Hecla Mining Company (HL) Q1 FY26 earnings call: guidance and Q&A

Are there any unannounced longer-term capital projects beyond the pyrite concentrate circuit or tailings reprocessing that analysts might not be modeling?

Management stated they have highlighted the main projects for the next several years, with the pyrite concentrate circuit being a near-term opportunity. No other significant longer-term projects are planned unless there's spectacular success at Aurora.

“Not really. I mean we're basically highlighted the projects that we are focused on in the next several years. Some of them are obviously shorter term, like the pyrite concentrate project, which Carla spoke about. I mean that's a very near-term opportunity, perhaps coming on in the next couple of years. Beyond that, nothing really longer term unless we have spectacular success at Aurora.”

asked by Heiko Ihle · answered by Robert Krcmarov

What permits are outstanding at Keno Hill limiting ramp-up, specifically regarding dry stack tailings, and does the Victoria Gold sales process provide any visibility for permitting? Can the ramp-up to 440 tpd be fast-tracked?

The Victoria Gold sale is not expected to affect Hecla's permitting in the short term. Keno Hill's permitting path involves submitting a project proposal to YES by year-end, followed by a 12-month review, and then submitting QML and water license amendments. Amended permits are expected around mid-2029. Short-term constraints include Phase 2 West tailings approvals and waste rock limits. A fast-track to 440 tpd is unlikely due to water management and sequential permitting.

“We expect -- our current estimate is that the amended permits could be received sometime around mid-2029. -- although, of course, there's variability around permitting. In the short term, between now and the time we receive those permits, there are a few constraints that continue to hold Keno Hill back.”

asked by Wayne Lam · answered by Patrick Malone

With the balance sheet strong and high-yield notes paid down, will Hecla consider increasing capital returns, potentially linking them to cash flows like peers, given past Silverlink dividend changes?

Management is discussing capital return strategy with the Board. While internal investments are prioritized for better returns, they acknowledge the strong balance sheet. They will communicate their strategy to the market, emphasizing funding growth opportunities first.

“But we will be discussing with our Board how and what our return on investment strategy should be, our return on capital strategy should be. And so yes, I would say stay tuned to that. We'll continue to discuss that with the market as time goes along.”

asked by Wayne Lam · answered by Russell Lawlar

What is causing the inventory buildup, particularly for precious metals at Greens Creek and lower sales than production at Lucky Friday, and when is it expected to clear?

Inventory buildup is primarily a timing difference due to lumpy shipments (monthly for Greens Creek) and the timing of quarter-end. Greens Creek's deepwater port allows control over shipments. Accounts receivable are typically collected within 30 days. Rising silver prices also increase the value of accounts receivable as pricing settles in future months.

“But what I would say is that the accounts receivable that we had on our books as of the end of the quarter was really collected in the next 30 days mostly. We also see because we're concentrate producers, as the price of silver goes up, we'll settle those -- the pricing on shipments will be a future month. So we see the value of the accounts receivable go up as well.”

asked by Cosmos Chiu · answered by Russell Lawlar

What is the hurdle rate for Greens Creek projects like the pyrite concentrate circuit, and are there penalty elements or market challenges for pyrite concentrate?

The pyrite concentrate project is expected to have a very compelling return on invested capital, easily exceeding the corporate target of 12-15% due to low CapEx (estimated $40M-$50M). The market for pyrite concentrate is very strong, and it also reduces reclamation liability. Management is being conservative in modeling treatment and refining charges, but it remains compelling.

“In terms of return on invested capital, we haven't isolated it for that particular project, but I would expect it would be very compelling, just given that it's a fairly low CapEx project. I don't know what the circuit cost. I'm going to guess around net $40 million or something, $50 million.”

asked by Cosmos Chiu · answered by Robert Krcmarov

How does the new Midas compare to the old operation (tonnes, grade, silver ratio)? What are the characteristics of the Aurora project (open pit/underground, grades, silver content)?

The new Midas operation will likely differ from the old one, leveraging the 1,200 tpd mill with potential multiple ore sources, including remnant mining and extensions found by exploration. Aurora is focused on high-grade underground minable targets, not open pit. It's gold and silver, probably a 1:1 ratio, with high-grade gold and associated high-grade silver.

“I would say it's almost certainly going to look different from the old Midas mine. So 2 things here. The -- the starting resource at Sinter, which I've flagged previously, is roughly between 180,000 to 200,000 ounces at very high grades. It is a narrow ore body.”

asked by John Tumazos · answered by Robert Krcmarov

Given strong balance sheet, would Hecla consider acquisitions, and would it be limited to US/Canada, or would it consider Latin America/other jurisdictions?

Hecla would consider other jurisdictions if they are relatively safe, generally in the top third of the Fraser Institute Index, after proper analysis of risks. While focused on organic growth, they remain opportunistic for M&A. Acquisitions must create per-share value, be precious metals-focused with a strong silver bias (or compelling gold assets funding silver strategy), and offer a clear competitive advantage (e.g., district consolidation, leveraging infrastructure, technical capability, exploration upside). They will be disciplined and avoid "fear of missing out" acquisitions.

“We would consider other jurisdictions. But again, they have to be in relatively safe jurisdictions. So as a rule of thumb, anything in the top 1/3 of the Fraser Institute Index, we would do a proper analysis on we wouldn't accept it at face value and would understand those risks before we moved.”

asked by John Tumazos · answered by Robert Krcmarov