Hecla Mining Company (NYSE: HL) Q2 2025 Earnings Call dated Aug. 07, 2025
Corporate Participants:
Unidentified Speaker
Mike Parkin — Vice President – Strategy and Investor Relations
Rob Krcmarov — President and Chief Executive Officer
Russell D. Lawlar — Senior Vice President and Chief Financial Officer
Carlos Aguiar — Senior Vice President and Chief Operating Officer
Kurt D. Allen — Vice President – Exploration
Matt Blattman — Vice President – Technical Services
David C. Sienko — Senior Vice President – General Counsel & Corporate Secretary
Analysts:
Unidentified Participant
Wayne Lam — Analyst
Heiko Ihle — Analyst
Joseph Reagor — Analyst
Alex Terentiew — Analyst
Kevin O’Halloran — Analyst
Presentation:
operator
Thank you for standing by. My name is Liz and I’ll be your conference operator today. At this time I would like to welcome everyone to the second quarter 2025 Hecla Mining Company earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Mike Parkin, Vice President of Strategy and Investor Relations.
Please go ahead.
Mike Parkin — Vice President – Strategy and Investor Relations
Thank you operator. Good morning and thank you for. Thank you all for joining us for Hecla’s second quarter 2025 results conference call. I am Mike Parkin, Vice President, Strategy and Investor Relations. Our earnings release that was issued yesterday along with today’s presentation are available on our website. On today’s call are Rob Kritzmaroff, President and Chief Executive Officer Russell Lawler, Senior Vice President and Chief Financial Officer Carlos Aguilar, Senior Vice President and Chief Operations Officer Kurt Allen, Vice President, Exploration Anvita Patel, Vice President, Finance and Treasurer and Matt Blotman, Vice President, Technical Services. At the conclusion of her prepared remarks, we will be available to answer questions.
Turning to Slide 2, our cautionary statement slide Any forward looking statements made today by the management team come under the Private Securities Litigation Reform act and involve risks as shown on the Slide 2 in our earnings release and in our 10Q 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 will now pass the call over to Rob.
Rob Krcmarov — President and Chief Executive Officer
Thank you Mike and good morning everyone. Turning to Slide 3, our strategic vision remains focused on four key pillars grounded in ESG leadership that position HECLA for sustainable value creation. The first pillar is operational excellence. We’re starting to implement semi automation and advanced analytics across our operations. We’re standardizing our systems and processes and improving mine planning to drive efficiency gains throughout the organization. Our second pillar is portfolio optimisation. Our Casa Barada strategic review has progressed well and I’m pleased to report that we should be in a position to update the market in the coming weeks.
On the path forward. I also want to address the recent acquisition activity in the sector. I believe the best opportunities to add value for shareholders is through deals that focus on earlier Stage assets versus acquisitions of well defined producing assets that are already being fully valued in the market. So while we will continue to evaluate potential opportunities as any prudent management team should at this time, we see more compelling value surfacing opportunities within our own robust project pipeline. Our third pillar focuses on disciplined capital allocation. So prioritising high return projects while strengthening our balance sheet.
We’re structuring our framework to prioritise free cash flow generation with clear return on invested capital targets. This means that every dollar we deploy must meet analytically derived return hurdles. Our effective execution on the ATM to delever $212 million of the $475 million long term debt while minimising shareholder dilution is a reflection of our capital allocation strategy in meeting these goals. And Russell’s going to speak more on this in a moment. Fourth, we’re committed to maintaining our silver market leadership. Our high quality operations averaging 14 plus year reserve lives which is double the peer average and they operate exclusively in low risk jurisdictions.
While we strive to achieve these pillars and while continuing to aim to be an ESG leader in the silver sector through environmental stewardship, through strengthening first nations partnerships and maintaining safety Excellence. Turning to Slide 4 I want to walk you through the strategic recalibration at Kino Hill that really demonstrates our disciplined approach to value creation. Our focus on optimising Kino Hill has confirmed that it is a core asset capable of delivering strong returns even at conservative metal price assumptions. The asset meets our investment hurdle rates at $25 per ounce silver and approaches self financing capability at current metal prices.
The key strategic. Pardon me, the key strategic decision was revising our Production target to 440 tonnes per day down from the original 550 to 600 tonnes per day baseline. And this isn’t about scaling back, it’s about optimisation. Through improved ore quality control over brake reduction and cost control. This throughput level delivers superior returns while preserving our expansion optionality. We’ve identified mining capacity as the primary near term production constraint and we have high confidence in achieving our target through systematic capital deployment including cement and tailings plant construction, waste dump upgrades, mine development programs, tailings capacity expansion and water treatment infrastructure enhancements.
This measured approach gives us high confidence in achieving our target 440 tonnes per day while maintaining the flexibility to expand when the conditions warranted. As we turn to slide 5 let me walk you through the compelling financial case for our 440 tonnes per day optimisation at Kino Hill. The economics here are particularly strong. Looking at the table in the upper left of the slide. At $30 silver, a significant discount to current spot prices, Kino Hill will deliver a 35% IRR over its reserve mine life. This return profile is well above our investment thresholds and demonstrates the potential quality of this asset even under our conservative case.
At $25 per ounce silver, the project will generate a solid 15% IRR from January 1, 2025 forwards. The 16 year reserve life provides another strategic advantage. This longevity has the potential to capture value through multiple metal cycles, as illustrated by the red line on the chart. We expect there is the potential for particularly strong free cash flow generation in later years as the mine reaches its steady state. Production of 440 tons per day and of course, ongoing exploration success could extend the mine life, which could further enhance the already attractive returns. I’ll now discuss the medium term outlook for Kino Hill and some of the major projects we’ll undertake to deliver the asset into nameplate capacity.
Slide 6 outlines our systematic approach to ramping up Keno Hill to its optimised production level. Our production timeline demonstrates a measured DE risk path from current operations to 440 tonnes per day, which we anticipate achieving in 2028. The key here is that we’re building Kino Hill with a long term future in mind rather than rushing the ramp up. And this approach allows for sustainable returns to our shareholders while ensuring the ESG excellence through our commitment to environmental stewardship and partnering with the local First Nations. And from an infrastructure perspective, our tailing storage facility will operate under phase through under phase two through 2028 when phase three will seamlessly take over.
This sequencing aligns with our waste storage capacity and existing permitting framework, diminishing the risk of potential bottlenecks. Now, while our analysis confirms that 440 tonnes per day meets our return thresholds, even at conservative silver price assumptions, we with preserved valuable optionality. The infrastructure we’re building can support expansion beyond this level should future conditions warrant. Meanwhile, our exploration program continues to deliver, consistently replacing depletion and growing our resource base. So what we’re accomplishing at Kino Hill is systematic de risking while advancing the project towards sustainable, profitable production. With each milestone we achieve, we’re increasing our confidence in the project’s potential to deliver meaningful returns to our shareholders.
As with any development project execution remains key. Turning to Slide 7, the second quarter delivered exceptional results across multiple metrics. On the financial side, we achieved record sales of $304 million, net income applicable to common shareholders of nearly $58 million and record adjusted EBITDA of $133 million, improving our net leverage ratio to 0.7 times. We generated cash from operations of over 160 million and record quarterly free cash flow of 104 million. Operationally, we produced 4.5 million ounces of silver and nearly 46,000 ounces of gold. Our silver operations delivered cash costs of negative $5.46 per ounce and all in sustaining costs of $5.19 per ounce.
That’s after byproduct credits. Casa Berati’s unit costs dropped by over $600 per ounce over the prior quarter and Lucky Friday set a new quarterly milling record on Greens Creek. Strong Performance Year to date, we made positive revisions to gold production and silver cost guidance with the new guidance summarized in slide 24 and the appendix of this presentation. I’ll now hand the call over to Russell for a detailed financial review.
Russell D. Lawlar — Senior Vice President and Chief Financial Officer
Thank you Rob Turning to Slide 9, our capital allocation priorities center on strengthening our balance sheet, investing in our highest return opportunities across our portfolio and maximizing free cash flow generation. As we focus on these priorities, we’re investing in organic growth. Notably, this was Keno Hill’s first positive free cash flow quarter under our ownership. We continue focusing on deleveraging, having improved our net leverage ratio 2.7 times and earlier this week we initiated a partial redemption for $212 million of our senior notes. Additionally, we also repaid our investment Quebec notes totaling $50 million Canadian from free cash flow in July.
We’re also progressing on portfolio optimization with the strategic review of Casa Berardi and disposal of a non core exploration property and a non core equity position on the right hand side of the slide. You’ll note that our producing asset base generated over $100 million in free cash flow, a new quarterly record with all four mines contributing to this total. Moving on to slide 10, silver made up 41% of our consolidated revenue with gold increasing to 42% based on the performance of Casa Berardi and Greens Creek, in addition to the increase in the price of gold, while base metals made up the remaining 17%.
With the increase in the silver price, we’ve also seen an expansion in our margins which grew from 65% last quarter to 85% this quarter with silver ASIC at $5.19 per ounce after byproduct credits. I’ll discuss the details more on the next slide. But in addition to the performance of our operations, we took steps during the quarter to improve our balance sheet which resulted in our net leverage ratio improving significantly from 0.2 0.7 times from 1.5 times last quarter. Turning to Slide 11, our strategic approach to raising capital demonstrates prudent financial management in which we utilized our ATM facility to raise funds for a partial redemption of the senior notes.
We chose the ATM facility to execute this capital raise to minimize shareholder dilution versus traditional equity offerings which have had discounts of more than 10% this year. Whereas we executed the ATM at a price which is approximately 10% higher than the volume weighted average price for the quarter at a minimal cost to our shareholders. This plan reduction this planned debt reduction lowers our overall future interest expense by about $16 million on an annual basis. We anticipate the interest savings will be reinvested to accelerate value creating activities including investment in our operations, expanded exploration programs, as well as strengthening the balance sheet.
Our strong existing asset base provides us confidence in our ability to service the remaining debt even apart from using the proceeds from any potential asset sales and fund growth initiatives while maintaining operational flexibility. So going forward, we would prioritize other means for debt reduction before issuing more equity. I’ll now turn the call to Carlos to discuss the details of our operations.
Carlos Aguiar — Senior Vice President and Chief Operating Officer
Thank you, Russell. I’ll begin on slide 13. Grain street continues to be our flagship asset, generating a strong free cash flow. The second quarter silver production was 2.4 million ounces, a 21% increase over the first quarter with silver grades averaging 13.54 ounces per ton. Total cost of sale decreased 15% to just under $59 million. Our second quarter silver cash costs were negative $11.91 per ounce and all sustaining costs were negative $8.19 per ounce, both after byproduct credits better than expected Gold production and higher gold prices drove Druid’s strong cost performance. Over the prior quarter, the operation generated over 75 million in operating cash flow and 69 million in free cash flow for Greens Creek.
We maintain our silver production guidance, Increased Gold Production Guidance and reduced Cost Guidance because we expect higher byproduct credits from gold. The table on slide 13 summarizes the guidance for the mine. Turning to slide 14, Lucky Friday achieved a new quarterly milling record of over 114,000 tons, beating the first quarter record by 5%. We maintained consistent silver production of 1.3 million ounces with grades of 12 and. A half ounce per ton. Total cost of sale decreased 4% to $42.3 million with cash cost of $6.19 per ounce and all sustaining costs of $19.07 per ounce. The operation generated $20.7 million in operating cash flow and nearly 5 million in free cash flow. We expect the third quarter to be our softest production quarter of the year due to planned capital project that will impact hoist availability which was anticipated in our February guidance. Lucky Friday guidance remains with no change. Turning to slide 15 in a hill second quarter silver production reached just over 750,000 ounces at a million rate of just under 300 tons per day as we continue ramping to higher tonnage rates.
Importantly, we delivered 2.7 million in free cash flow in the second quarter, our first positive free cash flow quarter under HECLA ownership. The operation remains in pre commercial production as the ramp up continues and capital projects are executed. The cemented tailings plant construction work is progressing well and we expect completion at the year end on slide 16. Casabra Rd showed significant cost improvements over the prior quarter with both cash cost and only in sustaining cost decreasing by more than 600 per ounce. Second quarter gold production increased 37% to just over 28,000 ounces driven by Planet increases in both underground and surface or grades.
We expect the stripping ratio of the 160p to decline in the fourth quarter with our surface mining contractor completing demobilization. This will drive further cost reduction while maintaining full mill capacity. Cash costs in the second quarter improved to $1,578 per ounce and only in sustaining cost to $1,669 per ounce. We expect to provide an update on a strategic review process in the coming weeks. I will now pass the call to Kurt.
Kurt D. Allen — Vice President – Exploration
Thanks Carlos. Turning to Slide 17, I will give an update on the activities going on in Nevada. Historically, Midas produced 2.2 million ounces of gold and 27 million ounces of silver at exceptional grades. With a fully permitted mill, ample tailings capacity and 30,000 acres barely explored, Midus offers potentially transformative upside. The 2020-2021 Sinter discovery containing 169,000 ounces of gold and inferred resources hints at a larger untapped system. Active drilling is delivering results. Seven of 12 planned holes are completed and have yielded two new gold bearing structures with visible gold. This is not from infill drilling or incremental extensions, but from areas located over two miles from the existing underground development and dense drilling and that really is what makes this particularly exciting.
These potentially emerging discoveries combined with widespread mineralization indicators throughout the area support potential for a significant new deposit. A recent draft engineering assessment confirms the mill remains in good condition, requiring only modest capital to restart. Hollister was historically ranked as North America’s third highest grade underground gold mine producing 0.5 million ounces of gold equivalent located within trucking distance of Midas processing facilities. The large property shows extensive surface alteration and mineralization. The Hatter Graben resource anchors multiple high grade expansion targets with additional potential at Santorinia. Both assets feature proven high grade production history, existing infrastructure eliminating major capital needs and vast unexplored potential.
With that I’ll turn it back to Rob.
Rob Krcmarov — President and Chief Executive Officer
Thanks Kurt. Turning to slide 18, our 2025 strategy focuses on four key themes. First, we’re focused on creating long term value at Keno Hill by prioritising permitting and project execution. Second, we’ll continue deleveraging through strong free cash flow generation. Third, we’re establishing a capital allocation framework to ensure smart organic investment. And fourth, we’re rationalising our portfolio with the Casa Berardi strategic review expected to conclude in the coming weeks. I now want to address what I feel HECLA Mining makes for a compelling investment opportunity. So please turn to slide 19. Hecla’s competitive advantage is evident in our industry leading reserve mine life.
Our average reserve mine life of 14 years is double the silver peer, the silver industry peer average of just seven years. This provides exceptional stability and long term value creation potential and allows for us to invest in these operations under the belief that we have more than a decade to earn a return on those investments. Not only do our mines have world class mine lives, they’re also positioned in the US and Canada which gives us the best jurisdictional risk ranking of any of our peers. Moving on to slide 20, we see another reason to own HECLA shares and what makes our portfolio unique.
HECLA offers investors substantial silver revenue exposure with about 45% of our nine month 2024 revenue coming from silver amongst the highest in our peer group and this calculation includes recent peer transactions. On a pro forma basis. Our silver exposure has remained strong with second quarter results showing 41% of revenues from silver sales. Our asset portfolio is heavily focused on silver with both revenues and resources concentrated in this precious metal. And finally on slide 21 we compare Hecla to our immediate peer group on core valuation metrics. We believe HECLA represents the best value investment in the mid cap silver space.
We trade at approximately $1.60 per silver equivalent ounce of total resources, the lowest amongst mid cap peers and at 1.3 times nav, which puts us at the low end of the peer range. The bubble sizes on this chart are equally important. They reflect jurisdictional quantity with larger bubbles indicating safer jurisdictions and as you can see, hecla’s focus on safe jurisdictions is demonstrated by our bubble size relative to our peers. This undervaluation represents significant asset reevaluation upside as we shift capital towards high return projects designed to unlock the true value of our mineral reserves and resources.
And I’m confident that over time and through continued execution, our true value will be better reflected in our share price. With that operator, I’d like to open the call to questions.
Questions and Answers:
operator
At this time I would like to remind everyone, in order to ask a question, please press stars and the number one on your telephone keypad. We’ll pause just a moment to compile the Q and A roster. Your first question comes from the line of Wayne Lam with TD Securities. Please go ahead.
Wayne Lam
Yeah, thanks. Morning guys. Maybe at Greens Creek. Congrats on a good quarter there operationally. Just wondering what was driving the higher grades and the outperformance there in the quarter. Was that a function of positive reconciliation or were those higher grades anticipated as part of the mine plan? And then just wondering maybe if there’s potential for that to kind of continue here or should we expect a bit of a reversion in the back half of the year.
Carlos Aguiar
We are expecting to continue with similar grades for the remainder of the year and the main reason about it was good execution. We had additional areas available to with better grades and that was the main reason for.
Wayne Lam
Okay, got it, thanks. And then maybe a Keto Hill. It seems like there’s been quite a change in commentary quarter to quarter, maybe helped by the continued strength in metals prices. I guess Last quarter the commentary seemed to indicate that the 440 tons wasn’t sustainable given the confines of the current permit constraints. So just wondering, you know, what’s changed there that would enable you to reach that target. Are you getting anticipating more or from Birmingham or Flaming Moth or just wondering what’s driving the change in thinking here.
Rob Krcmarov
Well, we started the year with. Thanks for your question. We started the year with just Birmingham. We’ve expanded the flame and moth so we have a little bit more operational flexibility. We’re also now focused on reducing overbreak, controlling dilution or control, all those sorts of things. Anything you want to add, Carlos or Matt?
Carlos Aguiar
It’s just the proper balance between capital execution permitting and space for growth. So we are trying to balance all the components and that’s it.
Wayne Lam
Okay. But you have, you have enough capacity on the back end to get to the 440 tons. Given the current permit constraints.
Carlos Aguiar
We won’t. Be getting there this year. That will still Take some time, but we do expect to see an increase next year.
Wayne Lam
Okay. Okay. And then maybe just one last question for me. Maybe on the debt, just wondering, in the context of record prices and the number of your peers being able to delever organically and buy back some stock, did you guys feel as though the portfolio is not positioned to where the current operations would be able to service that debt? And then maybe just wondering, if viewed in conjunction with the elimination of the Silver Link dividend, has the capital allocation strategy changed here? Or just wondering why you felt the need to retire a large amount of the notes with quite a bit of term left on the debt.
Rob Krcmarov
Yeah, thanks. Thanks, Wayne. The idea behind that was both the Silver Link dividend and, you know, the interest that leaves the company to, to service the debt. Those funds would be better served by our investors to be invested in, in our operations and in the opportunities that we have within our portfolio. And so we took the opportunity to reduce the debt so that we could increase the cash flow and reinvest in the assets. You heard Kurt talk about Nevada. We’ve owned Nevada for quite some time. We’ve been high on Nevada for quite some time. But the exploration there has been kind of in fits and starts as we’ve had cash flows.
So what we’re looking to do is really generate consistent cash flows so that we can then reinvest those cash flows back into those. Those areas that will benefit our investors the most.
Wayne Lam
Okay, great. Thanks for taking my questions and congrats on a good quarter.
Rob Krcmarov
Thank you.
operator
Your next question comes from the line of Heiko Ila from HC Wainwright. Please go ahead.
Heiko Ihle
Hey Robin team. Thanks for taking my questions.
Rob Krcmarov
Good morning. Michael.
Heiko Ihle
Perfect. At casa, you state in the release that the pit stripping ratio is expected to decline in the fourth quarter of this year and that should be further reducing your costs. 2 part follow up to that. First of all, we’re halfway through Q3 next. Q3 next week. Can you provide a bit of color on what we should model for this quarter and then maybe also quantify the improvements in the stripping ratio that you expect to see in Q4 and your current cost to haul that waste, please?
Matt Blattman
Hi, Heiko, this is Matt Blattman. You know, there’s a lot of pieces that are moving here, but one of the primary factors to the decrease in stripping ratio is that bit is nearing the end of its mine life.
So as you go down deeper in the pit, your stripping ratio just going to increase or improve geometrically as it goes down. So you know, we started off the year somewhere around that 15 to 20 to 1 stripping. We’re probably close to 10 to 1 at this point. And then you’ll just see it completely decrease over the next 18 months until that last ton of ore that comes out is probably one to one. So you know, we’re probably looking at something like a 10% decrease before the end of the year. But it’s just going to go slowly until we, we reach the end.
Rob Krcmarov
Maybe I’ll jump in just a little bit. Right. Because you know, clearly we don’t give guidance on a quarterly basis. We’ve seen the stripping ratio go down as we’ve gone through the year and that you see that come through in the economics. We expect as that stripping ratio will go down, we’ll be able to reduce contract reliance, which we should see then a cost improvement from them. And you know, as we look at the guidance that we provided, we expect to meet the annual guidance throughout the year. But you know, clearly we don’t give that quarter by quarter.
Heiko Ihle
Fair enough. And then if the permitting process. Oh the cost to haul the waste, any color on that.
Kurt D. Allen
I wouldn’t expect a dramatic change. I mean as we go deeper the distances are going to get farther. So the biggest improvement we’ll see is the, as we let the mining contractor go, we mine with our own fleet. That will help. But like I said, the haulage distances are just going to get more longer for us and not going to help.
Heiko Ihle
Got it. And I get there is a strategic review process here, but I mean with the permitting process for the new pits at casa, how much time should we mentally be looking at for that to happen? And maybe just capture like the costs that you pay to get the sun I assume are reasonably de minimis correct.
Rob Krcmarov
Permitting is not a, it’s not a super well defined process. It takes time. There’s, there’s review periods, there’s backwards and forwards. What we previously said is that there was going to be a five year permitting hiatus and that would allow us towards the tail end of that we would do some, we would do some pre stripping, some dewatering and so on and so forth getting ready. That’s all we can say. We can’t be much more specific than that at this point.
Heiko Ihle
Cool. Okay, I’ll get back to you. Thank you.
Rob Krcmarov
Thank you, Meiken.
operator
And your next question comes from the line of Joseph Weir with Roth Capital. Please go ahead.
Joseph Reagor
Hey guys, thanks for taking the questions, I guess. First one, back on Kino, on the slide 5 in the presentation it shows that at the 440 tons per day that the free cash flow increases starting pretty much in 2028. Is that driven by higher grades, lower capex, a combination thereof. Just so we can, you know, model out that.
Rob Krcmarov
Yeah, Joe, I can jump in here. It’s a combination of a few things. You do see some of the larger projects coming to an end at that point. So we do see capital coming off to some. If you flip to the next slide, you will see that there is some projects that will have to obviously continue and we’ll have to continue mine development and those types of things. So it’s not the capital comes to an absolute halt, but it does, you know, as we complete the kailings batch filled plant, there’s some water treatment capacity, those types of things.
When those things come to a completion, you do see the capital decrease. You also see the throughput that, that throughput getting to 440 tons per day will scale up and get to that 440 tons per day. Kind of late in this decade is the anticipation. And so as a result you see more throughput and therefore you would see higher ounce production as well.
Joseph Reagor
Okay, that’s helpful. And then. Over at Greens Creek it. Looks like, you know, it could have. Been an even better quarter. I mean it was already a pretty good quarter for the mine, but it could have been a better quarter if not for maybe some concentrate that didn’t get shipped out in time to count it. And should we expect that to get sold next quarter?
Rob Krcmarov
Yeah, Greens Creek, we’ve talked about this. You know, it’s. The sales can be lumpy. Right. Because we ship out essentially generally once per month on a ship. And so depending on when you ship within the month. We had a shipment in June, but it was kind of earlier in the month of June compared to in March. It was later in the, in the month of March. And so we just had an inventory buildup. And it really just comes down to when a ship would leave in September, whether we would have that inventory kind of remain stable or whether we would see a drawdown in inventory.
Okay, but at some point it’ll go out. Sorry Joe, what was that?
Joseph Reagor
But at some point it, it’ll be sold. It’s just, it’s not necessarily going to show up in Q3. It’s just eventually going to show up.
Rob Krcmarov
Oh yeah, absolutely. And you know, it’s, you know, we, we have to put together, you know, in one ship you may have two or three different parcels going to through two or three different customers. And so, you know, you’re managing that Process trying to both manage the inventory on site, as well as getting ships in and out based on tides and light and when customers need it, et cetera. So it’s a balancing act trying to get it all done. But we look at that and try to, you know, maximize. Get as much revenue as quickly as possible.
So, you know, it’s not like we’re sitting on it. Okay. All right.
Joseph Reagor
That’s helpful. Thanks. I’ll turn it over.
operator
Again. If you would like to ask a question, please press star, then the number one on your telephone keypad. Your next question comes from the line of Alex Jarantou with National Bank Financial. Please go ahead.
Alex Terentiew
Hey, good morning, guys, and congrats on the great quarter. Good to see all your operations firing at all cylinders there. Couple questions for me on Casa Berardi and Keno Hill. Maybe just starting with Keno Hill, I want to clarify your slide five. You’ve got, you know, free cash flow, undiscounted cash flow expectations at different silver prices. And they’re saying 440 tons per day. Is that kind of assuming your gradual ramp up to 440, or is that hypothetical, assuming it was 440 and 26, 27, 28, etc. Just trying to.
Rob Krcmarov
Yeah, maybe we should have clarified that in that slide. That is a ramp up to 440 tons per day. We would get to that 440 tons per day late, later in the decade, 29 or 30 in this scenario, ramping up to that point. So, yeah, I appreciate the question because. Yeah, we should have clarified that on the slide.
Alex Terentiew
Okay. Okay, that makes sense. I figured that was probably the case for Yellens checked and then just kind of related there. And I know somebody asked this earlier or variation of it just on the capital side. You know, I could kind of use that chart to help calibrate, but, you know, you noted a few things are coming off. Any big spending that we could kind of think about over the next two years to kind of get to that 440 rate. Any major investments that have to be done.
Rob Krcmarov
Yeah, we’ll. Carlos is sitting here with me, too, so please fill in some of the details. But we do have to build some tailings over the next few years. And I think you see that on slide six. It’s kind of kind of laid out there. We’re working on a tailings batch fill plant now, and that will kind of come to a conclusion sometime next year. There’s some additional water treatment that we have to put in. I think there’s some waste voice storage Some other infrastructure, some buildings and things like that.
Carlos Aguiar
Yeah, there are investments related with power distribution upgrades. So it’s in. Some of the projects are going to take over one year. And so there are significant upgrades in the infrastructure. And we are expecting to maintain similar level of investment for the rest of the decade. Okay.
Alex Terentiew
And then just on the permitting, sorry, for dry stock tailings, Slide 6 shows, you know, later in 2028, additional permitted capacity required. Is that capacity required just to maintain it at 440? So I guess my question is, come 2028, end of the year, you know, what’s the risk? That that’s kind of a hard stop. Unless if you don’t have the permitting, permanent additional capacity, or do you have a bit more room to keep going and kind of work on the permits?
Kurt D. Allen
I guess I’ll take that one. So, yes, you know, in 20, the end of 2028, we start to run into a capacity requirement. We need additional capacity for tailings. We do have some flexibility that once we have the cemented tailings plant constructed and operational, we have more opportunity to put more of the tailings underground, which then makes that surface capacity less of a risk. But yeah, somewhere in 29, we do have to have that permit in place. And it’s already underway. We’re already chasing that. So it does give us some room to work. And similarly, the waste production, There is a limit in our permit that says total tons of waste that we can mine.
It’s not a surface constraint. It’s not any physical constraint. It’s in the permit. So that needs an expansion as well. And they hit about the same time frame. So that’s part of the reason why you ramp up to 440 over a longer period. If you ramp up the mine to 440 very quickly and then run out of capacity, then you’re shut down. That doesn’t help anyone either. So it’s all about balancing it, all the pieces at once.
Alex Terentiew
Okay, that makes a lot of sense. Thanks. And then just lastly, Casa Berardi, you know, gold prices are obviously quite high. Is there opportunity to. And this, I guess a similar question here on tailings and permits. Is there opportunity to continue Casa Verardi even for another six or 12 months, you know, kind of lowering the cutoff, getting more tons through. Or is it. Or there are other constraints, Whether it’s permits or tailings or something like that, that kind of making. That’s making end of 2027 a deadline.
Rob Krcmarov
Well, we started this year with a view of closing down the underground around May of This year, obviously, gold prices have helped, and, you know, it’s turning out to be an increasingly valuable asset. We’ve now extended the underground to at least the end of the year, and then we’ll just see where gold prices are.
Alex Terentiew
Okay. Okay. And last one here on CASA, obviously a very strong Q2. You guys have made 49,000 ounces from that mine year to date. You know, you’ve kept guidance. So I guess my question is, you know, any upside to that number, or should we be kind of thinking that production will come down the second half of the year this year?
Kurt D. Allen
Yeah, I guess I can jump in and ask that. You know, we’re working through a strategic review right now. I would suggest, as Rob said in his comments early in the slide, we’ll have something to talk about to the market in a few weeks, and at that point we’ll be able to answer that question.
Alex Terentiew
All right, fair enough. Thanks.
operator
Your last question comes from the line of Kevin o’ Halloran with P Capital Markets. Please go ahead.
Kevin O’Halloran
Hey, Robin, team, thanks for taking my question, and congrats on the quarter. Just going back one more time to Kino on the ramp up there. Can you give us any granularity on the trajectory of the throughput? Would it be like a more gradual increase to the 440 tons per day, or should we expect kind of more lumpy gains in throughput as you complete some of these infrastructure items?
Rob Krcmarov
It’ll be a gradual ramp up. 2027 will probably be somewhere around about 330 tons per day from memory, and that’s around about 75% of the permanent capacity. And then it’ll continue to ramp up to 440.
Carlos Aguiar
Yeah, that’s. Yeah, there’s nothing to add. That’s the plan.
Kevin O’Halloran
Okay, great. That’s helpful. And then just final question for me, shifting to the Montana assets. Can you remind us what your current thinking is on how to advance those? I think you previously been looking at a few options, like maybe bringing in a partner versus advancing it yourself. Is there any updates on your thinking there?
Rob Krcmarov
Not really. Our focus has really been on completing the CASA review, where I have Dave Schenco here with me, where basically in the final stages of the review period. In fact, I think that finishes next week. Can you fill us in, Dave?
David C. Sienko
Sure. Yeah. We expect to get a finding of no significant impact on our permit application. And the objection period ended this week. So the Forest Service will work through that. But we would expect by say, October timeframe that we would have that plan of operations approved, which would Allow us to begin to rehab the added in the portal and to begin the exploration work at that project. So we’ll see what, we’ll see what happens with the objection, period.
Rob Krcmarov
So this is just to remind you this is primarily a copper asset. Copper equivalent grade of about 1.2% copper equivalent. I would say that it’s probably not going to be core for us. And so we would be receptive to someone who’s going to have a copper focus coming in and partnering with us. We do definitely want to participate in the upside on this thing because we see substantial value there to be realized.
Kevin O’Halloran
Okay, great. That’s it for me. Thanks guys.
Rob Krcmarov
Thank you, Kevin.
operator
Thank you. I’ll. And that concludes our question and answer session. I will now hand over the call to Mike Parkin for closing remarks.
Mike Parkin
Actually, I’ll make some closing remarks. Operator. Just before we wrap up, I do want to recap hecla’s value proposition. So unmatched jurisdictional security is something I’ve talked about. And so in an era of increasing geopolitical uncertainty, I think HECLA offers what others can’t. Complete operational stability with 100% of our core assets in Canada and the U.S. we eliminate the regulatory surprises, the policy shifts, the security risks that plague some of our competitors in less stable jurisdictions. And so your investment is going to be protected by really the world’s most reliable mining frameworks. You’ve got industry leading silver exposure.
And if you believe in silver’s fundamentals, and you should, HECLA delivers peer leading silver revenue exposure. And so while we do produce gold and lead and zinc, silver dominates our revenue matrix and revenue mix rather. And that percentage could increase further depending on the results of the strategic review of Casa Berati. When silver moves, we should move more. And this concentrated exposure gives you high leverage to the metal with some very compelling supply demand dynamics in the sector. You’ve got decades of visible production. Short mine lives create investment uncertainty. And our assets offer something rare multi decade production visibility that extends well beyond typical investment horizons.
Our long life mines don’t just offer returns next quarter. They provide a sustainable production platform that’s positioned to deliver value through multiple commodity cycles. And this isn’t just speculating on finding tomorrow’s ounces. It’s ownership of proven long term cash flow generation. Then there’s disciplined capital allocation. While competitors chase expensive M and A deals in risky jurisdictions, we’ve deliberately stayed on the sidelines of the recent consolidation frenzy. Our strategy is clear. Create value through the drill bit, not through the checkbook Our proven exploration teams consistently delivered mine life extensions and new discoveries and that’s the most accretive form of growth.
We’re also built for all cycles. So our crown jewels, Greens Creek and Lucky Friday, they’re not just mines, they’re fortresses. These are low cost long life assets that are projected to generate cash even in downturns. And that positions us to play offence when others are forced to play defence. So when the next cycle turns and distressed assets flood the market, we expect to have a balance sheet that will allow us to capitalise while others perhaps struggle to find their high cost operations in risky jurisdictions. And the bottom line really is that I think HECLA offers what smart investors seek and that’s jurisdictional certainty, industry leading silver leverage, decades of production, visibility, discipline, management and cycle proof assets in a sector full of risks.
Our approach is to systematically eliminate the variables that destroy value while maximizing exposure to silver’s upside. So not just another mining investment, it’s a strategic position in the future of silver backed by the stability that only the U.S. and Canadian assets can provide. So thanks for joining us today and we look forward to updating you on our continued progress in delivering shareholder value through operational excellence and strategic execution. Have a great day everyone.
operator
Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.