Hecla's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Hecla Mining Company ( HL)

Q4 2011 Earnings Call

February 21, 2012 1:00 PM ET


Mélanie Hennessey – Vice President, Investor Relations

Phil Baker – President and CEO

Jim Sabala – Senior Vice President and CFO

Larry Radford – Vice President, Operations

Dean McDonald – Vice President, Exploration


John Bridges – J.P. Morgan

John Tumazos – Very Independent Research

Anthony Sorrentino – Sorrentino Metals

Tom Adams – International Management

Trevor Turnbull – Scotia Capital

Chris Lichtenheldt – UBS Securities



Good day, ladies and gentlemen. And welcome to the Fourth Quarter and 2011 Year End Financial Results Conference Call. My name is Fab, and I’ll be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions)

I would now like to turn the conference over to Mélanie Hennessey, Vice President of Investor Relations.

Mélanie Hennessey

Thank you, Fab. Hello, everyone. And thank you for joining us for Hecla’s fourth quarter and year end 2011 financial and operations results. Our news release, which was issued this morning before market opened and today’s presentation are available on our website. In addition, Hecla issued a release last Thursday announcing the latest reserves and resources, and provided an update on our predevelopment and exploration initiative.

On today’s call, we have Phil Baker, Hecla’s President and CEO; Jim Sabala, Senior Vice President and CFO; Larry Radford, Vice President, Operations; and Dean McDonald, Vice President, Exploration.

Before we get started, I need to remind you that any forward-looking statements made today by the management team come under the Private Securities Litigation Reform Act. Such statements include projections and goals, which are likely to involve risks detailed in our various SEC filings, 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 projections.

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 such terms 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 line over to Phil Baker, Hecla’s President and CEO. Phil?

Phil Baker

Thanks, Mélanie. Hello, everyone. I’m glad you could all join us today. Jim and Larry, and I are here at the Zinc Conference, and so we’re speaking from a conference room, and there is a little bit of an echo and we apologize for that.

I’m going to provide a brief overview and then Larry will provide additional details on the work plan at Lucky Friday, and also will talk about Greens Creek’s capital program. Jim’s going to then speak about the financial results and Dean will provide an update on reserves, resources, exploration in the predevelopment initiative. I’m going to close out the call with our 2012 guidance and then we’ll take questions.

Now for the year end fourth quarter results please see slide four. First financially, it was an excellent year and the fourth quarter had very solid financial results. We had record 2011 sales and gross profits with $478 million and $265 million, respectively. While silver production was less than 2010, the 9.5 million ounces was in line with guidance, despite the challenges faced at the Lucky Friday mine over the last year.

Costs were $1.15 per ounce which remains among the lowest in the world and realized silver prices average $35 per ounce almost all of the margin. Cash from operating activities were $70 million or $238 million on a pro forma basis prior to paying the $168 million for the Basin environmental settlement. Our cash position at the end of the year was $266 million.

Now moving to slide five, we provide some additional 2011 highlights. Hecla had significant challenges but despite this, we have not only achieved excellent financial results but have number of other accomplishments.

Noteworthy, are the silver reserves and resources have increased for the six year in a row by 4% and 13% respectively to 148 million and 281 million ounces, also the largest in Hecla’s history. We executed a $102 million capital expenditure program at our operations in 2011 and significantly advanced our predevelopment initiatives far more than what we had anticipated at the beginning of the year.

We finalized and settled the long standing Coeur d’Alene Basin litigation. We acquired the minority interest in the San Juan Silver property which is now a 100% own for the Amethyst, Equity and Bulldog veins, and we introduced a new common stock dividend returning capital to shareholders.

And then of course, subsequent to the at the end of the year we had this the incident with the Lucky Friday where we had the shaft shutdown for this clean down, but we have now received approval from MSHA to remove the loose material from the shaft which brings me to slide six. And I wanted to have us cover upfront the Lucky Friday given the all of the announcements that we had on that over the course for the last month.

MSHA, you’ll recall, began a special impact inspection back in December and an order was issued to remove the loose material from the silver shaft and we are working with MSHA in order to progress as safely and quickly as possible to bring the Lucky Friday mine back into production.

Read the rest of this transcript for free on seekingalpha.com

More from Stocks

Micron Shares Soar; Chipmaker Is 'Managing for Profitability' Now, Says Analyst

Micron Shares Soar; Chipmaker Is 'Managing for Profitability' Now, Says Analyst

Dow Slips 178 Points; S&P 500 and Nasdaq Also Decline

Dow Slips 178 Points; S&P 500 and Nasdaq Also Decline

Facebook CEO Mark Zuckerberg Deflects Tough Questions From European Parliament

Facebook CEO Mark Zuckerberg Deflects Tough Questions From European Parliament

What Does China's Tariff Deal Mean for Automakers Like Tesla?

What Does China's Tariff Deal Mean for Automakers Like Tesla?

Lowe's Taps Home Depot Veteran As New CEO

Lowe's Taps Home Depot Veteran As New CEO