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Hecla Mining Company

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September 16, 2024 at 3:30 PM (MDT)|Broadmoor Hotel & Resort

Cassie Boggs

Interim President and Chief Executive Officer

Catherine “Cassie” J. Boggs
Interim President and Chief Executive Officer
Hecla Mining Company


Catherine “Cassie” J. Boggs was named by the Hecla Board of Directors to serve as Interim President and Chief Executive Officer effective May 23, 2024. She was elected as the first woman Chair of the Hecla Board in 2022 and was appointed to the Board in 2017. Until her retirement in February 2019, Ms. Boggs served as the General Counsel at Resource Capital Funds from January 2011 to 2019. Since November 2019, she has been serving as an International Expert in mining with the U.S. Department of Commerce’s Commercial Law Development Program and is an Adjunct Professor at the University of Denver, Sturm College of Law. She was Senior Vice President, Corporate Development at Barrick Gold Corporation from January 2009 to December 2010 and Vice President from July 2005 to 2008. Ms. Boggs was also an international partner at the law firm of Baker & McKenzie from July 2001 to July 2005. She has over 40 years of experience as a mining and natural resources lawyer with experience in domestic and international mining projects.

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The board in 2017. Please welcome Cassie over to you, Cassie. Thank you. Good afternoon. I'm Cassie Boggs, the Chair of Hecla's Board of Directors and interim CEO. I direct your attention to the cautionary statements regarding forward-looking statements that get made today. I plan to speak on three topics briefly. Hecla's current and near fo near term focus and strategic priorities are operations and the market for silver. It's a really exciting time for Hecla and we have many exciting and significant projects in the works, but of course, the most important one is hiring the next CEO. We are deep in that process and we have received and seen many highly qualified candidates. It has reaffirmed to us that Hecla not only has had a great past, it has a very bright future. We are nearing the end of that process and we expect that we will be able to make an announcement in the near future. But even prior to that announcement, Hecla is experiencing a breath of fresh air and a culture shift. We've eliminated some internal distractions and we are focused on collaboration and eliminating silos. This new culture is taking root and I'm heartened by the numerous interactions I've had with our employees who generally seem rejuvenated and excited. This has allowed us to refocus on core priorities which we expect will allow the new CEO to hit the ground running while also not limiting their ability to introduce new ideas and implement improvements to current practices. After all, part of the excitement within Hecla is the anticipation of the skills, experience and ideas our new CEO will bring. So we expect our priorities will remain on four aspects, improving our existing operations, particularly at Keno Hill, maintaining our social license and growth by focusing one on the large inventory of land and projects and two possible acquisitions with emphasis on our current jurisdictions of the United States and Canada. And for the time being, we will remain focused on these best jurisdictions, avoiding other jurisdictions until we see the political climate change. And finally, deleveraging our balance sheet on par with any of these priorities is our commitment to be responsible and sustainable miners. It is the key to ensuring that we can maintain our social license to operate, but it's equally important to change the way society and tomorrow's workforce thinks about mining. We've had very recent experience reaffirming this priority when the eagle mine heap leach failure. That's near our Keno Hill mine in the Yukon. When that failure happened. We're fortunate in that Keno Hill does not have a heap leach facility and utilizes the dry stack method of tailings disposal. But nonetheless, we understand the trauma and experience of our friends and neighbors. The first nations of the Nacho Nayak done. We've offered our assistance to both the NND and the Yukon government and we are and will remain sensitive to the Nn D's position on mining activities on their traditional territories and any impacts on Keno Hill's operations. This is the decade of a mining in my view, the decade for the mining industry to prove that it can mine safely and environmentally responsibly and the benefits of mining can be shared with all with respect to growth. In addition to our four operating mines, Hecla has 16 exploration and development projects. That's a lot for our company, our size and many of these projects have been with us for decades. So we plan on studying these projects to see if and how they can be brought online. To mention just one. Our Libby exploration project in Montana is a very large silver copper deposit that's only 50 miles from our Lucky Friday mine. We're hopeful that we will get the necessary approvals early next year to dewater rehab and and extend the existing audit so that underground exploration activities can be resumed. And deleveraging as we discussed in our Q two earnings release, we are focused on deleveraging in the second quarter. We significantly improved our net leverage ratio and materially lowered our net debt amount. We remain focused on improving both of these metrics. Hecla is 133 year old company with a rich culture of innovation and continuous improvement and that's embedded in our operations. So there are three key messages I'd like you to take from this presentation. First, Hecla is the largest US and Canadian silver producer and the third largest primary silver producer. Our operations are all located in the US and Canada and we will produce this year about 17 million ounces of silver. So we are the fastest growing established silver producer. Secondly, our four operations have long reserve mine lives of 10 plus years. Our silver operations are low cost and have significant leverage to silver prices with margins that are more than 50% of current silver price. Our portfolio offers further optionality of silver growth in the near and long term with our exploration projects including those in Montana. The map shows on this slide shows our four operations in bold as well as our exploration portfolio. And thirdly, the fundamentals of silver are strong given the current macroeconomic environment and with the critical role that silver plays in the energy transition. So we're committed to being responsible minors and safety is at the foremost foundation of everything we do. Our all injury frequency rate was 1.45 in 2023 16% lower than the US national average. Greens Creek and Lucky Friday recorded their lowest AIFR since 2012 when we implemented our safety and health management system. Our carbon footprint is low due to underground, lower throughput and the higher grade aspects of our silver mines, we were net zero on carbon emissions over the past three years. But looking forward, we expect to focus more on carbon sequestration at our operations and while our carbon footprint is low, our economic footprint is large in 2023 our economic impact was 855 million in the communities in which we operate. We are in fact the economic pillars of these communities. And as I said before, we believe in the long term potential of the Keno Hill mine and other exploration properties we hold in the Yukon and that is why we're committed to developing a long term relationship with the first nations on whose lands we operate as well as the Yukon government to help them develop and build a strong and responsible mining industry. So silver production in safe and stable jurisdictions is rare. 48% of the world's silver production comes from three countries, Mexico, China and Peru. US production is rare and Canadian production is even more rare. Hecla produces 45% of US of the US silver. And the next largest US silver producer is tech. So when you think of investable silver producers with U.S. and Canada focused silver production, we certainly are at the top of the list. This U.S. and Canadian silver production is underpinned by our high quality silver reserves, which are the fourth largest amongst our peers. Silver reserve grades are the second highest among peers. And it is this high quality of our reserves. And by-product credits that result in a low cost in the low cost profile of our operating mines, higher grade reserves coupled with lower throughput underground operation result in this low cost structure. This graph shows the all in sustaining cost profile of our peers. And Hecla's consolidated ASIC is the Green bar on the left at $11.80 in 2023. Now with Keno Hill operations ramping up, we do expect our consolidated ASIC to increase. But despite that our consolidated Asic will continue to remain very competitive among silver peers. So let me talk about our mines. Greens Creek is our flagship mine with a reserve life of 13 years. When Greens Creek started operations almost 35 years ago, the mine had a reserve life of seven years but our stellar exploration success coupled with its low cost structure and its excellent ESG practices made Greens Creek one of the best silver mines in the world. Greens Creek is expected to produce 9 million ounces this year with an ASIC of $9 per ounce. Hecla became the operator in 2008 and over the past 15 years, we've been able to make this mine even better with a focus on continuous improvement and investments with a high return on capital. Two examples are silver recoveries which have increased by 7% points and throughput which has increased by 25% to more than 2500 tons per day. It is a consistent, this consistency and innovation that has produced more than $2 billion in free cash flows. Since Greens Creek started production. Our return on the 70% stake of Greens Creek acquisition is 123% and there are not very many operations around the world that can boast of such a return on investment. And I would remind everyone that Greens Creek does all of this within the boundaries of a national monument. Lucky Friday is our second cornerstone mine located in Idaho and has a 19 year reserve life reserve mine Life. Lucky Friday is an 80 year old mine and one of the best examples of innovation in action with Hecla's patented underhand closed bench or UCB method. It has significantly improved the safety and hence the productivity of the Lucky Friday as we're able to manage seismicity better with every blast in its 80 year history. Silver production averaged 2.2 0.5 to 3 million ounces and looking forward over the next decade with the success of the UCB and our other investments in increasing mining throughput The Lucky Friday should be a 5 million ounce producer this decade. The Lucky Friday, as I said, is expected to produce 5 million ounces of silver this year and last year, we had expected, it would have produced 5 million ounces. But in the second half of the year, we had an unfortunate fire event in the secondary egress. The Lucky Friday has ramped up to full production following the repairs in the first quarter of this year. And we've been working with our insurer on insurance proceeds. We've received 35 million already and expect to receive the remaining 15 million in the third quarter. So the Lucky Friday is a great example of the value of long term thinking and investment in the early two thousands when silver was below $5 an ounce, some would have questioned the wisdom of looking for more silver in a 60 year old in a mine that was already 60 years old, but we embarked on a drilling program in 2005 and have increased our reserves by more than 300% over a 17 year period. Other significant infrastructure investments also have helped deliver significant returns. We're confident that the best decade of Lucky Friday is ahead of us. And it's this kind of long term thinking that is driving our investment in Keno Hill, our newest mine located in Yukon. It has the largest primary silver reserves in Canada and is among the highest grade silver mines in the world. We acquired the mine two years ago and are currently ramping the mine up to full production as we focus on safety, environmental standards and mining processes to set up the operations for the next decade. With its reserve mine life of 11 years, Keno Hill had a very strong second quarter as throughput achieved 400 tons per day, but we're still not declaring commercial production as we have more work to do on mitigating the risk to achieve a steady state throughput with elevating safety and environmental protocols to Hecla standards. And as I've mentioned, we believe that fundamental to Keno Hill's long term success is our long term relationship with the first nations of the Nacho Nyak D and the Yukon government. Our underground and surface exploration drilling programs continue to confirm significant exploration potential in the district. All of this long term thinking is especially important in order to make Keno Hill the next lucky Friday or Greens Creek in our portfolio. And finally, Casa Berardi, our fourth operation is our only gold operation. It's in Quebec and it has a 14 year reserve mine life. The mine has produced meaningful free cash flow in the past 10 years and is currently undergoing a transition from an underground and open pit mine to a full surface operation. Long term value creation at Casa Berardi is in the higher principal and W MC P pits which are currently under permitting and are expected to come online at the end of this decade. With respect to our focus, our capital allocation priorities are investment in our operations to drive organic production growth. And deleveraging Lucky Friday is a great example of the value of investments. As I've said in the long term, in the second quarter, the mine achieved its record throughput of 1180 tons per day that drove record silver production at that mine. And in that vein, our capital is being deployed in production growth through investments with the focus on Keno Hill. Our next priority is deleveraging the balance sheet. And the third is providing a return of capital to our shareholders with our unique silver linked dividend policy that provides exposure to silver prices in lockstep. Finally, what I'd like to leave you with are just some thoughts on the silver market. Silver supply is about a billion ounce market with 80% of the supply stemming from mine production. Silver demand is about 1.2 billion ounces and more than half this demand is industrial because silver's use because of silver's use in electronics and industrial applications. And the most notable growth aspect of silver's demand is of course in the use of solar application. Silver's demand in solar has increased at a growth rate of 17% per year over the past five years. And we see this trend continuing as silver is critical to solar and other energy transition applications like its use in electric vehicles. Newer solar technologies are using more silver for efficiency and gaining more and those technologies are gaining market share. So let me leave you with a number.  Every gigawatt of solar installation needs 0.45 million ounces of silver. I'm confident that silver's best days are ahead of us with the increasing deficit between silver supply and demand and silver's continuing importance to the energy transition. That's the last of my slides. I don't know if we have time for any questions. I'm afraid we don't have time for questions, Cassie. So, but thank you very much. So, we'd like to move on to our next speaker.


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