Q4 2023 Hecla Mining Co Earnings Call
Participants
Anvita Patil; Vice President of IR and Treasurer of Hecla Limited; Hecla Mining Co
Phillips Baker; President and Chief Executive Officer; Hecla Mining Co
Russell Lawlar; Chief Financial Officer, Senior Vice President, Treasurer; Hecla Mining Co
Carlos Aguiar; Vice President - Operations; Hecla Mining Co
Lucas Pipes; Analyst; B. Riley Securities, Inc.
John Tumazos; Analyst; John Tumazos Very Independent Research, LLC
Joseph Reagor; Analyst; Roth MKM
Don DeMarco; Analyst; National Bank Financial
Presentation
Operator
Good morning. My name is Ginnie, and I will be your conference operator today. I would like to welcome you to the Q4 2023 Hecla Mining Company earnings conference call. (Operator Instructions) Thank you.
I would now like to turn the conference over to Anvita Patil. You may begin your conference.
Anvita Patil
Good morning, Ginnie, and thank you all for joining us for Hecla's fourth-quarter 2023 financial and operations results conference call. I'm Anvita Patil, Hecla's Vice President of Investor Relations and Treasurer. Our financial results news release that was issued yesterday along with today's presentation are available on Hecla's website.
On today's call, we have Phil Baker, Hecla's President and Chief Executive Officer; Russell Lawlar, Hecla's Senior Vice President and Chief Financial Officer; and Carlos Aguiar, Hecla's Vice President of Operations. Phil and Russell will make most of the presentation. Carlos who's at Keno Hill will make a couple of comments. All of them will be available to answer questions.
Any forward-looking statements made today by the management team come under the Private Securities Litigation Reform Act and involve risks as shown on slide 2 in our earnings release and in our 10-K and 10-Q filings with the SEC. These and other risks could cause results to differ from those projected in the forward-looking statements. Non-GAAP measures cited in this call and related slides are reconciled in the slides or the news release. I want to remind you, if you would like to have a call with the management, you can do so by using the link under the section virtual investor event in our earnings release that was issued yesterday.
I will now pass the call to Phil.
Phillips Baker
Thanks, Anvita, and good morning, everyone. Thanks for joining our call. I'm going to start on Slide 3. 2020 13 was a year of marked that was marked by wins in face of challenges. Some of the challenges were expected some not. So let me first start with the successes we achieved. We reported the second highest reserves in our history. Our silver reserves have increased almost 40% over the past 10 years. And we've accomplished this by not only replacing 130 million ounces of silver production, but adding 65 million ounces through the drillbit, primarily at the Lucky Friday and Greens Creek and most recently by our acquisition of Keno Hill.
We've also had a successful year in exploration with some spectacular results at Keno and Greens Creek, we recorded our second highest revenue in silver production, and this was achieved despite Lucky Friday, not being in production for five months at Greens Creek, Lucky Friday recorded their lowest All Injury Frequency Rate of of all time. And we continue to be rewarded for the innovative culture we've created at our long legacy of 132 years.
We received a patent on the other hand, close bench mining method in terms of challenges this year, that was really marked by three events, the unexpected fire at the Lucky Friday, our decision to pivot to a surface only operation at Casa and to prioritize safety over production at Keno, which has resulted in slower than expected ramp up the mine by the Lucky Friday is already back in production, and we expect to ramp up to full production by the end of the first quarter.
Our decision in late August to transform Casa twofold open pit operation by mid 24 was a recognition that we need a radical change and we prioritize margin over volume. And our execution of this strategy is already yielding results at Keno Hill exploration drilling has highlighted the potential and the opportunity at this mine. And while our ramp-up at Keno Hill has gone slower than expected, we firmly believe that by focusing on safety and the environment and getting the mine to Hecla's standards is critical. If we're going to be successful and provide that long-term value that the Keno has the potential to provide now we've navigated through the challenges of 2023, and we entered 2024 with four operating mines that will give us significant growth over the next three years.
So let's talk about exploration and operations after Russell talks about the financial and technical reports and and colors to make a few comments. Russell?
Russell Lawlar
Thanks, Phil. I'll start on Slide 5. By several measures. 2023 was a very good year. We generated 720 million in revenue. Silver contributed 39% of our revenue, which is more than any other metal, demonstrating Hecla as a true silver company. We continue to have very strong margins from our silver operations with a margin of 50% of the average realized price of silver for the year as expected. And as we reported in the last quarterly call, we did see our net leverage ratio ticked up from 2 to 2.2 times last quarter to 2.6 times this quarter. This was primarily due to Lucky Friday, not being in production for the last five months of the year. Our goal remains to manage the net leverage ratio to be less than two times.
I'll now turn to Slide 6 to discuss the Company's priorities with its free cash flow as well as liquidity on the previous slide, I mentioned the strong margins we see at our silver operations. These margins equate to significant free cash flows with 12 months of production at Greens Creek and six plus months. At Lucky Friday, these operations generated 155 million in free cash flow. With this cash flow and using our balance sheet, we've made some strategic investments for production growth, 64 million investment at both Keno Hill and Casa Berardi. In 2024, we anticipate seeing strong free cash flow generation from Lucky Friday and Greens Creek relatively small investments at Keno and Casa as well as we expect 50 million from the insurance on Lucky Friday fire. Our priorities will be continued investment in the long-term production growth of our assets, which include development and exploration and all of our mines. But we'll also be prioritizing delevering our revolver debt. We have full access to our revolver and can access the accordion. If necessary, we expect to have adequate sources of cash flow to not only finance our production growth but also reduce the revolver debt. Our belief is revolvers are meant to provide liquidity when needed, which ours has put our best undrawn.
As we turn to the next couple of slides, I'll walk through some of the highlights of the technical reports on slide 7 is the summary of the technical report for Keno Hill. This report confirms the value which we've had the opportunity to capture Keno Hill, the mine projects to have 55 million ounces of silver in reserves at a reserve grade of more than 26 ounces per ton with an expected reserve life of 11 years and an undiscounted cash flow of 420 million after-tax cash flows discount of 5% is just over 300 million at $22. This report demonstrates the value of reserves at Keno Hill, which is only partially why we made the strategic acquisition. Phil will speak to this later in the presentation, but the value that we expect to be added at Keno Hill through the drill bit and our export and our exploration success confirms the significant exploration potential.
Turning to slide 8, we've owned the Casa Berardi mine for more than a decade and it's been a good mine over that time. However, when we acquired it back in 2013, we realized them. But there was the potential for significant value in the open pits, which were anticipated to start production later in the mine life. We see that value crystallizing as we work through the one 60 pit and move our way toward the West Mine Crown Pillar in principle offsets where we anticipate seeing this mine generates substantial free cash flows. However, it's not all investment in the property until then, based on this report, we anticipate seeing the cash flow from the property be slightly negative this year, turn positive next and be significant in 2026, which should return a large portion of our investment of the past couple of years prior to taking a production pause while accommodating a permitting timeframe for the higher-grade pits in 2027, we expect to process the stockpile followed by a production gap of three years when the higher grades and start production. The revised technical report anticipates a mine life of 14 years, returning an undiscounted cash flow of nearly 600 million and a discounted cash flow of almost 350, which demonstrates the value this mine brings to the portfolio.
Turn to slide 9, and I'll I'll turn the call over to Carlos.
Carlos Aguiar
And I will make only a few commenting on that side in Remodulin tail and Barstow. First on safety, we had a strong overall safety record of Lonza buying suspected by and should have done Greens Creek's. All Injury Frequency Rate went from 29 in Lucky filing following 66 above the lowest in their history. Casa Berardi was not where it should be, but have lots of changes in safety with unacceptable for all the operations. We have started a safety program. There is obviously more leading indicators like near misses risks and those interactions and inspections we expect to make our operation safer from changes in our foreign operations have started this year. Strong Lucky Friday restarted those planning in the first week of January in Keno, Haley, safer and therefore is beginning to ramp up faster. Greens Creek got the weather events behind it. In Casa Berardi is continuing the good performance of the last few months.
What are they for as we will have this year by having all four properties in operation up.
With that, I will pass it on to Phil, starting on slide 10
Phillips Baker
Thanks, Carlos. We've labeled Greens Creek on the slide, the foundation of Hecla's future since as we grow, Greens Creek will continue to be the foundation providing stability and consistency in our cash flow and production well into the future. And the mine reported a strong year, which could have been even better without the weather, reducing 12 days of production in the fourth quarter. Now we expect the mine to have another consistent year in 2024, with production expected to be about 8.8 to 9.2 million ounces. So a little less silver and also produce a little less gold due to mine sequencing where we're mining lower grades, but when will produce a bit higher zinc the zinc grades are a bit higher, so the cost per ounce will be higher. We also have are increasing the capital replacing some mobile and mobile equipment as risk mitigation of operating at around 2,600 tonnes per day is becomes particularly important at this higher throughput. We really need everything to be more reliable because there's not really an opportunity to catch up. If we have an upset and like we've done at Greens Creek for 30 years, we still see opportunities to have lower costs to these investments to allow us to have lower costs and also increase recoveries, which with some of the investments.
As slide 11 shows our planned 24 surface and underground exploration programs, which would be testing multiple targets with significant potential to add resources and Greens Creek started. The mine had a mine plan of seven years and now 37 year light years later, the mine plan is 14 years. This past year's underground exploration had good success in seven of the $0.08 drilled with four of those zones in the fourth quarter. So we're very excited about this year's program that coordinates the drilling underground with the surface drilling in the East or the upper plate and Gallagher, we will also draw in a land package we recently acquired. That's the Mammoth claims we had we've had an interest in acquiring these claims for at least 20 years and then includes Creek, which has been known to be a very prospective area but it is it's you have called the clip Creek. It's almost inaccessible and we started mapping this past year but have logistical issues. But we know what we need to do and we have a contractor that we think's going to be able to do it. So our focus is not just on expanding high-grade mineralization, but it's also making new discoveries, new discoveries that create potentially an unmanned claims that Greens Creek is a premier silver mine. It's the it's actually the 11th largest in the world. And I just wanted to congratulate the team on delivering excellent and consistent results and giving it a great future because this is truly a world-class asset.
So let's turn to Slide 12. And at Greens Creek is the foundation of helpless future Lucky Friday is the pillar of near term growth, i.e., consistency, culture and leadership of Lucky Friday brings makes it our second cornerstone assets.
Yes, if you put this together with Greens Creek.
These two mines make us the largest silver producer in the United States.
The mine restarted in early January. As Carlos mentioned, production should be about 5 million ounces cost per ounce should be similar to Greens Creek Capital will be about 15 million less this year than last year, and that's about the same as what we had in 2022, despite a 19-year mine plan, we are focusing on the potential to expand the mine to the East at the current elevation. So we're doing drilling and exploration arm to the to the east. Now there's lots of unknowns, but success could mean more production and lower costs. And with the mine already stabilized, we're starting to work on small improvements to allow higher throughput like the five new cyclones that we're putting in at the mill, which will be installed in June.
Now I'm going to move to slide 13 at Keno Hill were struck by two things. First, the ore body is growing with a similar or better quality. And I'm going to take a minute to talk about exploration, but makes me say that I'll do that in a couple of minutes.
First though, one topic, the second thing I was struck by, which is the safety and environmental performance has not met our standards at fixing them is not an overnight exercise. And given the long life that we see, we are laser focused but patient on improving it on safety, it's been changing people's attitudes and habits and where we can engineering out risks. So we've taken many of our single senior people from our corporate technical team and also at the Lucky Friday and have them rotating site. Basically what they're doing is mentoring the key 19. And then an example of engineering out the risk. We've budgeted a cemented tailings backfill plant for Birmingham to enable us to mine that in it and your hand mining, which we build be safer than it than the way we're buying.
Now for the environmental issues, we had a keynote we're doing studies to make the site meet our standards. And one of the things that's come out of these studies is putting a new water filtration plant at Birmingham, which will build this year that will cost it may be three, the 5 million. Now at this point, we're not giving guidance as to when we'll be in production and reporting unit costs we want to make sure that we have the safety and environmental issues right without the pressure of having the combined production targets with costs. What I can say is, though, that we we think we're going to produce about 3 million ounces of silver. We expect to spend about 15 to 17 million a quarter, and then we'll be 30 to $34 million of capital. So 2024 at current prices should be a small investment year that we didn't make at Keno. But given the exploration potential in the long mine plan now is the time to get it right, similar to what happened at Greens Creek IEnova almost 40 years ago. And speaking of Greens Creek, what we've decided to do is to trying to create more value by having Greens Creek and Keno trying to implement as many synergies as possible. They're actually only two hours apart and it's a seven hour drive between the two sites when she gets scanned way, which is a short 40 minute 40 minute flight. And now many of the supplies for Keno actually go buy Greens Creek to Skyway and then they get trucked to Keno. So what we're going to do is we're going to promote Brian Erickson, who's our VP and GM at Greens Creek and Kim Campbell large or Greens Creek controller to provide leadership to both operations. Brian, in addition to having had the job experience Creek's GM over the last two decades has led various departments is he set it up, mining the Houston surface up system maintenance and Kim has led purchasing warehousing accounting and a number of other functions. So we don't know exactly what the synergies will be or what their value will be in a mode of trying to outline that over over time that given the maturity of the systems that we have at Greens Creek this really should accelerate Keno and becoming a strong cash-flow-generating mine.
So now let me go to the exploration at Kiena when this is on slide 14, our drilling programs continue to provide quite remarkable mineralized drill hole intercepts from both underground definition and surface exploration drilling. And I'm only going to talk about burning and this morning, but realize that there are a series of other targets at Keno that some of which we will drill this next year that we'll actually get more drilling than than or as much drilling as Birmingham and fit from surface. If you look at the plan view, that's in the middle of the slide and that smart be prime and the upper corners. So see that the Birmingham deposit has a number of zones, the Edah Artic bear Northeast and deep Northeast. And then there's the small image to the right shows and I'm being private going through those zones. And you can see a prime is a cross-section that actually goes through the bears out. And if you look at the left most damage, that's three A. prime and the upper corners and the Board bears zone has three veins. The main main footwall vein and the Bear vein. And what I want to draw your attention to is the 54 ounce over 39.5 p., there is the trends first thing between the main and the foot footwall vein. This is the widest highest-grade intercepts that were where we had a similar grade intercepts a quarter earlier. I'm just I'm just not quite as wide. I'm looking back at the prime image that's in the middle. There's a red star that is the high-grade mineralization that's more than 1,000 feet deeper than in previous drilling on a long-standing view is that Kintera's potential was only in the top three, 400 feet from the surface. We now have evidence that the high-grade mineralization can be hosted the full depth of the one kilometer favorable Basal Quartz site host rock unit. And so these two holes, I really think are emblematic of the potential Keno.
Now turning to Slide 15. Last year, we concluded that we could not generate enough margin mining to separate underground deposits and open pit. Like I said at the beginning of the prepared remarks, we just had too many people. We actually had 1,100 people between employees and contractors and there just wasn't enough value in the rock to to operate the mine that way. So we made the decision to simplify the operations by shutting down the underground. And so our term, our team has really very successfully implemented the change 2024, we'll have about a half year of underground operations as we've mined out the already developed stopes. And then we'll have only surface tonnes coming out of the one 60 pit.
Then go to Slide 16. And what this shows is our production cost and capital guidance. Our 2024 silver production guidance shows an increase of about 15% to 20% this year, 30% by 2026. Silver cost guidance is slightly higher than 23. Cash costs are at $3.75, a split between 13 and 1450. So we still have substantial margin at current and even lower prices and proves that we're really the low cost leader in the industry and the gold cost guidance is lower. Capital guidance is lower as well as we completed and seeing the benefits of the major projects such as the service hoist and the lower bunker at the Lucky Friday.
Before I open the call to questions, I want to leave you with the increasing role that silver is playing in solar solar in the energy transition. And on Slide 17, you'll see some of the key numbers that highlights this 2020 13 was the 22nd year in a row that renewable capacity set a new record. So it's just continued to grow year after year and 75% of this renewable capacity in 2023. And the additions were solar. Then just in the United States, solar capacity has expanded by 44% a year on average since 2009. Now it takes about 0.5 million ounces of silver per gigawatt of solar that's installed. So in 2023. Silver demand in solar increased by about 50 million ounces to 190 million ounces, and that's a 12% growth rate in the last 10 years. So to put this 50 million ounces in context, that's the equivalent of five new Greens Creek or 10, the Lucky Friday. So not likely to happen that we're going to have production that's going to increase at the same pace that this demand for silver for solar is growing at. So that means we're going to have to rely upon above-ground silver in order to get that, I think you're going to need higher prices to meet that demand.
So with that, Ginnie, I'd like to open the call for questions.
Question and Answer Session
Operator
(Operator Instructions) Lucas Pipes, B. Riley Securities.
Lucas Pipes
Thank you, operator, and good morning, everyone. This is Nick Giles asking a question on behalf of Lucas and I really appreciate the update on Keno here, and it sounds like you've already made some nice progress. Is there still any ongoing assessment or is it now down to purely implementation yes, it's really execution.
John Tumazos
We're just working through getting people where they need to be when they need to be there again that we're in.
Phillips Baker
We certainly one of the things that we've seen is that we have a lot of young. We're relatively inexperienced people that come from all over Canada.
John Tumazos
And so that's why having this mentoring live, we think is so important and that, you know, it's it's it's a real effect.
Phillips Baker
It's been remarkable.
John Tumazos
The improvements that we've seen over the course of the last few few months.
Phillips Baker
But having said that, we want to be cautious that we're not pushing the organization faster when that's really capable of, but moving safely.
Russell Lawlar
Okay.
Lucas Pipes
Thanks for that.
Phillips Baker
Nice.
Lucas Pipes
Nice to hear that the synergies with Greens Creek as well on.
Okay.
Phillips Baker
I can appreciate you're not now, but I'm really excited about the potential for for the synergies.
John Tumazos
I mean, it was one of the things is some some back office things that Campbell's responsible for Brian certainly brings a low level of experience and the mining methods are very similar on equipment is a bit different because it's larger at Greens Creek. But I mean women's rate and thinking about is doing rebuilds we're doing in June for Greens Creek, maybe we'll also do on Keno in Juneau.
Lucas Pipes
Got it. Got it. That's that's great to hear on. I can appreciate you're not ready to give some guidance like like you outlined, but safe to say it's kind of a second half event before we see anything or any color you could give or give around timing, just rough estimates will go?
John Tumazos
I'm not going to it will be as fast as we can we can do it safely and you don't have a stabilized organization there. We are, as we indicated, when we made the change, we had fortunately no incidents that have resulted in injury on a major significant injury, but we have the potential for that and that that we're not going to we're just not going to take a risk.
Lucas Pipes
Got it. Got it. Well, I appreciate the color here. I'll go ahead and jump back into queue, but a continued Best of luck.
Russell Lawlar
Thank you.
Operator
Joseph Reagor, ROTH MKM.
Joseph Reagor
Hey, Phil and team. Thanks for taking my questions. On Keno Hill, as you look at the guide you gave this year versus the guy that was given at the beginning of last year. Your what do you think is the biggest delta for why om there isn't as big of an increase as we might have anticipated for the mine this year. Is it not getting enough workers aside? It is still underground development being behind schedule? Is it in our mine sequencing? How do you think about that. And then we'll what do you guys think is the biggest things you need to do in the future to kind of get it to where you want it to be yes.
John Tumazos
I mean, look, I think there's an element of caution here, Joe, that you want to make sure, as I said, that we're not pushing the organization too fast. I think yes, I think what we didn't appreciate was and the ability of the organization to deal on in a systematic way with issues that that arose and we're getting those systems in place to be able to do that on a I think, yes, it will be it will take a little bit of time, but I'm going to I'm highly confident that over the course of the coming year that will get there given number one, which we have taken our most senior experienced people in our organization and they're spending time, hence by Carlos is there at site on with this some reorganization with Brian, he's heading up the activities in both of these operations during stricken and Keno will have that leadership and the leadership will be close close by on. And so I think I think it puts us on a good path to to see the improvements. Technically, it's not yes, there's challenges, but technically it's they're all manageable sorts of sorts of challenges. Coley's, is there anything you would like to add?
Carlos Aguiar
One is just the mentoring and the training and trying to hire the most antiquated people retain, train, promote and, you know, build the team in the proper way.
John Tumazos
Okay.
Joseph Reagor
And then shifting over to Costa. Looking at the long-term plan, do you guys have off top of your head, the after-tax IRR for that expansion projects and we yes.
Russell Lawlar
And when we put the technical report together, that will be filed with our 10 K, we actually didn't we didn't calculate an IRR just because we're in kind of mid project here in terms of cash or near cash is interesting because we're going to put a little bit of investment in this year. We should see some nice cash flows over the next few years and a pause and then and then an investment. So we actually didn't calculate the IRR loan. What we did do is calculate the discounted cash flow number.
Joseph Reagor
But you're right, we're laughing job because one of our directors asked this question throughout the reason I ask is as a general rule of thumb, like if it was a non-operating asset CapEx that exceeds the NPV after tax would suggest the IRRs and the 25% or lower range. And I was just wondering if there's any risk at all that you guys so that there's a better use of capital than that?
John Tumazos
It's I guess the first thing I'd say is that the the investment that's going to end up happening there is really just the stripping from the pits that will happen in 2020, 29. And so it's a you know, we will have much of the equipment already in hand. So there is very little equipment that needs to be purchased relative to the just the cost of moving the moving the rock where we have a place to store that waste rock on. So I think there, I think can, but we certainly we can do the math to figure out what that we would.
Yes, we realize we have to have very good cash flow between now and and that pause time and we're doing that stripping.
Russell Lawlar
And the other thing the you'll see this in the technical report, but the payback on those pits, the principal on the West Mine Crown Pillar pit comes very, very quickly in the early 2030s. So that investment period of 2028, 29 and then a little bit into 2030 gets paid back quickly in 2031, 32, et cetera. So yes, that that speaks to what Phil just said in terms of us already today.
Well, we're investing in on the surface fleet, et cetera, setting ourselves up for this on this mine for the long run.
John Tumazos
Okay.
Joseph Reagor
And one final thing, if I could. I saw an article a couple of weeks ago a silicon you made the comments that you guys are looking at South America as a opportunity to maybe expand the Company and the production profile. Is this something that's like a long-term thought? Or is there any potential to do M&A in the next year or two?
Phillips Baker
Well, there's always the potential, Joe to do it.
John Tumazos
And what we have said consistently is we are prepared to go outside the United States, Canada for silver assets, and we won't do that for for gold or any other metal on that, we will consider it for silver.
Having said that, the ability to do those transactions are difficult and that and so we're not going to we don't have to push it were fortunate in that we have on growth in the near term and we should get to close to 20 million ounces on by 2026 bond. We arm we have in our portfolio. We actually have if you include the operating properties, we had 20 properties in our portfolio, half of which are silver assets, half of which are sold assets, and we'd like to advance those. Some of them are sort of based on the permitting process from some some we are we need to do more exploration on, but but we do have the ability to do things within our portfolio. But having said that, our long-term objective is to be harmed. It really a premier silver company, so which means more production as well as become. And this is a super long-term goal, but as well as become an S&P 500 company and we think with more production and higher prices, which where, as I indicated, why we think we'll see higher prices. We think out we think that that's something that could be achieved in a long-term contract.
Joseph Reagor
Thanks, Ricardo.
John Tumazos
Sure, sir.
Operator
Don DeMarco, National Bank Financial.
Don DeMarco
Where Greg you, operator, and good morning, Phil, or on my first question, maybe just building on the last caller's question about M&A. And we've seen with regard to pursuing silver assets, we've seen some of your peers challenge that silver assets diversifying into gold. I think I heard from you that you're still your priority silver. You wouldn't certainly go for gold outside of North America, but but would you consider gold assets? Are you still firmly focused in any M&A if it met all your hurdles?
Primarily focused on silver?
John Tumazos
We're absolutely primarily focused on silver We will, however, consider gold and maybe even other metals that are in the jurisdictions that are in the places that we operate. So we're in the we're in Alaska, we're in the Yukon. We're in Idaho, where in the Abitibi in Quebec and I would characterize just across the board in geologically has been the same. So would we consider things other than silver in those places?
The answer is yes, is it our first priority now, but we certainly think that we you saw the A-Pac transaction that we did in the Yukon. We bring. We think that it was a strategic acquisition that really sets up top and Hecla for very long term on potential of the things that could be very, very meaningful. So we're prepared to to consider those. Those things are okay. Yes, makes sense.
Don DeMarco
Looking at potential jurisdictions synergies from.
Okay.
Looking at the production outlook from receipt of silver productions increasing over the next three years, we see 20 million ounces at the high end of the range from a few years. Costs weren't included. We get that. But how should we think about costs over this time frame, should we think about cost increasing or flat?
John Tumazos
Or is there any I'm just kind of for the sake of modeling on what trends we should think about, you know, I would generally say that apart, you'll have some inflationary pressures. So you will see cost inflation as a result of that on page 7, and I'm going to talk about first, in terms of the total quantum of costs rather than on a unit basis, you'll see see some slight increases, but nothing nothing on.
Yes, at Greens Creek and Lucky Friday, I'm not anticipating any sort of significant sort of sort of cost increase on Anik Actemra. I'd say it's in a transitional or being a transitional period. I think I think you know, we'll on the objective, we will probably have long term given the exploration results. We have to see that property increase its throughput. We in fact involved in the technical report have an assumption that we get to, I think 550 tonnes or 600 short tons per day and sort of three or four years from from now. So as a result, you'll see more dollars needing to be spent at that location. But then when you look at it on a unit basis on fall or for Greens Creek and the Lucky Friday, it's really going to be a function of the byproducts and the prices of those byproducts on beyond to the extent we're at the similar sort of price levels that we are now, I wouldn't anticipate much, much of a change. And for Keno, I think over time we will be able to drive the costs down pretty substantial but it's going to take more tons. And I think I think the trend gets some of the synergies with Greens Creek, I think could be a benefit to us to both properties are currently wanting to add?
Russell Lawlar
Russell, I agree with what you said. There's really nothing that we have coming at us. You know that we would say we could point to that we would say this is going to change our cost profile dramatically, especially at the Lucky Friday and Greens Creek and thinking about it from me and just as produce production costs, but the costs were going to spend on a monthly or yearly basis.
Keno Hill deal, Keno, Hill's cost structures quite has quite a bit of fixed costs within it. And so as we are able to scale that up and see more throughput, there will be additional variable costs. But we should see on a per unit basis, those should come off on. And then, Phil, you mentioned the treatment charge earlier the by-product credits, but we also have the treatment charges in there as well. And right now, I think the outlook for the treatment charges should be relatively stable, but we will see those things can fluctuate and actually have an impact on our cost profile as well as a pretty dramatic move.
Phillips Baker
But in treatment charges over time frame through.
Don DeMarco
Okay. And just as a final question, Phil, you mentioned Keno Hill there on ramping up to a throughput rate of around 5,000 short tons per year per and done it some well, should we think about 2020 for production at 2.7 to 3 million ounces silver and Dom, what should we pair up in terms of the throughput rate for that rather than five five 50 tonnes per day, I would imagine. So what should we think about in terms of tonnes per day and 24 year old age.
John Tumazos
But that's certainly what we're still working through on because we do have higher grade areas. But generally speaking, somewhere between three and 400 tonnes per day on top of that, again, the lack of or we're not going to push it, but if we're if we're at at the lower end of the range of ounces that were at the lower end of the tons per day if we're at the higher end of the range. And that's just more tons that we've been able to process. So treasury and 400. Thanks.
Don DeMarco
Okay. Thank you very much for your answers. That's all for me and good luck with the rest of the quarter.
Russell Lawlar
Thank you.
Operator
(Operator Instructions) John Tumazos, John Tumazos Very Independent Research. Your line is open.
John Tumazos
Thank you.
Phillips Baker
Corner was 21 million boe or inventory adjustment solely related to falling zinc prices and zinc concentrates in transit?
John Tumazos
I think, John, I think the short answer to that is it's the Lucky Friday.
Russell Lawlar
And so, John, you're looking at the cash flow statement?
Correct?
The non-cash, the IBNR on the cash flow, yes, that is that's a couple of things. First, that's related to Casa Berardi. I would say the largest part of it on where you see that the cost per ounce, especially when you take into account the non-cash charges, the depreciation that goes into the inventory, there was a net realizable value write down there, and that was accelerated because we when we stopped development of some new resources, new reserves at the West mine underground, we accelerated the depreciation because we anticipate that will mine out in mid 2024. So we see the non-cash charge in the Casa Berardi have gone up. And I think that detail, if you go into the 10 K, you'll see that detail as noncash charges have gone up. So that's the biggest driver of that. There is then some changes as well at Greens Creek where you ship the concentrate and you get, you know, you have to true up estimates of what the inventory is that you have in the concentrate barn. So those will flow through there as well. But it's primarily Casa. What I would say is, as you mentioned, the change in the price of zinc. And yes, we have seen a big change in the price of zinc has come off.
A couple of things, though, if you look at the realized price of zinc, it's actually pretty healthy because we had hedges in place that and cause us to not have to take that lower price, right. So it's above $1.30 for the quarter, but also even at even at $1 $1.10, zinc, both Greens Creek and Lucky Friday have strong positive margin. So there's really no and our NRV write-downs at either of those mines.
Phillips Baker
Second question, referring to the $76 million in idle facilities costs, does that largely disappear after the January restart at Lucky Friday? And then say we'll hear when Keno Hill starts to produce revenue. Short answer is yes.
Russell Lawlar
Yes, that's correct here. In 2023, it was it was primarily driven by Lucky Friday and then also there's a chunk of it that was on Keno Hill as well, right? That's ramp-up at Keno Hill, where we essentially have our cost of goods sold matter. Our revenue and then the rest of the costs go through that. So as we see Keno Hill produce more would actually shrink as well.
John Tumazos
And then a little bit, yes, a little bit of Casa and Southern Nevada's And as well, we look at it remember, cash, we had the we had the fire in the in Quebec that caused us to have to be shut down.
Phillips Baker
Thank you very much.
John Tumazos
Thanks, John.
Operator
Your next question comes from the line of Lucas Pipes with B. Riley Securities. Your line is open.
Lucas Pipes
Thanks, operator, this is Nick Giles. Again, on behalf of Lucas on, could you provide any color around the cadence of insurance payments throughout the year? I know first proceeds were here in February and then how should we think about timing as far as paying down the revolver is paying that down contingent upon saving these payments?
Phillips Baker
Well, Nick, we had this as an insurance company in certain types of somewhere, I guess as to when they'll actually pay us.
John Tumazos
But we are we did they actually been very good and they did they did make payments just a couple of days ago on what they have said is that they would anticipate during the course of the year. So just sometime over the over the course as far as paying down the revolver. It will be a function of both that and the cash flow from from our operations. So it's a good idea. And ideally, we will as we build up cash position will we'll pay it down.
Lucas Pipes
Got it. Got it.
Okay.
Well, fair enough. I appreciate the color.
John Tumazos
Best of luck and to that, there are no further questions at this time.
Operator
I will now turn the call back over to Phil Baker, CYO. for closing remarks.
Phillips Baker
Okay. Well, thanks, everyone, for participating in the call. I'll remind you that we have the opportunity. If you'd like to have a one-on-one meeting with us, you can that you can schedule one with us in the next hour or two. And I and if those if that doesn't work, then please feel free to reach out to and VITA, and we'll be happy to schedule the different time from just to appreciate the interest. And I definitely think that we're in a place with silver that we've not done before. And I'm guessing that we're going to keep banging that drum to tried to get people to realize what's that what's happening in the service space with the growth in solar. So thanks so much talk soon.
Operator
This concludes today's call. You may now disconnect.
