Hecla Mining Company (HL) Temporary Care and Maintenance at Lucky Friday Mine Conference Call January 11, 2012 1:00 pm ET Executives Mélanie Hennessey – Vice President, Investor Relations Phillips S. Baker, Jr. – President and Chief Executive Officer Lawrence P. Radford – Vice President, Operations James A. Sabala – Senior Vice President and Chief Financial Officer Analysts Trevor Turnbull – Scotia Capital David Peirce – Royal Bank of Canada Steven Butler – Cannacord Genuity Gerald Chase – Pera-Smith Capital John Bridges – JPMorgan Chris Lichtenheldt – UBS Securities Tony Christ – Capital Securities David Bond – Platts Metals Week Duff Armstrong – Armstrong Financial Shiben Zee – RCM Capital Management Theodore Karl Geoca – Maxout Savings Advisors LLC David Peirce – Royal Bank of Canada Presentation Operator
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. They involve a number of risks that 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. And with that, I will pass the call over to Phil Baker, Hecla’s President and CEO. Phillips S. Baker, Jr. Thanks, Mélanie. This is Larry Radford’s first call with Hecla. He has been our Vice President of Operations for the past two months and has been dealing with this issue almost all of his time over the last little while has been on this issue. As we announced in the press release, we have been ordered to clean the built-up material in the shaft of the Lucky Friday. This is the silver shaft. This silver shaft was commissioned in 1983 and it’s been in almost continuous operation since then, it’s an 18-foot diameter shaft, and it’s over a mile deep. If you go to the – I guess the webcast, there are some slides available. if you go to the webcast, you can see a slide that shows a picture of the silver shaft at least the bottom, I’d say about half of it, and it shows the place where we’re currently mining on the 30 vein, and the work that we’ve talked about for sometime on the #4 shaft. The shaft that we have is over a mile deep. it’s one of two ways that we have to get into the mine, the other is #2 shaft and that’s the shaft that was built in about 1960. In order to produce from the mine, it was necessary that we have two entrances to the mine. So we’ve had the silver shaft and the #2 shaft with the order that requires that we clean this shaft. We only have one entrance. So we are not able to operate and produce ore.
This silver shaft is divided into two compartments; the east compartment has two conveyances in it for men and materials and for rock. The west compartment is essentially unused and has been for the past 30 years. Also, within the shaft is, power lines, vent lines, sand lines. The sand lines are a tailings-concrete mix of material that goes back into the mine and acts as the backfill.Occasionally, these sand lines over the past 30 years have leaked – have leaks in them, depositing cement-like material on the walls of the shaft in various lines. We had a rock burst in – two rock bursts over the course of November and December in the mine. and those rock bursts, if you look at that drawing on the website, we’re on the 5,900 level, and that level is a mile-long tunnel. A mile-long haulage way. And so those rock bursts that we had, we’re well into that tunnel, not quite the full mile distance. But very close to where you see the 30 vein, in fact right at the 30 vein, now that I mention it. So it is roughly a mile away. So the thing, the inspection that has occurred with respect to the silver shaft were not – was not specifically related to the rock burst, but it was done by MSHA, they’ve come in and done a thorough investigation and inspection of the whole operation, including the silver shaft. And so they issued a – what is called a citation, saying that we needed to clean the loose material, which we cleaned the material, but when they came back in, they concluded that the material needed to be cleaned further and we had not met the time constraint that they had given us, which was 10 days. And so under the order that they issued, we are not able to use the shaft for anything other than the cleaning of it. Read the rest of this transcript for free on seekingalpha.com