Good afternoon. I'm Mike Parkin, Vice President of Strategy and Investor Relations. Today, we're here to provide an in-depth view on what differentiates Hecla on our silver first from our silver peers, and the opportunities we have to create value for shareholders. Today's event is hybrid, so we'll be taking questions from both people in the room as well as online. For those on the webcast, there's a button that you can select to enter a question, and then we'll read those out in person and answer your question at the end of the event. At this point, can the people in the room please check to make sure their cell phones are placed on silent? Before we get started, a representative is here from the New York Stock Exchange to provide an overview on safety procedures.
Good afternoon. My name is Joe Carey. I'm the Fire and Life Safety Director here. Welcome to the Exchange. In the event of an alarm activation, I ask you to stand by while we do a quick investigation. Safety staff is assigned to this floor, and we'll keep you informed and guide you to a destination if necessary. If you need to evacuate or if the floor were to become untenable, I call your attention to the exit doors to my right and at the rear of Freedom Hall. Know that each hallway on the floor leads to a fire-protected exit stairs labeled either A, B, or C. Our preferred route is to bring you to the fire stair fire tower stair A, which is in the elevator lobby you came in from.
Please avoid the open interior stairs right outside Freedom Hall, leading down to the boardroom on the sixth floor for a fire situation. But for any other non-fire emergency, we will escort you there as it serves as our in-building relocation area. Know that we are monitoring the building at all times for your safety, and enjoy your event.
Thank you, Joe. Turning to slide 2, any forward-looking statements made today by the management team come under, come under the Private Securities Litigation Reform Act and involve risks as shown on slide 2, in our earnings releases and in our 10-Q 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 presentation and related slides are reconciled in the slides or the news release. Turning to slide 3, Hecla at a glance. Hecla Mining Company is headquartered in Coeur d'Alene, Idaho, and our common stock trades on the New York Stock Exchange, where we are today under the ticker HL.
We are covered by 10 brokers, and our share ownership is split roughly by 22% retail, 78% institutional, and our market capitalization as of mid-January was just over $17 billion. Next slide. Hecla operates 4 precious metals mines, all of which are located in either the United States or Canada, making Hecla the lowest geopolitical risk silver miner in the sector. We have a number of precious metals projects scattered across Canada, as you can see, and they're scattered across Canada and the United States, some of which we will be talking about with you today. Next slide. Our board of directors and executives and management team are shown on this slide, many of whom are with us today in the room to help support us in our presentation as well as during the Q&A period.
Our news release detailing 2025 production results and 2026 guidance was issued this morning. Along with today's presentation, they're both available on our website. Turning to slide six, I will now pass it over to Cassie Boggs, Independent Chair of Hecla's Board of Directors.
Thank you, Mike. Good afternoon, everyone. I'm Cassie Boggs, the Independent Chair of Hecla's Board of Directors, and on behalf of the board, I want to welcome all of you here today and thank you for your investment in Hecla and your interest in understanding where we're going. But I'm going to be brief because I know what you want to do is hear from Rob and his team, but I wanted to give you a board-level context about what you're gonna see. When we appointed Rob Krcmarov as CEO in November of 2024, the board was very clear: we needed a fundamental transformation, disciplined capital allocation, operational excellence, a platform to build for sustainable growth, not quick fixes. Fourteen months later, we are seeing it. Our board meets quarterly to review performance against Rob's strategic plan. We track return on invested capital monthly.
We stress test capital allocation decisions across multiple price scenarios, and what we're seeing is an inspired management team that is executing with precision. But what gives us confidence isn't just past performance, it's what this team has built to sustain that performance through commodity cycles, capital allocation frameworks with clear hurdles, business improvement programs that engage our workforce, and exploration investment at peer levels. The board approved a $55 million exploration budget for 2026. That's nearly double what we did last year, because we believe in the discovery potential across our portfolio. That's a strategic choice we've made to invest in our future. Today, you're gonna hear the specifics: operational performance, financial framework, exploration strategy, and our medium-term production outlook.
The board has reviewed this plan, we've challenged these assumptions, we've tested the capital requirements, and we are confident this team will deliver. As chair, my role is oversight and governance, but I want you to know our board is very engaged. We visit the operations, we meet with the workforce, we understand our assets, and we hold management accountable to the commitments they're making to you today. So now let me turn it over to Rob Krcmarov, our President and CEO, to show you how we are executing on this very exciting vision. Thank you.
Thank you, Cassie, and good afternoon, everyone. Thanks for being here, and welcome to our Investor Day. Before we walk through our prepared materials, I wanna make sure that you're all aware of news out of Hecla that just hit the wire. Today, we announced entry into an agreement to sell Hecla Quebec, our subsidiary that owns Casa. I'll refer you to the press release for whatever details we can give. But just to summarize, the purchase price is almost $600 million, with $160 million in cash, 9.9% of Aurizon shares paid at closing, and the rest is in the form of deferred and contingent payments. The deal is subject to customary closing conditions, and we estimate closing could be in roughly 30 days.
Casa Berardi has been and remains a key asset for Hecla, but closing the sale would allow us to redirect our capital and our attention towards what we do best and what we believe generates the most value for our shareholders: silver. Timing on this deal moved quickly, and we thought it made the most sense to proceed with this Investor Day, despite the timing of this announcement. So as we go through this presentation today, please keep this development in mind. With that, let's get started, and thanks again for being here. So let me start by what drew me to Hecla.
Around about four years ago, I left my previous place of employment as an executive at Barrick, and I'd set up myself to have a career as a board member, to contribute my experience that I'd gained over many decades. I have to say, I was enjoying it. I joined four companies, all in the mining industry: two producing companies, the world's largest drilling company, and also a major streaming and royalty company, and I was enjoying it. So one day, out of the blue, I get a call from a recruiter, and he says, "Hey, I've got a CEO job for you.
Are you interested?" And without even pausing, I said, "Absolutely not." And he said, "Well, I can kind of see that you're fully engaged, but can you help me find someone?" And so I said, "Sure, but you need to give me a bit of information. I wanna find a good match for you." And so he sent through the details, and I looked at the profile, and I thought, "Ah, it kind of describes me." And then when I found out that the company was Hecla, I thought, "Hmm, this is interesting." I knew a little bit about Hecla. You know, I spent most of my time in the gold industry, but what I did know is that the company had been around a long time, and I thought, "Well, that says something.
That means that there's a really good DNA. They've been able to pivot and adapt to survive, you know, over a century. There's, there's something there. I also came to understand that, I mean, and I was aware of Greens Creek. Pretty much everyone in the mining industry is aware of what a fabulous asset that is. Didn't really know much about the rest of it. So as I did my research, I saw Lucky Friday. That's been around for more or less 80 years, and I thought, "Well, that's, that's nice." I saw some growth at Keno Hill.
I'd never heard of Keno Hill, but I thought, "At least there's some growth there." I saw a huge portfolio of projects and properties, mostly exploration and pre-development stage, and I thought, "Wow!" I looked into those, and none of them had materially advanced, and I thought, "There's some value here. We've just got to unlock it," and I happen to know a thing or two about exploration, obviously. I engaged with all the board members individually before I joined. I got very comfortable. I could see that it was a talented, complementary board, diverse skill sets, most important, independent, and that's important to me, and obviously, to investors, it's important that there's good governance at the corporate level.
So, yeah, I saw that there was an opportunity to transform the company, bring some fresh, new perspectives, and help bring a new culture as well. With the profile being sought, that seemed to be a good match for me. A key question for me is, "How can I add value? What, you know, what would be my purpose here?" I thought about it, and I thought, "You know, I've been very fortunate in my career in that I've had, you know, over three decades of experience in what was at one time the largest precious metal company, complicated, at one time operating 25 mines all around the world." So I've had that diversity of experience.
I've also, my experience has ranged everything from technical and operational, all the way through to, strategic and commercial, and I thought I could bring something here. But one of the, one of the things that I really enjoyed, throughout most of my career is really developing and nurturing and building world-class teams, teams that, and watching them grow, watching them become empowered, watching them thriving and delivering value. And I saw an opportunity to do that at Hecla and reshape a culture that hopefully will help it last for at least another 135 years. I'll get to the specifics in a moment. Now, I didn't know the management team at the time, obviously, at the time that I started, but I quickly came to realize that this was a really, really talented team.
You know, for a reasonably moderate-sized company, we had some really good firepower throughout the organization. I saw that they were receptive to change, they were wanting to be empowered, they wanting to thrive and to make a difference. And then, as we sat down and started to talk about how we're going to position the company, what's our strategy going to be? I could see them becoming really excited to play a role, not just be told what to do. And, I have to say, like, it's, it's, it's been phenomenal working with this team. They're very energized and excited.
You know, it's true that obviously we've all been beneficiaries of increased metal prices, but more importantly, what really excites me is that we actually have started to transform, and you, you'll see the transformation in our systems, what we value, and where we're heading, and in fact, that's the key theme that should really emerge over the next couple of hours, surfacing value through transformation. Now, you all have choices, so why is Hecla the most compelling investment in the silver space? And that's what we're going to talk about today. But I do, before we get to the first slide, I do want to give you some key takeaways up front.
The first is, no matter what your historic perception is of Hecla, we are a company that's already undergoing a transformation, and if you're not already invested in us, we should absolutely be on your radar. We obviously have a silver focus. I believe that silver still has a long way to go, despite these record prices. The fundamentals are excellent. We have great operating assets, high grades, lowest cost quartile, long mine lives. We're in premier jurisdictions, and that really matters. I think that's a real point of distinction for Hecla. All of our operations are in Canada and the U.S., predictability, rule of law.
As investors, you don't want to wake up and read in the newspapers that your, one of your revenue-producing assets has been nationalised, or that there's been some new surprise tax, or perhaps even a surprise royalty, which is what happened in Ghana a couple of weeks ago to affect your cash cows. So safety is one of the things that Hecla offers that no one else can. We have a large portfolio of projects. We'll go through some of those, some of them with really compelling value propositions. You'll see growth, you'll see financial discipline, operating excellence, and we are a company that is value and per-share metrics driven. So let's start at the beginning. When I joined Hecla as President and CEO in November 2024, I inherited a company that was at a crossroads.
On the one hand, we had exceptional silver assets, and on the other hand, we weren't capturing the value that those assets should deliver. Capital allocation lacked rigor. Three acquisitions had underperformed. Investment decisions really reflected competing voices rather than rigor and analysis and discipline criteria. Quite simply, we weren't earning the returns that our asset base should generate. Our organizational systems were in their infancy. They weren't really built for excellence. HR, planning, decision-making, they'd grown organically without the rigor required to sustain performance in the long run. We had good people working hard, but within systems that didn't really enable their full potential. And for a very long time, debt constrained our flexibility. So these were opportunities to transform Hecla, and that's exactly what we've done.
We set out to build a systematically excellent, growth-oriented North American silver company, earning returns matching the quality of our assets. So on planning, we moved from single scenario planning to five-scenario optimization. Basically, a fundamental shift from production-driven to value-driven planning. We reinforced capital discipline, rigorous analytical frameworks, replaced gut feel. Multi-scenario stress testing, 12% minimum return on invested capital threshold, at—and that's a board expectation, that's not just guidance, monthly tracking, quarterly oversight. The framework's pretty straightforward. Basically, sustain what we have, invest in high-return growth projects, invest in exploration, strengthen the balance sheet, and then return capital to shareholders, and Russell's going to walk through the details here. It's, it's not complicated, it's about maximizing value. Our 2025 performance shows this transformation is real. We hit every guidance metric while executing some really remarkable changes.
Russell, Carlos, Kurt, Brian, and others are going to add some detail here, but let me highlight just a couple of key points. The gross leverage dropped to a mere 0.4x, and we're positioned for complete deleveraging this year. We generated $310 million in free cash flow in 2025. All four operations, free cash flow positive, and notably Keno Hill as well, even though that's still in ramp-up. We're generating 12% returns consolidated, 38% on a go-forward basis from silver operations at that, and that's at $50 silver. That's industry-leading performance. On operational excellence, safety improved significantly.
You know, being concerned about the safety of family, friends, coworkers, neighbors, people that we know, that's an innate human quality, but it's what we do about that concern that we have that really matters. But there's also a business reason why investors who obviously don't have the same connection with our employees should also care. Safe mines are efficient mines. Safe mines are profitable mines. Safety really speaks to a culture of planning, of duty of care to people, to equipment, to operational execution, and intention. It speaks to intention and planning and housekeeping, and that creates the foundation for operational excellence. And we've also demonstrated operational excellence through our record operational achievements across the portfolio, and we've talked about some of the record-breaking or records that we've broken in the last few quarters.
The market saw what we were doing. We delivered the best performance amongst silver stocks, nearly double the silver miners ETF. But we didn't just de-leverage to sit on cash. We de-leveraged to create a platform for growth, growth in value. Regarding exploration investments, for many years, we were spending like we had no opportunities. Now, we're investing like the company that we need to be. $55 million in 2026, double what we invested last year, including $16 million in Nevada, for example, at Midas and Aurora, and they are two tremendous district-scale opportunities, and more on that in a moment. With almost 250 million ounces of proven and probable silver reserves and targets, and targets for 100% reserve replacement, we're building the foundation for sustained production growth.
Now, before we talk about our outlook, let me explain why our silver focus matters. Primary silver companies obviously trade at a significant premium to gold producers. Hecla generates today around about 50% of revenues from silver. Almost all of our peers are in the 20%-30% range and have drifted towards gold. We're going in the opposite direction. Here's what drives that premium: it's scarcity. Why? Because high-grade primary silver deposits are geologically rare. Lucky Friday sits in only one of three districts that's produced over 1 billion ounces of silver, alongside Potosí in Bolivia and Pachuca in Mexico. And that scarcity creates pricing power in the commodity market and the equity market. Really, production growth means nothing without value creation.
I mean, we, we could, we could acquire 10 million ounces tomorrow, but those ounces, if those ounces come at marginal returns or in challenging jurisdictions, we could be destroying value. So it really is about value creation, not just pure production growth. Now, let me show you where this is heading. Our transformation strategy rests on three connected pillars. First, and foundational, is investment discipline. Every capital investment should meet 12% ROIC, and we track monthly. Our balance sheet is targeting sub 1 times leverage and +$200 million in cash. That's not about being conservative; that's really about building the flexibility to fund our vision. Second is operational excellence. We have some great assets and some great people, but what's different now is really the rigor and the analysis.
Near real-time production tracking at Greens Creek, and fairly soon, we have plans on rolling that out at Lucky Friday and eventually Keno Hill as well. Predictive maintenance, integrated ROIC dashboards, and so on. On portfolio quality, you know, I'm aware that the market sees Greens Creek as Tier One and the rest as a collection of legacy assets. Our strategy creates another premier asset, though, through Nevada exploration. That's our primary path, organic value creation, where we control the timing, we capture the full upside, and we leverage our existing infrastructure. And that's fundamentally different from acquisition dependent growth, which is based on limited knowledge and insights and comes with many potential risks. And we're all aware that there's a graveyard full of mining companies that have done poor acquisitions. We certainly won't be one of them.
Obviously, if a compelling opportunity emerges that meets our financial and strategic criteria and creates per share value, well, we have the capacity, but Nevada is where the portfolio transformation happens. So we'll talk about Keno growth more in more detail soon, but Nevada isn't speculation. High-grade silver and gold deposits, they're geologically scarce, they concentrate in premier jurisdictions, and our Nevada district offers just that. If we execute over the next 18-24 months, we could have material production within 5 years. That transforms Hecla from a Greens Creek anchored into a true multi-district platform, all in premier, safe North American jurisdictions. By 2028, if we execute, and we continue to have some of the fabulous exploration success that Kurt and his team has, has been having, you'll have a company that's trading on production growth and exploration success, not just a single asset.
Excuse me. So we are a fundamentally different company. Record operations, disciplined planning, strong balance sheet, strategic growth investments. It's not the same company that I inherited 14 months ago. We built a company designed to compound value through cycles. So the road ahead's clear: continue operational excellence, continue to build our analytical capabilities, deploy capital with discipline, high return growth projects, value creation opportunities, and eventually, when the time's right, value-accretive acquisitions. So let me show you where this is heading. This chart shows, this chart shows how we go from 17 million ounces in 2025 to a potential 20 million ounces producer over the medium term. In 2026, we're guiding 15.1-16.5 million ounces. Now, look at that medium-term bar on the right.
There's a potential pathway there to about 20 million ounces, and that's driven by 2 catalysts. First is Keno Hill ramp-up, which grows from 3 million ounces today to 4.5 million ounces. So that's 1.5 million ounces, but from an asset that we already know, and we know well, and we already own it. Second is the Midas restart. You'll see that dashed portion, that represents Nevada production, with high-grade discoveries that Kurt's gonna talk about in detail, existing permitted infrastructure and capital-efficient development that Matt will outline. So Midas can contribute meaningful ounces, potentially beginning around 2030 to 2031. So those two drivers alone get us to potentially up to 20 million ounces. I think a key point to stress here is that this chart shows our pipeline, not our ceiling, because there's more.
Beyond the medium-term 20 million-ounce profile, there's also potential for further expansion at Keno Hill. Aurora and Hollister in Nevada, they provide additional district-scale opportunities. We're obviously not including these right now because they need development decisions, they need permitting milestones, more CapEx invested. They've got a ways to go, but they are real options that our strengthened balance sheet positions us to pursue, and they point to our long-term sustainability, well beyond our already peer-leading long reserve mine lives. Of course, there are risks to achieving that increase in production, as we detail in our SEC filings. So just reiterating, 17 million ounces today, about 20 million ounces in the medium term, and a clear pipeline beyond that. And this isn't an aspiration, because Lucky Friday and Keno Hill, they're producing today.
Keno Hill is ramping up now, and Nevada has the infrastructure and permits, key permits already in hand. So we have the assets, we have the balance sheet, we have the discipline, and we have the plan. So summing up, Hecla's future is silver, long mine lives, low-cost quartile, premier and safe jurisdictions, Alaska, Idaho, Yukon. That's our fundamental advantage. Gold funds the vision, but, silver is our competitive focus and our growth engine. And again, here's what makes us different: Greens Creek, 26% ROIC at conservative prices. That is an absolute unicorn. And while that's generating returns, we're investing for value, $55 million in exploration, and I think we're already starting to see some measurable, unlocking of value there. I'm quite excited about that. The pipeline's deep.
Nevada, 313 million ounces of silver-equivalent resources with existing infrastructure. We know how to find deposits. You know, I've spent decades building exploration teams that discovered Goldr ush, which is a Tier One that's currently in production today. That team, my team also discovered Fourm ile, which has been recently described by Barrick as the discovery of the century. We're applying that same discipline and methodology here at Hecla. On our operations, significant improvement in safety. We're targeting best-in-class on every metric. We operate exclusively where risk is manageable and capital is rewarded. On finance, our balance sheet isn't a constraint anymore, it's an enabler. Debt capitalization under 5%, every decision governed by strict ROIC hurdles. We pursue M&A only when it meets our discipline tests.
So we're building a silver company that generates sustainable returns through operational excellence, funds growth through exploration, and uses a strong balance sheet to create options. That's Hecla's future. And now our leadership team will take you deeper into how we're executing that vision. So, you know, I talked about moving from gut feel to analytical rigor. That means understanding our costs and returns with precision, making consistent value-based decisions, and tracking performance with discipline. Russell Lawlar will now walk you through our capital allocation framework and the financial targets that drive our decision-making. And you'll see how we're deploying the balance sheet that we've rebuilt, how we're thinking about reinvestment returns, and the financial metrics that we've committed to. Over to you, Russell.
Thanks, Rob. In November of last year, I celebrated 15 years here at Hecla. During that time, I've had the good fortune of working with many incredible people, many of which are in the audience today. So I'll just mention Brian Erickson. Excuse me. He was the surface ops manager when I started at Greens Creek years ago. Chris Neville, sitting next to him, was the mine manager. Mike Satre is out here somewhere. You'll hear from him later on today as well. He was the tech services manager, and then Justin Wick. Justin actually handles our logistics and our concentrate sales. You know, these guys were guys that I worked with up there. We were able to work creatively to solve problems, add value to Greens Creek, and value to Hecla as a whole.
I was able to do many things that not a lot of people in the finance industry would have the opportunity to do because of that time. And the other thing, too, that we'll see later on in this presentation is a video of Juneau, of our Greens Creek mine, and it's really a spectacular place, and those years that I spent at Greens Creek will always be special to me. But as we get back to the slides and we think about the transformation that we've gone through, I'm gonna talk about a few things, including our balance sheet, 2026 expectations. But before I do that, I want to talk about three key themes that I expect you to really take away from this presentation. First, our financial position has substantially improved from this time last year.
We have $242 million in our treasury, with a total liquidity position of more than $500 million. We paid down our debt by approximately 50% from a year ago, both by adding to our future cash flows and reducing the risk to the company. Second, although metals prices are currently very healthy, and we expect this to continue, we manage the company with a long-term, disciplined view, one in which we can thrive and provide returns in any price environment. Third, we strive to be disciplined in capital allocation with our return on capital targets and clearly defined framework. We expect to be an industry leader in providing real returns to our shareholders.
As you can see, we've achieved remarkable results, a dramatic improvement in our debt position, a 75% improvement in gross leverage ratio, and an 82x increase in free cash flow, all driven by operational success on opportunistic deleveraging. Specifically, our gross leverage improved from 1.6x at the beginning of the year to 0.4x, and our net cash balance increased by more than $200 million. This was all made possible by the strength of our assets and success in our operations, as well as strong metal price environment, where we saw silver margin per ounce at 75%, compared to a very strong margin a year ago, 54%.
Free cash flow increasing from essentially break even to $310 million, all leading to a tripling of our return on invested capital from 4% last year to 12% this year. As we move to the next slide, 2025 focused on our balance sheet transformation, not just in the numbers, but in how we think about our business. The key change has been a rotation to thinking about debt on a gross versus net basis. This shift in mindset allows us to view our business as one built to invest accumulated capital rather than just holding it for risk mitigation purposes. We're targeting gross debt at no more than 1x EBITDA. This allows us to excel through challenges and price cycles with flexibility to invest in projects when opportunities arise, not just when we're firing on all cylinders.
Turning to the next slide, deleveraging not only reduces risk, it increases free cash flow. Our interest expense drops from $35-$40 million annually to around $20 million, directly boosting cash flow. Free cash flow kicked into high gear in the second quarter and remained consistent. This came from operational excellence at Greens Creek and Lucky Friday, Keno Hill's ramp-up, and Casa Berardi capitalizing on strong prices as stripping ratios improved. Turning to slide 22, we've been focused on return on invested capital for the past year. The ROIC - the results are strong. As the numbers demonstrate, we've more than tripled our return from about 4% in 2024 to 12% in 2025. With our best-in-class operations, we expect to generate significant returns in almost any price environment.
Even at $30 silver, Greens Creek projects to generate 27% return, while Lucky Friday projects to generate 8%. But at higher prices, which may even seem conservative today, those percentages project to more than double, and our consolidated return more than triples. Going to the next slide. Slide 23. Nowhere is the fundamental shift more pronounced than at Lucky Friday, where we've demonstrated how disciplined investment creates lasting value. Over the last decade, we've done many things to enhance value, including implementing a new mining method. This mining method had one goal: to improve safety. We delivered on that goal. Safety improved 58%, but production also increased by 45%, and inflation-adjusted costs stayed flat. Lucky Friday is delivering 12% returns on a decade-long investment. Show me another 80-year-old mine that's doing that.
We're not done, though. We're actively working on further cost improvements, reducing contractor reliance, optimizing mining methods, insourcing drilling, and consolidating sourcing. The point here is that Lucky Friday isn't a cost story, it's a return story. We've invested deliberately in a safer, more productive mine. It's delivering, and we're still improving. As we move on to the next slide, I'll talk about our guidance for 2026. Our expectations are strong, with silver between 15.1-16.5 million ounces. And as the slide shows, we're becoming a more balanced company. Greens Creek now provides slightly less than half our production. Gold production is expected at 134-146 thousand ounces, with approximately two-thirds of that coming from Casa Berardi and the remainder from Greens Creek.
This strong by-product credit at Greens Creek is why our cost per ounces are so low. Turning to costs, our All-in Sustaining Cost per ounce of silver is expected to be $15-$16.25. This increase reflects three factors: lower production volumes, higher sustaining capital investment, and more conservative by-product pricing. We expect gold All-in Sustaining Cost to be between $2,150 per ounce and $2,350, driven by underground extensions at Casa Berardi to ensure safe and productive operations over the next few years. Capital is expected to be $255 million-$279 million, which includes continued investment in Keno Hill, tailings at some of our operations, and other capital investment, which Carlos and his team will cover later on in the presentation.
We also anticipate increasing our investment in exploration to $55 million, which Kurt will cover in detail in a few minutes. To put this guidance in context, at $50 silver, we generate nearly $350 million in free cash flow. While utilizing a $75 silver price and gold price of $4,000, we anticipate cash generation of around $700 million. To be clear, this is comprehensive. It includes all expected capital, G&A, exploration, interest, and other, and other charges, including taxes. We ended 2025 with approximately $242 million in cash and cash equivalents on our balance sheet. Depending on 2026 prices and operational performance, the total of our treasury could increase to more than $1 billion by the end of the year. For silver leverage in safe jurisdictions, Hecla is the only choice.
No other miner offers this combination of silver exposure, liquidity, scale, and jurisdictional safety. Capital allocation is critical, as we've established clear criteria for how we deploy capital. As we move to the next slide, I'll talk a little bit about how we'll allocate that capital and that cash flow that I had just mentioned. This framework is similar to what we presented last quarter, with one addition: strategic investments. With our strengthened balance sheet and expected cash generation, we're now positioned to deploy capital for maximum shareholder returns. First, we continue investing in our foundation, safety, environmental excellence, and fully funding capital and exploration programs. Second, based on forecasted cash flows, we expect to fully redeem our bonds by during this year.
Debt can be a meaningful portion of a capital structure, but today we have sufficient liquidity and cash to invest in our business, maintain liquidity, and pursue strategic opportunities while delivering. Strategic investments must meet rigorous criteria, alignment with our silver focus and safe jurisdictions, clearing our 12% hurdle and delivering transformational value. This could include M&A, joint ventures or strategic partnerships, but only when they meet our disciplined criteria. As cash flow grows, we'll evaluate further investment across these areas, but we'll maintain discipline, and our purpose is set up to set up the company for long-term success. Our shareholder returns, our previous silver -linked dividend constrained our ability to invest in growth. We believe a dollar invested internally or in the right external opportunity can provide superior returns to paying a higher dividend.
We'll also evaluate share repurchases, but only if we see a dislocation in value. Whatever path we choose, long-term shareholders are our priority. We're not making decisions on short-term views or day-to-day share price. These results reflect our focused position in silver, where there's a fundamental supply-demand gap. We expect that gap to continue to persist. I'll now hand the presentation over to Anvita, who will explain why we're so excited to be in silver.
Thank you, Russell, and good afternoon all. Thank you for being here. This year I'll be celebrating 19 years at Hecla this February, and I've grown with the company, and I can tell you I've never been this energized to be a part of this company. In my role leading treasury and finance, we work hand in hand with our excellent operations team, that you'll hear from shortly, to ensure every dollar that we deploy meets our key ROIC thresholds. I think when operations and finance teams are aligned, that's when disciplined capital allocation happens, and we create the most value for all our stakeholders. With that, we will delve into silver. Silver, of course, all of you must have seen, was more than $110 per ounce today. It's an unprecedented territory, and it's a very exciting time.
So I'm going to make a case for why silver is the most compelling commodity opportunity, not just today, but also in the long term, and how Hecla is the best way to capture that opportunity. From this section, I hope you will take away these three key points. First, silver market is in a structural deficit, and we expect to remain as such, going forward. Second, this deficit is due to constraints on silver supply and strong demands for silver investment, as well as industrial. Third, and perhaps the most important, Hecla is the silver company to capture this full silver opportunity, and it's because of our jurisdictional risk profile, our superior asset quality, and most importantly, the significant transformation that we as a company have gone through that Rob and Russell talked about.
So with that, turning to slide 27, we'll start with the fundamentals of silver market. So silver supply is about a billion ounces. 80% of that comes from mine production, 20% comes from recycling, and it has been a billion-ounce market for more than a decade, and this 80-20 mix has not changed. However, silver demand has evolved significantly. Now, silver is a unique metal. It, it has the highest electrical conductivity, it's malleable, and it's a key industrial metal, just like copper, but it's also a monetary asset, just like gold. So silver's demand has seen a significant increase, as I said. It's either the demand composition is 60% industrial, with the remaining 40% coming from jewelry, silverware, investment demand, but it's the industrial demand piece that has given silver a very solid base.
The past five years, silver's industrial demand has seen a 10% annual growth rate increase, and it's been driven by silver's use in solar or PVs, photovoltaics, that has seen a 19% annual growth rate over the past five years. That is phenomenal. This strong demand has resulted in a market imbalance, which has resulted in a supply deficit of 800 million ounces since 2021 cumulatively. To put that into perspective, we have used nearly a year's worth of mine production from above-ground silver stocks in just four years, and that is unsustainable. This deficit is not going away, and let me tell you why, and that's on the next slide, please. This is primarily because of two reasons. First, supply side remains constrained. Two-thirds of silver's mine production comes from non-primary silver mines.
So these are copper, lead, zinc, gold mines, where silver is a by-product, and the prices of these metals is not driven by what silver price is. Second, recycling, which is the other 20% of silver supply, that has seen, that hasn't seen significant economic or technical incentives, so that supply source is going to be range bound. Then the demand for silver is very strong. Industrial demand doesn't show any signs of abating. It provides a very strong base, and investment demand will continue to benefit from macroeconomic and geopolitical factors, as you can see, the same factors that drive gold demand higher. So you might ask, if the deficit has been this large for four years, why is it now that we saw this increase in silver price?
There is one key factor for that: significant and sustained supply tightness, and that's driven by some key aspects. There's been a strong investment demand with ETF buying, physical buying, jewelry, demand for silver by retail. There's uncertainty around U.S. trade policy, as we can all see. China's recently imposed restrictions on silver exports, and the industrial demand continues to be strong. All of these factors have resulted in a liquidity squeeze in the London market and exchanges across the world. Next slide, please. Delving a little bit more into the industrial demand piece, what is propelling that? Silver's use in photovoltaics and solar, that has been the dominant long-term foundation, and our internal research suggests that this is not going to go away.
It's not just 5 years, but rather next 25 years, that solar is going to be a key beneficiary of this energy transition that we are seeing in the world. But it is not just solar, it's electrification, EVs, AI, data centers, all of these use silver, and we expect they will continue to do so. Because when you are building systems that cannot fail, there is absolutely no, substitute at all for silver's unique electrical properties, at scale. So, and along with this, of course, is investment demand, which where silver has a very high correlation with gold, and again, is driven by macroeconomic and geopolitical factors. That's harder to forecast, but that investment demand is here to stay. Next slide, please.
So now that we have established the strong arguments for silver, I think the question is: how do investors take advantage of this unique silver opportunity? Hecla is the answer. We are the premier silver company, and especially in a market where silver primary producers trade at a valuation, which is at a premium compared to gold producers, Hecla particularly stands apart with four key advantages. First, our jurisdictional profile. All our operations are in the U.S. and Canada, and it matters in an increasingly geopolitical uncertainty that we all see. And it just doesn't stop there. Our growth pipeline, which Matt will talk about, Kurt will talk about, is all in U.S. and Canada. Second, our silver exposure. Nearly 50% of our silver revenues come from of our revenues come from silver, and that number is only bound to increase with our announcement this morning.
And this is especially important, as Rob mentioned, because our peers have drifted towards gold, and we have stayed committed to silver. Third, our reserve life dominance. Our average reserve life is 14 years, which is twice that of our peers, and this longevity matters, especially when we are investing with the long-term horizon in mind, where we can innovate and improve our operations, and Brian will talk more about it. And fourth, our cost excellence and superior asset quality. Our silver operations are in the lower end of our silver cost curve, and this asset quality provides maximum leverage to silver prices. So Hecla is the choice not just now, but also in the long term. And before I hand it over to Carlos, I'll leave you all with this practical and time-tested thought: Has anyone here been to an Indian wedding?
Well, I have been to many, including my own 20 years ago, and there are two key things I have learned. First, silver, along with gold, is the currency of transaction at all Indian weddings. And secondly, silver demand at these occasions is particularly price inelastic. So with that, I'll hand it over to Carlos to speak about how we are executing our bright future ahead.
Thank you, Anvita, and, good afternoon, everyone. I'm Carlos Aguiar, Senior Vice President and Chief Operating Officer. Today, I will show you what operational excellence, actually looks like at Hecla, and I don't mean as, some abstract concept. I'm talking about measurable performance that drives real shareholder value. You are going to see in our safety results, our production execution, and our financial returns. We are systematically improving performance across the portfolio and why we believe the best years of several of these assets are still ahead of us. I've been with Hecla for 30 years in 4 different countries, 5 different mines, and I'm really excited to be here today for the same reason, is the years that are still ahead of us. But let me start where we always do at Hecla, with safety.
Safety is not just the first item on the agenda, it's the foundation of everything we do at the company. It drives our priorities and motivated us to innovate. This is anchored in our Safety 365 values: ownership, transparency, competence, and continuous improvement. I'm proud to report that we achieved a 13% improvement in our total reportable injury frequency rate in 2025. How did we do it? Through investments in training, in hazard reporting, and taking quick action when we identify trends. We demonstrate this commitment every year on Safety Day, when we actually stand down operations company-wide. Think about that. All the people that we have in this room, we stop everything so our teams can come together at each site for meaningful dialogue about keeping each other safe. And we are not stopping there.
This year, we are taking the next step by proactively stress-testing our critical control systems to identify and address vulnerabilities before they can result in a serious harm. The discipline, the planning, and the systematic approach required to keep our workers safe creates the same operational excellence that drive consistent, reliable production. Safety excellence is not separate from operational excellence. It sets the foundation for it. Now, let me talk about the tools and the systems we are building to drive performance across every aspect of our operations and deliver value to our shareholders. We are addressing three operational challenge that cost us time and money. First, we are making decisions with incomplete information. Second, we are responding to equipment failures after they happen instead of preventing them. And third, we are operating each site differently despite having common processes.
Our solution is pretty straightforward: connect our operations, standardize our systems, and use the resulting data to make better decisions faster. Here's how we are doing it. One Platform. We are replacing fragmented system with integrated financials, procurement, and maintenance. When Lucky Friday solves a problem, Greens Creek should know immediately. Real-time equipment monitoring. We are extending networks underground so machines can tell us when they need attention before they fail. That's a game changer. This makes the change from emergency repairs to a scheduled maintenance. AI-driven analytics. We are turning data from sensors, systems, and operations into actionable insights that help us to optimize everything from ventilation to production scheduling. The outcome: lower cost, safer operations, and faster decisions at every level. So I have outlined our safety approach and the technology improvements in the works.
Now, let me show you how we are deploying capital and reinvesting in our business. Our 2026 capital program is between $255 million-$279 million, and here's the key point: every dollar meets our 12%-15% ROI threshold. It's every single dollar. The two largest components tell you exactly our priorities are. First, 29% for tailings infrastructure, which this extends Greens Creek and Lucky Friday to the year 2045. Second, 28% for mine development. This secures decades of future production. At Greens Creek, we are replacing critical flotation cells this year, and this is a major mill infrastructure that's only upgraded once every 25 years. There will be some planned downtime in 2026, but this positions Greens Creek for operational excellence through the next decades.
So here's what you are going to see in the next few minutes, operational transformation backed by measurable results. And what I hope you take away is this: First, we improved safety significantly while exceeding production guidance across the portfolio. Second, we delivered in our cost commitments. And third, we are building the systems, capabilities, and workforce culture that drives sustainable performance through commodity cycles. And most importantly, this performance is sustainable. Our operations have clear line of sight to 2026 targets and beyond. Look, Greens Creek and Lucky Friday are cash flow engines. Keno Hill is ramping up to full permitted capacity with exceptional cash flow potential. Casa Berardi is maximizing value in this strong gold price environment. And behind these results, it's a workforce committed to operational excellence and continuous improvement. We have a portfolio that delivers today while positioning us for tomorrow.
And now, to provide deeper insight into our operations, I'm going to turn over to Brian Erickson. Brian is a true Hecla veteran, who has spent 27 years at Greens Creek, and before being promoted to VP of Operations, he was the general manager of our Greens Creek mine. Brian?
So thanks, Carlos, and thanks for joining us this afternoon. To get started, I'd like to introduce our site general managers. With us today, we have Bill Kloth from Greens Creek, Chris Neville from our Lucky Friday operation, and Jason Palin, all the way from the Yukon. I'll talk about a bunch of high-level details of our operations, but I would really encourage all of you to spend some time with these exceptional, exceptional folks. They truly are generating the value at our operations and are worth your time. Now we'll discuss our operations, turning to slide 35. Greens Creek Mine is the largest and lowest cost silver producer in the United States, with 35 years of continual operation and a bright future ahead. It's been our cash flow workhorse since 2008, with expectations of it continuing for decades to come.
Now, I'd like to play a brief video of Greens Creek to give you a view of this outstanding operation.
18 miles southwest of Juneau sits Admiralty Island, nearly 1 million acres of old-growth forest, home to North America's greatest concentration of brown bear and nesting bald eagles, the Kootznoowoo Tlingit Community of Angoon, and Hecla Greens Creek, the largest producing silver mine in the United States and Canada. As one of only two mines in the U.S. allowed to operate inside a federally protected national monument, the men and women of Greens Creek understand that our license to operate comes with exceptionally high environmental expectations. We work each day to go beyond the very stringent conditions set by more than 60 federal, state, and municipal permits that govern our operations. We take great pride in using technology to safeguard our workers, increase productivity, and amass an exemplary environmental record since first production in 1989.
With a footprint considered small for a major mine, roughly 360 total acres, Greens Creek consists of the mine, an ore concentrating mill, a dry stack tailings facility, a ship loading facility, camp facilities, and a ferry dock. Greens Creek is one of three underground mines in Alaska. The entry portal sits at 920 feet above sea level, and the mine currently goes all the way down to -1,100 feet below sea level. Some 2,400-2,500 tons of ore are processed through the mill each day, 365 days a year. The ore, which contains lead, zinc, silver, gold, and some copper, is processed through multiple flotation concentrators to extract the metals. The metal concentrates are dewatered and stored until they can be shipped to smelters around the world.
The tailings, the material that's left over after the metals have been extracted, are either dewatered and mixed with concrete and recycled underground to stabilize the empty spaces left over from mining, or stored on a specifically designed lined pad called a dry stack tailings facility. Greens Creek was an early adopter of the dry stack method, which results in significant environmental and safety benefits, including eliminating the need for a tailings pond and dam. Greens Creek uses an extensive drain system to collect all water, including rain and snow, that comes in contact with its operations. Once collected, it is stored in ponds before being recycled for use in the mill or treated to the strict water quality standards set by the state before release in Hawk Inlet. We use technology to reduce our impacts and keep people safe.
Running fiber optics underground enables us to better monitor the operating environment, which reduces emissions, enhances the safety of our workers, and ensures proper equipment performance. Fiber lets us teleoperate autonomous equipment from the surface, which keeps our workers away from the rock face, increasing safety and productivity. Our ventilation on demand significantly reduces power demands. We've implemented cleaner engine technology and exhaust filtration, introduced enclosed and environmentally controlled cabs, and required respirator use in high-exposure tasks and work areas. For almost a century and a half, mining has provided a strong economic anchor for Juneau, and Hecla Greens Creek is proud to continue that tradition. The mine is Southeast Alaska's largest private sector employer, and our employees earn an average salary that is more than double the Juneau average. We're the municipality's largest taxpayer, and we annually purchase $tens of millions in goods and services from area businesses.
The hydropower we purchase from the local utility helps us reduce our carbon footprint and subsidizes electric costs for Juneau residents as well. At Hecla Greens Creek, we produce minerals that are essential for our modern world in a manner that is safe and environmentally responsible. We are Hecla: responsible, sustainable, innovative.
So operating in a national monument requires excellence: environmental, operational, and financial. And what you just saw is how we earned that privilege over the last 35 years. Now let me show you how that discipline translates to returns, because at Greens Creek, environmental stewardship and value creation reinforce each other. Next slide. What you just saw represents 35 years of continuous improvement in action. Greens Creek exemplifies how sustained technical compounds value- excellence compounds value, sorry. Since startup, we've achieved 9% increase in silver recovery and a 15% improvement in gold recovery. These are not one-time gains, but sustained improvements that create lasting value. Next slide. Here's what that means in dollars. As an example, our 2014 carbon dioxide pH control project cost less than $2 million, but generated over 110% return on invested capital.
Those recovery improvements alone delivered 18 million additional silver equivalent ounces over the past decade. That's $400 million in incremental revenue and cash flow. That's operational excellence with measurable return. Next slide. And we're not standing still. Let me walk you through a few business improvement initiatives in action at Greens Creek. Let me start with our mining method optimization. We're rebuilding our long-hole stoping capacity with a target to reach 15% of ore tons by 2027. This is up from 3% in 2025. This fundamentally lowers our operating cost per ton and reduces our development requirements. Our short-term interval control systems enable real-time production optimization, while predictive maintenance technology reduces equipment downtime and maintenance costs by up to 8%, while also improving fleet availability. Enhanced backfill capabilities create production optionality, supporting our vision to possibly increase throughput after 2027.
These systematic improvements build on a culture of operational excellence that has delivered lasting value. These improvements compound. Greens Creek's generated over $2.4 billion in cumulative free cash flow. That's a staggering 192% return on our 2008 acquisition investment. Show me another mine that returns values like that. Next slide. One more opportunity that I'm particularly excited about is the Greens Creek Tailings Reprocessing Project. The tailings contain 12 Department of Energy-listed critical minerals. In a year-end 2025 pricing, this potentially represents $6.8 billion in gross value. I get accused of speaking softly quite often by my colleagues, so I'm gonna repeat that. That's $6.8 billion in gross value. Even at a conservative 5% recovery, that's significant value, without even considering potential reclamation obligation reductions.
We've spent five years developing partnerships and conducting bench scale testing, and in 2026, we plan to do pilot plant testing of raw tails and pyrite concentrate to expand this possibility. Next slide. So let me bring this together. Greens Creek remains our cornerstone asset. It's a substantial cash flow generator with a dedicated team focused on safety, environmental excellence, and financial performance. Through continuous improvement, exploration potential, and the exciting opportunity tailings reprocessing presents, this mine is as intriguing as it's ever been. Turning to slide 42, we'll discuss our keystone asset, Lucky Friday. So the Lucky Friday mine has been a cornerstone of Idaho's Silver Valley for 80 years, and after systematic investment in mining innovation, we believe that the best years could be ahead of us. We'll now play a brief video on Lucky Friday.
The Lucky Friday Mine, located in the Coeur d'Alene mining district in North Idaho, has been an integral part of the Silver Valley community for generations, dating back over 80 years. Hecla has employed generations of the same families, for which we are very proud. As one of the largest employers in Shoshone County, we take that responsibility seriously, providing sustainable jobs with work-life balance. We are active in the community as members of the local chambers of commerce and economic development organizations. We also support local organizations through donations and the volunteer efforts of our employees. Our team of over 450 employees and contractors represents a full spectrum of mining talent, from entry-level laborers and operators to skilled tradespeople and professionals, all supporting some of the best miners in the industry.
A safe workplace isn't just a priority for us, it's a value not to be compromised. It is who we are. Our work-safe, home-safe culture is built on employee empowerment. Team members actively participate in peer-to-peer coaching and hands-on risk assessments. Emergency preparedness is critical in the deepest mine in the United States. Our mine rescue team has won first place in the Central Mine Rescue Competition 10 out of the past 15 competitions. In 2024 and 2025, we achieved record-breaking production while delivering our lowest all-injury frequency rates for a full production year. In the underground mine, we're also achieving extraordinary success. The number 4 shaft, installed in 2016, extended the depth to 9,600 feet and has significantly extended our long-range plan since its construction.
This fully capitalizes on the main production zone, the Gold Hunter Complex, which has proven to be one of the largest silver deposits discovered in the history of the Silver Valley. The recent invention of our Underhand Closed Bench mining method, or UCB for short, combined with continuous process improvements, has driven the Lucky Friday to new production milestones, setting new operational records in 2025. We are excited to see what 2026 offers. Our processing facility, which produces high-quality silver and zinc concentrates, has a capacity of 1,400 tons per day. Concentrates are shipped daily to a nearby smelter, but are also available to the global market. Tailings are placed in storage facilities near the mine, and we are currently constructing our fifth storage facility that meets the current long-range plan.
The Lucky Friday is committed to reducing its fresh water consumption and reducing its water effluent, with our ultimate goal to be zero discharge. We have been evaluating multiple projects to accomplish this goal by recycling water to the underground as the primary concept. Guided by our commitment to health and safety and environmental stewardship, these projects undergo rigorous testing and evaluation towards reaching our goal of zero discharge. With more than 80 years of continuous operation, the Lucky Friday has deep roots and a long runway ahead. The mine currently hosts a 19-year long range plan, with our best production decades ahead of us. UCB has made our mine safer and more efficient, bringing the average decade production forecast close to 50 million ounces from a pre-UCB period, averaging approximately 25 million ounces per decade. We are always looking for ways to improve our operation.
In 2025, construction began on the surface cooling refrigeration project, which is expected to be completed in 2026 and will reduce the temperature underground, making it a safer and more comfortable environment for our workforce. Exploration at the Lucky Friday has been minimal in recent years due to having a very long reserve life. However, we are in a world-class mining district, which offers significant potential for additional resources and reserves. The Lucky Friday is in a fantastic position to explore the area known for deep deposits, being nearly 10,000 feet underground, with infrastructure that can easily access deep ore bodies within a few miles. We began focusing on exploration targets again in 2024 and are actively pursuing those targets into the future.
Overall, our success comes through collaboration with the local communities, our government partners, and the hardworking people who keep the mine operating every day. Rooted in the Silver Valley, we deliver critical minerals that the world depends on, and we take pride in being a responsible neighbor. We are the Lucky Friday.
So what you just saw is a 80-year-old mine that's fundamentally been reimagined. Hopefully, that gives you a sense of both the people and the innovation behind the Lucky Friday. Now let's turn to how that transformation is translating into safety, productivity, and returns, starting with the innovation behind that transformation, the UCB mining method. Lucky Friday has a long history of innovation, from underhand long wall mining to the Silver Valley's first concrete line circular shaft. But beginning in 2020, our team developed a patented breakthrough, the underhand closed bench, or UCB mining. UCB has proven transformational to the property. Most importantly, UCB releases seismic energy in a controlled manner during blasting, dramatically improving safety conditions with roughly 90% of the seismic energy released within the first 12 hours of the blast.
It also enables bulk mining, larger and more mechanized equipment, and less manual labor, boosting productivity and improving workforce safety. As Russell highlighted, UCB was born of necessity, and our focus on safety has transformed Lucky Friday into a return story. Next slide. Russell also spoke about a 12% annualized returns we've seen at Lucky Friday over the past decade, especially with the UCB method. The invention of the UCB was a catalyst for ongoing business improvement to fully capitalize on a creative solution to an historic, challenging seismicity problem. Here are a few ongoing improvements I'd like to highlight. In the next 2 years, we plan to bring UCB production drilling in-house versus contractor, which is expected to reduce costs by $1.3 million annually, or about $0.30 an ounce in operating costs.
The mine is improving refrigeration to keep the miners safe and more productive. A significant production increase was recognized within months from a workshop focused on increasing the number of ore skips per day up the silver shaft, from 157 to 180 skips per day. So that's a 15% improvement, translating to roughly 8% more annual metal production. Mill throughput over the last 5 years has increased from 48 tons per hour to over 68 or 60 tons per hour through crusher and cyclone optimization. And just recently, the operation briefly saw 70 tons per hour production rates, indicating additional potential. The Lucky Friday team represents the core of Hecla, with their continued drive for improvement and creating value, and the projects highlighted are delivering that value. Next slide.
So you saw this graph, briefly in the video, but I'd like—I liked it so much, I wanted to display it one more time to drive home an important point. Success of the UCB mining method has transformed the production profile of this mine from an average of 25.5 million ounces per decade over the past six decades to nearly 50 million ounces per decade post-UCB implementation. We produced 5.2 million ounces in 2025, broke multiple records: tons milled, tons mined, and silver production, most notably. Lucky Friday is not a cost story. It's a return story where the best decades of this 80-year mine is ahead of us. Next slide. So Lucky Friday is effectively a new mine, with many factors in alignment for future success.
We have higher grades of depth, a safer and more production way to mine with the UCB, and higher prices, and also a fantastic management team with Chris at the helm. We're really looking forward to what the future holds for this, keystone asset of the company. Next slide. Thanks. So located 280 miles north of Whitehorse in the Yukon, Keno Hill is the largest silver mine in Canada. The operation is currently ramping up to its permitted capacity of 440 short tons per day. The site consists of two underground mines, Bermingham and Flame & Moth, and a mill that produces high-value concentrate for world markets.
Since its acquisition in 2022, Hecla has made substantial improvements to improve the workforce health and safety, we implement leading environmental standards, protect Yukon and the First Nations' historic lands, and to de-risk production at this world-class silver deposit. The site's in a spectacular setting that remains endowed in mineral wealth, and we have a hardworking group of people addressing historical reclamation while building Yukon's mining future. Next slide. Keno Hill's advancing through an investment and ramp-up phase and is not yet in commercial production. We're building infrastructure with room for expansion when future returns justify. At 440 short tons per day, current reserves support 16 years of mine life. As Kurt will speak to in our exploration segment, we believe there is significant upside potential with this operation, allowing us to potentially operate here for many decades into the future.
2025 marked a milestone for Keno Hill, producing just over 3 million ounces of silver at the upper end of guidance in its first year of positive free cash flow under Hecla ownership. At 440 tons per day and $50 silver, Keno Hill has the potential to generate well over $100 million in annual free cash flow. Leverage to higher silver prices is also significant. $75 silver generates about $250 million in annual free cash flow and more than $300 million at $100 silver. Keno Hill's IRR is equally impressive. Our internal analysis shows the asset achieves a 12% IRR at just $30 per ounce silver, well below current prices, which supports our decision to advance through final ramp-up.
With 16 years of reserve life and exploration upside, Keno Hill should capture multiple silver cycles, generating exceptional returns over its life. Next slide. At current metals prices, Keno Hill is expected to be more than self-financing, generating cash flow for reinvestment and growth, and coupled with ongoing exploration investment, this asset has decades of potential in front of it. Slide 51. And finally, Casa Berardi. Casa is located in western Quebec and hosts both open pit and underground gold mines, and mining at Casa began in 1988 with a previous owner. Hecla acquired the operation in 2013 through an acquisition. Since the acquisition, Hecla has produced 1.4 million ounces of gold from this operation. Next slide. Casa Berardi is expected to generate significant cash flows in 2026 and 2027 at current prices.
At $4,000 gold, we expect to generate $250 million in cumulative free cash flow, building on the strong performance in 2025. The 160 Pit should be depleted by year-end 2026, and over the next two years, processed ore will consist of a blend from the 160 Pit and the higher grade underground ore. Beyond that, the operation is expected to transition to temporary care and maintenance while we develop two additional open pits. We're also evaluating third-party ore purchase opportunities to bridge any production gaps. Next slide. Casa Berardi is generating exceptional cash flow at current gold prices. [That] cash flow we're deploying into our silver growth-focused strategy to create shareholder value. I'd like now to turn it over to Matt Blattman, our VP of Technical Services, to speak about Midas, one of our most compelling near-term organic growth opportunities. Thanks.
Matt?
Thanks, Brian. Good afternoon. I'm Matt Blattman. I'm Vice President of Technical Services here at Hecla, and I'm excited today to talk to you about our project in Midas and why it aligns so well with our approach, disciplined approach to capital that Rob outlined in his strategy. Midas is a high-grade gold, silver district in northern Nevada, located about halfway between Winnemucca and Elko, just north of Interstate 80. It's the district originally operated between 1907 and 1940-something, and it eventually became one of those mining camps that Nevada's just so famous for. In the more recent times, the district has produced about 2.2 million ounces of gold, some 27 million ounces of silver, and about an average grade of half ounce per ton.
It eventually, and it operated that during that time frame from 1998 to 2014, and eventually, it then transitioned to its current state of care and maintenance. Now, I grew up in Winnemucca, if you can tell by my accent, and as a teenager, I used to go out with my best friend and his father—his grandfather, and work his grandfather's claims, building fences and whatnot. Later on, when I was going to school at the Mackay School of Mines in Reno, getting my mining engineering degree, I worked for a consulting company that did the original resource model on the Midas deposit that eventually became Ken Snyder Mine.
So as you can imagine, I'm pretty familiar with the district, and I've got a rather sentimental attachment to it. So in November of last year, we announced high-grade gold intercepts at both our Pogo and Center targets, with visible gold, including about 1 ounce per ton over 2 feet at Pogo, and about 0.5 ounce per ton over 6 feet at Center. These results validate our approach, our systematic approach, towards exploration that shows that significant high-grade mineralization still exists in the district well beyond those mined-out areas. But here's what makes Midas exceptional: We have most of that infrastructure already in place. That includes a mill that was built in the late 1990s by Franco-Nevada and later operated by Normandy and Newmont. We have that the permit on that mill allows us to process about 1,200 tons per day, and we have a tailings facility that has a remaining capacity of about 7 million tons.
And that also includes all the odds, the associated infrastructure and utilities that come with an operation like that, and the facility has only been on care and maintenance for about five years now. We had a recent preliminary engineering study by one of our trusted consultants, and they estimated to bring the facility back online, it would cost us about 30, So rry, about $50 million. We're now conducting more comprehensive engineering studies and analysis to refine that estimate and really understand what the scope of work will look like. But regardless of that final number, it's clear that it's going to be rather low capital intensity when you compare that against building a brand-new mill. And the permitting timeline is an advantage. It's a massive advantage.
While our competitors might be facing timelines that are 10 years or more to get a new permit for a facility, we already have many of those permits in hand, and, much of the infrastructure is already ready there to be refurbished and bring back online. Our 2026 exploration program is designed to define resources that could support a restart decision within 3 years. We're using rather conservative assumptions in our conceptual planning. That means grade estimates that are below the historical averages, mill throughput, capacities that are below the nameplate capacity of the mill, because we want disciplined economic thresholds and not just optimistic projections of the future. But if we can define resources that are, say, several hundred thousand ounces, with grades that are consistent with those historical values, the economics are really quite compelling.
Low upfront capital, leveraging existing infrastructure with high-grade ore and a potential path to production within five years. Kurt's going to talk a little bit more on the detail at Pogo and Center, and the broader Midas District, but we believe these deposits represent a fully preserved epithermal system that across our entire 30,000-acre land package, we can develop these initial discoveries while we continue district-wide exploration, potentially extending the mine life and even the scale of the operation as we go forward. The strategic value here is really pretty underappreciated. Midas offers genuine near-term production with a capital efficiency profile that's rare in this industry. We're not building in some remote location, in a from-scratch, brand-new everything. We're reactivating proven infrastructure in a proven district with high-grade gold discoveries.
Midas represents an organic growth opportunity that leverages our existing assets and maintains capital discipline and creates tangible shareholder value in an accelerated timeline. Midas isn't our only opportunity in Nevada. Our Hollister project is nearby, and we're evaluating Aurora, where we just received our exploration permits recently. Now, this emerging hub-and-spoke model with Midas infrastructure at the center could support multiple sources of ore over time, including potential joint ventures or purchases with third parties. Now, this hub-and-spoke model is common in Northern Nevada, and it's essentially the business model that Nevada Gold Mines, NGM, operates under. And with it, I will pass the time over to Kurt, who's going to speak more about our Nevada exploration program and provide some more detail on our largest ever exploration focused on organic growth opportunities. Thank you.
Thanks, Matt. I'm Kurt Allen, Vice President of Exploration here at Hecla. I've spent the last 38 years in exploration and operations, including my time as the Chief Geologist at the San Sebastian mine in Mexico, as well as the Rosebud mine in Nevada. That time taught me that the real measure of an exploration property and project is not whether there's just mineralization in the ground, it's whether you can mine it economically. Over the next 15 minutes, I want to walk you through why I believe and why we believe Hecla's exploration pipeline represents a significant value creation over the next decade and beyond. Before I begin, there are three main points that I want you all to take away from this exploration overview. The first point is our strategic shift from underinvestment to peer competitive exploration investment, representing a fundamental transition from depletion to growth.
The second point is that we have exceptional, existing assets in proven world-class districts, all located in safe jurisdictions. And finally, we have multiple near-term growth catalysts with significant exploration potential and discovery potential. So why does exploration matter? Exploration is really the engine of our future. Every ounce we produce today was discovered yesterday. As Rob and Russell explained earlier, the financial shackles are now off that has kept us from investing in our exploration pipeline. The shackles are gone, the increased 2026 exploration investment of $55 million, we are transitioning from depletion to growth, from defensive to offensive, from underfunded to strategically invested. Next slide. This slide shows where our projects are, the operations and exploration projects, all within low-risk, safe jurisdictions. Next slide.
Our 2026 exploration budget brings us to peer competitive levels, representing 4.5% of projected revenue. Our target is to achieve 100% reserve replacement, plus mine life extensions, and our focus for this year is approximately 80% on our operating assets and near-term development opportunities. With about half of our exploration investment directed at extending our already long mine lives, the return on resource additions is exceptional and gives us an even longer planning horizon. In Nevada, I'm really super excited about the emerging discoveries that we're seeing at Midas and the potential to restart operations, and I'll talk more about that in a moment. Excuse me. On our early-stage projects and generative exploration efforts, this is really where we can make a game-changing discovery. Now that we're back in the game, I'm excited about the possibilities for future discoveries.
Now, let me walk you through our top opportunities for 2026, starting with our foundation, Greens Creek, on slide 60. Greens Creek is a textbook example of how systematic, disciplined exploration can continuously extend mine life and create enduring value. The slide tells a remarkable story spanning 50 years. When we look at these plan views showing drill intercepts greater than 5 ounce per ton silver, you can see the evolution from the discovery from 1975 through today. Now, the initial discovery drilling in 1975 identified what many thought would be a modest 10-year mine life. But through persistent exploration and a deep understanding of geology, we've made discovery after discovery. The key message here is the exploration potential remains open in multiple directions. Greens Creek started with a 10-year mine life 35 years ago, and today still maintains a 12-year reserve life.
That's the power of systematic exploration in a world-class district. To pick up on Brian's point earlier, we're building an expanded dry stack tailings facility in anticipation of ongoing exploration success. Next slide. Let me show you specifically where we're focused in 2026, both underground and on surface. This slide demonstrates how we're pursuing a two-pronged approach to extend mine life. On the underground side, our 2025 exploration program extended Gallagher mineralization 550 feet down plunge from the existing resource. And we also intersected silver-rich mineralization in the northern and southern portions of the 200 South Zone. Those intercepts absolutely warrants follow-up drilling. Looking at the underground plan view, you can see the reserves are in red, resources are in blue, and our exploration targets are in light blue.
Those red arrows show where exploration potential remains open in multiple directions and multiple vectors for growth. On the surface side, we completed our 2025 exploration program, drilling three target areas, East Ore, Cliff Creek, and Gallagher. And we also completed large geophysical program and mapping in the area of our Lower Zinc Creek target. The exploration we completed in 2025 significantly advanced multiple targets, especially Lower Zinc Creek, where we see strong potential for near-surface discoveries. When you combine our underground success extending known zones with our surface program that's identifying new targets, you can see why we're confident about adding to the mine life through focused exploration program. This is a world-class deposit, and it's in a world-class district, and we're applying world-class exploration techniques to continue the growth story that's been unfolding here for 50 years. Next slide.
What I want to show you now is one of the most compelling exploration success stories in our portfolio, the Bermingham Vein System at Keno Hill. This slide illustrates why we believe systematic, well-funded exploration in high-grade silver districts delivers predictable and repeatable results. You're looking at a longitudinal section through the Bermingham system, and what you see here is the evolution over 16 years, from 2009 through to the present day. Each period shows drill intercepts greater than 10 ounces per tonne silver. Through each period of discovery, from the Etna to the Arctic, the Bear, the Northeast Bermingham, and the Deep Northeast Bermingham, we're not just finding parallel structures, we're understanding that this system has both lateral and significant depth potential.
We've been adding to the Bermingham system for 16 years, where we've developed a robust geologic and structural model, that with our systematic drill testing, we continue to make discoveries. That's the hallmark of a world-class vein system in the hands of a skilled exploration team. Slide 63 shows us continuing that trend in 2025, where we have discovered what we believe to be a new ore shoot, 500 feet along strike and down plunge, significantly extending known mineralization. Based on the drill spacing, the continuity of high-grade intercepts, and the geologic interpretation, we're targeting an additional 50 million ounces of silver resource from this one area.
Now, one of the key aspects at Keno Hill that really excites me is if you look at the plan map on the right side, you can see all of our targets within the Keno Hill District. There are currently a total of 17 targets that have exploration discovery potential in excess of 50 million ounces silver each. You can add up the potential we see at Keno Hill and understand that we have only begun to unlock the value from this very prospective district. Moving to Lucky Friday on slide 64. Lucky Friday sits in the Silver Valley, which, as Rob stated earlier, is one of three districts on the planet that have produced over 1 billion ounces of silver.
This slide shows the history of exploration, and in 1991, north of the Lucky Friday vein system, we discovered that the modest ore body below the surface outcrops of the historic Gold Hunter Mine continued at depth and blossomed into a world-class ore body containing greater than 200 million silver ounces. Mineralization continues to be open at depth and along strike. Extensive potential continues to exist today, and Lucky Friday has the infrastructure to support expanded operations at minimal cost. Finding another Gold Hunter scale deposit doubles the asset value. Moving to Nevada on slide 65, we are unlocking significant value in Nevada with our large district land packages in Tier One jurisdictions with exceptional infrastructure. We have three advanced projects consisting of Midas, Aurora, and Hollister, where continued exploration success could lead to a path to a restart development decision by 2029, 2030.
The combined exploration potential of these three projects is on the order of 2.5-3.5 million ounces of gold equivalent, a mix of high-grade gold and high-grade silver. The Midas discovery history here is shown over two centuries, where significant exploration potential and opportunity remain. Our projects in Nevada have proven geology, existing infrastructure, strong community relations, political stability, all located in Tier One jurisdictions. Slide 66 at Midas shows strong results from our drilling program in 2025, and it really validates our systematic approach to targeting, with structures confirmed in 5 of the 6 targets drilled. These early-stage discoveries demonstrate the district-scale potential. The Pogo and Sinter Offset discoveries in 2025 represent a significant breakthrough at Midas.
Finding visible gold in the first drilling of a 2-mile trend at Pogo, intercepting 0.95 ounce per tonne gold over 2.2 feet and 0.6 ounce per tonne silver, and the discovery of the high-grade Sinter Vein Offset displaced 750 feet across the post-mineral faulting, really does validate our systematic targeting approach to this untested southeast Midas area. Moving to slide 67. In 2021, we discovered the Sinter Vein. It is estimated to contain between 150 and 200,000 tonnes at grades between 0.65 and 1.6 ounce per tonne gold and between 10 and 15 ounce per tonne silver. These are really super high grades. In 2025, we found it again, 700 feet across a major fault that is shown in drill hole 462. Why does that matter?
Well, because when you find the same high-grade structure on the other side of the fault, it tells you you're dealing with a much larger system than you initially thought.
Our last drill hole of the season, almost 2.5 football fields away from 462, intersected 0.46 ounce per tonne gold over 6 feet, and that's shown in drill hole 475. The zone is open in all directions. It's not just geologic curiosity. With permitted infrastructure already in place, successful delineation could enable near-term production to restart with minimal capital. That's the Nevada advantage. We're not just discovering deposits, we're discovering deposits where we already have permits and mills to process it. Moving to Aurora, as seen in slide 68, receipt of the Polaris exploration permit, project permit, in Q4 of last year at Aurora was really the first step in unlocking the exploration potential of one of the highest grade gold-silver districts in Nevada. The second step is planned significant drilling of our high-priority targets in 2026.
Now, while I'm super excited about all of our exploration targets, I'm really excited about the high-grade results we're seeing at Midas. But Aurora is the one project I'm most excited about because it's the exceptional high-grade potential, and now we have the permit in hand to do the systematic exploration that's required. Lastly, slide 69 emphasizes the three key points I want you all to take away from the exploration update: our strategic shift from underinvestment to peer competitive exploration spending, our exceptional existing assets with proven world-class exploration potential, all are located in safe, low-risk jurisdictions, and we have multiple near-term catalysts with significant exploration potential. These three points demonstrate why we believe Hecla's positioned for sustainable, organic growth through strategic exploration investment. Turning to slide 70, I'll now pass it over to Patrick.
Thanks, Kurt. I hope you're as excited about some of our opportunities as we are. Good afternoon. My name is Patrick Malone, and I oversee sustainability for Hecla. I also have with me today in the second row, Loralee Johnstone, who oversees external relations in the Yukon. She'll be available during Q&A to answer any questions you may have about mining policy with the new government or with relationships with First Nations. I joined Hecla last year in April, and I joined for a couple of reasons. First, I saw that Rob had been named CEO. I've known Rob for a lot of years. We worked together at Barrick, and I have nothing but respect for him, and I was really excited for the opportunity to be part of his executive team. I was also really excited to join a premier silver producer.
As you've heard from Anvita and others, silver is such a fascinating story. Not only is it the key to unlocking energy transition, but it also has monetary value; it has cultural value. It's just, i t's really an interesting place to be, and I think the recent run-up in the price of silver only confirms the excitement that I had. I'm a passionate believer in responsible mining. I've spent over my 25, 26-year career now; I've permitted mines, I've operated mines, I've closed mines, and I've redeveloped old mine sites. My whole career has been focused on different aspects of mining. I've held legal roles, I've held technical roles, operational roles, executive roles. I've been at a major; I've been at a, an exploration junior, and now at Hecla, and there's a common theme through all of this.
It's the importance of trust in a mining company. You can have the best geology, you can have the best technology, you can have a perfect safety record, but if you don't have trust, the trust of your stakeholders, you're not going to be successful over the long term. I have an excerpt from our recently passed or recently adopted sustainability policy, and I think it really encapsulates what we're trying to do at Hecla. "Respect the lands we work on, build lasting relationships with communities, and provide enduring benefits for current and future generations." That's the formula for trust. It's actually a really simple formula, but very few companies, very few mining companies get it right. But for you as investors, I think this is a key point.
When you're evaluating companies that you wanna own, particularly over the long term, look for companies that invest in long-term relationships, because those are the ones that are going to be successful. They're gonna be, continue to be successful in getting new permits. They're going to continue to be able to operate. They're going to continue to be able to expand and grow. Building those relationships is baked into Hecla's strategy and, and the values of who we are. And because of those values, we're confident in our growth opportunities. We're confident in those opportunities because our communities, our stakeholders, are confident in us. So let me underscore a couple of ways, a few ways that we earn and maintain that trust. So first, each of our mines operates largely on hydropower. It's fairly unique.
We have low greenhouse gas emissions, we have low, carbon intensity, low overall emissions, and we have an advantage of having this cheap, renewable resource. This is also important for our relationships with the communities, 'cause long after we're gone, those resources will still be available. They'll continue to benefit from the fact that we were there. You also heard earlier about dry stack tailings. I'd love to talk to you a lot about. I'm really fascinated with dry stack tailings, but it's basically what it sounds like. Instead of being wet tails, they're dry tails, and that reduces risk, some of the risks that conventional tails pose. It also makes it interesting for us to be able to go back in and recapture some of the value by reprocessing some of these tails in the future, as you heard from Brian.
At Lucky Friday, during the video, I don't know if you picked up on it, but they're working towards zero discharge, zero water discharge into the environment. This is another amazing thing. Every year, we're making progress in getting to a point where there will be no discharges outside of the mine site. That protects water. It's a much more sustainable way to do business, and it, again, it reduces risk. We're also very proud of the economic impact we have on our communities. You can see some numbers there, but in 2024, over $1 billion of economic impact. And through our Hecla Charitable Foundation, cumulatively, we've already directly invested more than $5 million in our communities. And at these metal prices, we're expecting 2025 to be a very good year for our charitable foundation.
You can hear more about that in our sustainability report, which will be coming out in a couple of months. Here's another story that I'd like to share with you. Our Keno Hill mine site sits in the traditional territory of the Na-Cho Nyäk Dun, of the Nation of Na-Cho Nyäk Dun, the NND. They've historically been supporters of mining because mining has been a part of their community for a long, long time. But in 2024, with the Victoria Gold heap leach failure, they began to question: What is, how can we trust these miners? Do we want to continue our relationship with mining? Recently, Loralee and I met with the chief of the NND, Dawna Hope, who we meet with regularly, and we were talking about Hecla.
We were talking about the importance of mining in her community, and she talked, she used an interesting phrase. She said, "They're interested in generational mining. They're interested in mining that creates jobs and prosperity today, but for their kids and for their grandkids. They're interested in mining that leaves things better than they found them." That's exactly what we're looking for. We want long-lived mines. We want responsible mines. We think that's good business. We think that's smart investment. Chief Hope expressed confidence in Hecla, partly because they've seen the way we operate. They've seen the wilderness that thrives around our Keno Hill mine, and they were also intrigued when we told them about the burgeoning brown bear populations around Greens Creek. In NND culture, the presence of bears indicates a healthy environment. It's fascinating.
They asked us if they could come out and tour Greens Creek, so this spring, we're planning on bringing the chief and council over to Greens Creek to let them see firsthand how we're able to operate in this pristine environment. Now, I believe in mining—excuse me. I believe mining companies' reputations are largely determined by what we leave behind. So for a minute, I'm gonna talk about reclamation and closure, which is something that mining companies don't often talk about, but something that we're very proud of. The top pictures, you can see San Sebastian, the San Sebastian mine in Mexico during operations. It was an open-pit mine. And then you can see what it looks like last fall. I, I challenge you to find where an open-pit mine is in that picture. It looks like agricultural lands. It's been completely backfilled, reseeded.
It's virtually indistinguishable from the rounding, the surrounding environment. When Hecla took over Keno Hill, we accepted an obligation to clean up decades of historical mining impacts in the mining district. We've been engaged in that project now for a couple of years, and interestingly, it's entirely funded by the Canadian federal government. We're doing the work. We're being reimbursed and paid for, for doing this work, but in the process, not only are we cleaning up the environment, we're building out a new workforce, we're investing in communities, we're building these relationships, we're building trust and our efforts have been noticed. In fact, this last year, there's a picture there of when we received the Excellence in Environmental Stewardship Award from the Yukon government.
In the picture, you can see recently elected Premier Currie Dixon presenting the award to Loralee, as well as Lance, two members of my team. At that same event, Rob was able to sit down with the Premier and talk about mining and talk about the future of Hecla. The Premier was clear that mining is important to the future of the Yukon, and he remains fully supportive of Hecla, fully supportive of Keno Hill as we ramp up and responsibly develop the mine. Now, as I look forward through the rest of the year and the future, I'm really excited. I'm excited because we have the right team, we have the right resources, we have the right leadership, and we're at the right time to do some amazing things.
Now, of the many stakeholder relationships that we have, one of our key relationships remains with the governments that oversee our operations. To tell you a little bit more about those relationships and what we're doing with them, I'm going to turn the podium over to Mike Satre, our Director of Government A ffairs.
Thanks, Patrick. Well, thank you, Patrick, and, good afternoon, everyone. My name is Mike Satre. I'm the Director of Government Affairs for Hecla. I first joined the company in 2008 when I was part of the Greens Creek management team that stayed on after that foundational acquisition. I saw a significant opportunity by staying with Hecla at that time, and I even see more today. I have almost 30 years of experience in the mining industry, first half of which was spent as a geologist in both open pit and underground mines in technical and management positions. But I since have made the jump into the external affairs side of the business, where I truly enjoy translating what we do on an operational basis into the public policy world.
When I can sit down with the people in D.C. and make them understand how their actions impact a miner underground in Idaho, it truly makes a difference. The political world these days is more complex and moving faster than ever, but there's no question that our industry is at an unprecedented inflection point, and this creates significant opportunities for Hecla. The public's recognition of the need for critical minerals, coupled with favorable government policies, have fundamentally shifted the landscape in our favor. Today, I will talk about three critical developments that are accelerating value for Hecla: the emergence of critical minerals as strategic national priorities, sweeping regulatory reforms that are removing barriers to development, and our aggressive positioning to capitalize on both. Next slide. Let's start with the fact that now Hecla is a leading critical minerals producer.
Silver, lead, and copper were newly recognized on the official U.S. Critical Minerals List just a few months ago. They joined zinc, which had already been on the list, and gold, which is recognized as critical through executive orders. And listing just isn't symbolic. Critical mineral designation drives tangible advantages, federal funding opportunities, predictable permitting processes, and federal prioritization for our projects. But it's not just the United States, as Canada has been equally aggressive. They've designated zinc as critical and established the Critical Minerals Infrastructure Fund that focuses on nation-building projects, including energy infrastructure like the Yukon-B.C. Intertie. This creates real tailwinds for our Canadian operations. The message from both nations is clear: critical mineral development is imperative for national security, and silver represents precisely the type of strategic resource that must be prioritized in any modern mineral strategy. And that's not our words.
That comes from the U.S. senators who signed on to a letter endorsing silver as a critical mineral. Next slide. So let's talk about the regulatory environment. The Trump administration has made mineral development a national security imperative through executive orders. Deregulatory actions are underway across federal agencies, specifically designed to remove unnecessary hurdles to mineral production. More specifically, the FAST-41 process has emerged as a true game changer, and the Permitting Council is now actively soliciting mining projects to enroll for accelerated permitting. We, last year, strategically placed three of our exploration projects on the FAST-41 transparency list: Libby, Greens Creek, and Aurora. And all three projects received favorable notices of decision in the past four months on expedited timelines. On the congressional side, we're seeing genuine bipartisan momentum.
The SPEED Act would implement NEPA reforms designed to eliminate duplication, shorten timelines, and limit frivolous litigation, and the PERMIT Act would implement similar reforms under the Clean Water Act. These bills have already passed the House, and we are now working on garnering bipartisan support in the Senate. Next slide. When I say working on these bills, I mean it. This is what separates us from our competitors. We're not waiting for policy to happen, we're actively shaping it. At the federal level, we built direct relationships with White House and agency leadership. We've driven placement of our projects on the FAST-41 list. We've worked with the National Energy Dominance Council and the Department of the Interior to secure silver, silver's critical mineral designation. In Congress, we built bipartisan relationships that matter. Chair Westerman led 11 House Natural Resources Committee members on a tour of Greens Creek in August.
We're in regular meetings with both Republican and Democratic committee staff to advance permitting reform, and importantly, we've used our leadership roles in both national and state mining associations to support those efforts. We're also evaluating government grants, including Department of Energy funding, for recovery of critical minerals from tailings. In the Yukon, as Patrick talked about, we've established relationships with the new premier and Yukon Party government to support our operational needs. This is strategic engagement at scale. The path forward is clear. Hecla's portfolio aligns perfectly with what the U.S. and Canadian governments have designated as strategic priorities, and regulatory barriers are being dismantled. Hecla is actively driving this transformation. This is the environment we've been building towards, the path is favorable, and now we're focused on execution.
Now moving to Slide 79, I'll turn it over to Rob Brown, who will speak about our corporate development strategy and portfolio optimization.
Thank you, Mike. So I'm Rob Brown. I'm the Vice President of Corporate Development. I'm a geologist with a finance background, and I've spent three decades in commercial roles, mainly M&A, including several years in investment banking and as a CEO at another company. I recently participated in a board strategy workshop, where we aligned on what disciplined M&A looks like at Hecla, and that's what we'll cover in the next few minutes. You've just seen a $55 million exploration program across compelling internal pipelines. You're likely thinking, with a strong balance sheet and silver focus, are you looking at M&A? The short answer, yes, but with discipline, and let me explain what we're thinking about. Where we are today, we have approximately $240 million in cash, minimal debt, and the strongest balance sheet in Hecla's modern history.
Kurt showed you significant exploration opportunities. Those are our primary bets, but we'd be negligent if we weren't evaluating external opportunities in what's becoming a consolidated sector. Our M&A philosophy, while we're not acquisition-dependent for growth, Nevada exploration, Keno Hill ramp-up, near mine opportunities, these deliver growth we can control. But if the right asset emerges, we're positioned to act. So we have four non-negotiable criteria, starting with jurisdiction. We strongly prefer the U.S. and Canada, but we will consider other jurisdictions if they rank in the top third of the Fraser Institute mining surveys, and we can confidently identify and mitigate key risks. We conduct rigorous risk assessments, political, economic, legal, operational, and security. If we can't get comfortable with the risk profile, we'll walk. No asset is worth compromising our jurisdictional standards. Precious metals with strong silver bias.
Our primary focus are silver assets that strengthen our position as the premier North American silver producer. But we'll also consider exceptional gold assets if they're compelling cash generators that fund our silver growth strategy. Think of Casa Berardi's role with the gold funding our silver strategy. We're not diversifying away from silver. We're finding assets that support our silver focus program. The competitive advantage: why is this worth more in our hands? Is it nearby infrastructure, exploration upside that we can unlock, operational synergies? Do we have the opportunity for district consolidation? Financial returns: we must clear a 12% return on invested capital at conservative metal prices, and we will stress test every assumption. We've reviewed multiple opportunities over the past year. We've passed on all of them. Some were in jurisdictions we just won't touch.
Some were mediocre assets that were at a premium price. Some required capital that would generate better returns within our own portfolio, and some just didn't clear our return hurdles. That discipline is intentional. We won't chase deals just to show activity. So what are we actively watching? Well, the sector is consolidating, and primary silver assets are scarce. Safe, mining-friendly jurisdictions are limited, so what are we tracking? Silver focus opportunities in North America, high-quality gold assets that could serve as a cash engine, exceptional assets in top-tier jurisdictions beyond the U.S. and Canada, distressed situations where quality assets might become available, joint venture opportunities leveraging our infrastructure or technical capability, and district consolidation plays, particularly in Nevada. We're patient but ready. Why this matters to you?
If we find nothing that meets our criteria, we'll deploy capital into internal opportunities, strengthen the balance sheet further, or return capital to shareholders. If we find the right opportunity, whether in our home jurisdictions or a safe mining-friendly jurisdiction, whether silver focus or a gold cash generator, we can move decisively without excessive dilution or stretching the balance sheet. Either way, discipline is gonna govern the decision. So in summary, strategic flexibility, capital discipline, and silver focus. I'll now return it back to Rob for his closing remarks.
Thank you, Rob.
Fourteen months ago, Hecla had exceptional assets that weren't delivering the returns that they should. Today, $310 million in free cash flow, ROIC doubled to 12%, balance sheet rebuilt, exploration investments doubled and unlocking value. Now, that's transformation. So what makes this sustainable? Well, we've implemented some systems, as we've talked about. Russell showed you the capital allocation frameworks, Carlos showed you the tools, the business improvement tools, Kurt showed you an exploration strategy, turning drilling into discoveries and value. And these capabilities compound. Next is discipline. Our returns threshold, it doesn't change when silver hits $50. Our standards don't relax when schedules get tight. Clarity: we are the premier North American silver producer. Every decision serves that vision.
People, UCB mining innovation, metallurgical breakthrough, systematic exploration, operational discipline at Keno Hill, none of these from mandates, all from teams who believe in what we're building. So where are we headed? Over the next 18-24 months, Keno at permitted capacity, Nevada drill results that either advance or redirect our strategy. In 3-5 years, if Nevada succeeds, potentially a fourth production center. If not, we'll obviously redeploy that capital where it creates better returns, but throughout all of that, discipline. We won't chase production growth for growth's sake, as Rob pointed out. So, you know, you obviously all have a choice.
You can buy the ETF and get the commodity exposure, or you can invest in the largest primary silver producer in the United States and Canada, exclusively in Tier 1 jurisdictions, reserve lives double that of our peers, 30% ROIC from our silver operations, and a balance sheet built to execute. I think the best years of Hecla really are ahead of us. So thank you, and with that, we'll turn it over to questions. I've got a very talented management team here, so, feel free to ask them more questions. You can hear it directly from them. Okay, Mike, let's head off with some questions, please.
Thank you. First question, selling silver: how do you choose who to sell your silver to?
Anvita, would you want to answer that, please?
So most of the silver.
There's one.
Most of the silver-
Use mics.
So the silver that we produce is in concentrates, and it goes to our customers who are smelters, Korea Zinc, Teck. These are big players. Most of the silver goes to the concentrates and to benchmark customers. So we have predetermined contracts. We also sell silver on spot market based on the terms that we get, if they're profitable or not. But mostly, these are all predetermined. We do not produce silver in dor é . It's all concentrates. Most of it is concentrates.
Next question, it's on the news that we announced just before the Investor Day kicked off. What was the, you know, the kind of decision-making around selling Casa Berardi?
So we've owned Casa Berardi for around about, around about 13 years. During most of its life, it hadn't really made a lot of money. So, right, right now, at, high, very high gold prices, it's making money. You saw in Q2 and Q3, we, we made something like $30 million and $32 million, respectively. We're making money now. At the moment, on our current base plan is to harvest, and, we would continue to operate the 160 open pit until the end of this year, and then, supplement that with stockpile. So we've got about 2 years of production ahead of us. This is our plan. And then we have about a roughly, we've signaled roughly a 5-year permitting hiatus.
At some point, the plan is, was to do some dewatering, complete the engineering studies, and put the principal pit into production. That's kind of long-dated. What we've done, essentially, is bring that cash flow forward. Now, you saw our model, depending on your, on the gold price assumption, anywhere between let's call it $300 million-$400 million of free cash flow. We're bringing that forward. We're not having that five-year wait. We don't have to invest in capital in what's a gold asset. It's clearly not core to us. We want to focus on our silver business. Casa Berardi's also been demanding a lot of attention from technical support, and so we can redeploy that on our silver business. So, so really, we're heavily invested in silver.
I think, I think the new owner, Aurizon, I think they're, they're good operators. I think this is a win-win for both of us.
The next question online had to do with the comments around the potential to reprocess our tailings at Greens Creek. They're looking for what should the market be looking for in terms of next steps, news flow, what do we need to do?
Brian, do you want to talk to that, please?
Sure. Yeah, like I talked about, we'd been engaged with universities and some of the kind of startups that are looking at that technology for about the last five years. We're, again, have done bench scale testing, and we hope to move to pilot plant testing this year. So again, fairly, you know, fairly new thing for us, but I suspect here soon, we'll have some probably some discussions in the public realm about potential partners and how that advances in the company.
I think a key point here is this isn't just a dream. We're actually taking some action steps to see if we can realize some value. Even if we get a small percentage of that value, that's still, still material, so we'll chase that to ground.
Hey, Rob and team, it's Heiko Ihle from H.C. Wainwright . Maybe just talk a bit about the competitive bidding process for Casa Berardi, and if the process has shifted, or rather the pricing has shifted, given that obviously gold prices are probably a lot higher today than when this conversation first started?
Yeah, thanks for the question. So when we started the process, it was about 14 months ago. It was about when I started. The gold price was around $2,600. Casa was really not making really any money then. When we started that process, we invited various companies to come and tender. We eventually lined up on one. They did an extensive due diligence. It went for a long time. I won't comment on their process, but in the end, the offer that we received didn't reflect the value of the increasing value of the mine at increasingly higher gold prices. So I guess at the time that they submitted the bid, there wasn't that much confidence.
I mean, we'd never been in $3,500 gold territory, and so we modeled our cash flows. We knew with a high degree of confidence what we could achieve by executing our operating plan, which was the 160 Pit and processing the stockpiles. We also pivoted and kept the underground going, even though that was supposed to have closed two years ago. So, you know, I think we showed some flexibility, agility, and we recognize the increasing value. In September, we announced that the offer wasn't sufficient, we're gonna pivot, and we're gonna harvest this thing. We basically shut down the data room, and not long after, we had multiple unsolicited offers, and this time, people had more confidence that the gold price was gonna be stronger for longer.
And so the non-binding offers that they put forward to us, they got our attention, and so we engaged, and you know, there had been, you know, roughly four months of due diligence since then.
Fair enough. Thank you. And then just one quick one, and it's just a number that blew my mind in the presentation. You mentioned the economic impact of Keno Hill last year was $179 million. And I mean, as someone who's walked the soil there, that's just a huge number for what's, you know, in a lot of ways, a fairly compact mine. Maybe if somebody on your team could break that number down just a touch?
Sure. Who wants to do that? Patrick, go ahead, please.
Yeah. So that's the total economic impact. It, it includes, as well capital investment, as well as ongoing, salary, other, reagents, all of that. Altogether, that, that's what the number is. I, I don't have the exact breakdown for you right now, but I could work with Mike to get that to you, if that would be of interest.
Maybe, Russell, you can add a little bit more color on that, please.
Yeah, just adding a little bit to what Patrick said, keep in mind that includes the work that ERDC is doing, right? That environmental cleanup that, you know, we spoke to, as well as all of the capital that we, yo u know, we're deploying a lot of capital into that mine, as well as our operating costs are, in 2020, I'm talking 2025 in this case, but probably about $90 million plus in the capital, plus ERDC. So that's how you get to that total number.
It's a, it's a mind-boggling, large number. Thank you guys very much.
Thanks for your question. I'd also add that, you know, a key thing is the previous few years, Casa was draining of us around about $50 million of free cash flow a year. Now, it's self-sustaining, and we're getting closer and closer to that permitted 440 tons per day. So we're looking forward to the future with excitement. And this is also going to be a generational mine, I think. That's my expectation. There are so many documented historic workings, and we're only really touching two of them at the moment.
There's a question online that's a perfect follow-up to Russell's comments. Could you explain the ERDC and what that program involves?
Yeah, I'm happy to take that one. So ERDC, Elsa Reclamation and Development Corporation, there's a historic mining district that has, you know, well on 100 years' worth of impacts. There are water quality impacts, there are open adits, there, there are a number of features that need to be remediated and reclaimed. And the program, we are working together with the federal government. They provide the funding, we provide the manpower, the know-how, and we are systematically going out and addressing, in order of importance, the sources of water contamination, building places to or facilities to treat water, to reduce contact and move tailings, consolidate those.
From a closure perspective, from a redevelopment perspective, it's actually really satisfying work when you take something that had been closed to the standards of prior generations and bringing them up to modern standards.
Patrick, just as a follow-up, you mentioned we provide the manpower, but that's also covered by the federal government as well, in terms of the wages.
That's right. We're largely reimbursed for everything that we do.
Any other questions from the audience? Okay.
I should thank the audience for coming in. I know it's brutal out there, and the fact that you've braved it to come in here, I appreciate it.
One more question from online: "Thanks for the informative event. At Keno Hill, you talked about the potential at 440. Can you remind us of your planned mining and processing rates for 2026, 2027, and when you expect to sustainably operate at 440? With the exploration upside at the project and significant upside to mine life, is there an opportunity to accelerate and/or expand beyond 440?
Let's talk about 2026 first. So Jason, do you want to answer that?
Yeah. I believe guidance was released for that. As you see the guidance, you'll see a modest increase as we go into 2026, as we work to further increase our developed state and associated infrastructure. As we look into the forward years, we're looking for that modest growth until we can establish, develop state-associated infrastructure permits and all those things to establish the full permitted rates at 440. Not only to get to the growth, but do it efficiently and sustainably.
Thanks for that. So just to follow on from that, so our permitted rate is 440. There are a number of steps to get through there that were outlined on the slide. To Jason's point, there's a, there's a delta between our permitted 440 and what we've been mining at. So last year, we mined at around about 300 tons per day. This year, it's gonna be more or less around about 325, and that'll start to gradually ramp up. We've also invested in a tailings backfill plant, which is going to hopefully help with productivity, but it's also certainly gonna make it safer. That'll be rolled out. And so you'll, you'll see that daily tonnage rates start to increase gradually. Perhaps somewhere in around about two years, we might be around about four four forty.
Any discussion on beyond that that's gonna require, you know, more permitting, more infrastructure investments. We're aware of the optionality and the potential there, but right now we're just focused on get to 440, and even at these prices today we're making coin, so it's good.
Another one, with respect to Montana, the Libby copper, silver project, you've had some news on permits in a favorable manner there. What should we be thinking in terms of market updates there? What's the goals?
So at the moment, and we're very grateful for the FAST-41 designation, but what that does is it allows us to continue exploration. It allows us to rehabilitate an underground shaft. It allows us, it doesn't allow us to extend it. It allows some dewatering. But fundamentally, this is a very valuable project. I mean, there's a pile of copper and reasonably low-grade silver, but fundamentally, this is a copper deposit. To develop it, there will be a long permitting timeframe. All we have right now is the permit to explore.
And for that reason, I'm more interested in getting a very capable copper company with the proper credentials to actually take this on, either buy their way in or earn their way in, give us a free ride so that we can focus on our precious metals business. Mike, is there anything you want to add?
Yeah, I think the key is that we, you know, as Rob said, that we have the ability to go explore, and it's a five-year exploration program. We have a significant amount of dewatering and rehabilitation to do first, and we also still need to secure some state permits, which are still pending. So, as we work through that process, that slow process to get to the point where, you know, we can complete that exploration, then on the other side, we'll do what Rob talked about.
One other question from online is clarification around comments around the silver price and our assumptions. So our base, our guidance came out this morning, full details in the news release that's available on our website. In that press release, we make assumptions on metal prices. Can you comment how does that compare or contrast to the comments on the outlook for silver made in the presentation?
Russell, do you want to take that one, please?
In the presentation, you know, one thing that we tried to make clear is that we run this business for the long-term perspective in mind. And so as we think about the prices that we use to both plan the business, but also you can see in our cost guidance, we use conservative prices because we have frankly, we have assets that can produce at these prices, at lower prices and give significant margins at the prices we see today. And so although we're bullish on our prices, we're bullish on silver, we're bullish on gold as well, we're still going to utilize more conservatism in our planning so that we can ensure that we capture that margin.
Last question from those online: Would you ever consider holding metal on your balance sheet rather than selling everything you produce?
Maybe Anvita, you can take that.
As I said, that most of our silver is in concentrate, so we are required to sell that to benchmark customers. So unlike doré or other things that we can, we might have been able to hold, we—it's better to sell that inventory and keep that going. And plus, as Russell said, our operations are steady state, long-term, and we have that inventory build-up that will keep happening. So best to keep that working capital going, and deploy our capital to the best possible alternatives.
Last call for questions on the floor. Seeing none. Thanks, everyone.
Seeing, yep. Thank you, everyone, for participating online and in person, and make the most of these times. These are exciting times. We're excited about Hecla. I hope that came through, and I hope you are as well. So have a good day, everyone.