most metals production in our history and in the first quarter of this year we had the most silver and silver equivalent production out of the 500 quarters Hecla has been in existence. And we're now on track for about a 10% higher silver production than last year's record. And silver production growth is not coming at the expense of gold, whose quarterly gold production was sixth highest in our history. This production growth is improving our financial results. In the first quarter, we had our highest revenue in about five years, and despite relatively low first quarter prices, we had our best adjusted EBITDA since 2012 when the silver price was $20 an ounce and gold was $1,600 an ounce. With the silver price up about $3 from the first quarter to the second, second quarter is on a path of significant growth in our cash flow, but I'm getting ahead of myself. To have these results, we have maintained investment in all of our properties. At Casa Berardi, we invested in automation and improving operations and in development and saw the lowest mining cost per ton since we acquired the project. And we're moving forward rapidly to bring into operation the surface pits at the East Mine Crown Pillar, often referred to as EMCP, which should increase gold production and decrease the per ounce cash cost. Greens Creek had solid performance again, showing lower cash cost after by-product credits per ounce and higher production on the back of very high grades. The recovery gains that we've made over the last 18 months have made a great asset even better enabling Greens Creek to generate additional cash flow through the rest of its life. And last week we reached the bottom of the #4 Shaft at the Lucky Friday. The focus now shifts to equipping the shaft, installing electrical equipment and we expect it to be operational this year, and we have a 20 to 30 year mine life ahead of us. And San Sebastian has started smoothly, allowing us to strengthen our balance sheet with its significant cash flow in the short-term. With its low cash cost, this project should be a major cash flow provider this year. Dean will talk about some of the exploration advances there which could extend the mine life. Finally, a project you're going to hear more about, Rock Creek, has taken another step forward in the permitting process with the completion of the public comment period of the Draft Supplemental Environmental Impact Statement. We're very pleased to note that the public comments were overwhelmingly positive. We're hopeful that the project will get all the necessary permits within a year or so to allow us to move under the underground phase of exploration. With the first quarter performance, we're increasing our silver production guidance, as found on Slide 4, to 15 million ounces in 2016 at a cash cost after by-product credits of $5 per ounce, with 8.1 million from Greens Creek, 3.1 million from Lucky Friday and 3.8 million ounces from our newest mine in San Sebastian. Now this 25% increase in expectations for San Sebastian is really because of the great job our team did in starting this mine up. Now, Jim Sabala, our CFO and my partner and friend, plans on retiring after the May AGM. So this is going to be his last quarterly conference call. He's had a very strong role in fashioning our success over the last eight years. He and I went through the 2008 financial crisis, settlement in the environmental litigation, a white knight bid and a hostile situation, and the development of the #4 Shaft at the Lucky Friday where Jim started his career as a miner when he was 18, fitting that he ends his career with the completion of the #4 Shaft excavation. Those of you who know Jim know we will surely miss his guidance, leadership and of course his sense of humor. And so, Jim, for one last time, with a smile, would you please review our financial performance this quarter?

It's my pleasure, Phil, and as Phil mentioned, I started my career with Hecla Mining Company over 40 years ago, and I'm pleased to be ending it here with the Company reporting record financial results. On Slide 6, [let's start with] [ph] few key production and financial metrics. In the first quarter, we had record silver and silver equivalent production, and that has softened the impact of weaker metals prices. In fact, the results were quite remarkable when you consider the fact that silver, gold, lead and zinc were down 13%, 3%, 8% and 16% respectively compared to 215's first quarter. All of our mines reported exceptional results for the quarter leading to an increase in silver production of 61% to 4.6 million ounces, and our gold production also increased 37% to just over 55,000 ounces. Cash cost after by-product credit per silver ounce decreased 36% in spite of lower by-product credits, and per ounce gold cash cost after by-product decreased by 20%. Overall, revenue was up 10%, due in part to the addition of San Sebastian, and the 12% decline in operating cash flow was due to a $20 million increase in working capital, consisting the establishment of work-in-process inventory at San Sebastian and accounts receivable increases, which we expect to normalize over the course of the year. During the quarter, we did have a net non-cash foreign exchange loss of $8.2 million, due strictly to the impact of foreign exchange rates on our long-term Canadian deferred tax liability. The solid production improvement combined with a careful attention to cost by our operators have allowed us to continue to report industry leading low per ounce cash cost after by-product credits and strong margins. Slide 7 shows our silver operations continued to deliver a strong cash margin in the quarter of 79% of sales or $11.77 per ounce. The gold cash margin is 34% of sales or $406 per ounce. And of course, at current prices, experience since quarter end in the margins are demonstrably better. As you can see on Slide 8, Hecla offers investor a truly diversified revenue stream, with 39% of our revenue from silver, 37% from gold, 15% from zinc and 9% from lead. I just want to note, the silver revenue grew relative to the other metals. We expect that to continue in the quarter with the higher silver prices. We also have diversification among four distinct mines, with 41% of the revenue coming from Greens Creek, 16% from Lucky Friday, 25% from Casa Berardi, and 18% from San Sebastian. On Slide 9 we show our liquidity trend. We have $134 million in cash and cash equivalents despite the $20 million working capital increase, which was principally due to the timing of shipment in Greens Creek. Consequently, we have over $230 million in total liquidity available to the Company. With working capital at San Sebastian now funded and higher metal prices, we look forward to improving results over the remainder of 2016. It's worth noting that absent those items, we would have reported breakeven cash flow in spite of the very low first quarter metal prices and continuation of key growth programs such as the East Mine Crown Pillar and the #4 Shaft. Our capital structure is shown on Slide 10 and is within our benchmark levels, with the net debt to EBITDA ratio of 3 and debt to total capitalization of 21%. It is long-term, has a low coupon of 6.875% and no maintenance covenants. It also gives us the operating leverage which is valuable during these times of rising prices. And with that, I'll turn the call over to Larry for a review of operations during the first quarter. Larry?

Thanks Jim. On Slide 12, Greens Creek had another excellent quarter with production up 21% over the prior year period. This was the result of better tonnage, grade and recovery. Some high-grade stopes that were mined at the end of 2015 continued into the first quarter. More notably, the recovery initiatives that the Greens Creek team have taken on have borne fruit, as you can see on Slide 13. When you have a site that has footprint constraint, such as Greens Creek, increased recoveries are one of the most viable ways to increase production. The Greens Creek team have several initiatives underway with the goal of increasing the recoveries further. Production at Lucky Friday was a 17% improvement over the prior year period, as you can see on Slide 14. Despite higher production, the per-ounce costs were flat because of lower by-product credits. Regarding our primary growth initiative, the #4 Shaft project, we have reached the bottom of the shaft at 8,600 feet, almost 2 miles of depth from surface. I was standing down on the bottom of the shaft yesterday and reflected on the quality of the construction and the record that the construction team has achieved of over 1,600 days without a lost-time accident. Our focus now turns to equipping the shaft with steel electrical equipment and in commissioning the shaft. We are on track for completion of this approximately $225 million project in the fourth quarter. The #4 Shaft project is designed to give us access to higher grade ore zones once the associated development is completed. On Slide 15, you can see a prototype battery-powered LHD which is undergoing testing at Lucky Friday. It is part of our ongoing effort to innovate throughout the Company. At the Lucky Friday, we see the potential for using battery-powered vehicles to reduce emissions and heat generation at depth. On Slide 16, Casa Berardi gold production increased 20% over the prior year period. Since acquiring the mine in 2013, we have worked through rock mechanics issues, changed the principal production zones to east of the deepened shaft, broadened the leadership team, changed shift's schedules, improved our mine plan compliance and taken on numerous improvement initiatives. For example, we automated the shaft, a $200,000 project that has resulted in 15 more skips per day. Another example is automating stope drills. This allows the drill to continue to operate during the shift change and during the time we are venting blast gases, gaining an additional 65 feet of drilling per day. The yield improvements are reflected in Slide 17. You can see the gradual improvement in the asset as reflected by the increasing monthly tonnage. But what's really exciting about Casa Berardi is the new East Mine Crown Pillar pit. You can see the progress with the excavation on Slide 18. And if you look closely at the top of the picture, you can see how close we are to the plant. This is an important step forward for the mine because it is expected to produce 5,000 ounces of gold this year and 30,000 each year forward starting in 2017. It should also extend the mine life, increase cash flow, and as a project, has an internal rate of return of about 90%. So it is an efficient use of capital. Moving on to San Sebastian, I'd like to show Slide 19, because the photo on the top right of the grand opening is a reminder of how quickly we got this project up and running. The photo on the bottom right shows rock samples from the East Francine pit that are north of 1,000 silver ounces per ton. And on the photo on the left, we show how compact and shallow the pits are. We are mining from three pits, blending the highest grade ore from the East Francine pit with the lower grade ore from the other two pits. We expected the ramp-up to go smoothly, and it has. In the first quarter, the feed grade averaged 0.32 ounce per ton gold and 41.3 ounce per ton silver. The focus in 2016 continues to be maximizing cash flow and investigating opportunities to extend the life of either the service pits or to go underground. With that, I'll turn it over to Dean to discuss San Sebastian.

Thanks Larry. Today I want to discuss the exploration success we've had at three of our projects, starting with San Sebastian. We are seeing good results close to the open pits at San Sebastian. On slide 21, you can see exploration drilling has focused on the Northwest extensions of the Francine and Middle veins and near the Middle vein open pit. Extensive trenching has been concentrated to the Southeast of the East Francine open pit where mineralization has been defined. The longitudinal section of the Middle Vein shown in Slide 22 identifies some of the new high-grade intersections near the current Middle Vein pit. These extensions may expand the pit and also put us in close proximity to high-grade resources that could be accessed underground. And particularly exciting is the recent discovery about 1,600 feet to the west of this pit of high-grade silver oxide mineralization close to surface, and we are aggressively drilling in this area to potentially define a new pit. The longitudinal section of the Francine Vein shown in Slide 23 identifies some new high-grade vein intersections in the West Francine area that is 3,000 feet to the west of historic Francine Vein production. Drilling continues near surface to the east and slightly greater depths where vein mineralization appears to get stronger and a new resource is developing. At Casa Berardi, the targeting by up to eight drills is shown in the longitudinal section on Slide 24. Drilling of the 118 Zone now defines the high-grade mineralized zone that extends for over 1,000 feet or long strike. Strong drilling results have upgraded and expanded resources of the 124 Zone, from the bottom of the proposed principal pit down-dip for over 1,500 feet. Strong grades identified along the eastern extensions to the 123 Zone now cover a down-dip area of over 2,000 feet. Based on surface drilling, both the 134 and 140 zones have localized high-grade [puds] [ph] that may define potential open pit opportunities. The strong drilling results continue to define new resources that are expected to sustain production at Casa Berardi in the coming years. During the quarter, definition drilling at Greens Creek upgraded resources at the Northwest West and Deep 200 South zones, and exploration drilling defined extensions at the 9A and Deep 200 South zones. As shown in Slide 25, there are some large high grade resource areas that are being infill drilled to indicated category. When a new life of mine plan is finalized later in the year, much of the Northwest West and Deep 200 South resources should convert into reserves. Our drill programs continue to deliver high grade drill intersections, and the red arrows define mineralization trends that remain open to identify new resources in the future. And with that, I'll pass the call back to Phil for some closing comments.

Thanks Dean. As I started out, I said that we think our strategy has worked, and I think there's real evidence that as we see the higher prices, we're able to take advantage of that with our growing production. But we also have just maintained a degree of conservatism where we can withstand things should prices not stay at these levels or go higher. The mines are performing really well with the record production and we're going to have good cash flow generation for the year. So with that, operator, I'm happy to take some questions.

[Operator Instructions] Our first question comes from the line of John Bridges from J.P. Morgan. Your line is now open.

Phil or Jim, firstly and most importantly, Jim, congratulations on your great career and best of luck in your new career.

Thank you very much, John. That means quite a lot coming from someone I've known as long as you and your professional nature, so I appreciate it.

Best of luck. Just wondering, how long will it be before you start thinking about building a mill at San Sebastian?

At this point, the focus is on extending what we're doing now, which is using the leased mill and contract miner. And so, if we can get that thing extended out past two years, we think that's a great start. And we've done work in the past on a mill. We probably need either more higher grade material or we need somewhat higher prices to be able to justify the sort of returns that we need to see in constructing a mill. So I think the time will come, it's just not yet.

Interesting. Okay, as a follow-up, you've got access – you've got the #4 Shaft done, now you've got to punch out to access the ore, and then you've got…

John, let me interrupt you. We've got the excavation done. We still have another six to eight months of work that we have to do to equip it. And then we'll start on the development of the 6,500 level and ultimately the 7,500.

Right, right. There's been confusion from other mining companies in the last year or two with respect to ramp-up some underground mines. Could you give us a sort of best case, and an over and under, on what sort of ramp-up you expect in terms of tons from Lucky Friday over the next few years, just to give us a broad idea, with some flexibility to protect yourself?

Look, there is no increase in tons. Tons will say land at sort of 800 to 900 sort of tons per day. What we'll see over time is development of more of this high-grade mineralization, this galena mineralization that we had images of, I don't remember, some of the slides we had today. But as we go deeper, the length of that mineralization goes from about 50 feet that we're experiencing today to about 500 feet when we get down to the 7,200 level, so about 1,000 feet below where we are now. So it's going to be a – when we do the development on the 6,500 and the current plan has us developing on the 7,500, and so it's not until those two levels are developed that we will realize that longer length of mineralization that will increase the production from 3 million to 5 million ounces. Now having said all of that, we are examining if there's another way to mine the ore body so that we do not leave a pillar of high-grade mineralization in the ore body. If you go back and look at some of our long sections, you'll see around the – like somewhere around the 5,200 level or so there's a pillar that has high-grade ore in it and we want to try to figure it out this way to avoid doing that, because we would leave 100 to 200 feet of high-grade mineralization. So we're in the process of evaluating whether we can develop the mine a little differently than what's in the current plan. The current plan today has this developing to 6,500 next year, to 7,500 the year after that basically, and we get into the high-grade the year after that. So that's what the current plan. And when we're in that high-grade, we are producing 5 million ounces.

Yes, so the ramp-up is kind of out in the 2019-2020 range in terms of metal. That's when the 7,500 development is complete and we have more stopes operational in the better part of the ore body.

Okay, that's very helpful. Thanks again and good luck to Jim and Phil.

The next question comes from the line of Lukas Pipes from FBR & Co. Your line is now open.

Jim, unfortunately I didn't have the pleasure to work as long with you as some of the others, but what a great way to end a very long career and congratulations on that and a very well deserved retirement. And I wanted to follow up a little bit about maybe first the M&A environment. Are there still an ATM out there that you laid out a few months ago, and I was just curious with where the stock price is, obviously you had a fantastic run, how you think about opportunities in this space and where does that ATM fit-in in today's price environment?

I guess two things I'd say. There has been a nice run in the stocks but it's not only been ours, it's also been things that we might be interested in acquiring. And so we're very mindful of that. We've been fortunate in that over the last five years or so we've not had to take an impairment of any size, and that's despite having made an acquisition in 2013, and if you look at other folks, I think you'll see most people have had to take impairments. And so we're very cautious of acquiring assets that are not going to be able to withstand changes in the price environment. So that's the first thing. So we're certainly looking at opportunities to continue to bring new assets into the Company. I'm happy to say I think we have a good pipeline with what we have in hand. You've seen good growth already. I think you'll see continued growth as we get deeper at the Lucky Friday and increase production there and then ultimately as we develop Rock Creek. So we're looking but we don't feel compelled to have to do something in order to fundamentally grow our production base. The ATM only allows us to do up to $75 million, and so in terms of its role in an acquisition, it's probably not a big – it probably does not play a big role.

Got it, got it. Okay, that's helpful, thank you. And then maybe as a follow-up and along the same theme, when you think about the balance sheet, obviously as I mentioned, you're trading very well in terms of the kind of market cap on top of the existing debt, but how do you think about the current leverage ratio, to what degree is that a focus over the course of the year, working that down a little bit or do you think kind of 3x here is something you're comfortable with?

We're certainly comfortable with the indebtedness that we have in the underlying assets that we have and where those assets are going this year, next year and into the future. With respect to trying to do something to reduce the indebtedness, basically we've had bondholders who have wanted to increase their stakes. There's really no bonds available. So when you look at the pricing on the bonds, it's not something that you couldn't really get your hands on any of size. So it's not likely that you'll see the debt reduced unless there is an opportunity to acquire some of that debt at a discount to par. So, Jim, you want to add anything to that?

The only thing I'd add is, we said from the get-go that our goal was to maintain leverage at around 3x EBITDA and a third of capitalization, and we're within those based on trailing four quarters. And with the improvement in metals prices, we're going to see that leverage ratio has improved. So I think we're comparable with the overall level of debt. We have seen as the price has improved and the Company has reported excellent results that the bonds are trailing very nicely. Those people that were able by as someone that were at discount have done very well. And so with a long-term cost to us of 6.875% and the prospects the Company has in front of us, I don't see a lot of motivation to go out and get crazy with those bonds.

But I will say that if the opportunity came to do something, we certainly would welcome that and we certainly see the ability of Hecla to carry that indebtedness and the ability to repay it, and the ability when it comes to maturity to be able to go into a new bond. So we have lots of flexibility with respect to the bonds and we're mindful of, just in the same way we are with acquisitions, not to acquire things that can't withstand a low price environment, we're mindful not to have too much indebtedness that can't withstand a low price environment. Jim, you want to add anything?

The only other thing I'd add is, I think the same opinion is viewed by others, and more importantly the rating agencies because just within the last month or two, we had Moody's do a review of the Company and it was part of their overall review of the precious metals sector and the energy sector, and they had to downgrade [indiscernible] out and alive for a lot of the issuers, and in Hecla's case, they did not touch the rating and they actually increased the outlook on the Company. So I think that's a testament also to where the Company is headed with regard to its balance sheet.

Yes. Jim, again, all the best. Phil and Jim, great job this quarter and continued best of luck here.

Our next question comes from the line of Chris Terry from Deutsche Bank. Your line is now open.

Couple of questions for me. Just in terms of San Sebastian and the drilling work you're doing there, can we expect to updated resource at midyear or is it just going to be updated early next year with your annual statement?

I guess it depends on the results that we see, but I think it's likely the latter where it will be at the beginning of the next year. To the extent that we're able to give some guidance early in that, we'll certainly consider doing that, but other than just giving sort of the raw information, it's hard to quickly put together a new resource as you're adding to it, right. So it's a process that becomes very inefficient if you do that, so it's unlikely.

Okay, thanks so much. And then on the overall guidance upgrade you've done on the silver, how conservative would you say that is? And I guess leading on from that, if we see silver process continue to go up from here, will you start to adjust mine plans at all or are you pretty set in how that looks over the next at least 12 months and that will stay as is?

Starting with the question about being conservative, I don't think it's conservative to think it's our best estimate of where we think things will be given that there's lots of uncertainties that occur. So I would say that I lost my train of thought. What was the other…?

Mine plan adjustments.

Yes, and as far as adjusting mine plans, no, these plans are pretty set. The ability to take some additional material that's – we can do that to a very small degree but there's not any major sort of change that you would see.

Okay, thanks. And the last one just on the working capital, will that be reversed in the coming quarter or just over the course of 2016?

It just depends on the timing of the ships really to Greens Creek to see that reverse itself as to when that will happen. So every quarter we try to work to, and every day in fact, we try to work to minimize our working capital, but we'll just have to see. Anything to add?

No.

Great. Thanks so much.

Our next question comes from the line of [Mark Mihajlovic] [ph] from RBC Capital Markets. Your line is now open.

Congrats on a really good quarter. So you seem to be a bit more positive on Rock Creek now. Can you just outline your plan for that asset over the next couple of years?

We're more positive because we've now had it for a year and we've now just completed the public comment period on the draft EIS, draft supplemental EIS. And so we've gotten some sense of what the view of the public was with respect to that. And so that has given us quite a bit of confidence on its ability to move forward. In terms of timing, it's now back in the hands of the Forest Service and they have to take into account all the comments received to issue the final supplemental EIS and the draft record of decision. We're hoping that can occur within a year or so, maybe even sooner than that, and then as soon as that happens, if it happens early enough in 2017 or late 2016, then maybe there's potential to do something in 2017 to actually go and start doing some work. Otherwise we're probably looking at 2018. Having said all of that, you still have the risk of further litigation. We think that's unlikely. This is the third round of the completion of an EIS. We think that the issues are so narrow that it's not something that needs or there is really an opportunity to litigate, but you just don't know what will happen on that front. So we'll deal with whatever is dealt to us, but the project is we think a great project and we think it will happen. We wouldn't have bought Revett if we didn't believe that Rock Creek was going to be able to be permitted and we were going to be able to put the mine in place.

Okay, that's great. And I guess just, obviously you guys don't provide too much quarter by quarter guidance, but just wondering, you mentioned a few of the high-grade stopes you had carried over from Q4 into Q1, are you generally through that and should we expect more normalized levels from here on, or is there still a bit more that we could see in Q2?

Larry, you want to…?

Yes, we've seen grades come down to more of our year on year average. So will we see more? We get a few surprises at Greens Creek from time to time but I couldn't guess them.

Thanks. That's it for me.

Our next question comes from the line of Jessica Fung from BMO Capital Markets. Your line is now open.

So just a couple of questions from me on San Sebastian. Quarter one really was so strong for you guys, and though you revised guidance up, it still seems like we might see quite a drop maybe in terms of grades or recoveries. Could you give us some guidance in terms of the trend we might see for the rest of this year?

Yes. So what happens is we mine out the Francine vein during the course of the year, and so we're now only on the Middle and the North veins. As a result of that, you see the production decline, and so we think the guidance that we've given is a reasonable estimate of what we're expecting to see. Larry, anything to add?

Yes, and it's a new operation. We're still getting our arms around the reconciliation between the mine and mill. There's no red flags but it's new and we're trying to get our arms around it. As Phil mentioned, the East Francine vein is quite rich, and as we run out of that, as we transition into the Middle and North veins, we'll see grades come down.

Okay, perfect. And then very quickly at Casa Berardi, so the automation that you guys have there, it looks like you've increased your tonnage above what you typically guide there, which is sort of 2,200 to 2,300 tons per day. Do you expect to be able to maintain rates then above that 2,300 tons per day going forward?

One thing that we've done in the automation is the automation of the hoist, and so that's given us I think about 15 additional skips a day, which is about 5%. So that's where part of that comes from. Larry, you want to add?

Yes, I think if you go back to the Slide 17, you'll see that probably more importantly we're starting to get more consistent with our production. We are narrowing the highs and the lows. And as important, as we mentioned, we have the East Mine Crown Pillar pit coming in. So the plant has capacity for, a round number, say 3,100 tons per day. So, yes, between the underground and the open pit, our goal is to keep that plant full.

The first place we get is to about 2,900 tons. Larry, it's encouraging may that we'll be better than…

Yes, because there's two different tonnages, but to be clear, when I say 3,100 tons per day, I'm talking about on any given day. But when you throw mill availability, then it's down around, like Phil is referring to, which is it is little lower than 3,000.

Okay, got it. Perfect. Thank you so much.

I'm showing no further questions.

Okay, thanks very much. We appreciate everybody being on the call. We're available if you have any further questions, call Mike or call me, and thanks very much. Look forward to hearing from you. Bye-bye.