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Hecla Mining (HL 1.07%)
Q1 2024 Earnings Call
May 09, 2024, 10:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Thank you for standing by. My name is Rochelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the first quarter 2024 Hecla Mining Company earnings conference call. All lines have been placed on mute to prevent any background noise.
After the speakers' remarks, there will be a question-and-answer session. [Operator instructions] Thank you. I would now like to turn the call over to Anvita Patil. Please go ahead.
Anvita Patil -- Vice President, Investor Relations and Treasurer
Good morning, Rochelle, and thank you all for joining us for Hecla's first quarter 2024 results conference call. I'm Anvita Patil, vice president of investor relations and treasurer. Our earnings release that was issued yesterday, along with today's presentation, are available on our website. On the call is Phil Baker, president and chief executive officer; Russell Lawlar, senior vice president and chief financial officer; and Carlos Aguiar, 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. We will all be available to answer your questions. Any forward-looking statements made today by the management team comes under the Private Securities Litigation Reform Act and involve risks, as shown on Slide 2 and 3, 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.
Phil Baker -- President and Chief Executive Officer
Thanks, Anita. Good morning, everyone. As you may know, I'm the chair of The Silver Institute, and I've volunteered for this position because of the world's growing need for silver. And so, I'm going to actually start the call talking about silver because I'm just very excited about the role that silver has in the energy transition, and something I didn't really appreciate, which is the silver demand in India.
So, let's go to Slide 3. I can't overstate how remarkable 2023 was for solar energy and silver. New investment in renewable energy was about $675 billion. And of that, 393 billion or almost 60% was for solar.
And that's a 12% increase over 2022, and it's a new annual record. And this investment should continue. Silver's photovoltaic or PV demand increased to 194 million ounces, and that's per the silver survey that was put out about four weeks ago. And that's about four times more than the demand 10 years ago.
And it's -- and photovoltaics now represents 16% of global silver demand. Silver photovoltaic demand has had about a 17% annual growth rate over the last five years. And in 2024, there should be another 40 million ounces for solar. So, to put that into perspective, 40 million ounce increase is about the same as the total demand that you had for photovoltaics in 2013.
And you'd need four new Greens Creeks and eight new Lucky Fridays to meet it. Now, let's go to Slide 4. About two weeks ago, I attended the India Silver Conference where I learned five things. First, India's silver demand is pretty consistent at about 17% to 19% of global demand.
We had a drop off during the pandemic, but it has since come back. And as global demand grows, so does Indian demand. And Indians actually have to pay more for their silver because of 12% duties and taxes that they have now. That's going down 1% per year until it gets to 3%, so it's going to improve for them.
February imports set a monthly record of 77 million ounces. And if you take the first quarter in total, it exceeded all of the silver that was imported for the whole year in 2023. And what might be most surprising of all is the price of silver and rupee terms hit an all-time high in April. And then, finally, I learned the policy commitments the Modi government has made renewables -- has made to renewables has really created a very large new market for solar.
And that was a lot of the conversation at the Indian conference was, how they move forward with solar. As you put the solar and the Indian demand together, it's about 35% of silver's global demand, and they are both growing. And the three-year deficit is now over 500 million ounces, and I expect more deficit this year and into the foreseeable future. Silver's fundamentals are unlike any time in its history.
Now, turning to Slide 5, let me talk about Hecla and its role with the deficit. With the Lucky Friday back to full production and Keno Hill ramp-up progressing, we are the fastest growing established silver company as a result of innovation and the efforts of our people. If you go back to 2010, we produced total of 10 million ounces, Greens Creek produced 7 million, Lucky Friday produced 3 million. This year's guidance is Green's Creek at around 9 million and Lucky Friday at 5 million.
That's a 40% increase without considering Keno Hill. And it's not just production growth for the sake of growth. We have maintained a low-cost structure, in fact, the lowest in the industry. In 2010, Lucky Friday's cash costs were $3.76 per ounce.
We're going to be around $2.50 to $3.25 this year. And this improvement is due to investments that we've made, the fore shaft, the patented UCB and innovation that we made, mining method, the service hoist, ore storage bunkers, and lots of other improvements. And over the same period, Greens Creek's costs have also remained consistently low. This year, we expect cash costs to be $3.50 to $4 and AISC to be $9.50 to $10.25.
And Green's Creek has had growth in reserves. Since 2010, we've replaced 120 million ounces and added reserves to maintain a 13-year mine plan. When Green's Creek started its operations back in 1989, the mine had a seven-year reserve plan. I think Keno is gonna be on the same path as these two mines.
Turning to Slide 6, there's really three messages for this quarter. First, our silver operations are strong and consistent with Green's Creek delivering a solid quarter and Lucky Friday achieving full ramp-up. Second, Keno Hill's ramp-up is going well, and we're seeing incremental and steady improvements in the safety culture and engineering risks out of the mind. Third, we see the first quarter as an inflection point with strong free cash flow from our established silver operations, improving performance at Keno, and the insurance proceeds, which we will use to delever over the next 12 months.
Finally, we expect to release our 2023 sustainability report at our annual meeting May 17th. And we are again net zero in 2023 on Scopes 1 and 2 carbon emissions, where we've utilized UN-certified offset credits. And this year, instead of using credits, we are investing in research to sequester carbon in our operations. With that, I'll pass the call on to Russell.
Russell Lawlar -- Senior Vice President, Chief Financial Officer
Thanks, Phil. I'll start on Slide 8. In the first quarter, we saw our financials begin to rebound as expected from the effect of the fire at Lucky Friday. We had nearly $190 million in revenue, an increase of 18% from last quarter while we still invested free cash flow in the operations.
We saw an improvement of approximately $30 million from the fourth quarter last year, maintaining our net leverage ratio at 2.7 times. We expect to see the net leverage ratio improve to less than two times over the next 12 months as we see the full effect of Lucky Friday coming back into production, as well as the continued ramp-up at Keno Hill. We also saw our positioning in silver continue to improve as 44% of our revenue was generated from silver, an improvement of 5 percentage points over 2023. The margin at our silver operations have remained strong during the quarter at 47% of the realized price of silver.
We expect the margins and the resulting free cash flow from these operations will continue to improve as we continue to see the effect of Lucky Friday for the remainder of the year. Turning to Slide 9, with Lucky Friday back to full production and the Keno Hill ramp-up going well, I'll speak a little bit about our financial priorities in 2024, which are hinged on the fact we have these great silver assets, which have generated over $600 million in free cash flow since 2020. I expect this free cash flow trend to continue and even strengthen as we see support in the price for silver and see the impact of Lucky Friday being back into production. This free cash flow will first be invested in our operations, including the ramp-up of Keno Hill.
We anticipate we'll spend $190 million to $200 million in capital, lower than last year because of the completion of projects at both Lucky Friday and Keno Hill. We also anticipate spending just over $30 million on both exploration and pre-development with a plan to continue to add to our existing mineral endowment and our various operations and exploration properties. Our next priority will be to delever the amount drawn on our revolver, which we've used for liquidity due to investments made at Keno Hill and Casa Berardi while the Lucky Friday was out of commission last year. With strong expected EBITDA generation, I expect our net leverage ratio to revert to our target less than two times over the next 12 months.
With that, I'll pass the call to Carlos.
Carlos Aguiar -- Vice President, Operations
Thank you, Russell. I'm at Keno Hill remote with the rest of the team and will keep my remarks short. We started the year on a strong note with Lucky Friday achieving full ramp-up, another strong quarter from Green's Creek, and Keno Hill's improvement on safety and environmental metrics as we ramp up production. Casa Berardi's transition to open pit is continued, and we are focused on creating cost control.
We have work to do as we evaluate extending underground operations. I look forward to having all the four operations running at full throttle this year. With that, I will pass the call to Phil.
Phil Baker -- President and Chief Executive Officer
Thanks, Carlos. I'm going to start on Slide 11 with Greens Creek which reported another solid consistent quarter with strong free cash flow generation. The mine produced 2.5 million ounces, and the increase in production was driven by higher grades and throughput. And the throughput exceeded 2,550 tons per day.
To put that into context, when we acquired operatorship of Greens Creek, we were somewhere around 1,950 to 2,000 tons a day. Cost performance is in line with the plan. Cash cost per ounce was $3.45 so all-in sustaining costs were $7.16 per ounce. That's lower than in the fourth quarter due to the higher silver production in the by-product credits.
Capital spending is lower than planned due to timing of equipment deliveries and less capital development because of unexpected or where ramp was planned. That's a great problem to have. First, fore shaft cash flow generation for the quarter was 20 million lower than the last quarter due to increase in receivables. So, we just have this working capital build up, which is going to reverse.
We're reiterating our production guidance of 8.8 million to 9.2 million ounces and our AISC guidance of 9.50 to 10.25. Throughput has continued to increase toward the 2600 tons per day, and it requires a significant focus on maintenance. We're expanding our predictive maintenance practices in the middle of the mine to identify problems proactively. This has improved availability, increased college capacity, and identified numerous opportunities that the team will focus on.
But we are reaching the limit of what we probably can achieve in terms of 10-inch growth without, you know, sort of rethinking the kind of investment that we need to make. Turning to Slide 12, lots of achievements at the Lucky Friday: full ramp-up in the first quarter producing 1.1 million ounces of silver; a thousand days without a lost time injury; multiple days in March of record mill throughput, over 1,300 hundred tons per day. And to put that in the context, traditionally, the throughput rate was probably around 850 tons. We've completed two critical projects, the service hoist, which increased hoisting capacity about 25%, and, of course, ore bunker, which decoupled the mill from the mine with five days of stockpile capacity.
And that's a big deal to be able to have those two things decoupled, particularly when we're operating at these higher tonnages. The mill can't catch up otherwise. We continue to work on other improvements like grinding classification to increase throughput. Cash costs in AISC were 8.55 and 17.36 per ounce respectively, higher than guidance ranges due to the ramp-up.
So, that will come down over the course of the year. The mine produced 12 million in free cash flow, including the 17.4 million insurance receipts and is on track to achieve production and cost guidance for the year and be cash flow positive for the year. Turning to Slide 13, and this is where I'll spend the majority of the remainder of time, Keno Hill is improving. And we are learning and trying to do everything through the lens of safety and environmental improvement.
And we are making it safer. Our injury frequency rate is down 41%, but it is still too high. Like every operation, we have a two-pronged approach where we're trying to change behavior, and then we're also engineering and designing out risks. And so, for behavior, we initiated a 10-step action plan to implement the best practices in training, reporting investigations of accidents and supervision.
The program is about 40% complete, and it's resulted in increased morale and has promoted a culture of transparency. So, we actually have had more significant potential incidents or as many as we had a year ago, but there's been more reporting. And the point of this is the key to a safe site is really having no fear in telling what is really happening. And the team is responding well to that.
This is where we're making, I think, great progress. On the design side, we're focused on modifications to environmental controls to bring it to Hecla standards. And our standards in many cases exceed the legal requirements. And I'm struck by a comment that Brian Erickson, who's a longtime Greens Creek leader -- some of you probably have met him on tours of Greens Creek, and he's now, well in June, start overseeing both Greens Creek and Keno Hill.
And he rattled off a list of things not legally required but that we need to do in order to meet Hecla standards. Now, it's going to -- like Greens Creek, it's going to be a long process. I mean, we're still improving our standards at Greens Creek, a 37-year-old mine. But the geology at Keno and our culture warrants it.
So, for the next year or so, our focus is on better monitoring, getting more fulsome hydrologic studies, and making the water treatment plant upgrades. And design improvements are also being made operationally to make the mine more predictable and efficient, which makes it safer and more productive. There are a number of things, but the biggest is the cemented tails batch plant, which is going to allow underhand mining at Bermingham. And whenever you have the challenging ground conditions like we have at Keno, nothing could make it safer or more productive than having miners mining under a constructed back, the underhand method allows you to do.
This plan's going to be finished by year-end, and full conversion to underhand mining will happen by the end of next year. So, we're at 277 tons per day, and this is all from the Bermingham deposit, about 30% more than last quarter. We still have too much variability in how much we mine in millage day, but it's getting a lot better, and we're seeing even more consistency in April and into May. At the start of my comments on Keno, I said we're learning.
And what immediately comes to mind is that particularly in the shoulder seasons, in order to manage the clay from Bermingham, we need the hard rock from Flame & Moth deposit to make the crusher run better. So, despite Flame & Moth being lower grade, and when I say lower grade, I think it's like 24 ounces per ton so it's not super low grade, a portion of our feed's going to come from it in order to make crushing better. And you'll start to see that in the next few months. With 600,000 ounces that we've done this quarter, we're confident we're gonna hit our production numbers, reach commercial and full production probably before year-end, but only if we're making the mine safer and more environmentally compliant.
Now, let me go to why Keno's life we think is gonna be longer than the current 11-year mine life. And it's the exploration results we're seeing. So, if you go to Slide 14, last quarter, I highlighted high-grade intercepts at Bermingham, including one which was 54 ounces per ton over 39.5 feet, as well as an intercept which was 1,000 feet deeper than any previous drilling. And it provided the evidence that high-grade silver mineralization can be hosted within the full depth of the 3,000-foot favorable basal quartzite host rock unit.
Now, we've continued drilling. And the results we shared today are just as exciting where there were two additional intercepts in the footwall vein, one of which was 55.4 ounces per ton over nearly 41 feet and the second was 51.2 ounces per ton over almost 40 feet. These are multiples of the sort of widths of what we normally see. These holes are near existing infrastructure, and they exceed our model's expectations.
We also have two surface exploration drills that we've just started turning -- targeting the 3,000-foot strike length and 2,000 foot of dip length on the Bermingham vein system to test that deeper basal quartzite host. There's also other drilling targets outside of Bermingham to see if we have cracked the code for how this system is in place. We expect to be here for decades to come. Turning to Slide 15, I'll talk about Casa.
Casa produced 22,000 ounces and an AISC of just under $1,900, capital costs of about $13 million, all of this is as expected per our guidance. We did experience lower surface grades, about 10% to 15% lower than previous low-grade quarters, some of it do processing low grade stockpiles. We'll be watching this in the coming quarters. The mine had 9 million of negative cash flow, and this is an improvement over the prior quarter.
And this year is an investment year at CASA. But we do expect free cash flow before we reach the gap in production in a few years. So, the investment we're making this year is as expected. Going to Slide 16, shows our guidance for the year.
We're affirming our production and cost guidance. And before I open the call for questions, I just want to thank all the Hecla employees across all the sites and ask them to continue to focus on safety, both designing out our hazards and making safe choices. With that, Rochelle, I'd like to open the call to questions.
Questions & Answers:
Operator
[Operator instructions] Your first question comes from the line of Heiko Ihle of H.C. Wainwright. Your line is now open.
Heiko Ihle -- H.C. Wainwright and Company -- Analyst
Hey there. Thanks for taking my questions. I assume you can hear me OK?
Phil Baker -- President and Chief Executive Officer
We can, Heiko. Thanks.
Heiko Ihle -- H.C. Wainwright and Company -- Analyst
Hey, Phil. So, Keno Hill, your release states that your action plans should be substantially completed before the end of the year, but you do need a carve-out for some longer-term infrastructure. I mean, obviously, Flame & Moth is starting next month, but building on what you had on Slide 13 earlier, can you just provide some color on what exactly you're referring to with that carve-out, when you expect to undertake this, and maybe just even what you expect to spend by quarter? I assume it's mostly front-loaded?
Phil Baker -- President and Chief Executive Officer
Yeah, no, I certainly -- the guidance that we've given for 2024 is unchanged. There's nothing that -- all of this is as I just wanted to make it clear to people that as we go to the underground -- the underhand mining method that is -- that it will be a process that will take some time before we'll be fully underhand at Birmingham. And as far as additional capital in 2025, we haven't gone through those plans, but I'm not anticipating that there's going to be some major sort of capital outlay, you know, in any one year. But because of the exploration success that we're seeing here, it's a dynamic situation, we're contemplating permitting for a much larger throughput than what we currently have.
We haven't finalized that, but that's the path that we're on. And like Greens Creek that over the years, and I think if you go back to its early, you know, '90s, its rate was well below the $1,900 or so that we had. I don't remember what it was, and I don't know if, Russell, you had any --
Russell Lawlar -- Senior Vice President, Chief Financial Officer
I don't know. I'm not sure what it was.
Phil Baker -- President and Chief Executive Officer
It was -- so this is going to be an evolving mine and the exploration success that we're seeing justifies that. Carlos, anything you want to add?
Carlos Aguiar -- Vice President, Operations
No, that's correct. So, we are still -- you know, a long road ahead of us, and we are still evaluating all the stuff that we can make. Nothing to add.
Heiko Ihle -- H.C. Wainwright and Company -- Analyst
Got it. And then, just a quick clarification. You had ramp-up costs of 8.7 million during the quarter at the site. Can you just break that down a little bit?
Phil Baker -- President and Chief Executive Officer
When you say break it down, I mean, it is sort of the stub. So, we have our total revenue that we generated. That goes into operating costs and then the stub is what goes into the ramp-up costs. Any color --
Russell Lawlar -- Senior Vice President, Chief Financial Officer
Yes, we can add -- I can add a little bit to that. Basically, the way that we handle ramp-up costs are at Keno Hill, we will allocate -- you spend -- we spent -- this quarter, we spent about $15 million in cash expenses at Keno Hill. And we generated roughly $10 million of revenue. So, we allocated $10 million of the $15 million to cost of sales.
Because we're in a ramp-up period, we're not actually earning margin where it's a combination of earning some revenue while we're actually ramping up or building the operation. And as such, then we'll allocate the remainder to ramp-up costs. So, as we see the revenue at Keno Hill increase, we should see the ramp-up costs come down when we do get to the point where we believe we're at commercial or full production, we would then allocate all of the costs to cost of sales. At that point, you know, we would expect we would have a margin as well.
Phil Baker -- President and Chief Executive Officer
And we'll determine that we're in commercial production when we're confident that we have a stabilized operation. And that's in part reason for mentioning about the underhand method. I don't expect that we'll have to wait until we get all the way there to underhand, but I just be aware of that, but that's something we'll have to consider.
Russell Lawlar -- Senior Vice President, Chief Financial Officer
And then lastly, I would just add, it's the same methodology we've used at Lucky Friday. We did the same thing with Lucky Friday, whether it was last quarter or previously. In Q1 of 2024, we did have a little bit of ramp-up costs in January. And that's -- we've kind of disclosed that within our financials, but it was a couple of million dollars.
And keep in mind that that line item in the income statement will ramp up on suspension costs. There's some costs in there for Nevada and a very, very small amount from San Sebastian as well.
Heiko Ihle -- H.C. Wainwright and Company -- Analyst
Very comprehensive answer. Good quarter. Stock is reacting well, and I'll get back in queue.
Russell Lawlar -- Senior Vice President, Chief Financial Officer
Thanks, Heiko.
Operator
Your next question comes from the line of Lucas Pipes of B. Riley Securities. Your line is open.
Lucas Pipes -- B. Riley Financial -- Analyst
Thank you very much, operator. Good morning, everyone.
Phil Baker -- President and Chief Executive Officer
Hi, Lucas.
Lucas Pipes -- B. Riley Financial -- Analyst
Phil, I wanted to first ask on Lucky Friday. Just looking at Q1, obviously, going -- things are going in the right direction, but still more needed for the full year. So, I wondered if you kind of walk through a punch list of what you expect and what you need to see if you hit that full year guidance? Thank you very much on that.
Phil Baker -- President and Chief Executive Officer
Look, I don't think it's doing anything more than what we did, you know, prior to the fire, and we're on track to do that. You know, a function of what's the actual grade that we hit as we go through, but we're not anticipating any particular issue with getting to the 5 million ounces. If we have any problem, it's really about getting the people that we need and maintenance. That's our biggest challenge in order to have the availability.
But it's -- we're -- I think we're going to be -- as the year goes on, we're going to be in an optimization mode, you know, what additional changes can we make to get beyond where we are expecting to be. Carlos, anything you want to add or correct?
Carlos Aguiar -- Vice President, Operations
Yes. This is a really exciting time for Lucky Friday. Of course, the termination of the major projects that were completed last year. This is going to be our first year, you know, utilizing those projects and future comes right for a lot of time.
Lucas Pipes -- B. Riley Financial -- Analyst
Thank you for that color. But for my second question, I'd like to turn to Casa. So, you mentioned previously that the free cash flow contribution should really pick up in 2026. Could you quantify your expectations around 2025? Can you give some color around that? And then, with the significantly higher gold price environment today, are you looking at that mine differently from a strategic perspective from an operational standpoint? I would appreciate your thoughts on that.
Thank you.
Phil Baker -- President and Chief Executive Officer
So, Lucas, you know, probably the best source of information as to what we think 2025 and 2026 will look like is our technical report. And so, I would point that up for your attention. And at this point, we don't see anything dramatically different from that other than we do have higher gold prices. You know, where we have experienced some lower grades than what we had in the plan.
So, we're going to be watching that closely and trying to figure out what's happening there, if it's temporary or, you know, if there's more to that. I don't know anything else --
Russell Lawlar -- Senior Vice President, Chief Financial Officer
I don't think I have much to add. Certainly, higher gold prices could potentially cause us to have a little bit more material from the underground. I think if you step back and you think about the entirety of Casa Berardi, it's probably around the -- kind of around the edges. But, you know, we'll take the opportunity if we have the opportunity.
Phil Baker -- President and Chief Executive Officer
And when you ask the strategic question, I guess, look, we see Casa as playing an important role of providing us with diversification, giving us scale. But frankly, we are certainly more focused on silver and always have been, and Casa and gold was a means to an end of being able to be larger in order to take on more silver opportunities. And, you know, it's serving that purpose, and I think it will continue to serve in the future. But the focus certainly is on silver, Lucas.
Lucas Pipes -- B. Riley Financial -- Analyst
And, Phil, on that, you speak with a lot of excitement and passion about the outlook of the silver market. I think I've heard, you know, growth aspirations about Hecla and the S&P 500. And so, when kind of taking a step back, how aggressive do you want to be over the next few years to pursue the silver opportunity? Is this a time to focus on Keno, get that up first, or maybe press forward on a couple of different fronts to pursue the opportunity outlined at.
Phil Baker -- President and Chief Executive Officer
Well, I guess, certainly, we've got to focus on Keno and get that up and running the way we think it can. But Keno is a long-term game, it is -- I have no doubt that it is probably -- we currently have an 11-year mine life. I have no doubt that we are finding more, and we will end up with a longer mine life than that. And so, it's one that's an evolution.
With respect to acquiring new things, we're certainly always looking and it's -- and we're more focused on what the opportunities when they arise and trying to put things together than trying to time something. So, if things become available, and it's -- people want to -- you know, they see the vision of Hecla as continuing to be the premier silver producer and one that's even bigger and one that could conceivably reach this goal of S&P 500, we would want to have them join up with us to help us achieve that. But we don't have to do those things. I mean, we have within our portfolio, there's eight projects that we have that are silver projects.
And some of them, particularly the Libby exploration, and things that we have in Montana have the capacity to fundamentally change Hecla and really have a step forward to be able to accomplish some of these goals on our own. But we're going to be continuing to look, and we want to bring other assets in it, if we can.
Lucas Pipes -- B. Riley Financial -- Analyst
Phil, really appreciate the color and perspective. To the entire team, continued best of luck. Thank you.
Phil Baker -- President and Chief Executive Officer
Thank you, Lucas.
Operator
[Operator instructions] Your next question comes from Joseph Reagor of ROTH MKM. Your line is now open.
Joseph Reagor -- ROTH MKM -- Analyst
Hey, Phil and team. Thanks for taking the questions. I guess, following on something Heiko asked on the ramp-up and maintenance costs, can you give us any guidance on what those might look like over the remainder of this year and then kind of long-term?
Phil Baker -- President and Chief Executive Officer
When you say the maintenance costs, what are you referring to, Joe. By the way, hi, Joe. What are you referring to?
Joseph Reagor -- ROTH MKM -- Analyst
So, there was -- in Q1, there was like $14.5 million between ramp-up costs, which I know you guys attributed some of that to expenses versus revenue at Lucky Friday and Keno. But beyond that, how much of that is ongoing care and maintenance for like Nevada and San Sebastian, etc.?
Phil Baker -- President and Chief Executive Officer
We can give the breakdown --
Russell Lawlar -- Senior Vice President, Chief Financial Officer
I do -- certainly for Q1, most of that cost, $9 million was related to Keno, $2 million was Lucky Friday, and the Nevada and San Sebastian were $3 million and $0.5 million, respectively.
Joseph Reagor -- ROTH MKM -- Analyst
So, 2 million at the Lucky Friday relates to that --
Phil Baker -- President and Chief Executive Officer
Just one month.
Russell Lawlar -- Senior Vice President, Chief Financial Officer
Right, I think that long term, it will go down to just the Nevada and San Sebastian numbers. And, you know, certainly, one of the things that we're working on actively is looking to minimize those as well because we want to make sure that those expenses are as small as we can.
Phil Baker -- President and Chief Executive Officer
Yes. And Joe, I'm glad you followed up on Heiko's question, because I probably should point out again that we are taking Brian Erickson, who's been at Greens Creek for 27 years and has been the GM, I don't know, last four, five years. And we've asked him to be a regional Vice President over both Greens Creek and Keno. And the reason for that is to try to look for synergies between the two operations because in the mining world, these are actually very close together.
They're -- it's about a six- or seven-hour trip from one mine to the other. And if you fly the whole way, if you flew, you could do it in two hours, including immigration. So -- and you think about materials, it's all coming up through the inland passage. It actually goes right by Greens Creek.
And so, we're going to try to combine procurement and nobody will be better than Brian at looking at what things we can do together between those two operations in order to drive the cost structure down, try to apply fixed costs that we have at Greens Creek to Keno without increasing Greens Creek's fixed cost. That's the idea. And, you know, it's going to -- again, it's going to be an evolution at Keno, it's -- it took a long time for Greens Creek to be cash flow positive. It will not take that long at Keno, but it's going to be a period of time that we will be investing in.
I just don't have the visibility at this point as to what those synergies might be in order to drive that quicker.
Joseph Reagor -- ROTH MKM -- Analyst
OK. OK. Fair enough. And then, as you think about Keno, you know, progress again in Q1 compared to Q4, you know, you're maintaining your guidance for the year.
But are there any issues that are ongoing there that you guys feel may ultimately result in needing to make a significant capital investment to fix something or, you know, increase the fleet size or whatever?
Phil Baker -- President and Chief Executive Officer
You know, I think it's going to be driven more by the exploration success we have and wanting to increase throughput there. That could cause us to make a substantial investment. If we stay at 400 tons a day, now there's -- it's just hard to -- you don't have a lot of space at 400 tons a day to make a significant capital investment. But what we're anticipating is -- I mean, the exploration we're seeing is the potential is so great.
I don't think that will be the case. I think you will over time. But I don't have any visibility on what that might be at this point. But it is a very exciting place, and we've focused a lot of attention to try to get this right with start.
Because the only thing that can really, I think, caused a problem for us is really safety and environmental poor performance. And we've got to get those right, so we're focusing a lot of time and attention on those.
Joseph Reagor -- ROTH MKM -- Analyst
OK. And then, one last one. On Nevada, the assets have been idle for a while. But given the current gold price north of $2,300, is there any opportunity to consider restarting operations in Nevada or selling that asset to another company who might want to look at that opportunity? You know, is there any way to generate some value there?
Phil Baker -- President and Chief Executive Officer
Yeah. So, certainly, we are evaluating if there's material in Midas that could be mined at these higher prices. And we are continuing to do the work necessary in order to get back underground at Hollister on Hatter Graben. There is nothing that I can -- well, there is a huge opportunity for value creation if you could restart those operations at Midas and at Hollister.
As far as selling it, I mean, that's always a possibility. But we view it as having so much long-term exploration opportunity and so little has been done on the Eastern Robin corridor and in Hollister that we think that's not likely something we would do. But it's -- you know, we're not going to be wed to an asset, particularly a gold asset.
Joseph Reagor -- ROTH MKM -- Analyst
OK. Thanks. I'll turn it over.
Phil Baker -- President and Chief Executive Officer
OK. Thank you.
Operator
There are no further questions at this time. I will now turn the conference back over to Phil Baker for the closing remarks.
Phil Baker -- President and Chief Executive Officer
The only closing remark I have is, I know this is a busy day with lots of companies reporting. And I appreciate folks being on this call and certainly understand if you want to reach out to us later and either Russell or I, and we're happy to answer questions and look forward to speaking to you. Thanks for being on the call.
Operator
Thank you. That concludes today's call. Thank you all for joining. [Operator signoff]
Duration: 0 minutes
Call participants:
Anvita Patil -- Vice President, Investor Relations and Treasurer
Phil Baker -- President and Chief Executive Officer
Russell Lawlar -- Senior Vice President, Chief Financial Officer
Carlos Aguiar -- Vice President, Operations
Heiko Ihle -- H.C. Wainwright and Company -- Analyst
Lucas Pipes -- B. Riley Financial -- Analyst
Joseph Reagor -- ROTH MKM -- Analyst
