Hecla Mining (HL) Q2 2026 earnings call transcript

Thanks, Hillary. Good morning, and thank you all for joining us for Heckler's Second Quarter 2026 Results Conference Call. I'm Mike Parkin, Vice President of Strategy and Investor Relations. Our earnings release that was issued yesterday, along with today's presentation, are available on our website. On the call with us today is Rob Critchmeroff, President and Chief Executive Officer Russell Lawler, Senior Vice President and Chief Financial Officer, Carlos Aguar, Senior Vice President and Chief Operations Officer, Brian Erickson, Vice President of Operations, Kurt Allen, Vice President of Exploration, along with other members of our management team. At the conclusion of our prepared remarks, we will be available to answer any questions you might have. Turning the slide to, any forward-looking statements made today by the management team, come under the Private Securities Litigation Reform Act and involve risks as shown on this slide, in our earnings release and in our 10Q filing with the SEC.

These and other risks could cause results to differ from those projected in the forward-looking statements. Non-GAP measures cited in this call and related slides are reconciled in the slides or news release. Please note as we discuss financial figures and projections throughout this presentation and in the earnings release, we are referring to our continuing operations. I will now pass the call over to Rob.

Thank you, Mike and good morning, everyone, turning the slide three. Heckler enters the third quarter of 2026 from a position of real strength.

And I'm speaking the financial strength, a position today that marks the strongest balance sheet in the company's very long history. And the attribute shown on this slide that define us as North America's premier civil producers, they haven't changed. What has changed though is that we have confidence with which we can now invest in what comes next. So I'm eager to have our teams discuss some remarkable developments that are coming out of our substantial project pipeline, which further solidifies our market positioning. More on that in a minute, turning the slide four.

This was another very strong quarter for Heckler, even though a couple of headline numbers moved in different direction than last quarter. And I want to spend a moment walking through why, because I think the underlying story here is a good one. Revenue from continuing operations was 334 million compared to the record, 411 million we reported in the first quarter.

Two things are driving that change, and it's worth being clear about both, because neither of them is a production problem. First, middle prices pulled back from the highs we saw earlier in the year, although I do remain confident in the outlook for silver and gold prices. And second, part of the gap was simply timing.

A meaningful amount of silver concentrate, mostly at Green's Creek, was produced but not yet sold as a quarter end. Had that concentrate shipped within the quarter, revenue would have been noticeably higher on top of an already strong quarter. That inventory shipped in early August, and you're gonna see it show up in our third quarter results.

Those of you who have followed us for some time know the lumpy sales pattern at Green's Creek. The adjusted EBITDA from continuing operations was 199 million, more than double the 94 million we generated a year ago.

Operating cash flow was 175 million, and free cash flow was 136 million. Our second best quarter on record, and very close to the record 144 million we posted last quarter. Every single one of our minds generated free cash flow again this quarter. With Green's Creek and Lucky Friday, each setting new site level quarterly free cash flow records, and 130 million and 88 million respectively.

Our balance sheet is simply the best that's been in our long history. We ended the quarter with 483 million in cash, no long-term debt outside of capital leases, and an essentially fully un-drawn $225 million revolving credit facility with a $75 million according.

The balance sheet this strong gives us real optionality. The flexibility to keep investing in the projects and the assets that make the most sense for this business on our own timeline, rather than being dictated to by our balance sheet.

On the operating side, we produced 4.2 million ounces of silver, up 8% from the prior quarter, and Lucky Friday delivered new quarterly production record of one and a half million ounces of silver.

And I'm especially pleased with our safety performance, our consolidated total reportable injury frequency rate, or trifer for short, improved to 1.57. And that's a meaningful improvement from the 2.07 reported for the first quarter. That's the kind of improvement that reflects real deliberate commitment by our teams.

And frankly, it matters more to me than any financial metric on this slide. We also conducted our annual safety day in early June, with senior leadership visiting every site to reinforce safe working practices.

So turning the slide five. A medium-term pathway to 20 plus million-ounce silver producer is advancing, and it's anchored by the Kino Hill ramp-up and a potential Midas restart, with further potential upside from Kino Hill expansion, and from Aurora and Hollister in later years. And their return, we've got two organic opportunities at Greens Creek that I'm really excited to give you more detail on today. Both are the kind of high-return, low capital intensity projects that we look for. Our bar for any of these organic investments is a return on invested capital that clears our cost of capital by a healthy margin.

And early work on both suggests that they can. I'll turn it over to Brian now to walk you through those. Brian, over to you.

Thanks, Rob. Good morning, everyone. Turning to slide six. So I'll start with the Greens Creek Pirate Concentrate Circuit. It's a project we've got to share considerably more detail about today.

To summarize, we're advancing engineering and metallurgical studies on a new processing circuit, the Greens Creek Mill. But if the studies pan out, we'd produce marketable pirate concentrate stream from mill tailings that currently goes to the dry stack tailings facility. Still pretty early stage work, but I want to be clear about our conviction. The relative simplicity of the project combined with the potential returns we're seeing at this stage of the study, give us confidence that this moves towards execution, not an evaluation for its own sake.

Once fully ramped up, we expect the new circuit could add approximately one to 1.2 million ounces of silver and 10 to 15,000 ounces of gold in additional annual production.

This is on top of Greens Creek's existing output, while also reducing volume we're adding to the tailings facility. Early engineering and metallurgical work points to the potential robust return on capital that would meet our investment thresholds. It's expected to be a low capital intensity project with CAPEX currently estimated at about 40 to 60 million. Anticipated mostly for mill components, storage building, sizing upgrades, and some ship loader work to support the additional tonnage.

Additional operating costs are in the new circuit, they're also expected to be relatively low in terms of the overall increase to our annual spend, and are currently estimated as an incremental 10 to 15 million dollars per unit. When you put all this together, you can see the potential for impressive MPV upside at current metals prices. Currently, we're targeting first quarter or first production between the fourth quarter of 2027 and the first half of 2028 with the ramp up period of roughly a year.

We'll continue to firm up the economics as engineering advances and we'll keep you updated. I wanna stress these numbers are subject to change as we advance through more engineering studies, but we're very excited about the potential for this project in terms of production, the more importantly in potential future cash flows.

Second, I'll discuss the Greens Creek Tailings Reprocessing Project. This remains one of the more compelling opportunities in the portfolio. Dry stack tailings facility, 600,000 ounces of gold, at two and 30 of the 2026 metals prices, this represents the two value across the 6.1 billion dollars, that must emphasize the 40 degree of recovery processing capital costs.

We're working with a vendor that specializes in new technology and that's to convince states to be no logical test work this month, which we expect to complete in the quarter. That worked together with confirming a suitable processing facility is expected to determine how we move forward. And that's with Pirette Concentrate, extension through streams, tree flows, and reclamation liability, absolutely meaningful added benefit.

It is a central cash flow that could generate. If this project proves viable, we would expect it to be an additional low cost intensity project to dovetails well with the Pirette Concentrate Project.

Finally, the Midas Restart Project in Nevada also continues to advance for continuing to evaluate the hub and smoke model that would bring over from Midas and potentially Hollister or other region sources through the existing permitted mill, or also evaluating remaining mineralization in the old mine under the existing mill as a potential additional resource. Kurt will touch on the latest Midas exploration results in a few minutes.

Now I'm now turning the call over to Carlos for an operations review.

Thank you, Brian. I am turning to slide eight. Green's Creek produces 2.1 million ounces of silver, and over 14,000 ounces of gold in the second quarter in line with our expectations. Cost applicable to sales were 60 million with cash costs of negative 17.11 per ounce, a basic of negative 10.71 per ounce bought after by product trends.

Exectioner retools this quarter driven by very strong by product ratings. Touch flow from operation was 139 million and pre-cash flow was a new side level record of 130 million. As Rob mentioned, a portion of the concentrate produced this quarter hadn't yet been shown at the end of the last quarter, which is what brought the gas between our strong production and the revenue we recognize.

That inventory was cheaper than nearly Agos, and we were reflecting in the third quarter financials. For the full year, we now expect Green's Creek to produce eight to 8.3 million ounces of silver, an improvement over prior guidance, and 51 to 55,000 ounces of gold, a tough applicable to sales of 240 million with cash costs of negative 12.16 to negative 12 per ounce, a basic of negative 4.25 to negative 3.75 per ounce, bought after by product credits and bought an improvement to prior guidance.

Learning was line nine. Lucky Friday had an outstanding quarter, producing a record of 1.5 million ounces of silver on higher meal grade. Cuts applicable to sales were 35 million with cash costs of 3.95 pounds, an 8.6 of 17.8 pounds, bought after by product credits.

Cash flow from operation was 104 million, and free cash flow was a new side level record of 88 million.

The sources cooling projects on track for completion by September. For the full year, we have tightened out our silver production guidance to 4.9 to 5.2 million ounces, with cost applicable to sales of 140 million. Cash costs are now expected to be lower at nine to 9.75 per ounce, and make it expected to be a modestly higher at 20.50 to 26 per ounce, reflecting higher plan and sustaining capital investment.

Learning to slide 10, at Keena Hill, we produced 625,000 ounces of silver in the second quarter, up from half a million ounces in the first quarter. Cash flow from operation was 18 million, and free cash flow was nearly 18 million. The fifth consecutive quarters of positive free cash flow at Keena.

We are taking a deliberate approach at Keena Hill. Rather than push for tonnage, we rode ahead of the site development and permitting work that needs to happen first. We are running the mine at a sustained lower rate while we focus our effort there, and continue to generate costly free cash flow. Work that we believe support around to meaningful being higher tonnage rates in later years.

Out of date, full-year guidance is 2.2 to 2.6 million ounces of silver, reflecting or focus on permitting, inside the lab in the mirror term.

I do want to highlight some good news of the permitting front. We received the permit to expand our tailings to storage at Keena Hill this quarter. That approval reflects the strong work and relationships we have built with both the Yuko government and our first nation partners, the M&D. And it's an important piece of the foundation supporting our longer term plans for the site.

I now turn the call over to Russell for the finance update.

Thank you, Carlos. Turn it into quite a quilt.

Sorry, Russell, if I could just jump in. I'm aware that Brian dropped out. He's been dialing in from Yukon, so I just want to repeat a part that might be important that was missed.

At the time, Brian was talking about the 51 million ounces of silver and the 600,000 ounces of gold and the many other metals that are locked in. I just want to point out that we are working with a vendor who specializes in this technology.

And they're set to commence phase three metallurgical test work this month, which we expect to complete in the quarter. So that work together with confirming a suitable processing facility is expected to determine how we move forward. So I just wanted to complete the record on that because I'm aware that it was lost in transmission. So over to you Russell, thanks.

Thanks, Rob. I'm going to start on slide 12. As Mike noted, everything I'll cover here reflects the results from our continuing operations.

Mine revenue during the quarter was $323 million with silver accounting for 68% of that total, while gold was 14% in the remaining from our base metal byproducts. Net income from continuing operations was $118 million or $0.18 per share. And adjusted EBITDA was $199 million. Our margins remain exceptional. We realized 90% of the realized silver prices margin during the quarter.

Consolidated free cash flow was $136 million, nearly matching last quarter's record of $144 million with all three mines contributing. Turning to the balance sheet, we ended the quarter with $483 million in cash. No long-term debt outstanding outside of capital leases. And essentially a fully-undrowned credit facility. We've moved from a net debt position of nearly $270 million a year ago to net cash position of roughly $472 million today.

The strongest balance sheet in heckles history. Turning to slide 13, we've all washed oil prices and fuel prices climb on the back of current world events. And I want to spend a moment on why this is far less impactful for hecklers than it is much of our peer group. The starting point is the nature of our overbodies. Our mines are high-grade underground mines. Because of the greatest high, we process far fewer tons to produce each ounce.

We don't run large diesel-hall truck fleets that define low-grade, open-pit operations, so our diesel consumption per ounce is structurally low. That is the primary reason fuel is only about 3% of our consolidated cost structure this quarter. It's a function of these operations.

The second piece is where our electricity comes from. Power is our largest energy input, and we source it from local utilities, primarily from renewable hydropower. Hydropower isn't priced off crude oil or natural gas, so when fuel markets spike on geopolitical shocks, the cost of that energy actually runs our mines and mills. Don't move with them. Put those two things together, hydrate or that keeps our fuel intensity low, and a power-based anchored in hydro that is decoupled from volatile fuel markets.

And you get a cost structure that is far more predictable and far more insulated from energy price swings than most of our peers can claim. In an environment of rising and uncertain fuel prices, that translates directly into more resilient margins, and it carries the added benefit of a lower carbon footprint for the metals we produce.

As we turn the slide 14, you'll see the slide has been updated for our Q2 results and outlook changes and projects our 2026 after-tax free cash flow across a range of metal prices. At $50 silver and $3,500 gold, we project about $500 million of free consolidated free cash flow for the full year. With these prices below current spot prices, at elevated prices of $75 silver and $4,500 gold, above current prices, we see the potential to generate nearly $700 million in free cash flow. At the top end of the range, we're showing today $100 per ounce silver and $5,500 gold. We see the potential to generate nearly $800 million of annual free cash flow.

That's obviously a bullish scenario, but it shows the kind of operating leverage our platform has across a wide range of prices. This shows how our business has the ability to produce substantial cash flow across a wide range of price environments. I'll now pass the call to Kurt to go through explorations.

Thank you, Russell. Turning to slide 16. Our 2026 expiration of pre-development budget of $55 million remains at an all-time record for the company, representing about 4.5% of projected revenue. We've structured that across three priority areas. 24 million are near-mine programs, which carry the lowest risk and highest return and are targeting adding one to two years' worth of resources for conversion to reserves.

16 million in Nevada across Midas, Aurora and Hollister, targeting a resource of a half a million to 1.5 million ounces of gold equivalent, aimed at forming the basis for a potential Midas restart, and $10 million in early stage and generative exploration.

I'm pleased to share some exciting results from our recent expiration release, which came out last week on the 29th of July and is available on our website.

Turning to slide 17. At Kino Hill, we've extended a high-grade silver trend to 800 feet of strike length, and it remains open in both directions. The extension brings us closer to the historic Hector Calumum mine, which produced over 96 million ounces of silver during its operating life. You can see the old workings on the right side of this image.

Recent expiration highlights include 10.2 feet at 62.7 ounces per ton silver or nearly 2 kilograms per metric tonning. 10.1 feet at 44.6 ounces per ton silver and 8 feet at 22.4 ounces per ton silver. These exceptional results support our long-term vision for Kino Hill as an asset with the potential for generating for generational mining. We are following up on these results and are planning to have a further update later this year.

Turning to slide 18. In Nevada, our drilling around the Pogo center gap at Midas has identified two new Midas-style high-grade gold silver mains and the system remains open. This adds to the picture Brian described earlier around a broader Midas hub and spoke opportunity.

The new veins discovered are very similar in style to what was mined very successfully previously at Midas. Beyond these results, I want to flag the two additional expiration programs are ramping up this quarter. Drilling at Hollister has been underway for several weeks and at Aurora, my favorite project, were on track to begin drilling in mid-August. Aurora is a past producer of extremely high-grade mineralization with historic results grading above two ounce per ton gold, which is equivalent to more than 60 grams per ton. Like Midas, it has a permitted mill to site. There would be investment needed to make this a viable operating site again, but we'll focus on that with the, depending on what the drill bit tells us before we get there.

This could provide, this could prove to be a major value servicing opportunity for the company, and I really look forward to the results from the initial holes, which we could have this fall, so stay tuned. I'll now turn the call back to Rob for closing remarks.

Thank you, Kurt. So, turning to slide 19. Let me leave you with a few thoughts before we open the lines for questions.

This was a quarter of continued strong financial results, building on a track record that has helped us deliver and move into a position of real financial strength. The kind that lets us keep investing in our robust project pipeline for years to come and surface value for our shareholders.

The underlying business has never been stronger. We're making disciplined investments in our asset base to set it up for continued success. Our safety performance improved meaningfully this quarter, and as I said at the top of the call, our balance sheet is without question the strongest it's been in this company's history.

We believe in a robust precious metals market, and we think silver has a very bright future. At today's prices, we're already generating substantial free cash flow. And as Russell just said, at the top end of the pricing area, we showed you today, this platform can generate nearly $800 million in annual free cash flow. So, that's the kind of operating leverage we have now, and we're working hard to capture it for our shareholders.

I really do hope that you share the enthusiasm that we have for our project pipeline and the excitement it's bringing as it advances. And we believe Heckler remains the most compelling way to gain exposure to silver in this sector, and we look forward to continuing to execute and to keeping you updated throughout the year. I'll now ask the operator to open the line for questions.

Thank you. Obviously, metal prices have gone down a little bit. And I assume there is some sort of bonus structure for staff by asset related to metal pricing. I just want to see, is there any way for us to extrapolate this into a cost per ounce or cost per gun by, you know, a dollar change in the underlying solar price?

Or how do you guys model this out? Oh, and I want to address it.

Yeah, yeah, no problem, Heiko. We, you know, I would say the most direct, you know, tie to silver price is the profit share lucky Friday. And if you go back late last year, you'll see as we as we guided, we had had our prices in lower prices because the guidance obviously came out lower in the years. Prices went up. You saw our prices rise quickly.

This year we intentionally built higher prices, you know, when we came into January, February, we were at high price, high silver prices. And so we intentionally built high prices into that profit share. As the years come down, we have seen that cost of bait.

And so in the guidance that we've issued now, we've used robust prices, but not say the $90 silver that we used at the beginning of the year.

I'm thinking trying to figure out a way to convey directly how much that would be per ounce. And frankly, I would have to kind of get back to you on that. I don't have a direct number for you right now, but I think it's generally isolated to lucky Friday.

And you can see it as you look at the cost performance of lucky Friday over the past, you know, kind of year or so.

Yeah, of course. Long-term capital investment. Any color on what we should model for a longer-term capital? And maybe you can't really answer that question, but that's all I'll try differently if you can. Are there any large-scale investments at any of the other assets coming on in 2027 and 2028 that may not be obvious for us?

You know, I can continue to- Thank you for the question. Go ahead, Rob.

Okay, go ahead, Russell.

Okay.

In terms of- Sorry, this is awkward because we're in separate offices.

I'll just start, Russell. Maybe you could fill in the gaps, if you don't mind. In terms of capex, we don't really have any huge, you know, expansions going on in the near future. What we do have is as a Nevada restart, we estimate that's going to be pretty low-low capex, given that we already own the mill.

The capex for the Powerite Concentrate project, that's really quite low, particularly in the context of the phenomenal returns that it's expected to generate.

The calling project at Lucky Friday, that's almost finished. And so I would say nothing really major coming up.

The only thing I'll add to that, Rob.

Anything to add, Russell?

We're building.

Yeah, a little bit to add to that.

The only thing that I'll add is that we're building tales at Greens Creek Lucky Friday over the next couple of years. And then, you know, Keynote Hill, there's tailings that we'll be building in the near term and then kind of more intermediate term. But also, you know, Keynote Hill will continue to invest in the infrastructure to bring that mind production up.

And I can jump in on that one, Rob.

Yeah, I was looking at this as well.

So it's a good question, Cosmo. If you think about our, the way we think about our mind site free cash flow, we actually look at the, I'm looking at page three of our earnings released where we reconcile free cash flow to cash flow from the operations. And what we do for my insight is we actually add back the expiration expense that was incurred at that site because expiration expense is an expense that we allocate from a corporate perspective. And it's not, not really related to the core of the operation in the current period. And so if you think about free cash flow at the corporate level in Q1 versus Q2, what you'll see is the expiration expense did go up Q1 over Q2, and that is included in our corporate consolidated free cash flow number.

That's one. And then the other is just corporate expenses that are not included in those Q1 or corporate cash cash outflows, I'll say. So it's not included in Q1. So it's essentially timing. It's working capital timing.

Well, we are projecting the third quarter being a really similar.

Yeah. Go ahead.

We are projecting to be the third quarter really similar to the second quarter. Definitely. We are in a new song. We are in that allotment of the new song's keynote here.

And that's the projection that we can report today. It's going to be really similar to the fourth quarter for the new year.

Yeah.

Yeah. As Carlos said, look at Q3 looking very similar to Q2. The key point is that we expect to meet our revised guidance at the end of this year. And so what happens in between? We just don't have that level of detail disclosed yet.

But I think I think you've answered my question in terms of the new guidance Rob. And then I guess my other question on keynote Hill is with the lower guidance for the year. Does that impact potential timing of commercial production? Or does it really matter?

So, you know, we've outlined our five criteria for commercial production. We've only met one, which is the silver recovery.

You know, what we're focused on right now is getting the permits that we need and investing in the infrastructure and working our way through that.

I would say that if we can receive the permits, the critical ones by mid-2029 and we can execute on the key infrastructure projects over the next two or three years. And the tailings expansion could be advanced far enough in 2029 to permit the mill to resume normal production levels. We expect to begin ramping up to higher production levels by the end of roughly 2029. So, you know, this is a ramp up that's been taking a little bit longer than what was initially thought. But we understand what permits we need. We understand the infrastructure that we need to invest in.

And we're working to resolve the permits and complete those investments. We are buoyed by the fact that, you know, the expiration results that Kurt talked about. You know, you saw the 96 million ounces adjacent at the end as we've continued to get high grade extensions to burn deep. As Kurt said, this is a generational mine that's going to be hopefully in production for a very, very long time. And we just need to get it through this permitting and investment phase. And it is very cash flow positive today. And it has been for the last several quarters.

Well, the quality is very high. In fact, we've had extremely high demand from multiple inquiries, I guess, I'll hand it over to Russell. It might be he can give you a little bit more color on that.

Thank you.

Thanks, Rob. You know, as we think about the pirate concentrate, one thing I do want to point out is you, you know, I think Brian laid it out well. Unfortunately, he kind of was, you know, his line was interrupted during that and I think Rob came in and kind of cleared some of that up. But we're still working on this project. It's incredibly, I'll say, perspective. We're very high on it. We think it's going to be a very good project. But we're still working on some of the engineering and we're still nailing down some of the costs. So what I don't want to do is put out a, you know, return on invested capital number now while we're still in those stages while we're putting those numbers together.

What I would say is that we have a return on capital criteria, which we presented our investors in our investor day earlier this year of 12 to 15% on return on invested capital. This project, we would expect would exceed that substantially. And, you know, if you go back and you look and I think it's in our earnings release or a queue or maybe both, you know, we expect that we would get roughly maybe a million ounce of the silver a year from this project.

Yes, that would increase our recoveries. And we would reduce the amount that goes to the tails, which is also cost savings and that the investor will be relatively modest along with from a capital perspective. And the fact is we're already producing three concentrates at this line. So as a result, the operating costs, we don't expect we fill up substantially either. And so from a return on expected capital, we just, we think it's going to be very, very robust.

Does that, is that enough flavor for you?

I would say, yeah, I mean, go ahead and apply payability because again, like I said, kind of on the front end of this, we're still working through that in some of these details.

I'll hand it over to Carlos in a minute. But basically, Josh, this was scheduled high grade. It's just a matter of timing. We just went through a high grade zone, this quarter. And again, we don't expect to maintain those high grades. It'll revert, probably revert back to the mean.

Yeah. It's going to be part of the timing. Even we were expecting to have, you know, a fraction of that high grade at the end of the second quarter.

And so at the end of the first quarter, sorry. So we had the most significant portion of the high grade and the second quarter. And that was the reason, right, which was planted.

And of course, we are not expecting to case, you know, that kind of level for the main of the year, but definitely was planted in which is the matter of time.

Well, this project was really designed to.

Yeah. Keep going.

Okay. This project was really primarily designed to set up a long-term future as we get into deeper levels and set ourselves up. We already have a long reserve life ahead of us. It's very difficult to quantify productivity improvements, but you know, it just stands to reason that when you're working in a fairly hot mine, you're going to be less productive when the conditions are not great compared to when the workers are comfortable. I can't really quantify that, but you just know inherently that logically it makes sense that they should be better productivity.

We'll just rely this to the ground.

Well, we are projecting a similar. Great on trial. Good. And the recorder. And we have to change it to. Some benefit in the last quarter. But it's going to be mostly second. Second half of the year. It's slightly better than the first half.

And that the driver for that was going to be, which, which of the factors. It's going to be a. Okay.

Go ahead Russell.

Yeah. No problem. Thanks Kevin. Yeah, as we think about, yeah, I would say from an ACIC perspective. Green's Creek. It really shows the value of that or that comes out of Green's Creek, right? So two or three things on Green's Creek specifically.

First, they had a great first half of the year, right? In terms of their silver production. So silver ounces were very, very strong. The gold by-product is huge. And I made a comment in a different question. I think it was too high go earlier on the prices that we used in our guidance for Lucky Friday cost. Well, in a similar sense, we have to make an estimate as it relates to the prices that we use for by-products at the beginning of the year, what would be realized versus what we estimate. And so we tend to be a little bit conservative on that.

I'd have to go back, frankly, and look at to see exactly what those were there in our year-end release. And so we've outperformed on the gold for sure. The zinc has been a very strong, you know, the price of zinc has been very strong. And one of the things that people do sometimes oversee is the fact that Green's Creek has an incredible zinc by-product as well.

So that's Green's Creek. As produced costs are essentially online. They're doing well. And then from Lucky Friday's perspective, we've seen a better cost, I'll say a better cost control in general for the mine as a whole. We have seen that profit share that I highlighted earlier come off a little bit just because the price of silver's come off. But then again, they had a fantastic first half of the year from a production perspective.

So you kind of wrap all of that up and that's the reason the basic guidance is better. I would highlight that we do expect capital spend in the last half of the year to be more than we did in the first half of the year. That's a couple of reasons. The third quarter tends to be, you know, kind of a full quarter of better weather. You know, as we relate to construction, construction projects are underway, that kind of thing.

And then we just tend to see more equipment deliveries. You know, we order equipment seems to be earlier in the year and it kind of comes in later in the year. So I would expect the third and the fourth quarter to have more capital spend. And you can see that if you look at our capital spend in the first six months versus our guidance.

I can. So our effective tax rate, one of the things that I would like to highlight as it relates to taxes is our operations are in the United States and Canada. And as a result, just because and I'm going to highlight the United States as a result of the, frankly, the tax regime in the United States, it's lower than most of the other jurisdictions around the world.

And so you should see less cash taxes paid from HECLA than many of our peers. Number two, during the quarter and you'll see this week we highlighted it in our earnings release. During the quarter, we did a little bit of tax work to combine our Nevada US group with our kind of main US groups and includes Lucky Friday and Greens Creek.

And as a result of that, we actually can utilize the expenses in Nevada against the income that's being generated from Greens Creek and Lucky Friday. So you actually see a little bit lower tax rate as a result of that. And we will see obviously less cash taxes paid.

We did what we expect to utilize our NOLs both on a state and a federal basis for the year. And so therefore we did make the cash tax payment in the first quarter.

I was just trying to look that up and I frankly don't have it in front of me. But you would see that, you know, at this point, that would be the taxes that we would expect to pay.

In terms of permitting, I don't really know the answer to that question. It's basically simply an extension to the existing circuit. So I imagine permitting would be minimal. Maybe something at the loadout bay.

I don't really know.

Carlos or Matt, can you add any color on that?

Yeah. For the, you are right. For the pyrite condors, minimum, for me, required. And then we are not expecting anything that we can delay, so that's why I don't see any issue. But there's some minimum required.

Yeah. And in terms of, in terms of reserves, it's an interesting question because there's almost certainly some material that was stuck in resources. And now that we have the means to process.

I really, or at a profit, I would expect that there may be some of that converting into reserves, but I can't quantify that right now.

I think there could be some germanium or gallium actually in the in the tailings project. I don't really know.

I'll defer to Brian. Brian, if you're still on the call, could you answer that, please? Yeah, I'm on. Can you guys hear me?

Yep.

Okay. Yeah, there is. And we've looked at that as part of both production and the tailings reprocessing and pirate concentrate.

It's pretty minor, but certainly that's a conversation we need to have with smelters on what the recoveries could be on that and the payability.

Well, Lucky Friday doesn't really have any significant antimony compared to the neighbor's phone. We have looked at that. There is lots of these single asset guys there now that are up and running or moving towards first production. And there's probably a case to be made for consolidation there. Is that something that Heckler would be interested in or look at at all?

We're primarily excited by the inherent upside in our own assets. Lucky Friday in particular, you know, there hasn't been any meaningful exploration there since about 2011. And so that's something that we're kicking off at present. We continue to monitor all of our neighbors, like I guess. And, you know, if there's a compelling value proposition, we will consider it, but we're more excited about the potential on what we already own and understand, and where we already have our own infrastructure, which is in top shape.

Do you want to do it?

Aurora, thanks for your question, Eric. At Aurora, it's too far by road. We had processed some loaded carbon previously, but to take all from Aurora to Midas, it's probably not going to happen. We do have about a 600 ton per day mill that's on site. It's actually, it's not in great condition, I have to say. Certainly not as good as Midas. That remains to be determined.

Really, let the drill bit do the talking. As Kurt said, he's really excited about this. I went out to this project in the late spring, and I actually understand why he's excited. There's legacy open pits. There's legacy underground production workings and edits. And then the best target that Kurt's focused on hasn't had a single drill hole on it. You can actually see it from the side of the hill. So I'm very excited to see what he's got going to yield.

Yeah, it's similar to the Midas mine. It's more broken up than what we see at Midas. You know, mine has had very narrow, really high grade veins within a six, seven foot, eight foot wide zone. And so it's similar to that in that respect. The offset is very similar to the center discovery that we had in 2021.

Yeah.

Thanks, Eric.

I'll hand that one over to Matt.

Thanks, Rob. So that's your question, Alex. We're actively studying it. You know, obviously Kurt is drilling and identifying the resource and we get that all farmed up. And my worst nightmares of Kurt finds that resource and turns to me is the put into production tomorrow and I don't have that ready. So we've already started geotechnical assessments. The rock was started on a hydrogeologic assessment of the inflows and geochemistry.

We've also started on some of the my design and what it would take to refurbish the milk. So those numbers are all ongoing, but obviously we're not going to invest in any of that until we've decided we've been able to firm up within the ground. So the timing will be very related on exploration success, but we're being prepared now to have that information ready if he gets that or assuming the drill identifies the resource that we're looking for.

It's probably in that range, but again, you know, it's like a lot of unknowns out there, but yeah, that's probably a reasonable thought.

Any, any permitting constraints? Yeah, I mean, sorry. Permitting constraints constraints constraints. Okay.

So in terms of permitting constraints, we're in the process of reviewing what we have available. In general, we have a lot of that those permits in hand. Some will require modifications. Some will require some updates, but that's, you know, in general, we're, but much better spot than what we would be. If it was just a green field site.

Alex, what do you think about project? Sorry, Alex, when you, when you think about project development, you know, the normal course is you define a resource, you do your studies and stuff like that. But we're in a unique situation in that we already own some of the key infrastructure. And so what we're trying to do is be agile here and run parallel streams. So Kurt's obviously trying to define the critical methods of resources that we need to get this in the, in a production. Matt's trying to work on all the background engineering study work that needs to happen. So it's really about being agile.

In terms of, you know, two or three, I would suggest it will probably be a little bit longer than that. In terms of key permits, if, for example, conceptually, we want to put a portal. To access the new discoveries that Courtney's team have made, that's probably almost certainly going to require a new permit. But the middle, the tailing facility, all the key ones, we already have them in hand.

Not really. I mean, permitting takes its course. It's up to us to provide the engineering and the design criteria that basically informs the permit. And then the regulators take as long as they need, they obviously need to consult with the First Nations group as well. But we do know the sequence and really it is, as we said previously, it is focused on making sure that we have sufficient water treatment capacity.

That we have sufficient tailings capacity and waste capacity as well. We understand the sequence we, but in terms of the timing, it's very hard to pin down. We're going as fast as we can, but it's not entirely in our hands.

Well, thank you all for the thoughtful questions today. And thanks for joining us this morning. I'll just leave you with this week. We are in the strongest position this company's ever been in. And we're putting that strength to work in the right places for shareholders and for the long term value of this business. We do look forward to updating you again next quarter. So thanks everyone and have a great day.