Hecla Mining Q3 Earnings Call Highlights

Key Points

• Record cash generation strengthened Hecla’s balance sheet: Q3 operating cash flow reached $203 million and free cash flow hit $151 million; cash rose to $692 million, with about $1.2 billion in total liquidity.
• Keno Hill output will be curtailed due to permit limits: Throughput is expected to fall to about 300 tons per day in Q4, with further reductions starting in January 2027 while the company seeks permits and infrastructure.
• Hecla is pursuing growth and may consider shareholder returns: A proposed Greens Creek circuit could add up to 1.2 million ounces of silver annually, while management said it may evaluate buybacks or dividends in the first half of 2027.

Hecla Mining NYSE: HL reported record operating and free cash flow in the third quarter of 2026, as shipments of silver concentrate from its Greens Creek mine helped lift revenue and the company built its cash balance to nearly $700 million.

The silver producer also outlined plans to reduce throughput at its Keno Hill mine to stay within permit limits, while advancing several projects that it says could support longer-term production growth. President and CEO Rob Krcmarov said Hecla’s preference is to invest in projects it already owns, although the board could take a closer look at shareholder returns in the first half of 2027.

Record cash flow and a stronger balance sheet

Revenue from continuing operations, including environmental services, was $395 million, up from the prior quarter. Of that total, $372 million came from mining operations, Chief Financial Officer Russell Lawlar said. The increase was driven primarily by the timing of shipments at Greens Creek, where concentrate held at the end of the second quarter shipped in early August.

Income from continuing operations rose to $150 million, or 22 cents per share, from $118 million, or 18 cents per share, in the second quarter. Adjusted earnings before interest, taxes, depreciation and amortization were $211 million, up 6% sequentially and more than 40% from a year earlier.

Operating cash flow from continuing operations reached a record $203 million, while free cash flow was a record $151 million. Greens Creek generated site-level free cash flow of $147 million, also a record, and Lucky Friday contributed $67 million. Keno Hill’s free cash flow was negative $2 million.

Hecla ended the quarter with $692 million in cash, up from $483 million at the end of June. It had no long-term debt apart from finance leases and had entered a new $500 million revolving credit facility, undrawn except for $3.4 million in letters of credit. The facility also has a $100 million accordion option.

Lawlar said the company had approximately $1.2 billion in liquidity. Hecla realized $63.62 per ounce of silver sold during the quarter, with an all-in sustaining cost of $14.34 per ounce. The cost measure excludes Keno Hill, which remains in pre-commercial production.

Keno Hill throughput to fall

Hecla produced 4.2 million ounces of silver during the quarter. Greens Creek contributed more than 1.9 million ounces, Lucky Friday nearly 1.3 million ounces and Keno Hill a record 963,000 ounces.

Chief Operating Officer Carlos Aguiar said Keno Hill’s record reflected higher silver grades and a record quarterly milling rate. But capacity under the mine’s existing waste rock, tailings and water permits cannot support that rate over time, he said.

Hecla expects Keno Hill throughput to fall to approximately 300 tons per day in the fourth quarter, with further reductions beginning in January 2027 to levels significantly below the fourth-quarter rate. Management expects silver production to decline by a smaller proportion as the company mines and processes higher-grade material more selectively.

Krcmarov said the company’s preference is to keep the mine running while it secures permits and builds infrastructure. However, Hecla could consider placing the operation on care and maintenance if permits or infrastructure are delayed or silver prices fall materially, he said.

Vice President of Sustainability Patrick Malone said tailings capacity is the fixed constraint used to shape the current plan. The company expects the relevant permits around mid-2029. Lawlar said Hecla does not expect Keno Hill to reach commercial production until later this decade or early next decade.

Projects target additional production

Hecla is advancing a proposed pyrite concentrate circuit at Greens Creek that could recover silver and gold currently sent to the dry-stack tailings facility. Vice President of Operations Brian Erickson said preliminary estimates indicate the circuit could add 1 million to 1.2 million ounces of silver and 10,000 to 15,000 ounces of gold annually once fully ramped up.

Subject to permits and final investment approval, intermittent concentrate production using temporary equipment could begin as early as late 2027, with the new circuit potentially reaching full capacity in late 2028. Erickson said the estimates remain preliminary.

The company is also evaluating three potential ways to recover value from Greens Creek’s existing tailings: processing through a third party, direct sales to a smelter and on-site processing. It expects to load a test parcel of approximately 5,500 dry metric tons for shipment and sale to a third-party smelter in the fourth quarter, though Erickson cautioned that commercial shipments are not assured.

At Midas in Nevada, Hecla is working to expand the existing gold and silver resource to a scale that could support a restart. The company is evaluating whether its existing mill could also process ore from other regional sources, including Hollister.

Capital returns and guidance

Hecla raised the lower end of its 2026 consolidated silver production guidance, improved its cash cost and all-in sustaining cost outlook, and lowered planned capital investment. Lawlar said higher-than-assumed gold and zinc byproduct credits and slightly lower sustaining capital contributed to the improved cost guidance.

Krcmarov reiterated a medium-term goal of producing more than 20 million ounces of silver annually, while noting that growth depends on exploration, development and permitting. He said the Keno Hill slowdown did not change that target.

Asked about shareholder returns, Krcmarov said Hecla would probably need to consider them seriously sometime in the first half of 2027. Share buybacks could be an option if management sees a gap between its valuation of the assets and the market’s valuation; dividends could also be considered. He said a silver-linked dividend was unlikely.

About Hecla Mining (NYSE:HL)

Hecla Mining Company NYSE: HL is a precious and base metals mining company that explores for, develops, and produces silver, gold, lead, and zinc. The company also undertakes activities related to mineral processing, mine development, and exploration of additional mineral resources.

Founded in 1891, Hecla is headquartered in Coeur d'Alene, Idaho, and is one of the oldest mining companies listed on the New York Stock Exchange. Its operating portfolio has included the Greens Creek silver-gold-lead-zinc mine in Alaska, the Lucky Friday silver-lead-zinc mine in Idaho, the Casa Berardi gold mine in Quebec, and the Keno Hill silver operations in Yukon, Canada.

Through its mines and exploration projects in the United States and Canada, Hecla supplies silver and other metals to industrial, investment, and manufacturing markets.

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