Hecla Mining Co

NYSE:HL

Earnings Call Transcript 2024-Q3

[Operator]

Thank you for standing by. At this time, I'd like to welcome you to the Third Quarter 2024 Hecla Mining Company Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Anvita Patil. Please go ahead.

[Anvita Patil, executive]

Good morning, Adam, and thank you all for joining us for Hecla's Third Quarter 2024 Results Conference Call. I'm Anvita Patil, Vice President of Investor Relations and Treasurer. Our earnings release that was issued yesterday, along with today's presentation are available on our website. On the call is Cassie Boggs, Interim President and Chief Executive Officer; Rob Krcmarov, incoming President and Chief Executive Officer; Russell Waller, Senior Vice President and Chief Financial Officer; Carlos Aguiar, Senior Vice President and Chief Operations Officer; and Kurt Allen, Vice President of Exploration.

At the conclusion of our prepared remarks, we will be all available to answer questions. Any forward-looking statements made today by the management team come under the Private Securities Litigation Reform Act and involve risks as shown on Slide 2 in our earnings release and in our 10-K and 10-Q filings with the SEC. These and other risks could cause results to differ from those projected in the forward-looking statements.

Any non-GAAP measures cited in this call and related slides are reconciled in the slides or the news release. I want to remind you if you would like to have a call with management, you can do so by using the link under the section Virtual Investor Event in our earnings release that was issued yesterday. I will now pass the call to Cassie. Thanks, Andrea. Good morning, everyone.

[Catherine J. Boggs, executive]

Thanks Anvita. Good morning everyone, I want to express both my excitement and gratitude that Rob has agreed to join us as the next President and CEO of Hecla. I've known Rob for 19 years. And based both on my experience in working with him and his proven track record of success, the Board is confident he is the right person to lead Hecla, not only at this junction but well into the future. Rob is a seasoned and successful geologist, having worked in the mining industry for 3 decades. He has broad experience across various geographies and operations. But more importantly, he is a leader who provides vision and fosters collaboration and teamwork by bringing diverse groups together, and that's what Hecla needs. So with these opening remarks, I'll pass the call to Rob, both to introduce himself and to give some perspective on why he decided to join Hecla.

[Unknown Executive]

Well, thank you, Cathy. As Cathy noted, she and I have known each other for 19 years, and I really cannot think of a better leader to have led Hecla over the past 6 months. And really, that's one of the primary reasons I've chosen to join this team. As this opportunity presented itself, I evaluated Hecla and confirm my understanding of the company.

The independence, strong governance and complementary skills of the Board were reassuring. And as you know, Hecla has a long and rich history of being a leader in the silver mining space with silver assets that are among the best in the industry when considering all their attributes. Additionally, I'm joining a well-seasoned and talented team. And in fact, let me be the first to congratulate Carlos as Hecla's new Chief Operating Officer.

Let's turn to Slide 3, and I'll talk a bit more about why I chose to join Hecla. The value of a mining company rests on 2 key pillars: the quality of the team and the strength of its assets. Hecla is fortunate to have both. Our team is talented and dedicated, and our assets are world-class with reserve lives extending -- exceeding a decade in every mine and nearly 2 decades at Lucky Friday. These silver mines are among the highest grade in the industry, really setting us apart from our peers.

Equally important is Hecla's culture of innovation. So for example, we pioneered and implemented the underhand closed bench mining method at Lucky Friday. And in fact, I'm excited to visit there tomorrow to meet the people who pioneered this mining method and to see it in action. We also boosted throughput and recoveries at Greens Creek and integrated generative AI into our drilling programs.

And so this culture extends to our commitment to ESG practices, which is crucial for maintaining our social license to operate. A standout example is Keno Hill, where a year ago, we prioritized the safety of our employees, contractors and the environment over production. We remain committed to responsible operations and valuing input and collaboration from the Yukon government and the First Nation of Na-Cho and Nyak Dun. With strong exploration success, we're invested in the long-term future of this operation and in fact, the entire district, building on our foundation of stakeholder engagement and continuous improvement in safety and environmental practices.

Lastly, one of our most exciting attributes is our exploration potential. Beyond our active mines, projects like Midas and Aurora in Nevada and Libby exploration in Montana, they could create lasting value for our shareholders. With that, I'll hand the call over to Russell.

[Russell Lawlar, executive]

Thank you, Rob. I'll start on Slide 5.

We previously provided our priorities for capital allocation during the year. And similar to the second quarter, we've made progress on these priorities during the third quarter. Carlos will speak more on our investment in Keno Hill during the quarter, but I want to highlight that we have invested approximately $40 million in capital at the mine during the year with more than $14 million in the third quarter, while producing almost 600,000 ounces of silver this quarter, bringing the total to over 2.1 million ounces, which puts us on track to meet our guidance this year.

As we saw an opportunistic market environment, we issued equity under our ATM program to pay down our revolver. At quarter end, we had $13 million drawn on the revolver and $22 million in cash on hand, giving us a net positive cash balance of $9 million. With the deleveraging from our revolver and improvement in our adjusted EBITDA, we've also seen our net leverage ratio improved to 1.8x compared to 2.3x in the prior quarter.

Moving to Slide 6. As you can see, we generated strong cash flows from our operations during the quarter and consistent with our strategic priorities, we invested in our assets with a total capital investment of almost $55 million, split almost half between growth and sustaining capital. Slide 6 shows that we raised $57.3 million under the ATM and paid down $49 million on the revolver, further demonstrating our deleveraging. The last point on this slide is our silver-link dividend. With our realized price of silver last quarter at $29.77, cash used to pay our dividend was $8.7 million, which includes the additional $0.01 per share owing to the price of silver.

As we move to Slide 7, I'd like to highlight the exposure Hecla gives to investors to silver. As 44% of our revenue is derived from silver and as we see increases in the silver price, it continues to contribute a greater share of our revenues. Another interesting development in the quarter is what is likely the first time in decades, we also generated a small amount of revenue from copper.

Due to continuing monitoring and responding to changing market conditions, we've been able to transition the copper contained in Greens Creek's high-grade silver concentrate to now being a payable metal. This is similar results seen in continual development of zinc payability in this product over the years and further adds to the diversity and value of this product. Not only is it desirable as smelter feed for its precious metal content, but also provides benefits in terms of base metal content from zinc, lead and now copper. Current proceeds from copper are projected to be significant, but we continue to explore opportunities to increase its impact.

We continue to see strong margins at our Greens Creek and Lucky Friday mines where during the third quarter, our consolidated all-in sustaining cost per ounce compared to the realized price of silver provided a margin of 48%. This is slightly less than the previous quarter, primarily driven by a higher AISC, which was due primarily to lower production. And as I noted previously, during the quarter, we were able to reduce our net leverage ratio to 1.8x and deleveraged significantly from the revolver. This was primarily driven by a $41 million increase in our adjusted EBITDA, ATM proceeds and receiving the remaining insurance funds from the Lucky Friday claim. With that, I'll pass the call to Carlos.

[Carlos Aguiar, executive]

Thank you, Russell. I will start on Slide 9, Greens Creek flagship mine. Greens Creek produced 1.9 million ounces of silver. Throughput of 2,314 tonnes per day was lower due to 5 days of unplanned SAG mill maintenance, where we had a failure of the variable frequency drive. The team's quick response helped address the issue, and we brought forward a portion of the scheduled maintenance for the fourth quarter during the downtime.

In all, we had 7 days of unplanned downtime, 5 of which were in the third quarter. Silver grades were lower in the quarter, but are expected to increase in the fourth quarter. Despite lower production in the quarter, revenues were higher compared to the second quarter at $170 million as we drill down on the prior quarter silver and zinc concentrate inventory build.

While production costs at Greens Creek remains stable, cash cost and all-in sustaining cost per silver ounce increased to $0.93 and $7.04, respectively, due to lower silver and by-product production.

This quarter, as Russell previously mentioned, we added copper as a payable metal in our silver concentrates. A small win, which should add better economics in the long reserve mine life of this operation. Strong metal prices and higher sales, coupled with stable costs resulted in a strong free cash flow generation of $47 million. And year-to-date, the mine has already generated more than $100 million in free cash flows.

Primarily because of the unplanned mill shutdown of 7 days, we are lowering our production guidance slightly to 8.6 million to 9 million ounces. Guidance for cash cost and all-in sustaining cost per silver ounce is also revised lower as high prices for zinc and gold are expected to more than offset lower metal production. While the unplanned SAG mill maintenance has impacted our production slightly this year, I am very proud of our team for handling their repair expeditiously.

Greens Creek is a premier silver mine, our flagship operation and positioned it for a strong finish to the year. Lucky Friday, innovation-driven growth. Lucky Friday produced 1.2 million ounces of silver with 3.6 million ounces produced over the 9 months of the year. Our production over the first 9 months was the highest over the past 23 years. Production was lower quarter-over-quarter due to lower mill throughput and lower grades. While the mill throughput was 3% lower over the last quarter, it was the second highest throughput in the mine history after a record last quarter.

Lower mill throughput primarily stem from the installation of new cyclones, which will help us consistently achieve a higher throughput. Cash cost and all-in sustaining cost per silver ounce were $9.98 and $19.40 respectively, and trended higher due to higher maintenance costs for parts and mobile equipment and higher use of contractors in the quarter.

We expect contractor costs to trend lower in the fourth quarter as we expect to achieve the forecast headcount. Costs year-to-date have also impacted due to repairs and infrastructure upgrades this year after the fire last year in the secondary escapeway. Capital investments in the quarter totaled $11.2 million and included significant development and preproduction drilling, a key [indiscernible] recall right now for the UCB mining method.

The mine generated free cash flow of $23.2 million in the third quarter with $69 million generated year-to-date. We completed the $50 million Lucky Friday insurance claim, collecting the remaining $14.8 million during the quarter. We are revising our production and cost guidance for Lucky Friday to reflect the strong but lower-than-expected production and higher cost in the third quarter.

Our revised production guidance is 4.7 million to 5 million ounces with all-in sustaining costs now expected to be in $14.5 to $15 per ounce of silver range. Our capital guidance for the mine is affirmed at $45 million to $50 million with $37 million invested year-to-date. Lucky Friday is our second cornerstone asset. And while the quarter was impacted by lower throughput and grades, we expect improved grades and mill throughput in the fourth quarter. Our investments in the mine over the past 3 years, including the UCB mining method, the service hoist to increase our hoisting capacity and the coarse ore bunker to decouple the mill from the mine have established the foundation for this mine to be a 5 million ounce producer over the next decade.

Casa Berardi. Executing on surface transition plan. On Slide 11, Casa Berardi produced 21,000 ounces in the third quarter at cash cost of $1,754 per ounce and all-in sustaining costs of $2,059, both higher than the guidance range, primarily due to the lower production than planned, reflecting lower mill grades.

Production costs at Casa Berardi have remained stable as the team remains focused on cost containment. The team has continued the detailed stop-by-stop analysis to review further extension of the waste mine underground stopes. Given the current strain in gold prices, we expect the underground operations to cease in mid-2025. We are reiterating the production, cost and capital guidance of the mine, but our work at Casa Berardi is not done.

We have made significant progress in transitioning the mine to a surface-only operation where we moved 62% more surface ore and waste tonnes during the first 9 months of this year compared to last year. Currently, approximately 70% of the mill feed comes from the 160 pit. In the second half of 2025, we expect the 160 pit to fill the mill. The pit should continue production until 2027 with production levels of the mine expected to decline once the underground operation sees production next year.

We expect long-term value creation of the mine with a higher grade principal and west mine Crown Pillar Pit. Given the time lines around permitting, stripping and dewatering of the pits, we expect the production hiatus at the mine to be above 5 years. We expect the pits to generate significant free cash flow once in production.

The mine has a long reserve mine life ahead of it, and we have more work to do at this mine as we evaluate the mine fit into our overall portfolio and other potential strategic alternatives.

Keno Hill, largest silver producer in Canada. Keno Hill produced approximately 600,000 ounces in the third quarter with year-to-date production of 2.1 million ounces. This throughput for the first 9 months of the year was 314 tonnes per day by far to 260 tonnes per day in the quarter as the mill was not operational for about 35 days due to delays in receiving an authorization for construction and the permitting for the dry stack tailings facility as a result of the heap leach pad incident at the Eagle Gold Mine in late June. Ultimately, all authorizations were received, and we completed related design and construction work at the facility and the mill restarted operations on October 26.

While the mill was not in operation, we continue mining activities. And as of October 26, we have mined 2.5 million ounces of silver, including an ore stockpile of nearly 0.5 million ounces. During this downtime, we also made upgrades in the secondary ball mill and the filter presses.

For the quarter, expenditures on production costs, including ramp-up costs were $25 million within our guidance range of $25 million to $27 million. Capital investment of $14.4 million were related to construction of dry stack tails, development and equipment purchases. Due to permitting delays, construction of the cemented tails batch plant, which is instrumental in changing the mining method from overhand to underhand has been delayed and is now expected to be completed in mid-2025.

Transition to underhand mining, which will improve safety and productivity at the mine is now expected in 2026. I want to congratulate the Keno Hill team for making significant improvements in safety, environmental and mining practices. Keno Hill 12 months rolling all injury frequency rate was 2.82, a 27% decline over 2023. Keno Hill currently has a reserve life of 11 years. Our ability to successfully operate in Yukon for the next decade depends on, among other factors, a strong relationship with the Yukon government and the First Nation of Na-Cho and Nyak Dun. These relationships and continued investments are critical to operate and deliver long-term value at Keno Hill. With that, we pass the call to Kurt to speak about Keno Hill's exploration results.

[Kurt Allen, executive]

Thank you, Carlos. Slide 13 contains plan maps of our underground and surface diamond drilling target areas at Keno Hill. Underground drilling is focused on extending mineralization and resource conversion in both the Birmingham Bear and the Flame & Moth vein systems. This drilling continues to intersect high-grade silver mineralization over substantial widths and highlights the significant potential for high-grade silver mineralization in the district.

Slide 14 contains longitudinal sections contoured by silver grade times thickness values through the Birmingham Footwall vein to the left and through the Flame & Moth vein #1 to the right. At the Birmingham Football vein, you can see the high-grade intercepts received during the quarter show significant silver values and widths in areas that were previously interpreted as containing lower grades. These intercepts include 63.8 ounce per tonne silver over 10.2 feet.

At the Flame and Loft drilling in Vein 1 has intersected wide and high-grade silver mineralization in areas that were previously interpreted to be barren and includes intercepts up to 71.6 ounce per tonne silver over 14.8 feet. Drilling in both veins will positively impact resource models and is providing more geologic information and confidence in our resource base.

Three surface drills were also active on the property and are continuing to test multiple targets, including the Birmingham Deep, the Birmingham Townsite, Elsa 17-Dixie, Silver Spoon and Inca target areas. These target areas have the potential for the discovery of large high-grade silver deposits. With each new exploration intercept, we continue to add to our understanding of the structural geology of our target areas and continue to demonstrate that the mineral potential of this highly prospective district remains significant. With that, I will pass the call back to Cassie.

[Catherine J. Boggs, executive]

Thanks, Kurt. So before I speak about guidance, I'd just like to spend a few minutes discussing our strategy, investment and why we are in the Yukon. The geologic environment at Keno Hill specifically and in Yukon more generally is world-class. And while each generation has its challenges, the Yukon government, the First Nations of the Na-Cho and Nyak Dun and all other external stakeholders have historically been supportive of mining. But now given the tragic events in June at the Eagle Gold Mine, which like Keno Hill is within the First Nation's traditional territory, some of the local community are questioning the emphasis on increasing production.

We value the perspectives of the First Nations and the Yukon government and our ability to successfully operate in Yukon is premised on environmental stewardship, responsible mining practices and sustainable mining for the benefit of all stakeholders. As such, we are prioritizing stakeholder outreach in the near term, and we expect our 2025 production at Keno Hill will remain at 2024 levels. We plan to use this opportunity to strengthen community ties, advance permitting and improvements to infrastructure, including the new water treatment plant at Birmingham and the new cemented tailings batch plant.

With this base, we are on a long-term mission of building value at Keno Hill and in the Yukon. The strong geologic potential of the operation in the district is a critical driver of why we see Keno Hill to potentially join Greens Creek and Lucky Friday as cornerstone assets in our portfolio. And with the exploration success we're seeing, we remain confident that Keno Hill's reserve mine life will continue to grow.

So moving on to Slide 15 and talking about guidance. As Carlos described before, we're lowering our silver production guidance for Greens Creek and Lucky Friday and affirming Keno Hill's silver production. We are also increasing Lucky Friday's cash cost and all-in sustaining cost guidance while reducing Greens Creek cost guidance. Overall, our consolidated silver and gold cost guidance remain unchanged.

Capital and exploration guidance is affirmed as well. And before I open the call to questions, I just want to express our gratitude to all our dedicated employees. Your unwavering commitment to safety and environmental stewardship has been instrumental in establishing Hecla's strong reputation and operational success. We're confident that your continued dedication will play a vital role in shaping a successful future under Rob's leadership. And with that, operator, I'd like to open the call to questions.

[Operator]

[Operator Instructions]

Our first question comes from Lucas Pipes with B. Riley.

[Lucas Pipes, analyst]

Rob, congratulations. Great to see. My first question is on the strategic side and maybe a touch early, but I wondered where Hecla is positioning itself. I think of 3 dimensions, gold versus silver, base versus precious, North America versus Americas as a whole. That's kind of been a traditional way of how I've thought about it. And so I'd be curious where you think Hecla would be sitting within that matrix?

[Unknown Executive]

Well, thanks very much, Lucas. In terms of the strategy, let me just start out by saying we've got 2 flagship mines and 2 mines that haven't really met our expectations. And so really, our focus is going to be on organic growth and really focusing on maximizing the value of what's really quite an extensive portfolio and in particular, making sure that Keno Hill follows a measured path to optimum production and profitability.

So reaching that point is going to take a bit longer than we initially anticipated. And as in our release, an important precondition is really some of the remediation of past work and completing several capital projects, improving the safety of our people, environmental compliance and most importantly, coordinating with our most important stakeholders, the First Nations of Na-Cho and Nyak Dun and the Yukon government and really looking to obtain their support and input.

Moreover, there's going to be an increasing renewed focus on cash flow generation at all of our assets and not just production maximization. Regarding geographic spread, right now, we want to stay focused on Canada and the U.S. While these large mines and deposits in Mexico, granting of permits in that country, even on operating mines has come to a standstill. And so when you look at the additional security risk, that's become unacceptable for Hecla. And right now, we're not really prepared to speculate that the conditions are going to improve. We prefer to focus on safe jurisdictions where our investors can be reassured that there's a clear path to obtaining the required permits and the production and the cash flow continues uninterrupted as long as we meet our commitments, obviously, and have social license. So we'll continue to evaluate the situation in Mexico. But right now, we're going to continue to focus on our own assets, internal growth in the U.S. and Canada.

[Lucas Pipes, analyst]

Rob, this is very helpful. I appreciate that color. And on the point of cash flow, how should investors think about allocation? Is it back into the business, be it operational improvements, CapEx, exploration? Or is there also a priority towards debt reduction?

[Unknown Executive]

Well, we're obviously not comfortable with our debt, and we will address that in due course. But our intention is to allocate capital to make sure that Keno Hill and Casa Berardi are performing to the optimum levels.

[Unknown Executive]

And maybe if I just add a little bit, the continuation of investment at Greens Creek and Lucky Friday clearly will also continue as those mines are the mines that we're using the cash flow from to invest in those mines of Casa and Keno Hill as well. But clearly, investing in our business needs to be one of our first priorities, including exploration as well.

[Lucas Pipes, analyst]

So in the context of higher metal prices currently, any excess to maybe where the budget was, would not necessarily go towards the balance sheet. It would probably go first and foremost towards operations. Is that reasonable? Or what should you drive to?

[Unknown Executive]

I would look at it right now, we will continue to invest in our operations, both capital exploration. You saw during the quarter, we paid our revolver such that we're net -- almost net 0 at the end of the quarter. We really wanted to get off the revolver just because revolvers are great, but they're best undrawn, right? And so we were able to do that, the market was conducive to do that. And as we move forward, we'll look to -- as we generate more cash, we'll look to build the cash balance. So there will be a bit of a balance between building a cash balance such that, that net leverage ratio continues to come down. But our future is going to be organic growth, like Rob had mentioned at these assets. So we'll need to continue to invest in them as well.

[Lucas Pipes, analyst]

Rob, congrats again to the entire team, all the best of luck.

[Operator]

.

Our next question is from Heiko Ihle with H.C. Wainwright.

[Heiko Ihle, analyst]

Rob, congratulations on your appointment. As you probably already know, I just want to say you have a very talented team around you. I've covered Hecla for going on a decade at this point. Looking forward to meeting you in person and obviously, also congratulations to Carlos on this promotion. I know it's your first day. So maybe even a little bit more of a general question, but what have you been seeing with labor costs in the fourth quarter thus far? And I'm not sure if you can maybe give some granularity by asset, but if you can, that would be great. And otherwise, maybe just a little bit of a more general answer of what you're seeing.

[Unknown Executive]

Thanks, Heiko. I'm going to hand that one over to Russell and perhaps Carlos to comment.

[Carlos Aguiar, executive]

Well, our labor cost in 2 of the 4 mines are close to 55%, and that includes the usage of contractors. So as you know, in the third quarter and according to our jurisdictions, most of the capital projects are executed. So during that period of time, of course, we have an extra people executing on the projects. And that's why we are expecting for -- so once the construction drops a little bit in the last quarter, we are expecting a decrease in the use of contractors in the near future.

[Russell Lawlar, executive]

And, I don't have a whole lot to add to that. But Carlos did mention one of our larger drivers of cost is labor, 45-or-so percent is internal labor and then you add some contractors on top of that. But what we did mention in the release was that we expect to see the contractor labor come off in the fourth quarter as we both fill our roles and as Carlos had mentioned, complete some of the work that was done in the third quarter.

[Heiko Ihle, analyst]

Fair enough. And then maybe just building on the last question here. Rob, with your background, I did a little bit of Googling earlier today, and obviously, Hecla disclosed some of your past. Let's talk about your longer-term plans for the firm. I mean, I assume there's been some talks made with the Board even before your appointment. But are there any meaningful changes in regards to -- we talked about capital allocation earlier, but besides that, M&A for the future, that kind of stuff that we should expect to see?

[Unknown Executive]

With regards to M&A, I'll continue to engage with the Board. And most importantly, I think it's really important that we actually are very clear on what our M&A criteria are going to be. And so we'll have that discussion, establish some parameters and guidelines and really have a disciplined approach to that.

In my past life, I've been involved in a fair bit of M&A, and it's really important that we have a thorough due diligence. So if we choose to proceed, we're only going to do that subject to a full and thorough due diligence and a fully informed Board. And M&A is best done from a position of strength. We're not there yet. And I believe that we can add value to our existing assets by focusing on the internal growth that I spoke about and really maximizing the value of our existing portfolio. So really, it's going to be more introspective, make sure that all of our assets are performing. And then at some point in the future, with the blessing of the Board and a very clear direction, we'll consider M&A.

[Heiko Ihle, analyst]

I assume you don't have a favorite asset yet, do you? Too early.

[Unknown Executive]

I mean it's hard not to love Greens Creek because it's just a fabulous asset. I have to say, even though we've -- Keno Hill has been a slower ramp-up than we expected, I love the exploration potential there. I really do. I think that's got district scale exploration potential. And in fact, I like the Yukon as well.

[Operator]

Our next question comes from Mike Parkin with National Bank.

[Michael Parkin, analyst]

Can you just clarify how long the mill at Keno was offline in the third quarter?

[Carlos Aguiar, executive]

We were down 35 days during the third quarter.

[Michael Parkin, analyst]

Okay. And then with the tailings, you kind of had previous notes in like your Q2 that the tailings capacity would be met by the end of this year. With the work you're doing, what kind of capacity have you been able to add? And are you able to still like do further construction into year-end? Or is it kind of weather dependent and you're having to wait until the spring to resume work?

[Carlos Aguiar, executive]

So we are going to continue expanding the current dry stack tailings capacity at the end of this year and the following year. And we are going to end with over 2 years of capacity to continue the operation.

[Michael Parkin, analyst]

Okay. So you're not weather dependent restrained?

[Unknown Executive]

No.

[Michael Parkin, analyst]

Okay. Great. And then one other one, Rob, like you've obviously given us quite a bit of color in terms of what you're thinking of. But as you get more comfortable with the assets, do you foresee giving like a broader market update on the path forward for Hecla in terms of once you've had the time to visit the sites, really get into the numbers, is there that thought to come out with here's where I plan to take the company? Or is it going to be just a bit more piecemeal and we'll get updates on like quarterly earnings, that kind of thing?

[Unknown Executive]

It's a good question, David. As you can imagine, I'm going through an intense onboarding. I've already been to Casa, and I'll be visiting the other 3 operations in the next 3 weeks actually. In fact, tomorrow, I'm going to Lucky Friday. Once I get a clearer picture, the thinking is going to evolve. And I'd like to think that at some time, when it makes sense, we'll have an Investor Day and more fully articulate our vision.

[Michael Parkin, analyst]

Okay. You guys have quite a massive project pipeline that hasn't been talked about much in the market. Are you planning to do any site tours of those assets? And is there a thought towards possibly rationalizing that portfolio down to core projects and potentially letting loose some of the noncore post review?

[Unknown Executive]

Yes, absolutely. I mean while the cupboard is full and we're blessed with many projects, we can't really service all of them and do them justice. And so one of the things I've been talking to Kurt about is the need to really focus on the ones that can deliver near-term and medium-term value and those that perhaps might be best managed in the hands of other operators who will give probably the attention that it deserves. So yes, we will rationalize the portfolio and focus on the very best assets.

[Michael Parkin, analyst]

Great. Looking forward to the updates and welcome aboard.

[Operator]

Our next question comes from Sean Wondrack with Deutsche Bank.

[Sean Wondrack, analyst]

It was just a couple of months ago at our [ high-yield ] conference, I had asked how serious Hecla was about repaying the revolver. So really nice to see the opportunistic paydown there. There was a comment made earlier on the call, not comfortable with debt. Is that fair to assume that was referencing the coupon? Or is that referring more to the size of the facility?

[Unknown Executive]

One of the things that we've tried to message to the market is that over time, what we do want to do is look to delever. This isn't something that we would necessarily do kind of larger overnight necessarily. But over time, we do believe that the leverage ratio is too high. And so the 2.3, we saw it come down to 2.1, and we'll look to build that cash balance, like I said earlier and look to bring that down. But we will look to also balance out with the investment in our assets, like I had mentioned previously, the exploration, but then also the capital development and the projects that needed to take place at the assets.

[Sean Wondrack, analyst]

And is there any kind of a more formal net leverage target or a band at which you'll seek to operate within?

[Unknown Executive]

Historically, we've said 2x, less than 2x, which we're at that level now. Historically, though, if you go back, we would run 1x or less making much of the time. I'd like to see us be able to build that position back up again. And yes, those things take time. Certainly, we're in an environment where the prices should be helpful with that thought.

[Sean Wondrack, analyst]

Great. And then as we think about moving into next year, is there any reason to believe that CapEx will be materially different relative to '24? I know it's a little early. I'm not sure if you can comment on that yet.

[Unknown Executive]

Yes. I would suggest we'll come out with our full detailed guidance next year. We've kind of directionally said where we expect Keno Hill to be, et cetera. But as it goes for those details, we'll come out with guidance next year, early next year.

[Operator]

Our next question comes from the line of Joseph Reagor with ROTH Capital. Rob, welcome to the team.

[Joseph Reagor, analyst]

So I guess a lot of my questions have already been touched on, but just on Keno Hill, as you guys switch the mining method, how much cost savings maybe on a per ounce basis are you expecting from that?

[Unknown Executive]

We still don't know. We need to evaluate, but the main propose is the safety. That's the main propose of the change of the mining method, which is going to occur until 2026. But as today, we don't have any estimate about the reduction in cost because the main top priority is safety.

[Joseph Reagor, analyst]

Okay. And maybe a bigger picture question then. In the event that you guys aren't, for one reason or another, able to ramp up production there, whether it be due to First Nations issues or anything else and the costs don't come down significantly. Is there any risk in anyone's eyes that, that asset would need to be curtailed in the current price environment? Or is there a certain price environment where you would consider that?

[Unknown Executive]

Yes. I think, Joe, I think maybe even a quarter ago, we talked a little bit about this as it relates to our commitment to the Yukon. And I think that clearly, with Cassie's remarks on, I think, the last slide that we had presented, we're committed and as well as Rob mentioning is as he was asked about what his favorite asset was and his view on the Yukon. We look at the Yukon as a district that we're invested in, and we expect to be there for the long term. We do believe that we need to make investment in that operation both in a number of ways, right? That's both the community, it's infrastructure, it's environmental practices and infrastructure, safety, et cetera. And we're going to do those things and expect to see those results.

[Joseph Reagor, analyst]

Okay. Fair enough. And then kind of just adding on to these big picture questions about the whole company. Obviously, debt reduction is a focus. Any thoughts about changes in dividend policy or a time line on when we might see you guys kind of empty a little bit of the cupboard of these longer-term assets?

[Unknown Executive]

Well, yes, I'll speak to your first point on that. The dividend policy, we believe, gives our shareholders exposure to silver. And I think that many of our shareholders like that exposure. It's clearly -- the dividends are approved by the Board. And so as a result, there -- it's a Board discretion as to how that goes. But we do believe that it does give that exposure to silver. As it relates to emptying the cupboard, maybe defer to Rob, but I think that's probably -- I don't know, I'll defer to you and let you maybe answer that. As it relates to the -- I think you're talking about the rationalization of the portfolio.

[Unknown Executive]

Yes. Yes. What's the time frame is?

[Unknown Executive]

Yes, it will be when opportunities arise, I guess, is what I would suggest, right?

[Unknown Executive]

Yes. I mean I would like to visit some of those assets and personally understand what the opportunity is and whether we should be focusing on it. Really, the priority right now is the operations. So perhaps sometime during the, I guess, Q2, I'll have a clearer picture.

[Operator]

I will now turn the call back over to Rob for closing remarks.

[Unknown Executive]

Well, thank you, everyone, for your questions. This concludes the call, and we look forward to engaging with you again soon. Have a good day.

[Operator]

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.