Hecla Mining's CEO Presents At Temporary Care And Maintenance At Lucky Friday Mine Conference (Transcript)

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

Good day, ladies and gentlemen. And welcome to the Hecla Mining Company Corporate Conference Call. My name is Barack, and I’ll be your operator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session at the end of the conference. (Operator Instructions)

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

Mélanie Hennessey

Thank you, Barack. Welcome, everyone. And thank you for joining us on today’s call to discuss the latest developments at the Lucky Friday Mine. Our news release, which was issued this morning before market opened is available on Hecla’s website. Phil Baker, Hecla’s President and CEO; Jim Sabala, Senior Vice President and CFO; and Larry Radford, Hecla’s new VP of Operations have also joined us on the call today.

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.

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