Hecla Mining Company (HL) Q2 FY26 earnings call: guidance and Q&A

How does metal pricing, particularly silver, impact staff bonus structures and can this be extrapolated into a cost per ounce change?

Russell Lawlar explained that the most direct tie to silver price is the profit share at Lucky Friday. As silver prices came down from the beginning of the year, the cost associated with this profit share abated. He noted it's generally isolated to Lucky Friday but could not provide a direct per-ounce quantification immediately.

“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 kind of year or so.”

asked by Heiko Ihle · answered by Russell Lawlar

What should investors model for longer-term capital investments, and are there any large-scale investments at other assets coming in 2027-2028 that are not obvious?

Rob Krcmarov stated there are no huge expansions planned in the near future, highlighting the low CapEx for the Nevada restart and the pyrite concentrate project. Russell Lawlar added that building tailings facilities at Greens Creek, Lucky Friday, and Keno Hill, along with Keno Hill infrastructure investments, are ongoing.

“In terms of CapEx, we don't really have any huge expansions going on in the near future. What we do have is the Nevada restart, we estimate that's going to be pretty low CapEx given that we already own the mill.”

asked by Heiko Ihle · answered by Robert Krcmarov

How can asset-level free cash flow figures (Greens Creek $130M, Lucky Friday $88M, Keno Hill $15M) be reconciled to the corporate free cash flow of $136M, especially when Q1 corporate FCF was higher despite lower asset-level contributions?

Russell Lawlar clarified that mine site free cash flow calculations add back exploration expense (which is a corporate allocation) and exclude other corporate expenses. The differences between corporate and asset-level FCF are primarily due to timing and working capital movements, with exploration expense increasing in Q2.

“If you think about our -- the way we think about our mine site free cash flow, we actually look at the -- looking at Page 3 of our earnings release, where we reconcile free cash flow to cash flow from the operations. And what we do for mine site is we actually add back the exploration expense that was incurred at that site because exploration expense is an expense that we allocate from a corporate perspective, and it's not really related to the core of the operation in the current period.”

asked by Cosmos Chiu · answered by Russell Lawlar

Given Keno Hill's Q2 production of 625,000 silver ounces and working through lower-grade zones, why isn't the revised full-year guidance midpoint higher, and is 600,000 ounces a sustainable quarterly level?

Carlos Aguiar projected Q3 production to be similar to Q2, with the second half slightly better than the first half. Rob Krcmarov emphasized that the company expects to meet its revised full-year guidance, and the focus remains on permitting and infrastructure for long-term sustainability, with higher production levels targeted by the end of 2029.

“We are projecting to be the third quarter really similar in the second quarter. Definitely, we are in the new zones, we are in development of the new zones Keno Hill. And that the projection that we can report today, it's going to be pretty similar to the second quarter for the remainder of the year.”

asked by Cosmos Chiu · answered by Carlos Aguiar

Are the stated 1.0-1.2 million ounces of silver and 10,000-15,000 ounces of gold from the Greens Creek pyrite concentrate circuit before or after payability factors?

Russell Lawlar indicated that the project is still in early stages, and while they are confident in its potential, he advised analysts to apply payability factors for their own modeling as the company is still working through those specific details.

“I would say -- yes. 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.”

asked by Cosmos Chiu · answered by Russell Lawlar

What drove Lucky Friday's strong Q2 performance, particularly the high grades, and is this level of performance sustainable given the outlook for the second half?

Rob Krcmarov and Carlos Aguiar clarified that the high-grade production in Q2 was scheduled and part of the mine plan, but it was a matter of timing. They do not expect to maintain those specific high grades, and production will likely revert to the main plan.

“Yes, Yes, it's a revenue was part of the timing, even we were expecting to have 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 in the second quarter and then that was the reason, right, which was planned. And of course, we are not expecting to see that kind of level for the remainder of the year, but definitely it was planned. It was just a matter of timing.”

asked by Joshua Wolfson · answered by Carlos Aguiar

What were the key drivers behind the improved All-in Sustaining Cost (AISC) guidance, and are there any broader cost pressures being observed?

Russell Lawlar attributed the improved ASIC guidance to strong silver production at Greens Creek, high gold and zinc byproduct prices, and better cost control at Lucky Friday. He also noted that capital spend is expected to be higher in the second half of the year due to construction projects and equipment deliveries.

“So 2 or 3 things on Greenstreak specifically. First, they had a great first half of the year, right? In terms of the silver production, so silver ounces were very, very strong. The gold byproduct is huge. [...] And one of the things that people do sometimes oversee is the fact that Greens Creek has an incredible zinc byproduct as well.”

asked by Kevin O'Halloran · answered by Russell Lawlar

Has Greens Creek ever been assayed for germanium and gallium, and is there a plan to monetize these if they exist, similar to the Trail smelter upgrade?

Brian Erickson confirmed that they have looked at germanium and gallium as part of production and tailings reprocessing, noting it's 'pretty minor.' He stated that conversations with smelters regarding recoveries and payability would be necessary.

“Yes, there is, and we've looked at that as part of both to production and the tailings reprocessing and pyrite 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.”

asked by Dalton Baretto · answered by Brian Erickson

What is the expected process and timeline for Midas to become a formal project with a production decision and first gold, considering existing infrastructure?

Matt Blattman explained that they are actively studying and running parallel streams of work (geotechnical, hydrogeologic, mine design, mill refurbishment) while exploration defines the resource. Rob Krcmarov suggested the timeline would likely be 'a little bit longer' than 2-3 years, emphasizing the agility of using existing infrastructure but acknowledging the need for new permits for certain aspects like a new portal.

“So to answer your question, Alex, we're actively studying. Obviously, Kurt is drilling and identifying the resource and we get that all firmed up. And my worst nightmares have Kurt finds that resource and turn to me and let's put it into production tomorrow, and I don't have that ready.”

asked by Alexander Terentiew · answered by Matthew Blattman