Capital allocation and M&A
Q: Harrison Reynolds asked about the best use of capital given the $700 million cash balance and M&A criteria.
A: Russell Lawlar explained they are building cash for future liquidity, growth projects, and exploration, with capital returns to be evaluated when appropriate. Rob Krcmarov stated M&A criteria include remaining a silver-focused company in safe jurisdictions, noting they have the time to be disciplined.
Q: Harrison Reynolds asked about the outlook for process grades at Keno Hill under the new selective mining plan.
A: Rob Krcmarov noted grades improved from 19 ounces per tonne in the second quarter to 26% in the third quarter and expects to maintain reserve grades. Carlos Aguiar added that they will focus on reducing dilution through selective mining and processing.
Keno Hill operations and permitting
Q: Wayne Lam asked if there is potential to move Keno Hill to care and maintenance given the negative free cash flow.
A: Rob Krcmarov stated the plan is to continue operating within current permits while building infrastructure, though they could consider care and maintenance if silver prices fall or permits are delayed.
Q: Wayne Lam asked if there are specific project issues delaying permits in the Yukon.
A: Patrick Malone stated there is nothing specific delaying the process, and they plan to file a project proposal by the end of the year for the Federal review.
Q: Wayne Lam asked about the strategy for tailings reprocessing and if building an on-site facility is outside the company's expertise.
A: Brian Erickson explained that they are evaluating three pathways for optionality, noting that self-processing is within their wheelhouse as it mirrors the pyrite circuit they are already building.
Q: Wayne Lam asked about the potential for an attributable-linked capital returns program.
A: Rob Krcmarov said they will likely have a robust discussion about capital returns with the Board in the first half of next year, noting that while silver-linked dividends are unlikely, standard dividends are being considered.
Greens Creek performance and Keno Hill production
Q: Tosin Gala asked about the variance in Greens Creek throughput and grades compared to the previous year and if it indicates the 2027 cost profile.
A: Russell Lawlar noted that grades fluctuate, while Brian Erickson added that throughput is lower due to mill work, which is not a long-term concern.
Q: Tosin Gala asked about the status of commercial production at Keno Hill and the impact on the 20 million ounce production target.
A: Russell Lawlar clarified that commercial production is a GAAP accounting term not expected until later this decade, while Rob Krcmarov confirmed the production slowdown does not impact the medium-term 20 million ounce target.
Keno Hill constraints and cost guidance
Q: Cosmos Chiu asked if the tailings capacity constraints at Keno Hill are new and if they are the reason for the Q4 throughput curtailment.
A: Rob Krcmarov stated the constraints are not new and are interrelated with waste rock and water management, while Patrick Malone added they have 200,000 tonnes of permitted tailings capacity remaining.
Q: Cosmos Chiu asked which constraint is the most significant among tailings, waste rock, and water.
A: Patrick Malone identified tailings as the hard, fixed constraint, whereas the others are more variable.
Q: Cosmos Chiu asked about the rationale for drilling at Keno Hill given the near-term throughput constraints.
A: Rob Krcmarov explained the goal is to find high-grade ounces, and once they are unconstrained in 2029, they will be able to mine faster and utilize the mill's full potential.
Q: Cosmos Chiu asked how much of the improved cost guidance is due to byproduct credits versus labor cost pressures.
A: Russell Lawlar attributed the cost improvement to favorable gold and zinc byproduct credits and lower sustaining capital, noting that while labor is 50% of costs, they are monitoring competition.
