We're very pleased to host, Phil Baker, the President and CEO of Hecla Mining, and Russell Lawlar, the CFO. They just reported earnings last week and the Alexco acquisition a few weeks ago. Phil, tell us about all the developments.
Hey, John. Thanks very much. Appreciate the opportunity to be here and presenting to your friends and mine. You know, the headline of this presentation is that we're the United States' largest silver producer, and I guess that's something I can't overemphasize, the fact that we produce 40% of all the silver mined in the United States, and that's growing. That's what the real message of my presentation is gonna be, is the fact that we are a growing silver miner, and I believe we're the fastest growing silver miner in the investable silver miner. Let me just mention that I will make forward-looking statements, and they are subject to the cautions that you'll see here on this slide and on the next slide.
You should look at our 10-Q and 10-K for further cautions in the forward-looking statements that I'll make. Hecla, we're really on a remarkable growth path. We are likely to see at least a 30% increase in our production, maybe as much as 50% over the course of the next few years. Why do I say that? I say it because we have three things happening simultaneously. The first thing we have is the Lucky Friday, and it's, as we go deeper in the Lucky Friday, the grade goes up. Because we have devised a new mining method, we're able to mine it more productively. Second, we're making this acquisition of Alexco.
We would expect that to close before the end of the quarter, and we would expect to see that in production before the end of 2023. Then third, we've got Greens Creek. Greens Creek, while it's been a fantastic asset, we think we can make it even better by increasing the throughput. That's something we've done in the past, and I think we'll successfully do it in the future. Some piece for investors to remember is that where you mine is important. If you're in a risky jurisdiction, no matter how good the deposit you have, that deposit is at risk. The economics of what you're doing is at risk. We have our mines in Alaska, Idaho, Quebec and what we hope will in the Yukon.
These are mines that have very long mine lives. For our three operating properties, mine lives in excess of 10, 15 years. These are mines that have been operating, you know, 30 years in the case of Greens Creek in Alaska and Casa Berardi in Quebec, and 80 years in the case of Lucky Friday. My expectation is they could mine for another 30 and 80 years. We have very large reserve base. That reserve base is very, very high grade, and high grade solves a lot of problems. It allows you to mine less material, have less of an environmental impact, and gives you the opportunity to really drive your costs down.
Final thing I'll say as an introduction is the brand value that Hecla has. We're a 130-year-old mining company. We've been on the New York Stock Exchange over 50 years. Our balance sheet is very strong with a couple of hundred billion dollars worth of cash on the balance sheet, plus access to a revolving credit facility of over $100 million. We have the ability to finance the things that we're doing. We make a point of giving of making returns to shareholders in the form of dividends. We've been paying a dividend since, I don't know, about 2011 or so.
In 2012, we have a dividend that is linked to the silver price, and as the silver price goes up, we give shareholders more of the cash flow that we generate. The average free cash flow yield has been about 14%. Let me just go into some of these items in a little more detail. You know, the first one being the production that we have from the United States. In 2021, we produced almost 13 million ounces of silver. That represents 40% of all the silver produced in the US. The US produces about 4% of the world's silver. Canada produces about 1%.
We would anticipate with Alexco, we have the potential to be a 40% producer of all the silver produced in Canada as well. Let me talk about each of the mines, and I'll start with Greens Creek. First point to make is that Greens Creek, since 1989-1997, so 10 years after it first went into construction, it has been a free cash flow generator every year since then. Generated about $1.2-$1.3 billion in free cash flow in its existence. You can see over the last six quarters, it's generated $266 million of free cash flow. It produces silver. It's the largest silver producer in the United States, but it also produces gold, zinc, and lead.
As a result of this mine and the Lucky Friday, we're not only the largest silver producer, but we're the third largest zinc producer and the third largest lead producer. You can see in our guidance, we expect to produce almost 9 million ounces. We expect the cash cost to be close to $0, the all-in cost to be somewhere around $7. The point I made earlier was that we're gonna increase the throughput of the mine. You can see since 2008, when we became the operator of the mine, we've increased throughput about 15%. What we're looking to do over the course of the next few years is to increase throughput another 5, maybe up to 10%.
Not a big jump, but as you increase throughput, more ounces, lower cost per ounce. The Lucky Friday. Lucky Friday is on a new path for this mine. It's been around for 80 years. It's gonna have its best time in front of it. It is a free cash flow generator. That's one of the things we try to do with each of our operations, is we try to make sure that they're each generating free cash flow. It's done a good job as we're ramping up with this mining method. I'm gonna talk about the new mining method, which is called the underhand closed bench. It is a mining method that we have.
We think we'll be able to get a patent on the mining method. It is a unique way of mining these ore bodies. Guidance this year, we expect to be a little over 4 million ounces. Last year, we were a little over three. The year before, we were about two. We're having this growth, and we're seeing the costs, cash costs somewhere around $3 and our all-in costs around $11. The mining method, before we talk about that, you need to understand what the ore body looks like. This is actually an image that shows the ore body, a long section of the ore body. The distance from one side to the other is about half a mile. The distance from here to here is about a mile and a half.
This is the area that we have mined over the last 20+ years. We will ultimately mine these areas that you see at the top. The focus for the next 20 years is gonna be going deeper. As we go deeper, the grade of the ore body increases. You can see from this point to this point, there's 1,000 feet with the silver equivalent grade of 30-35 ounces. That's a huge increase over what has typically been mined at the Lucky Friday. That's why production's going up. It's really all about grade.
In order to mine safely and productively, we've had in the past with our cut-and-fill method we've only been able to access the stopes about 75% of the time. 25% of the time, we have shut the mine down in order to manage seismicity because we're so deep underground. Realize the bottom of this shaft is almost two miles below the surface. What we have done is we've come up with this new mining method, the underhand closed bench. The way this mining method works is that we are on the cut that we have at this level. We are underneath cemented backfill. We have an engineered back over our head, it's very safe. Nothing's going to. There's not gonna be any seismicity above your head.
What we're doing is we're drilling vertical holes instead of horizontal holes. Typically, you are drilling horizontal holes, and you're moving eight feet at a time. What we're doing now is we're drilling the long holes. This is similar in some with and the way the blasting is done similar to long hole mining. We're drilling these long holes, and we're doing it over a distance of about 300 feet. Then we blast it all at one time. What that does is it induces the seismicity to happen on the blast. 96% of the seismic activity that occurs now occurs within a millisecond of this blast. This mining method would not have been possible 15 years ago. John, am I coming through okay? John, can you hear me? Hello?
John, I'm going to assume that it's I just saw you again. Saw you move. Can you hear me, John?
Yeah. For maybe 45 seconds, your screen froze. If you have any other windows open or teenagers streaming video, you might wanna control-
No, I'm here in the office.
Okay.
Um-
We're good.
Let me go make sure I'm making this clear. What happens is we are blasting these vertical holes, and we're blasting over a 200-300 foot length, and we're inducing the seismicity on the blast. What that means is that we no longer have to close the mine down, close stopes down for 25% of the time. We're able to operate on a 24/7 basis. This is blasted. What happens is this mucker comes in, and it, when it blasts, it actually swells up. You can see here how it swells up. It actually goes all the way to the roof of that cut. We muck that out. We then fill it, engineered backfill.
We then muck the next level, and we do it one more time, and then we repeat the cycle. The productivity of this is remarkable with what we're doing. That's the underhand closed bench method. We think as a result of the higher grade and the underhand closed bench, that this mine is in a place it's never been before. What this chart shows is the silver production by decade. You can see that roughly speaking about 25-26 million ounces per decade. This coming decade, we're gonna be double that. The value of this mine and its ability to generate free cash flow is unlike any other time that it's ever had in its 80-year history. That's Lucky Friday.
Green's Creek, Lucky Friday are the two key things that are gonna drive silver growth. Then there's Alexco. Before talking about Alexco, let me mention Casa Berardi. It's our gold asset in Quebec. We're producing around 130,000 ounces. Cash costs are relatively high, $1,300. All-in costs are, you know, up to $1,700. It's a free cash flow generator. And what's the, you know, how does this mine improve? It improves really by the exploration that we're doing there and getting higher grade. In the meantime, we'll continue to operate this, generating free cash flow, looking for that higher grade material. Let me go to Keno Hill and this Alexco transaction.
We looked at this, and whenever we're evaluating things, we think about it in terms of a number of key ingredients that an asset needs to have, and that's whether it's our own asset or something that we're gonna acquire. You know, I'll just go down the list here. Highly prospective, top-rated mining jurisdiction. Like I talked about before, where you're mining matters. The grade of the deposit, the life of the deposit. Under the technical report that Alexco did about 18 months ago, the mine life is about eight years. That's a good start, and we think that we'll be able to make it longer. The ability to increase throughput or lower costs, we think we'll be able to do that over time. Infrastructure, no significant capital outlay.
There's an existing mill. This is road access. There's power lines. There's infrastructure that makes this a very viable operation. 88 sq mi land package. Significant exploration potential. Then finally, being in a place where you have sort of the stewardship of our environment and the community. We, you know, where we operate, we operate for generations, and so it's really important that we're taking care of the environment and we're good partners of the community. Here's a picture of that 88 sq mi land package. Over 200 million ounces have come from this land package at a 40 ounce per ton average grade. It's a super high grade historic district, and very little work has been done on this in modern times.
The reason for that was there was an environmental issue that Alexco solved. That's one of the big values that Alexco brought to this, was coming to an agreement with the Canadian government on how to clean this up and do it in a way that would not burden the operating company. They've solved for that. Basically, what happens is the government pays us for the work that we do to clean things up outside the small areas that we will disturb for mining. It has been a very successful arrangement that Alexco has had with the government.
What are we gonna do, when this deal closes, and that we expect it to close before the end of the third quarter, is we're focusing on the development. We're gonna do close to 1,200 meters of development, and the infill drilling will drill maybe 4,000 meters of infill and definition drilling in order to be able to improve the mine plan, and to have a consistent level of production. We'll do this on the Birmingham, and we'll do it on the Flame & Moth. You know, reserves that Alexco has identified on Birmingham is about 18 million ounces. On the Flame & Moth is about 15 million ounces.
It all sits in this area. So all of this, the Birmingham Deep is an inferred resource that we will over time drill and move into, hopefully into a reserve, and that will extend that mine life that I talked about earlier. You have those operations, those four operations. At this point, we're only providing guidance with respect to the three we own. With that, we would anticipate our silver production to grow by 15% by 2024, and that's really about the grade at the Lucky Friday that drives that. You know, you can see where our, on a consolidated basis, where our costs will be. Cash cost of $0.75, so call it $1-$2. All-in costs, call it about $11.
We're gonna spend about $150 million-$160 million of capital. We've increased the capital because we're able to move some things from 2023 into 2022 in order to advance things faster, particularly at the Lucky Friday. We certainly have had some inflationary pressure, and we've identified new things that we should do in order to improve the productivity and reduce the risk, particularly at Casa Berardi. Last couple of things I'll mention is the financial strength that we have, that you know, over the first half of the year, we generated close to $400 million of revenue. Cash flow from operations of $78 million. Free cash flow of $22 million. We have that almost $200 million of cash on the balance sheet and liquidity.
We do have debt that's outstanding. That debt is long term. It's a high yield bond. We have been in the high yield bond market now since 2013. We think with the mix of assets that we have, U.S. assets, long-term assets that have multi metals, we think it's appropriate for us to have this type of debt. We don't like bank debt, we don't like project debt, but we do like high yield bonds that gives us access to another source of capital. We would anticipate that over the long term that we'll be in this market, you know, continuously. We view this as a permanent source of capital. Our operations generate great margins. Here it is. Here's the margins that the silver assets generate.
You can see just this past quarter rather, $12 an ounce of margin, you know, for every ounce that we produce. You can see the free cash flow that we generate. As a company, we've had $238 million of free cash flow since Q2 2020. We have had inflationary pressure, and you can, you know, we're providing some insight into what's driven the inflationary pressure. The biggest thing has been diesel, and the biggest impact that we have with diesel is at Casa Berardi, where we have both underground and open pit operations. Then I mentioned the dividend. With the cash flow that we generate, we wanna provide a return to shareholders, and we do it in two ways.
We give a base dividend, and then we give a dividend that's linked to the silver price. With where the silver price is today, for every ounce we produce, we're giving $1 back to shareholders and generating a 5% return to shareholders on the ounces that we produce. In summary, story at Hecla is really about the growth that we have, growth that's in safe jurisdictions, growth that is with operations that are strong sort of in every environment, because of the high-grade nature of them, and growth that is sustainable. You know, we'll get to this 17-20 million ounces, and we'll be able to sustain that.
If you go back and look at our history over the last 20 years, we've gone from 5 million ounces of production annually to about 8 million ounces of production in the second half of the first decade of this century to this past decade, we've gone to 12-13 million ounces, and we've been able to maintain that. Now we're gonna go to 17-20 million ounces, and I would anticipate that we'll be at that level for some time unless we grow from there, which obviously we'll be working to do. John, I'll stop there. I've gone a little longer than what you had asked me to do, but happy to take questions you might have.
We're doing just fine, Phil. The question box is empty. Anyone in the call that wants to submit a question is welcome. Phil's slides are archived on the 2022 PDF Slide tab of our website, www.grandparentresearch.com. The same URL will work for replays as well as for the live presentation, and we archive all the URLs and slides on our website for a year. Phil, let's talk a little bit about the history of Alexco's operations. They've been idle for almost a decade. When was the last year they produced silver?
Oh, geez. I wanna say it's about 2014. Alexco produced some silver. They had a run for about three years. The issue that Alexco had was, among other things, they had a stream with Wheaton Precious Metals, and that stream was 25% of the silver that they produced. The result of that was that roughly half of the free cash flow went to Wheaton. That was one of the conditions that we had in acquiring Alexco, reaching an agreement with Wheaton to either eliminate or reduce the stream, and ultimately we agreed to an elimination of it.
That was really critical. The mines only ran for about three years under Alexco paying the Wheaton stream.
Correct.
Could you refresh us when the Keno Hill district operated? Was it from 1900 to 1950?
Roughly that time, timeframe. I think it might have started a little later, but not much.
Now, Alexco, since it idled in 2014, did it do drilling every year, or did it do drilling occasionally?
You know, I'm not sure if they drilled every year. I kind of doubt that they did, but it's possible. Certainly the other thing that Alexco did besides deal with the environmental liability is they found these deposits. You know. In fact, let me go back to this slide. Hector-Calumet is the primary historic producer. But Bermingham, Flame & Moth, Elsa, these are all discoveries made by Alexco. This is not. They're not just taking something that someone else discovered and building on it. They actually have made new discoveries. Remember, this is 88 sq mi, so you know, these look like they're really close together, but they're quite a distance apart.
What they have done is they've figured out the structure, the correct structural interpretation to understand structurally where you have the best chance of finding another deposit. So that was the huge success they've had. But realize they've had a limited exploration program. The program has been near surface, and it's been near infrastructure. So there's a huge opportunity across this larger land package. So, John, you're frozen again. I saw your screen move. So John, can you. I saw you move again. Can you hear me now? Can't hear me. Can you hear him?
I can hear you now, Phil.
Okay, great.
My internet provider faded twice. Both of those interruptions were on my end and not your end. I apologize.
No, no worries.
I was about to boot up my Wi-Fi hotspot from my cell phone for backup.
That's crazy.
I don't have Verizon. I have a company called Spectrum. It's the only provider here.
Okay.
Apologies to everyone.
Yep. You have that large land package, and while there probably hasn't been drilling every year, they did the hard work of figuring out the structural interpretation. You know, great job by the guys at Alexco. Which, by the way, the lion's share of the employees at Alexco will be retained by Hecla. You know, in this time of having a shortage of workers, we're very excited about bringing people over. The general manager at the site will continue to be the GM, and we have a whole slew of employees that work for him, and then the hourly guys, all those people we're anticipating will continue. In the corporate office, there's a large percentage of those folks that will continue.
Phil, Greg Johnson, one of the NovaGold founders, has a company, Metallic Minerals, in the neighborhood. Tara Christie has Banyan Gold. She's the spouse of John McConnell at Victoria Gold.
Maybe you put it the other way around. He's the spouse of her.
Something like that. There's these neighboring companies that also promote the trend. It sounds like the 88 sq mi in the existing deposits that Alexco was gradually drilling are enough to keep your plate full for the first couple years.
Look, I think it'll be longer than the first couple of years. Having said that, you know, we're in the district, and we'll wanna continue to grow. Whether we go beyond this will be a function of what's available and what it costs. You know, time will tell. But we don't need to do anything other than this.
Could you talk a little bit about the productivity gains from the new mining method at Lucky Friday, and how many tons per day you were doing two years ago, and how many tons per day you're doing this year, and how many tons per day you might do in a couple years forward, and how much of the output gain is from tons per day, the new mining method, the widening structure at depth, and how much is from the higher grade at depth?
Well, the historic throughput of the Lucky Friday has been something less than 800 tons a day. 750, 780 tons a day. There had been occasions where the mine has run at a higher rate. You can go back to 1999, 2000, you know, the price of silver was so low that the mine tried to offset that by running at a significantly higher rate. It had various areas to mine. It had where we're mining today. I'll go to that screen. It had where we're mining today. It had this area up here, but then it also had another area, the original Lucky Friday vein area. We know we have the capacity to hoist.
We know we have the capacity to mill at a higher rate. With this new mining method, we're now just mining in this one area on this one vein. We would anticipate that we're currently around 1,100 tons a day, and we anticipate that we'll get to 1,200 tons a day over the course of the next year or so. Where we can go beyond that as far as tonnage is unclear, but there certainly is the capacity of the infrastructure to probably go as high as 1,400, maybe even 1,500 tons a day. What that all means is more ounce production. The first thing that happens is ounce production goes up because of the grade.
You can tell that by, not the most recent technical report that we have, which is based upon the new mining method, but the previous one, which was the old mining method. With that method, we got to 5 million ounces a year. With the new mining method, we're getting to 6 million ounces a year. We think we'll have a better cost structure, better economics, and more importantly, a safer operation and an operation that we think can continue to grow in terms of its productivity, which we could not have done with the old method, because we had to let the rocks rest, because we didn't know when the seismic events were going to happen. Now we know when they're gonna happen.
We're controlling that, and now it's allowing us to envision this 1,200 tons a day and potentially more.
How long did you have to pause to let the rocks rest after you blasted and mined?
Well, you know, I don't know specifically, but generally speaking, the stopes were shut down a quarter of the time. Twenty-five percent of the time, no one was allowed in the stope. Now, different parts of the ore body would have more seismicity than other parts. Each stope was different as to the need to let it pause. On average, it was 25% of the time. Out of every four weeks, one week it was shut down. Sort of think about it that way. Out of every 12 months, shut down for three months.
Did the workers move from stope to stope?
Yeah, generally speaking, they did, but on a limited basis because we had a system in the past that allowed them to basically bid for an area that they would work. Sort of like a flight attendant bids for which flights they want, they got to pick which areas they wanted to mine. That was what the strike was about, is we needed to be able to move people more freely and put people where we needed them. That was ultimately resolved and, you know, we entered into a new arrangement about three years ago.
Tell us about the productivity changes at Greens Creek in Alaska?
Well, if you go here, I mean, what it has been is really about getting more tons through the mill. I can tell you that when we took it over, it was about 1,900 tons a day. We ultimately moved it up to about 2,300 tons a day, and now we're looking at the ability to try to move it to 2,500, maybe even 2,600 tons a day. You know, stay tuned with this because despite how good this mine has been, we think it can be even better. It's been an extraordinary mine. I mean, you can see here the cash flow generation that this mine has had. You know, it had a rough start.
That's something people have to understand about mines, is that they're a complex dance and particularly these underground mines, that takes some time to get resolved. But when you do, these things can go on for generations.
I guess since 2016, we've acquired Aurizon to get Casa Berardi, Klondex with two small underground mines.
2013.
2013, excuse me. Klondex and now Alexco. We didn't have any discussion about the Nevada division. I know you were shipping some ore, I think, to Barrick to treat the refractory ore.
Yeah. The Nevada Gold Mines, we were shipping to them. That's all gone on pause as we announced a year ago. You know, our focus is strictly on exploration. Having said that, we are mining a little bit and stockpiling it before we let some of the old workings at Fire Creek flood. The newer workings will continue to maintain, waiting for the opportunity to mine those and put that material through an autoclave or a roaster.
You're gonna go back after it floods?
No. There's different areas of the mine. What we're doing is we're mining those areas that we want to allow to flood, so that we don't sterilize that material. We'll stockpile that material till the time comes that there's capacity in the autoclaves. Remember, I-80 is, they've acquired the autoclave from Nevada Gold Mines, and they're in the process of rehabilitating that facility. There's gonna be the need for feed in Nevada in a few years. We wanna be in a position to be able to deliver material.
You might have another alternative that might bid at a different rate to treat your material. Is that what you're suggesting?
Well, just higher recovery, right? The recoveries that we get out of our own mill are inadequate given the complexity of the metallurgy. While if you go into the autoclave, you can get, you know, close to 90, certainly over 90%. If you go into a roaster, you're over 75%. Both of those are options for us and, you know, we wanna leave that optionality open to us.
Whenever you predicted 17-20 million ounces of output, of course, you're talking about silver only.
Silver only.
When you talked about percentage changes, you were talking about silver only.
Correct.
Should we expect the gold, lead, and zinc outputs to be about steady?
Well, certainly, lead and zinc will also increase because Keno Hill has that as byproducts. The Lucky Friday, as the grade goes up for silver, it also goes up for lead and zinc. Not as much, but it does go up. You can expect to see those, that production increase as well.
I know you're a careful student of silver. The lead and zinc markets are highly interesting. This year, the World Bureau of Metal Statistics reports larger lead than zinc output. Zinc has been stagnant around 14 million metric tons, and silver actually grew more rapidly and appears to surpass it.
You mean lead grew more rapidly.
Lead surpasses zinc. Excuse me. Do you have any thoughts on the bigger lead consumption? Maybe the world auto fleet's gotten bigger, and there's more replacement battery demand.
Yeah. You know, nothing is slowing that down in the intermediate term. What will happen long term is an open question, but certainly in the intermediate, in other words, the next decade, maybe two or three decades, pretty steady demand. Because realize that even on an electric vehicle, they still have a lead-acid battery. It is.
It's still the starter.
Correct.
With zinc, I think the use of aluminum panels, the EVs tend to be all aluminum, for example, takes away some of the galvanizing, and some of the coating weights got lighter. I think that explains some of the stagnation in zinc.
You know, the bigger issue for the zinc and why it's stagnated is the fact that energy is so expensive in Europe, and so smelters have actually had to shut down. It's been more of a result of a lack of smelter capacity and hence why the price of zinc is, you know, $1.50+ per pound because of the lack of smelter capacity.
It's very ironic that the lead demand is more robust and the lead price is $0.90 as opposed to $1.50.
That's the reason is.
The supply constraint.
Yes.
In terms of the three former mines of Klondex, in Nevada, are the Hollister and the Midas operations likely to stay quiet at any gold price?
Yes. We're not anticipating restarting either one of those. Both of those are on an exploration path. That's what our focus is. We've got this East Graben Corridor on Midas that we're exploring on. We have on Hollister the Hatter Graben. As we've disclosed, we've hit water that we need different permits for to de-water the Hatter Graben, so we're in the permitting process for that. The other thing I'll mention is that there was another property that came with those three called Aurora, and we are doing exploration on that. There were actually four properties that Klondex had.
Could you tell us where Aurizon lies or what its history is?
Yeah, it's right on the California border. It's gone by a couple of different names. Esmeralda was a previous name of this, so you might be familiar with that, John. That's been around for some time. Very high grade, and we're drilling on the patented ground where we're able to get the permits necessary, and we're working on permits across the larger land package to explore.
Once again, if there's any questions from the webcast, please use the question box. We, the only question, Phil, is my neighbor around the corner in Holmdel telling me the Internet's better in New Jersey, and I should go back. It's from Chen Lin. How many people from the Hecla corporate organization will be seconded to the Yukon for the Alexco acquisition?
Yeah. I'm not interested.
How many are seconded to work on the Nevada Gold Mines? Do you have the capacity to evaluate new opportunities?
Yeah. The short answer is there's really no one from the corporate office that will be seconded to either of those. We have a team that's in Nevada. We have an employee from Nevada that is going to go up to Alexco, you know, to Keno Hill. With the exception of that, the Keno Hill team is largely the team that Alexco has had. We will have our expertise go up there on a periodic basis, but they're not gonna be seconded. These guys are quite capable. They need some additional resources, and they need a bit of oversight, and what we can provide both of those things without secondment. As far.
To your second question, we have the same capacity to evaluate further things that we've had up to this point.
Good. You're very pleased with the Alexco team.
Yep.
You think by relieving them of the one-quarter output obligation to Wheaton Precious Metals and funding them for drilling and development, they're gonna run clear on their own.
Yeah. Yeah. Well, on your own, you know, no one ever does things in a corporate setting by themselves. You need the full team of people to make a mine successful. We'll provide the expertise that they might not have, but we don't necessarily need someone there for extended periods of time. You know, it is. The GM is someone that we know well and very capable GM. Has been a GM at previous. Not for Hecla, but for other companies. We're quite pleased with the fact that he's coming into the Hecla. We actually looked at bringing him into Hecla at some time in the past. It's someone that we know well.
The silver price has been bouncing around. At $20 silver and the current gold, lead, and zinc prices, how much free cash flow did you generate in the June quarter?
I don't recall, John. The first half of the year. I have a slide here. First half of the year, it was $22 million of free cash flow. We would anticipate over the second half of the year for us, with the investment that we're making in Alexco, with the increase that we're doing in capital expenditures, that will diminish. I don't know where we'll ultimately come out. It depends on the metals prices. We think that we're in a period of time of making investment and so that we can increase this, the silver production that we have. We can get to this 17-20 million ounces in fairly short order.
A few years, we're not yet ready to make a commitment as to when we get there, because it depends on when we bring Keno Hill back into production and at what level that they're producing. It won't be too many years before you'll see us at that higher level of production. The capital investment that we're making now, we think is well worth doing.
Super. Basically you've got your business plan for the next couple of years laid out, and Alexco is a great new opportunity. I bet they're just as happy as you are, to participate via the Hecla stock.
No, they are. You know, the team at Alexco is very excited about becoming part of Hecla. It is very gratifying going to those operations, going to the corporate office and seeing the enthusiasm that folks have for being part of Hecla. Having said that, they're also committed to Keno. It's interesting. These people went to work there with a vision as to what Keno could be, and what they see is that Hecla is gonna allow that vision to come to a realization.
In terms of Wheaton Precious Metals, it's better for them to have 135 million of Hecla stock than a non-producing stream.
That's right. You know, it was a good transaction for them. They got a great return on the investment that they made. They understood that from Hecla's perspective, the stream needed to be quite small for us to move the asset forward. It got to a point where it was so small that it was not relevant to them. It was better for them to go ahead and close out of the position.
That stream was relatively early in the history of Wheaton Precious Metals and streaming.
Yep.
Later, after the 2013-2015 downturn, it became frowned upon for streaming companies to take more than 10% of a straight gold and silver property, rather than taking the silver or the gold byproduct from Antamina, where copper was most of the gravy, for example.
That's exactly right.
Sandstorm had taken too big a piece of Luna in Brazil. I think that, I'm sure Wheaton was very happy to improve the situation, and they didn't. Before the 2013, 2014, 2015 break in prices, maybe, there was a little too much optimism by those financings.
Well, as Clint and Randy have said to me, Clint's the CEO of Alexco, Randy with Wheaton. When they first put the stream in place, they thought this was gonna be more of a lead zinc producer than a silver producer. You know, based on what they knew at that time. They were pleasantly surprised with how much more silver there was than the base metals. It caused the stream to get out of whack relative to the revenues generated.
Phil, there's no questions in the question box. I think we covered the, everything except Casa Berardi, which I presume is steady state.
Yeah, it's steady state and it's you know, let's continue to explore. You know, this is this mine we've now increased to 4,000 tons per day, where we've gotten the mill to where it's functioning reliably. You know, with that 4,000 tons a day, if we can find some additional grade, what you'll see is a significant free cash flow generator. That's what our focus is on. It has a long mine life. I mean, we've got 15+ years in front of us.
Well, Phil, thank you. Congratulations and thank you on the tremendous rebound in your share price after the sell-off the day Alexco was announced. I guess Alexco is better appreciated as well as the turnaround at Lucky Friday.
All right. Thanks, John, for having us.
All the best. Enjoy the rest of the summer.
Okay, appreciate it.
Apologies for my internet. Thank you.
No worries. Thank you.