May 6, 2014
Executives
Mike Westerlund - Vice President, Investor Relations Phil Baker - President and CEO Jim Sabala - Senior Vice President and CFO Larry Radford - Senior Vice President, Operations Dean McDonald - Senior Vice President, Exploration
Analysts
John Bridges - J.P. Morgan Garrett Nelson - BB&T Capital Markets Anthony Sorrentino - Sorrentino Metals Tony Stark - Stark Enterprises Joseph Reagor - Roth Capital Partners
Operator
Good day, ladies and gentlemen. And welcome to the First Quarter 2014 Hecla Mining Company Earnings Conference Call.
My name is Kitty, and I’ll be your coordinator for today. At this time, all participants are in listen-only mode.
Later, we will facilitate a question-and-answer session. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Mr.
Mike Westerlund, Vice President of Investor Relations. Please proceed.
Mike Westerlund
Thank you, Operator. Welcome everyone and thank you for joining us for Hecla’s first quarter 2014 financial and operations results conference call.
The financial results news release that was issued yesterday after market closed, along with today’s presentation are available on Hecla’s website. On today’s call we have Phil Baker, Hecla’s President and CEO; Jim Sabala, Senior Vice President and Chief Financial Officer; Larry Radford, Hecla’s Senior Vice President, Operations; and Dean McDonald, Senior Vice President, Exploration.
Any forward-looking statements made today by the management team come under the Private Securities Litigation Reform Act and constitute forward-looking information under Canadian Securities Law as shown on slide two. Such statements include projections and goals which are likely to involve risks detailed in our most recent Form 10-K and Form 10-Q and in the forward-looking disclaimer included in the earnings release and at the beginning of the presentation.
These risks could cause results to differ from those projected in the forward-looking statements. In addition, in our filings with the SEC, we are only allowed to disclose mineral deposits that we can economically and legally extract or produce.
Investors are cautioned about our use of terms such as measured, indicated and inferred resources, and we urge you to consider the disclosures that we make in our SEC filings. With that, I will pass the call to Phil Baker.
Phil Baker
Thanks, Mike. Hello, everyone.
We are really pleased with the first quarter. Despite lower prices this is one of the top five quarters Hecla has had in its history, if you consider a number of different metrics.
We had almost 500 quarters. So it’s really been an amazing quarter for us.
So why is this quarter one of our best and is that performance sustainable. First, the clear performance comes out of the philosophy that we started implementing in 2008, with the acquisition of Greens Creek and certain of our Venezuelan assets, with the investment we made in the Lucky Friday and Greens Creek over the past four years and with the acquisition of Casa Berardi.
We want mines that have loan rise, low cost, predictable performance and manageable jurisdiction, so that we can invest our people and our money in making the mines better and bigger, generating long-term returns for our shareholders. In this quarter we are reaping the benefit of some of that investment with significant growth in production, revenues, cash flow and adjusted net income, and the silver cash cost after by-products cost per ounce is significantly lower, affected almost half of what we had a year ago.
With the consistent performance of Greens Creek and Luck Friday at full production, silver production is up 31% in the first quarter, gold is up 238% with our third full quarter of Casa Berardi production. These production increases, despite significantly lower metal prices have resulted in a 65% increase in revenues.
Silver cash cost after by-product is $3.83 per silver ounce. And most of the revenue and cost improvements had flowed in the operating cash flow and that’s almost three times last year.
And now that reflected in cash flow, but when we focus on our fundamental earnings, we see adjusted net income applicable to common shareholders up about 45%. So in this first quarter, we achieved an increasing revenues and margin cash flow earnings even though prices declined and we are still able to invest in growth with internally generated funds.
So let’s go to slide [Technical Difficulty] ROE going to be able to continue to increase revenues, margins, cash flow, earnings and still invest in growth. And short answer is, yes.
Even with the low prices 2014 should significantly improve on 2013. We are maintaining our production guidance from January and are updating our cash cost guidance to $6.50 down from $7.
And this is driven by Greens Creek’s cost is subjected to be $5 per silver ounce down from $6, while we have increased Luck Friday’s guidance $0.75 based upon our first quarter’s experience. With adjusted EBITDA of $41 million in the first quarter and exploration capital expenditures of about $34 million, we are in very good position for the spending this year to be less than adjusted EBITDA.
We also have optimization programs at Casa Berardi that Larry is going to talk about. We see $140 million of potential benefit from this program.
We are about 20% of what we paid for the mine. While some of this benefit might be realized this year, primarily it’s expected to start in 2015.
These types of improvements will help make this quarter’s performance stay sustainable well into the future. We have added production on the silver equivalent basis to our guidance because so many companies now report that.
We want to give you a sense of Helca scale. If you consider all those, we will produce on a silver equivalent basis about $29 million ounces.
So we have grown dramatically. This is double what we produced in 2012, a third more of what we produced last year.
Since our primary business -- since our business primarily has fixed cost, more production materially improves Hecla’s economics. I think Jim’s presentation on Q1 financial.
He is going to show that. So, Jim, why don’t you takeover.
Jim Sabala
Thank you, Phil. This quarter is the strongest financial performance out of the past five despite lower prices, slide six demonstrates that.
Compared to the first quarter of 2013, all of our key metrics have materially improved. Results have come about as a result of achieving goals of more consistent operations at Greens Creek, getting Lucky Friday back to full production and integrating and optimizing the operations at the newly acquired Casa Berardi mine.
Slide seven shows the driver of our financial metrics production. Silver production increased by 31% over the first quarter of 2013 and gold production more than tripled to 46,000 ounces.
As also mentioned earlier, our results were achieve despite metals prices being significantly lower than the previous quarter as shown on slide eight. First quarter-over-quarter realized silver price was down 31%, gold down 20%, zinc 3% and lead 8%, so it’s truly remarkable to have one of Hecla’s best quarters with this kind of price reduction.
With the acquisition of Casa Berardi and the ramp up the full production at the Lucky Friday we continued to diversify our revenue stream, production outcomes from three separate geographic areas and from four products. In the first quarter 41% of our revenue came from gold, 31% from silver, 17% from zinc and 11% from lead.
We continue to actively hedge our base metals production. Currently, we have approximately $180 million of lead and zinc hedged out over the next three years.
We have hedged about one-third of our forecast zinc production for the next three years and half of our lead production. Focusing on our margins, you can see on slide 10, that our silver business continues reporting even stronger margins, strong efficiencies reported at Greens Creek, combined with ramp up of Lucky Friday production resulted in cash cost, after by-product credits per silver ounce produced of $3.83 per ounce resulting in an 81% gross margin or just over $16 for the silver business.
Likewise the Casa Berardi we realized $1,298 per ounce for gold revenues and cash cost after by-product credits of $886 per gold ounce resulting in a $412 gross margin or 32%. There is no doubt about it that 2013 and 2014 have been a period of volatile precious metal prices, one of Hecla’s strength is its historical ability over the long-term to manage periods of both very good and very poor metal prices.
This is due to combination of consistent production and the low cash cost achieved at each of our properties. As you can see on the cash bridge on slide 11, we met our goal to have predevelopment, exploration and CapEx expenditure within the $41 million of adjusted EBITDA.
If metal prices soften further in the coming quarters we could expect to further reduce discretionary expenditures and modify our business plan as necessary to provide the appropriate level of the liquidity within the business. And this is set forth on slide 12, where we finished the quarter on the back of strong operating results, with the contribution of three long lived mines and excellent liquidity.
We have 208 million in cash and cash equivalent and consequently if you include our unused revolver we have total of over $300 million in liquidity available to the company. And with that, I’d like to turn the call over to Larry Radford now for review of operations during the first quarter.
Larry?
Larry Radford
Thanks, Jim. You could see on slide 14 that the unit costs at Greens Creek were quite low.
$16 per ton less than a year ago and cash cost after by-product credits of $1.58 per ounce. It’s important that you don’t just take first quarter cash cost and straight line them for the year.
The significant drop in the cash cost over Q1 2013 is principally due to the availability of lower cost hydroelectric power that has resulted from higher water levels in the dam than another years. The mine is currently running on hydroelectric power so we anticipate moving to diesel power by mid summer, which should push up cash cost after by-product credits to be in line with our annual guidance of $5 per ounce.
Planned expansion at the Greens Creek Tailings Facility continues to work its way through the permitting process. On slide 15, you can see the quarterly ramp up back to full production at Lucky Friday and the corresponding reduction in the cost over the past five quarters since the mine restarted.
We have increased Lucky Friday’s full year cost per ounce by $0.75 to approximately $9.75 per silver ounce after by-product credits to bring our full year expectation in line with our first quarter result of $9.60. On #4 Shaft on slide 16, we have excavated below the 6500 level and/or over 2000 feet deep.
We believe the project risks have declined significantly with the focus primarily on the sinking of the shaft and development of operating stations. Outfitting the shaft is still in services and commissioning.
The high risk projects such as design, fabrication, procurement, commissioning of the centralized refrigeration plant and hoist room construction are complete. We are on track for completion of this $215 million budgeted project in Q3 of 2016.
The #4 Shaft is designed to access higher-grade ore zones potentially increase its silver production at Lucky Friday to the 5 million ounce per year rate as soon as 2017. On slide 17, you can see Casa Berardi’s production and cost.
This brings the mine production to about 94,000 ounces of gold production since we acquired the mine. Since then, we have been busy integrating the asset by rebuilding the long-term mine plan, improving the ground control program to improve safety performance, ensuring consistent operations, and optimizing our cost per ounce margin.
I think we have come a long way so far and we are now moving beyond the integration and into optimization. The advanced engineering work to optimize Casa Berardi operations is detailed on slide 18 and targets increasing metallurgical recoveries, better controlling dilution and reducing the amount of development necessary to maintain production.
Let’s look at these projects for a minute. We are working to increase metallurgical recovery by adding class floatation circuit, grinding the concentrate and then leaching it.
The target is an 8% improvement in recovery on two ore zones. With about $50 million of required capital, this project is worth about $70 million life of mine.
Due to permitting, the investment and benefit should occur in 2015. Second optimization project is to reduce development cost by reducing the drift cross-section.
Basically what we are doing is having dedicated loading base so we can the reduce the size of ramp and drift cross-sections throughout the mine, reducing waste and improve stability. Every 1% of reduction in waste is worth about 3.5 million life of mine so our goal of reducing waste by 10% could result in a $35 million pick up for our life of mine.
Third projection is the reduction of dilution. Basically, the mining method at Casa changed over the years as the ore zones now go into more longitudinal long hole stoping which can have large dilution variability.
The dilution depends on the stability of the hanging wall linked with the stope pad and the thickness of the vein and the irregularity of the mineralized zone. We plan to optimize dilution by reviewing our minimum mining width and reviewing our blasting practices.
We are targeting a 5% reduction in dilution which could mean $35 million in savings life of mine. These initiatives should positively impact revenue, cash cost, as well as reduce capital with an expected benefit of $140 million over the life of the mine.
Additional information on these programs can be found in the April 9, 2014 Investor Day Presentation on the company website. On slide 19, you can see some images from the Shaft deepening project at Casa.
The project that was originally started by Aurizon deep in the West Mine Shaft by 340 meters requires approximately another 38 meters of shaft construction and shaft loading facilities to be completed. This project is expected to provide additional access to the 118 Aurizon and to enable deeper exploration.
We continue to expect the Shaft work unloading pockets to be finished late in the third quarter. I will now turn the call over to Dean for exploration and pre-development.
Dean McDonald
Thanks, Larry. During the first quarter, we had active drill programs underground at Greens Creek, Casa Berardi, and Lucky Friday, and on surface, at San Sebastian.
There has been considerable success in drilling high-grade intersections at the three mines and a table of recent intersections can be found at the end of the Q1 press release. At Greens Creek, as shown on slide 21, we continue to define high-grade precious metal rich, Deep 200 South trend at the South end of the mine.
That should allow us to add resources to the mine plan. In the next two quarters, we plan to resume exploration at the south end where mineralization remains open and to the north to evaluate a gap along the trend as shown in the slide where there are good opportunities to find similar high-grade mineralization and link 200 South to other mineral trends.
We have been very active at the Casa Berardi with extensive definition and exploration drill programs, as shown on the longitudinal section on slide 22. Definition drilling programs have upgraded and expanded resources in the 113,118, 124, and 127 zones and we are encouraged because many of these areas are expected to host new reserves once mine plans are updated.
Exploration drilling is defining new mineralization that is along the down plan trend of the 124 Zone and 140 Zone resources. So we continue to be encouraged that the potential in the 1 mile gap between the West and East mines.
Slide 23 is a plan view of the San Sebastian project in Durango, Mexico. First, engineering studies are evaluating a low capital approach to develop the Middle Vein, which is in the black oval on the slide.
I think we could have some news in this work in the next two quarters. In addition, we've been completing an extensive surface trenching and shallow drilling program that have -- that identified strong gold, silver anomalies to the north of the current Middle Vein resource.
We believe these anomalies may represent the location of the offset mineralized veins that were truncated by the San Ricardo Fault. Finally, in addition to work on San Sebastian, we are advancing other predevelopment projects during the quarter with permitting, metallurgical testwork and mill design and mine optimization as the principal activities.
I'll now pass the call back to Phil for some closing comments.
Phil Baker
Thanks, Dean and I’ve just got a couple of closing things to say and then we'll open it up for questions. We really have done what we’ve said we would do.
We’ve transitioned Greens Creek into a very strong and consistent silver producer. We’ve brought the Lucky Friday back to full production and seen its cost fall dramatically.
We've integrated Casa Berardi into Hecla and are continuing to find ways to improve the mine performance further. And by thoughtfully reducing our capital predevelopment and exploration spending, we are operating within adjusted EBITDA, which should allow us to maintain our financial strength.
This quarter’s strong performance was in a week metals price environment but it’s not going to always be that way. We see demand from the growing middle-class of China and India.
It grew 26% alone in China last year. History has shown us that as a country’s middle-class gets wealthier, it consumes even more precious metals.
Metals demand is leaving the west, and the factors that will determine its price are going with it. It’s going to the east.
It’s going to Asia. I don’t know if it’s next week or next year, but the prices will move higher at some point and when that happens, Hecla will, like it has in the past, we think lead precious metals equities higher.
In the meantime, we are going to focus our energy on making our good assets even better. One more point before I end.
Larry mentioned that we had the Investor Day in Toronto and New York. We did record that.
It is available on our website for the next couple of months and I just would encourage you to access our archived information. And with that, Kurtina, we will open the line for questions.
Operator
Thank you. (Operator Instructions) Your first question comes from the line of John Bridges representing J.P.
Morgan. Please proceed.
John Bridges - J.P. Morgan
Good morning, Phil, Jim.
Phil Baker
Hi, John.
John Bridges - J.P. Morgan
HI. Just wondered with respect to the number four shaft, you say their full budgets 200 something.
Can you sent away along there, but you only finish the project in 2016. When does the shaft capital finish and the capital development into the ore body begin?
What’s your capital doing and what sort of additional development capital will you need to actually access the ore body?
Phil Baker
Well, we are spending $215 million for the capital that’s associated with the shaft and the level of developments and that's going to be completed in the third quarter of 2016. The focus is now just in those limited areas.
Jim and Larry, do you guys want to add anything to that?
Jim Sabala
Included in the $215 million in the centralize refrigeration plant, which will cool the mine down of the 8,000 foot level. In terms of connecting the shaft of the mine, the two principal operating stations were at 6,500 and 7,500.
We've already connected to 6,500. So these connections are being made as we think the shaft and that connection at 6,500 now will proceed deeper and will eventually connect that 7,500.
So that's ongoing development in the mine. It’s just our normal sustaining development that goes laterally, John.
John Bridges - J.P. Morgan
Okay. Fine.
That answered the question. I feel there might have been a lump of capital development coming through as well.
Great. So just looking to San Sebastian and there seems to be a lot of activity going on there.
Have you become more comfortable with that now you feel you may have picked up volumes somewhere at the start of the fall?
Phil Baker
No, that’s not what’s driving the activity. What’s really driving it is, is a plan that we are looking at would be very-very low capital.
It’s basically evaluating if we can do what we did back in 2001, where we opened up some pits and we ran material through in existing mill. We are looking at that same approach now.
So what we might find on the other side of the San Ricardo Fault would be upside on top of that. And so if we can get these pits, if we can make that work we can then use the cash flow from that program to really pay for the development in the mill that we would build for the underground portion of the mine.
It’s going to take us another quarter or maybe two to come to a conclusion if that’s going to be feasible.
John Bridges - J.P. Morgan
Okay. Okay.
That’s encouraging. That fits within the new royalty tax schedule and --
Phil Baker
Yes. That goes into the evaluation.
John Bridges - J.P. Morgan
Okay. Excellent.
All right. Well done, guys.
Thanks a lot.
Phil Baker
Thanks, John.
Operator
Your next question comes from the line of Garrett Nelson representing BB&T Capital Markets. Please proceed.
Garrett Nelson - BB&T Capital Markets
Good morning.
Phil Baker
Hi, Garret.
Garrett Nelson - BB&T Capital Markets
Could you talk a little bit about your zinc and lead hedging strategy and whether you have any plans to change that? And what are the deficits a lot of people are expecting in these markets?
Obviously, Hecla primarily leverages to silver and gold but as you know, last year about one-third of total revenue came from zinc and lead and there you are fairly well hedged through 2015. But maybe looking out to 2016 and beyond, would you consider leaving more tons on hedge so you could potentially benefit from higher prices?
Phil Baker
Sure, Garrett. So, we currently are 30% of the next three years production for zinc is hedged and 50% of the next three years lead is hedged.
And of course, as we progress as time goes on, we deliver into those contracts and there is more hedging in the earlier periods than in the later ones. So that’s going to -- those hedges will come off relatively quickly and there [Technical Difficulty]
Jim Sabala
Hello.
Phil Baker
Hello
Garrett Nelson - BB&T Capital Markets
Yeah. So, I think I lost you there for a second.
Jim Sabala
Phil, if you’re on a phone, we’ve lost you.
Operator
It appears Mr. Baker’s line has disconnected.
Jim Sabala
Okay. I’ll take up where Phil left.
I think where he was, at was of course, our portfolio was front-end loaded in 2014 and in 2015, it’s just a way their hedging program. And more as if you take a look at 2016, we’ve only got about 9% of our zinc hedged.
A little bit more lead, we are about 43%. We’ve got the disclosure in our 10-Q.
The way we managed the program is we keep our eye on the market and we adjust our quantities going forward depending on our perception. And so when we see times of rising prices are constricting supply, we will modify our targets upon when we will begin to enter hedging.
So that’s one withered way of saying yes. We follow the projections and we follow the expectations for the market and we adjust our hedging strategy accordingly.
Garrett Nelson - BB&T Capital Markets
Okay. That’s great.
Jim, just a housekeeping question on the full year tax rate, could you help us out with what we should be modeling for the final three quarters.
Jim Sabala
We’re expecting that 25% to 30% rate for the remainder of the year.
Garrett Nelson - BB&T Capital Markets
Okay. Great.
That’s all I have. Thanks a lot.
Operator
Your next question comes from the line of Anthony Sorrentino representing Sorrentino Metals. Please proceed.
Anthony Sorrentino - Sorrentino Metals
Good morning, everyone. I see that you are planning $150 million in CapEx in 2014 and $18 million in predevelopment and exploration expenditures in 2014.
Would you be able to give a breakdown of those amounts by property?
Jim Sabala
Sure. The total for the Greens Creek mine is $35 million to $40 million.
Casa Berardi is around $50 million. Lucky Friday is around $55 million and any remainder would be miscellaneous capital that we have.
And in terms of exploration and pre-development…
Phil Baker
So Jim, I’m back on.
Jim Sabala
Okay.
Phil Baker
Go ahead.
Jim Sabala
Okay. In terms of exploration, predevelopment as I indicated it’s about $17 million.
You want to go through the breakdown, Dean?
Dean McDonald
Sure. Anthony, in terms of exploration Greens Creek will be $3.5 million to $4 million, Casa Berardi about $3 million, Mexico $2.3 million.
And then the remainder of exploration spread around in Quebec, in addition to Casa Berardi about another $2 million. On the pre-development side, most of that predevelopment expense were about $1.3 million is at San Sebastian, some of the things we talked about in the call.
And the remainder is at the Bulldog and Creede, Colorado.
Anthony Sorrentino - Sorrentino Metals
All right, very good. Thank you very much and congratulations on a great quarter.
Jim Sabala
Thanks Anthony.
Dean McDonald
Thanks Anthony.
Anthony Sorrentino - Sorrentino Metals
You are welcome.
Operator
Your next question comes from the line of Tony Stark representing Stark Enterprises. Please proceed.
Tony Stark - Stark Enterprises
Yes. Hello.
I’m calling in regards to ask regarding the higher expenses at Casa Berardi in the first quarter of 2014 compared to the last quarter of 2013. I would just like to get a general idea what maybe pushed that cost up?
Jim Sabala
I’m sorry, what pushed, what cost, what are you referring to?
Tony Stark - Stark Enterprises
The cash cost at the Casa Berardi for the cash cost of the gold ounces.
Jim Sabala
We didn’t operate Casa in the first quarter of 2013, so if you go to our press release…
Tony Stark - Stark Enterprises
No, I’m saying that they were higher in the first quarter of 2014 compared to the last quarter of 2013.
Jim Sabala
There is just a very slight difference in the number of ounces that were produced. So it’s -- there's almost no difference between the two periods.
Tony Stark - Stark Enterprises
Yeah. I was asking as if I have to give an explanation what pushed up the cash cost, they were about $50 or $60 more?
Jim Sabala
It’s the $1,000 less ounces of production and it was the cost of heating. The propane costs were much higher in the first quarter of 2013 than they were in -- 2014 than they were in the fourth quarter of 2013.
So those two factors that caused that slight increase in cost per ounce.
Tony Stark - Stark Enterprises
But do you anticipate them going down throughout the next three quarters or would they generally stay about the same?
Phil Baker
Our guidance is $900 an ounce. So we would expect on average to come to $900 an ounce.
Tony Stark - Stark Enterprises
Okay. Got it.
My other question was regarding the amount of M&As going on in the industry and just consolidation that’s going on. Would you consider teaming up with a bigger mining company or private equity if the right offer came on the table?
Phil Baker
Look, we consider all sorts of ways to continue to grow the business. We’re fortunate and that we have internal growth without having to acquire assets in order to achieve growth.
But we’re mindful of opportunities and we’re always looking for innovative ways to get those assets. An example of that would be acquiring Aurizon, we went to the bond market and did this $0.5 billion bond offering and used that rather than primarily our shares.
So we’re open to all sorts of alternatives.
Tony Stark - Stark Enterprises
Yeah. What I was leaning towards moreover if there was an offer to acquire Hecla or to team up with another joint venture that had more capital or expertise?
Phil Baker
We were always looking for what will give shareholders long-term value. So you have to consider any alternative.
So yes you consider that relative to the alternative of continuing down the path that we’re on.
Tony Stark - Stark Enterprises
All right. Well, that's pretty much it, thank you.
And once again thanks for the great quarter and thank you for answering my questions.
Phil Baker
Sure thing.
Operator
(Operator Instructions) Your next question comes from the line of Joseph Reagor representing Roth Capital Partners. Please proceed.
Joseph Reagor - Roth Capital Partners
Good morning guys.
Phil Baker
Hey there.
Joseph Reagor - Roth Capital Partners
I have a few follow-on questions, some of the things that other people brought up? The first one being at Lucky Friday, you said the total number is 215, what's been spent to date on that?
Phil Baker
I think it’s worth about a $135 million, Jim.
Jim Sabala
Yeah.
Joseph Reagor - Roth Capital Partners
So about $80 million…
Phil Baker
So $135 million.
Jim Sabala
Yeah.
Phil Baker
And that will be spread over the next three years with the majority -- with the larger percentage being this year and next year and with the same being done in 2016. That's significantly smaller.
Joseph Reagor - Roth Capital Partners
Okay. Then moving over the San Sebastian, you said the examining of small footprint for potential production there, using in existing mill.
Is this the mill you guys own? Is it in the neighboring area or is this a shutdown mill that you could pull mill through or…
Phil Baker
The latter. It’s either a mill that shutdown or one that’s operating the high capacity.
There’s more than one that’s available.
Joseph Reagor - Roth Capital Partners
Okay. But it would probably -- it would be some form of either toll milling or purchase and use agreement.
Phil Baker
Order leasing, order leasing it.
Joseph Reagor - Roth Capital Partners
Order lease agreement. Okay.
And then lastly just looking at the overall economics in the market conditions, have you guys given any thought to potentially, I know, the dividend isn’t much but spending it at all seems a bit pointless at the moment, I mean, given the EPS adjustable at $0.01 for the quarter. It doesn't really justify a dividend or is that something you guys are not examining at this time?
Phil Baker
No, we’re not examining at this time. But certainly our investors that can only invest in the company if we pay the dividend.
So one penny a share is something that we can handle. And we don’t think it prevents us from doing anything that will allow us to grow and it allows some shareholders to own the share.
So we think it’s worth doing.
Joseph Reagor - Roth Capital Partners
Okay. So it’s being done more for a strategic reason than for distribution of capital?
Phil Baker
Yeah, yeah. I think that’s right.
Joseph Reagor - Roth Capital Partners
Okay. Thanks Phil.
Phil Baker
Certainly when you have the silver price go up and it triggers the additional dividend, the silver price-linked dividend than that’s really return of the capital.
Joseph Reagor - Roth Capital Partners
And is there any thought to adjust the pricing on the link there because I mean…
Phil Baker
We’re not, yeah, we’re not considering at this time.
Joseph Reagor - Roth Capital Partners
Thank you.
Phil Baker
Sure thing. Good to talk to you.
Okay, well I think that's all of the questions, Katrina. So we will end the call here.
I’ll just close by saying we think that this quarter is really the culmination of work that we've been doing for almost the better part of the decade now in changing the direction at Hecla and having us focused in on these assets that can see sort of improvement that you are seeing with Greens Creek, Lucky Friday and Casa. We look forward to the rest of this year being able to demonstrate that strong performance.
So thanks for being on the call and if you have any questions please, please give Mike or me a call. Thanks a lot.
Bye.
Operator
Thank you. Ladies and gentlemen thank you for your participation in today's conference.
This concludes the presentation. You may now disconnect.
Good day.