Hecla Mining Company (HL) Q2 2023 Earnings Report, Transcript and Summary

Hello and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Hecla Mining Company Second Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Anvita Patil, Vice President, Investor Relations and Treasurer. Please go ahead.

Good morning, Regina, and thank you all for joining us for Hecla's second quarter 2023 financial and operations results conference call. I'm Anvita Patil, Hecla's Vice President of Investor Relations and Treasurer. Our financial results news release that was issued yesterday, along with today's presentation, are available on Hecla's website. On today's call, we have Phil Baker, Hecla's President and CEO; Lauren Roberts, Hecla's Senior Vice President and Chief Operating Officer; and Russell Lawlar, Hecla's Senior Vice President and Chief Financial Officer. Any forward-looking statements made today by the management team come under the Private Securities Litigation Reform Act and involve risks as shown on Slides 2 and 3 in our earnings release and in our 10-K and 10-Q filings with the SEC. These and other risks could cause results to differ from those projected in the forward-looking statements. Non-GAAP measures cited in this call and related slides are reconciled in the slides or the news release. I'd like to remind you if you would like to have a call with the management, you can do so by using the link under the section Virtual Investor Event in our earnings release that was issued yesterday. With that, I will pass the call to Phil.

Thanks, Anvita. Good morning, everyone. Thanks for joining our call. This second quarter was a good quarter for safety, production, cash flow and starting changes at Casa, but maybe the most significant event of the quarter is the restart of the Keno mill, because when you combine that with what is happening at Greens Creek and Lucky Friday, I think that Hecla is now in another period of substantial growth in silver production reserves and maybe even faster than what we had over the last five years. And if you look at Slide 4, you can see why I'm saying that because what that shows is what we've done over the last five years. And the numbers for those five years are pretty remarkable, 27% growth in revenue, 79% growth in silver reserves, 37% growth in production, $0.75 billion of free cash flow from our three mines. And it's no longer a question that Greens Creek mill can operate at 2,600 tons per day, or maybe even 2,800 tons per day. It's now more of a question of whether we can maintain mining at that rate or even higher. And the Lucky Friday without the service hoist in the bunker, which is in operation this month and the fourth quarter respectively, is already producing about 20% more ore than 18 months ago and is at a 5 million ounce run rate. At the restart of Keno, we have – having – we will have our teething problems, but if you look, we have an exceptional district given the grade of the ore, the recoveries that we are experiencing and the remarkable exploration success with continuous discovery of mineralization. So over the last five years, we had that 37% growth in production and we expect 40% over the next three years and close to 20% growth just this year. We probably will also see growth in our reserves more free cash flow generation. And I think all of this should result in share performance – positive share performance. Now Hecla is a silver company with gold exposure and we believe gold exposure will always be important to our portfolio for many reasons. It gives us diversification from the concentrate market. It hedges against silver's higher volatility, especially during recessions. It gives us scale to grow. And these are the reasons Casa Berardi is important to our portfolio. As we've indicated for the last year and a half, Casa has been impacted more than our other sites by inflation causing underground mining costs per ton to double, underground grades have declined as we expected, and tailings construction costs are higher because it requires more buttressing. So while we are permitting the higher grade pits, we are moving quickly to mine only the 160 pit. Lauren's is going to talk more about Casa in a moment. So now what I'd like to do is move to Slide 5 for a few comments specifically on the quarter. I think it was a great second quarter and I think the first half silver production is evidence of the point I started with and that's that our silver production is growing even faster now. With this quarter Lucky Friday produced 1.3 million ounces and four out of the last five quarters, we've produced more than 1.2 million ounces. And at that rate, Lucky Friday is close to being the 30th largest silver mine in the world. And just to put that in a context, in 2021, Lucky Friday was producing about 40% less than what it's doing now. And as I mentioned, we restarted the mill at Keno Hill and the improvements we completed leading up to the restart of performing well, the secondary crushing circuit modifications are proceeding on schedule. The grades better than modeled, and we anticipate being at full production by year-end. And of course, all this performance was underpinned by Greens Creek's consistent 2.4 million ounces of production and $36 million of free cash flow. Our all-in injury frequency rate was the lowest in the history of the company at 1.18, an accomplishment that reflects our focus on changing behavior and engineering out risk. And I think the best example of engineering out risk is the UCB mining method, which puts miners in places that are safer, doing safer tasks. We will be focused on how low the injury frequency rate can go at the Lucky Friday. And Lauren, who is going to retire at the end of the year, will talk more about each property. Now, silver revenues are growing relative to gold. We are almost 45% for the quarter, and I think we'll likely have more than 55% of our revenues from silver by the end of the year. The silver operations have good cash flow generation and the prices can strengthen a little bit. The second half should be even better, and Russell will have more on this. We maintained our consolidated silver production and cost guidance, but we have adjusted the production cost guidance for Casa Berardi and the production based on the impact of the wildfires and the fact that we are moving quickly to open pit only operations. And now, I'll pass the call to Russell.

Thanks, Phil. I'll start on Slide 7. Hecla has long been known as a leader among the silver miners and the largest U.S. silver producer. As we look at this slide, it is easy to see why, where over the past six months, the margin at our silver mines was 56% and they've already produced more than $105 million of free cash flow this year and we are excited to see what Keno Hill will add to this profile. Over the past three and a half years, the Greens Creek and Lucky Friday mines have generated more than $560 million of free cash flow. This has allowed us to invest in exploration to grow our production in silver reserves as well as acquire and invest in Keno Hill, which we anticipate will both add to our production profile and improve our balance sheet and debt metrics. This leads me to Slide 8, where I'll discuss our first quarter revenue profile and balance sheet. Silver accounted for 40% of our revenues in the first half of the year, which continues to show the strength and consistency in our silver mines with approximately 34% of our revenue coming from gold and 26% from base metals. We ended the quarter with $107 million of cash on our balance sheet and had liquidity of $219 million. We also monetized our zinc hedges for approximately $7.6 million as the zinc price declined to its lowest point in the second quarter since April, 2020. The strength of our balance sheet and financial flexibility with a net leverage ratio of less than 2x, remains one of our most important objectives. As of the end of the quarter, we were slightly higher than our goal. This is primarily due to the suspension of mining operations in June at our Casa Berardi mine due to Canadian wildfires, as well as our continued investment in Keno Hill. I expect that as we come into the third quarter, this will revert to being less than 2x due to the production of both of these mines during the quarter. I'll now turn the call to Lauren.

Thanks, Russell. Let me start by saying it's very satisfying that our succession and development planning have put us in a position to fill the VP ops role and to backfill that vacancy internally. Carlos and Chris have steady hands and will do a great job. As for me, I haven't hung up my spurs just yet. There's a lot to accomplish in the next five months. And with that, I'd like to turn to Slide 10. Greens Creek, our cornerstone asset turned in another solid quarter with production of 2.4 million ounces of silver and free cash flow of $36 million for a total of more than $73 million in free cash flow for the first half of 2023. Gold production range strong at 16,000 ounces due to better grades and plan and improved performance in the gravity circuit. Cash cost for the quarter was $1.33 per ounce, and the AISC per ounce was $5.34. Both metrics are slightly higher than the previous quarter, primarily due to a lower zinc byproduct credit due to lower zinc price. Capital spending was $8.8 million in the quarter for a total of $15 million for the year. Our expected capital spend at Greens Creek is now between $49 million and $52 million for the year, which is a slight decrease over the previous guidance. We are increasing our gold guidance for Greens Creek and lowering our AISC guidance because of the lower sustaining capital spend planned for the year. Moving to Slide 11, Lucky Friday produced 1.3 million ounces of silver at an AISC of $14.24 per ounce in the second quarter. This quarter marked fifth consecutive quarter of silver production exceeding 1 million ounces, the highest quarterly production in the past 23 years, and a new safety record with an all-injury frequency rate of 0.52 at the end of June, a remarkable achievement. Capital spending at the mine was $16.3 million as we focused on two key projects, the service hoist, which was completed earlier this month, and the coarse ore bunker, which we anticipate completing by the fourth quarter. The service hoist is expected to debottleneck our production hoisting capacity, while the coarse ore bunker will decouple the mine in the mill by adding the capacity to stockpile ore for multiple days, both projects are critical to achieving our production goal of 425,000 ore tons per year, the rate we expect to achieve by year-end. Free cash flow generation for the first half of the year was $34 million reflecting the mines strong performance during the year. We are reiterating the production guidance, but increasing the cash cost guidance for 2023 to $4 to $4.70 per silver ounce and all-in sustaining cost of $11.50 to $13 per ounce. This increase in cost guidance is due to higher labor costs of $2.5 million related to the wage increases in the new Collective Bargaining Agreement, lowers zinc byproduct credits because of lower zinc production and prices, higher sustaining capital related to the timing of mobile equipment deliveries and increased development to achieve our throughput target. We are increasing the capital guidance to include higher sustaining and growth capital spend, which is primarily related to our two major debottlenecking projects. Moving now to Slide 12. At Keno Hill, we remain on track to achieve full production in the fourth quarter. We restarted the mill in the second quarter using lower grade stockpiled ore for the startup. The mill produced 184,000 ounces in the quarter while operating with a temporary portable crusher. The next milestone in the mill is to complete the secondary crusher improvements, which we anticipate in the third quarter. We expect capital spend at the mine to be $47 million to $49 million for the year, slightly higher than our initial guidance due to increased development and no improvements. I’m encouraged by our progress at Keno Hill. While we have a limited sample size, the resource model is performing well through the second quarter. The mill to model reconciliation is showing slightly fewer tons at better grades for the same silver and lead content and more zinc. The improvements we made in the mill prior to restart, including advancing the level of process control, are performing as expected. Silver recovery map then exceeded our target at 94% and the concentrate quality is very good. We are looking forward to commissioning the upgraded secondary crushing circuit in the third quarter and expect it to improve the reliability and efficiency of that circuit. In the mine, we are going through the typical ramp up learning curve. We've learned how to manage the ground in the primary development headings and are now working through the process in the ore headings. The Bear Zone is requiring more shock with an expected, and that is being incorporated into the mining cycle. Our key underground infrastructure project should be completed in the third quarter and we look forward to a strong finish for the year. We are reiterating our production and cost guidance at more than 2.5 million ounces and an all-in sustaining cost between 12.25 and 14.75 per ounce. I'm excited about the future Keno and expect the mine can produce up to 4 million ounces in 2024. On Slide 13, the left hand photo shows an excellent example of very high grades we are encountering in the Bear Vein. The photo is a little difficult to discern in the presentation, but you can see a lot of glean in there and that's a 160 ounce space, which is pretty impressive. The right hand slide shows our progress on the secondary crusher circuit where we are replacing most of the components except the crusher itself. Turning to Slide 14. Casa Berardi produced approximately 19,000 ounces of gold for the quarter at all-in sustaining cost of $2,286 per ounce. Production was lower due to wildfires in Abitibi, which caused access road closures for the majority of June. As Phil said in his comments, Casa Berardi has experienced declining head grades and increasing cost pressure over the past several years. As noted in our technical report, Casa becomes an open pit only operation in the future. After careful evaluation, we decided to make some changes now to better prepare for that future. We conducted a stope by stope margin analysis of the remaining underground reserves and resources during the quarter. We concluded that the East Mine did not yield attractive economics and closed it. For the West mine, the analysis showed attractive economics until about mid-2024. These changes put more production pressure on the 160 open pit and we made the decision to begin the process of insourcing the mining there. We authorized the purchase of 16 million in surface mobile equipment, about 12 million of which has been delivered, and we are busy assembling it and training operators. As our crews ramp up and the balance of the equipment is received, we expect to take over all of the open pit mining by the end of 2024. Much of the waste rock being produced by the stripping is being directed to the construction of tailings Cell 7 this year and through calendar year 2026. We are adjusting our production cost guidance to reflect these changes. Previously, our plans modeled with the 160 pit combined with the underground production would act as a bridge until we get the permits to mine the higher grade open pits. With the changes I just described, it will not be possible to void a production gap, which we estimated about two years between 2028 and 2030. Once 160 is fully mined, we anticipate permeating it as our long-term tailing storage facility for the higher grade pits. Until then, we'll build multiple raises on our existing Cell 7 tailings facility. In consultation with our engineer of record and independent review panel, we've determined that increasing the height of the facility will require us to build a substantial buttress for it. That capital has been reflected in our ongoing plans. I think the way that I think about Casa in three phases. Over the next four years, we'll make some modest investments that are returned in the period to produce the remaining permitted reserves and resources. Then there will be a period of investment while we complete the permitting of the higher grade pits, invest in the infrastructure and equipment necessary to complete the transition to a fully surface operation and to expose the first ore. Once the first ore comes and that's expected in 2030, positive free cash flow generation falls quickly and then builds over the coming years. Before I pass the call back to Phil, I want to emphasize Casa’s long reserve life and the significant exploration potential on a large land package on the Casa Berardi break. We are making the right decisions today to put Casa back on the path to free cash flow generation and a brighter future. With that, I'll pass the call back to Phil.

Thanks, Lauren. Turning to Slide 15, we are reiterating our silver production and consolidated AISC guidance. With our changes at Casa, we are revising our three-year gold production and cost guidance for the year. Capital guidance is increasing to $225 million to $235 million, mostly due to the increase of the Lucky Friday and at Casa Berardi for the reasons that Lauren has explained. So I'd like to go to Slide 16 and before I end my remarks, I want to emphasize the critical role that silver plays in the transition to renewable energy. Silver demand in photovoltaic was about 140 million ounces in 2022, and that's about 12% of total silver demand. In 2023, some technologies that are known as TOPCon and HJT are expected to account for 80% of all the new photovoltaic manufacturing facilities. And these two technologies use 30% and 120% more silver respectively than the currently widely used PERC technology. So silver demand and solar is set to grow further as the transition to clean energy accelerates. And I'm not going to be surprised if 30%, maybe even 40% increase in demand in silver for solar happens this year or next, raising solar to more than 15% of total silver demand. And if the economy slows, I'm confident that the commitment that's been made to renewable energy will cause the growth of silver and solar to continue. And so it seems inevitable that solar is going to swamp other silver demand categories with maybe the exception of investment demand. With that, Regina, I'd like to open the call to questions.

[Operator Instructions] Our first question will come from the line of Lucas Pamatat with Canaccord Genuity. Please go ahead.

Hey. Phil and team, good morning and thanks for taking my question. Just wondering about Casa Berardi, could you provide more color on how much you expect to invest in those three years that the mine has closed down and over the next 18 months? Because I think you had previously said it would cost a $100 million to $120 million to transition to open pit mining. Just wondering if that number still valid and if so, how much of that is baked into the CapEx guidance?

Yes. The short answer is that number is still valid and that was without stripping. And if you add the stripping costs and it's order of magnitude $200 million, $250 million. This is out in 2028, 2029 maybe a little bit in 2030. And so it's not anything that's an immediate capital outlay. We are making some relatively small free cash flow of Casa does not cover all of the capital costs that we'll make in this year and next year, but it's a relatively small amount. I think that each year it's $30 million, $40 million. And then the following years it's free cash flow positive and we'll return that capital that we're investing in 2023 and 2024 over the 2025, 2026, 2027 timeframe, yes those three years.

Got it. Thanks. And just one more for me. You had talked in the past about how you were hesitant to shut down the mine just because of – due to the sort of demand for labor in that area. What are you planning on doing with those employees or how are you planning on retaining them, I guess?

Well, the need to retain employees is, certainly it's something we want to do and it's something we want to – we're the largest private employer in the region. But the reality is that the mine has to be economic. And so we went through and looked very carefully at what stopes we could mine, made the determination of the need to shut down the East Mine. And we'll mine the West Mine stopes that are economic and we'll have that workforce through that period of time. And then we will move to open pit, an only open pit mine. And so we'll have certainly some of those people that will transition into those roles. Lauren, what would you like to add to that?

So we've already begun that process of transitioning some of the underground workforce into the open pit role. So a significant number of people that were displaced from the East Mine are going into the new fleet that we purchased to operate the new fleet.

Got it. Thanks guys. I'll get back in the queue.

Your next question comes from the line of Lucas Pipes with B. Riley. Please go ahead.

Thank you very much, operator. Good morning everyone.

Hi, Lucas.

My first question is also on Casa and kind of thinking through the transition there. It was touched on a little bit in the prior question in terms of transitioning labor. Can you frame up what the net impact would be over the coming years and how you would manage that? And then is there kind of idle mine costs for the underground works following the exit from underground operations? Just trying to understand if there's anything we need to model longer term as it relates to the underground workings. Thank you very much for that.

So Lucas, before you – can you repeat your second question? I'm not sure I understood.

So essentially when you abandon the underground section of Casa, is it – you just pull the plug and walk away from the underground workings, or do you have remaining costs, maintenance costs for the underground works, even as you don't actively produce underground anymore?

It does not sterilize the underground and we will have to make a determine in the future as to what level of maintenance do we do on the underground. So stay tuned, we'll see where we can add on that. But certainly, what we will do, we will attempt to maintain the ability to go back into that mine underground, different price conditions, different costs, environment. The underground could be revived plus exploration. We're continuing to drive the exploration drift to do further drilling to the west of where we're currently operating in the West Mine. So stay tuned for that and that will occur over the course of the coming year. With respect to the employees, the fact that we are such a large employer, the issue is not going to be having enough employees. It's the fact that we're having to reduce that number, but that will occur over the course of the coming year. And I think ultimately we end up with what roughly half being good. Yes, but Lauren, go ahead.

Yes. So in terms of company employees, we started the year at about 650 company employees. And we're now down to about 522, just to put things in perspective. And over the course of the year, there aren't many more changes. Honestly, normal attrition, the next change will come with the closure of the west mine.

Got it. Thank you very much for the detailed responses. For my second question, I do want to stay on the labor topic. So in the past you had mentioned labor constraints, especially on the skilled side, and I wondered if you could give us an update from Greens Creek, Lucky Friday, Keno, how things are going on the labor front? And I'll leave it there for now. Thank you very much.

Sure, Lucas. We can talk about, I guess in general and then maybe Lauren you can add if there's anything specifically. But in general, we've done a very good job of attracting the people that we need at the mines. I think there's been a turnover rate at the Lucky Friday, for example, has fallen to the sort of levels that we've seen in the distant past, 10% or less sort of turnover rate. Frankly, the biggest issue we have is with the technical people, engineers, geologists, that's more of a challenge at the moment. You're always going to have difficulties with mechanics, very skilled miners, but we've done a pretty good job there where we have some vacancies is really in the technical areas. Lauren?

Yes. Broadly I would say that, what we're seeing it being less difficult to fill those roles over the past year than it was say, the prior two. Not to say that there isn't still competition, but we're pretty much at staffing levels everywhere and we're able to find folks and we supplement in terms of the skilled trades on contract when we need to, but it hasn't been a material impact for the business at this point.

We need schools to fill up more engineers and geologists, right?

That's exactly right. Yes, that's where the skill gap really is on the technical side, because there's a bunch of gray hairs in Hecla. So we're doing all right with that.

I appreciate the color. And I think I'd mentioned before I know what degree I'll recommend to my children. So thanks again and best of luck.

I hope they [indiscernible] Lucas.

Your next question will come from the line of Joseph Reagor with ROTH MKM. Please go ahead.

Hey guys, thanks for taking the questions. Kind of following on a little bit of that, the labor question. With the shutdown of the East Mine, will there be any changes in the labor force at Casa in Q3 and also on that on the East Mine. Will there be any charges taken for the closure of that?

The answer is no to both questions. We don't anticipate any additional steps labor wise nor is there a impairment charge.

Okay. And then compared to the February, I think, 2022 technical report you guys put out on Casa, how different will the mining rates be as you switch to fully open pit in 2024 compared to what was in that document?

Fundamentally, there's really just two changes to that document. One is the underground production that's shown there will not occur past 2024. And then – and that was I think originally going to about 2030. And then there's additional capital that will be reflected. Otherwise, it's the plan that we have always had. Lauren, anything to add? Russell, anything?

Let's say in terms of the immediate changes with the shortening of the underground, we are accelerating the 160 bit, which is why we purchased the equipment. And so for context, the acceleration is not massive. We go from circa 12 million tons moved this year to a little under 20 next year. So that's not a huge change. And then the following couple of years, the rate drops off and we'll be fully in-sourced at that point in time.

Okay. All right. Thanks for help there. And then on Keno, obviously, great to see it started up early. I think you guys were originally targeting Q3. But how confident are you guys in the full-year guidance, since you started early? Is there any chance for upside to it and are things going smoothly to start this quarter to achieve it?

We're confident in the guidance at this point, but it is a startup and so will be a function of what we see as the ability to put the tons in the mill and what the grade is going to be and the recoveries. We certainly are learning as we go, but yes, there isn't anything that would cause us to say, let's change something at the moment. Lauren?

Nothing to add to that. That's correct.

Okay. Thanks guys. I'll turn it over.

Your next question will come from the line of Mike Parkin with National Bank. Please go ahead.

Hi, guys. Sorry to beat a dead horse, but I got a couple questions on Casa as well. You've kind of indicated where you started the year unemployment, where you are now. Can you give us a sense as of like, say 2025-ish, how many employees you'd expect to have? Is it still around just over 500 or would it be even lower?

It's sort of in that range, that we would have because remember we're insourcing the mining. So work that's done by contractors will be done by Hecla employees.

Okay. And then with respect to your reserves and resources, now, is there going to be any reclassification of any of the ounces that fit in the underground categories into potentially open pit?

It will not be – we'll not go into open pit, but there will be a reclassification of reserves to resources that from the underground right. But it's relatively small. My recollection is 10% or 15% of the total. It's small.

1.7 million tons, it's not a big number.

Okay. And in terms of what you're planning to mine with the future open pit, is that what we're seeing in the inferred resources right now?

Yes. It's in the reserves and it’s the 3 gram material, so the current 160 pit is 1.7 grams, 1.8 grams and something like that. And so when we go into the Principal and the West Mine Crown Pillar pits significantly higher grade and the strip ratio is particularly on the Principal pit is quite attractive.

That was actually going to be one of my questions. Historically, you've had quite an elevated strip ratio. Can you give us just a general sense of what the life of mine average would be?

I don't remember that, but Principal is about seven to one and the West Mine Crown Pillar is a multiple of that. I don't remember what it is, 22 to one and that's in the technical report. Nothing has changed with respect to the timing of those pits are as described in the technical report. Really the big change in the technical report is the underground being shortened and the 160 pit being advanced and more, more capital for the Cell 7 that you're saying at Cell 7.

Okay. And the decision to move ahead with this, is there like a minimum IRR threshold that you're using to justify it? And at what silver price would that be done at?

Well, it's a gold asset, yes so the real decision in terms of the big capital outlay really doesn't happen until 2027, 2028. Now the –between now and then it is cash flow positive, so you just end up having those two years where you've got to make a capital outlay. And so while we expect that this will go forward, certainly a different decision that conditions are different at that time could be made. But – and the reason we expected it forward is that's very high grade open pit material. It's very economic, it's generating, according to the technical report, I want to say a $1 billion plus or minus free cash flow over the inclusive of the capital. So it's a very economic set of pits.

Okay. That’s it from me.

The ultimate decision is made in 2027, 2028.

Okay.

[Operator Instructions] And our next question will come from the line of Heiko Ihle with H.C. Wainwright. Please go ahead.

Hello everyone. Sorry for, in case I ask something that's been asked before, I got on a little bit later. I was on another call. So sincere apologies if that were to happen here?

[Indiscernible]

Yes. First time that happened to me on your call, can you provide some color on the cost of labor parts and so on for your new mining operation at the Yukon. I mean, I think by now you'll have a pretty decent sample size for what actually transpired versus what you have modeled with output costs. Anything else that you think would be good to pass on to the analyst community with starting up operations that you maybe didn't expect? I don't know availability of labor, bottleneck for parts, that kind of stuff?

Well, I guess the first thing I'll say, Heiko, is that we've been fortunate in that. We've not had a huge turnover at Keno. There was a cadre of people there and they wanted to be there and it's pretty cool place and they recognize the sort of grades. So we've been fortunate in that. The turnover rate has not been that high and we have been able to attract technical people to the site. Certainly the issue is it's a rotational schedule, so you've got to have basically twice as many people as you would need for an operation that does not have that rotation. And it's certainly in the Yukon. But comp wise, I think we're competitive. I don’t have off the top of my head, can't tell you where it stands. Do you have any color, Lauren?

No. Not from that perspective. I would say that we've really not had trouble staffing either miners or technical people.

The other thing is there's been some other operations that have closed down and that actually has given us a supplement of quite a few folks, so the Minto operation.

That's quite helpful. Thank you. Moving on from that, I know everyone else was focused on Casa at least on the questions that I heard. But can you walk us through your exploration plans for the Bear Zone versus the Townsite Zone for the remainder of the year just when it comes to maybe meters and holes and even money spent?

So I'm sorry, which – it was muffled, which zones?

The Bear Zone versus the Townsite Zone?

Okay. Well, look, we have so many targets that it's a challenge. And so there actually will be a drill is now moved from those two zones to the Chance Vein, which is off the – it’s a little bit further a field. But we're getting great results. One of the things we're going to try to figure out is, how we might drill in the winter and should we be drilling in the winter. So I guess stay tuned for that. Our total spend and exploration for Keno Hill is $3.7 million. So we don't have a huge budget there. But it will expand if we start drilling in the winter, and plus we'll start to have access underground. We've got platforms that we're waiting to get access to, but we'll be getting access to those fairly quickly. So you'll see a little bit drilling in the fourth quarter from the underground that were more drilling as a result of those underground platforms.

I wasn't going to ask this until you just brought it up, but what is the cost differential between winter drilling and summer drilling approximately?

I couldn't tell you other than it's more, and the big issue that they have is just managing the water because it gets so cold, remember, it's minus 40, 50 degrees on occasion there. Having said that, we experienced that at Casa and we actually do all of the surface drill, not all of it, but almost all.

Preferentially in the winter.

Yes, in the winter because of the swampy nature of that area. So we have the skills and the experience to do it. We just have not done it there. And I say we, Alexco did not do it there, but I think it's likely that you'll see a start to do some.

That's very helpful. Thank you. And I will get back to queue.

Thanks, Heiko.

And with that, I'll hand the call back over to Phil Baker for any closing remarks.

Okay. Well thanks very much, Regina. I appreciate the questions. I hope that you'll think about the five years that we've last experienced and the accomplishments that we have had because I think we're in a position to see that same sort of experience where we see the growth, the dramatic growth in our silver production. And the fact that we have this silver production in the U.S. and in Canada is more meaningful today than it was five years ago. And we really have a group of people that is very capable. They like working for Hecla, working for a company that has the history and the expertise that we have where we're able to do things like the UCB method of mining at the Lucky Friday. So stay tuned. We're certainly available for questions. We have some time set up for analysts, shareholders, anyone who's interested to be able to talk to Lauren, Russell or I. And so please make a request to be on one of those calls. And with that, have a good rest of your day. Thank you very much.

That will conclude today's conference call. Thank you all for joining. You may now disconnect.