Good day, ladies and gentlemen and welcome to the Third Quarter 2014 Hecla Mining Company Earnings Conference Call. My name is Lacy and I’ll be your coordinator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of the presentation. (Operator Instructions) I would now like to turn the presentation over to your host for today's call. Mike Westerlund, Vice President of Investor Relations. Please proceed.

Thank you, operator. Welcome everyone and thank you for joining us for Hecla’s third quarter 2014 financial and operations results conference call. Our financial results news release that was issued this morning before market opened along with today’s presentation are available on Hecla’s website. On today’s call we have Phil Baker, Hecla’s President and CEO; Jim Sabala, Senior Vice President and Chief Financial Officer; Larry Radford, Hecla’s Senior Vice President, Operations; and Dean McDonald, Senior Vice President, Exploration. Any forward-looking statements made today by the management team come under the Private Securities Litigation Reform Act and constitute forward-looking information under Canadian Securities Law as shown on slide two. Such statements include projections and goals which are likely to involve risks detailed in our Form 10-K, Form 10-Q 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 those projected in the forward-looking statements. 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 terms such 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 call to Phil Baker.

Thanks, Mike. Hello everyone. Thanks for being on the call. If there is one thing I hope you take away from the call today, it's that the third quarter results clearly show the strength that Hecla has in times of weak prices. This strength comes from production growth, diversification of metals, our low-cost profile or strong cash balance and the ability to manage our capital and exploration investments depending on the prevailing metals price. Now this has been a strong third quarter for Hecla with all three mines operating well and we have seen quarter over quarter growth in production in our entire suite of metals, silver, gold, lead and zinc. Greens Creek continues its solid, low-cost consistent cash generating performance. Lucky Friday is exceeding expectations with silver production increasing 19% over the second quarter of this year and 103% over the third quarter of last year. We are also making improvements to our Casa Berardi mine and Larry will provide more details on all three mines in a few moments. The production increases come in times of volatile and low silver prices and we are fortunate to have several competitive advantages to reduce that volatility and deal with the low silver prices. For example, because of our low cash cost after byproduct credits profile our high quality assets are not very price-sensitive. Meaning that we don't have to change your mine plans are start high grading at current prices. Another advantage is that we produce large amounts of four metals. The prices of gold and silver are weaker but the prices of lead and zinc are stronger giving us a natural revenue hedge. We also hedge a portion of our lead and zinc production, cushioning us further against price volatility. In addition to these competitive advantages we also are…

Thank you, Phil and good morning everyone. The third quarter of 2014 can best be described as another quarter of continuing improvement compared to the same period of last year. We saw improvement in our key financial metrics, as well as silver and gold production. And it all starts with production and on Slide 6 you can see our silver production increase 25% to 2.9 million ounces due to increased production at the Lucky Friday and another strong quarter from Greens Creek. Our gold production also increased 15% to 42.5 thousand ounces, primarily the result of improved production at Casa Berardi. This is the first quarterly comparison we have had now where we have had ownership of Casa for the full quarter as compared to the previous year. An improving production drives the financial metrics. On Slide 7 we summarize the key financial statistics for the third quarter of 2014 compared to last year's comparable quarter. Revenue increased 27% to $136 million. Adjusted EBITDA has increased 38% to $43 million. Operating cash flow increased $7 million even after the payments of $55 million made in the third quarter of 2014 to satisfy the remaining obligation of the Coeur d’Alene Basin settlement putting that forever behind Hecla Mining Company. If one takes that payment out of the statistic for a truly comparable benchmark, operating cash flow for this quarter was $57 million, an increase of $62 million. Cash cost after byproduct credits per ounce declined 27% to $5.43. These results have come about for several reasons including consistent operations and the availability of low-cost, hydroelectric power at Greens Creek, increasing production at Casa Berardi as operations ramped up and the benefit of consistent and improving operations at Casa Berardi. The solid production improvement combined with careful attention to cost by our…

Thanks, Jim. On the operating side, Lucky Friday continues to impress showing a 19% increase in production over the second quarter and 103% increase over the prior year period as you can see on Slide 15. The higher volume of 973,000 ounces of silver has lead to a lower cash cost after byproduct credits per ounce of silver of $8.71. The mine is running well. As we said on the October 20 release, we expect the fourth quarter production to be less then Q3 due to mine sequencing. Regarding then #4 Shaft project on Slide 16, we are at the 7500 station and the shaft is more than 73% complete. We are on track for completion of this approximately $215 million budgeted project in 2016. On July 17, Greens Creek had another consistent quarter product 1.9 million ounces at a cash cost after byproduct credits per sliver ounce of $3.75. The increase in silver ounces produced is due to mine sequencing and has contributed to lower cost which are very low by industry standards and support our guidance for the year. The costs continue to be helped by the availability of hydro power, which we expect to last for the end of the year. The planned expansion of the Greens Creek tailings facility continues to work its way through the permitting process. If all permits are received as anticipated, construction should begin in 2015. On Slide 18 you can see that Casa Berardi produced 28,977 ounces of gold in third quarter at a cash cost after byproduct credits of $898 per gold ounce. This small increase in production from the second quarter contributed to the lower cash cost despite interruptions to production resulting from the shaft deepening project change over which I will discuss in a moment. This brings the…

Thanks, Larry. Our exploration and pre-development budgets have been more constrained this year but we continue to make several high grade previous metal vein discoveries at San Sebastian. At the mines we are systematically adding new resources and continuing to convert those resources to reserve, extending mine life even when contemplating lower metal prices. During the quarter we had active underground drilling programs at the mine and on surface at San Sebastian, Greens Creek and Casa Berardi. A table of recent intersections can be found at the end of the Q3 press release. At our most advanced exploration pre-development project, the San Sebastian property near Durango, Mexico, we had considerable exploration success in the past year by adding and upgrading new high-grade silver, gold resources at the middle, north and recently discovered East Francine veins as shown in the plan map on Slide 21. These veins are open along strike and at depth and their close proximity should have many synergies as mine planning is advanced. We are investigating a scenario where we open pit as well underground mine with the bulk of the resources being mined underground. As Phil noted earlier, this is similar to the approached we took in 2001 to 2005 when we last mined on the project. Drilling the last quarter has defined a new high-grade gold silver resource at the north vein. Currently the vein is being defined for a continuous strike length of over 2500 feet and to a depth of over 330 feet, as shown in the longitudinal section in Slide 22. Drilling pierce points shown in the grade by thickness longitudinal, define some very high grade zones near surface and are at a drill spacing required to upgrade most of the resource to an indicated category. The recourse is open at depth,…

Okay. Thanks, Dean. We have seen precious metals decline dramatically, particularly silver. Even today seen a big decline. Hecla is 125 year old company. The Luck Friday is a 70 plus year old mine. Greens Creek has been around more than 25 years. We have seen these declines in prices before. These are assets and Casa is positioned to be another asset to weather the storm and allow us to emerge with more production, more cash flow, more reserves and more resources. And so with that, operator, I would be happy to open the line for questions.

(Operator Instructions) And our first question comes from the line of John Bridges with JP Morgan. Please proceed.

I just wondered -- I remember how important San Sebastian was to you in the early 2000s. I just wonder how quickly you could get this thing up and running if things really deteriorated and actually as that cash flow. Do you have remaining permits in place? How quickly could you get this thing moving?

Look it would -- the construction of the mill would be the key element here and that’s a couple of year process to get that to happen. So nothing could occur immediately but this would probably be a relatively low capital project. Something less than a $100 million. And when you look at this surface material, there would be a substantial amount of that, when I say that maybe it's a few years worth of that sort of material. And it's quite high grade, quite high margin surface material. So absolutely the idea of being able to access that material and generate immediate free cash flow is appealing and something we are working on.

But is there a custom mill, like the one you used before? Are those still available?

Sure. I mean that is also an alternative, is to consider mills that are in the area and feed those mills. And that's on the table as well.

And if all you had to do was get permission to, or permitting to dig the hole. How quickly could you do that?

Call it 9 months from the time we start that process.

This (indiscernible) is a useful little discovery here.

We think so. And that's why we are trying to highlight this a bit more. We think this thing has good potential. It's produced -- in those early years we have produced about 25 million silver equivalent ounces and we started the year with about 55-60 million silver equivalent ounces. We think this will continue to grow. And it's high-grade.

Yes, I remember how important the asset was to you and obviously you got...

Yes, it was 2013. It was the highest cash flow generating asset for the company.

Our next question comes from the line of Jorge Beristain with Deutsche Bank. Please proceed.

I just was wondering, Phil, if you could give us -- you have said over and over that your mantra is trying to live within your EBITDA or adjusted EBITDA generation. But as we look out ahead into 2015, it does seem that you've got some spill over CapEx still pending. And if we just run a kind of mark-to-market on where silver and gold and everything are today, it would seem you are sort of trending towards about 100 millionish potential EBITDA, including even roughly the effect of the hedges. So, I'm just wondering if you could breakdown order of magnitude. Do you see still spending $35 million on Greens Creek, $60 million on Lucky Friday, $30 million on Casa? And then would there be any growth CapEx on top of that because I'm just trying to ordinarily rank, if something had to give, where you would see tucking in the CapEx to still live within your EBITDA.

Jorge, we are still in that planning process so I am not prepared to give guidance with respect to 2015. What I will say is that, the way we are starting the process is to attempt to live with than EBITDA. I think we probably would have more than what you are projecting but we have quite a bit of flexibility as to what we turn off. First starting with the exploration efforts and then moving into various capital programs. So just stay tuned is all I can tell you with respect to 2015. We are prepared to spend down a little bit of the cash on our balance sheet. So with over $200 million today and we think we will end of the year somewhere around $200 million. We have the flexibility to do that.

Okay. And if maybe I could have a follow-up with Jim. Just in terms of your recent debt issuance. Could you just bring us up to speed if there's any covenants or any kind of triggers there and the timeline on debt repayment?

There are no covenants that we have to deal with. It's just covenants that essentially exist. So I will let Jim comment on that.

No, Jorge, as Phil indicated there are no maintenance covenants, there are only incurrence covenants. And they are the type of covenants that as long as you keep making the interest payments, you are just fine. And obviously we are under no stress whatsoever in that area with the liquidity we have got. And in terms of reduction of debt, that was an 8-year piece of paper when we issued it. So while we always look at opportunities, I think it's safe to say that that's not immediately in our screen to reduce those bonds nor do we have really the ability to do so without paying a premium.

Got it. And, sorry, if I could just squeeze one more in. Your San Sebastian, you quoted it could be 100 million ounce opportunity and you said that it would only cost about $100 million of CapEx, or essentially $1 an ounce to get that into production. Could you give us an idea of roughly what the operating cost per proud would be, the C1?

Yes, we haven't developed that. But let me be clear on the hundred million ounces. We have produced about 25 from there. We have on the books, at the beginning of the year, silver equivalent of about 55-60 million ounces. So we are saying it's -- we think that the property will ultimately be over 100 million ounces from where we are starting right now. Stay tuned on what the specific capital will be and what the operating cost will be. But what I can suggest to you is that we will take this project forward if it generates significant returns in the current price environment. And I think there is the potential of this thing doing that given the low cost of mining the surface material and the fact that it's high-grade. I mean there's lots of that surface material that probably has a value of maybe $400, Larry? $400 [rock] (ph). Yes. So there is the potential for lots of margin from the surface material. And there is the potential for a few years of production from that surface material.

And our next question comes from the line of Garrett Nelson with BB&T Capital Markets. Please proceed. Garrett Nelson - BB&T Capital Markets: Nice work at Casa Berardi on the cost side, especially in light of the 22-day closure of the west mine shaft during the quarter. Was that work completed entirely during the third quarter or did it carry over into the fourth quarter? I'm just trying to get a better sense of operational expectations at that mine in the fourth quarter and into 2015.

Go ahead, Larry.

Yes, the biggest task was to remove the bulkhead that separated the upper section which is the operating section, from the lower section which is the deepened section. So that was the -- we obviously had to put longer ropes on the hoist and that sort of thing. And that was all completed in the third quarter. There was a little bit of cleanup work that spilled into the fourth quarter which is basically electrical work and a little bit of hydraulic work. But to give you a sense for it, going into the fourth quarter we had only four of the contract employees left on the mine side. Garrett Nelson - BB&T Capital Markets: Okay, great. And then I'm also trying to get a better sense of Hecla's earnings sensitivity to the Canadian dollar, as the U.S. dollar just continues to rise. Obviously, that's helping to some degree on the cost side at that mine. But have you disclosed anywhere the company's, say annual EBITDA sensitivity to 1% change in the U.S. dollar to Canadian dollar exchange rate?

We haven't. But I will give you an easy way that you can put it into your models. Since our revenues are U.S. dollar driven, all of our cost virtually are denominated in Canadian dollars. And so when you look at our $898 cost of production, you can modify that pro rata for any changes in the Canadian dollar.

And our next question will come from the line of David Deterding with Wells Fargo. Please proceed.

Just looking here at the, I know you are not prepared to give what your CapEx is for 2015, but as you think about just maintenance CapEx, if things got really bad, what would be a level you think would be a maintenance CapEx level that you could run your mines at?

Well, look, you can go back to 2009, which is -- we were coming out of the 2008 event, you can see the level of CapEx that we had at the Lucky Friday and at Greens Creek. Those were both order of magnitude $13 million. Do I think we can go that low? I don't know, we would have to work through everything. Certainly there is work that we need to do at the tailings for Greens Creek and we are not going to stop the development of the #4 Shaft. So it's certainly -- the maintenance capital might be that low but the total capital would be higher. If you had sort of a scenario where prices went significantly lower than today, I guess the thing I would say David is, we do have that balance sheet that we can weather the storm because certainly prices couldn't stay a lot lower than where they are today for years. I think you'd be talking about a relatively short period of time.

Okay. That's a great segue kind of into my next question on Slide 13. You guys have had this liquidity between $312 million and $338 million over the past, or $308 million and $338 million for the last five quarters and your cash balance has stayed steady. And you mentioned that you'd be willing to spend down some of that capital next year as you build out some of these projects. What is a comfortable level you guys feel that you want to have in liquidity?

I will let Jim add to this, but certainly somewhere around the $100 million range is always in the back of my mind because of the working capital requirements that you have it Greens Creek. If we have the ability to reduce that working capital requirement at Greens Creek then maybe I would be willing to see us go a little lower than that. Jim?

Yes. I agree with everything Phil said and really don't have anything in addition David.

Okay. And then my just last question. You were talking about prices staying much lower than this for a longer period of time. I think we've talked in the past about industry consolidation potentially at that $15 level and we're almost there. Any thoughts on what we might see if we see silver prices stay in this $15-$16 range for the next 12 plus months?

Well I think it puts a lot of pressure on the development capital for a number of mines. So what ends up happening is, yes, they are able to operate and they are able to stay in business for the next year, two years but they just get way behind on development and they sort of put themselves in a position where they cannot complete their mine plans. And that's where we really have the opportunity, with the cash flow that our mines generate, we will be able to work our way through that price environment. And coming out the other side, we would be in a position to put capital into those mines that are troubled. So we just see it as a great place to be. But if you're not able to do that, we still see growth from the Lucky Friday and we're trying to indicate we are going to see growth we thing from San Sebastian.

Our next question comes from the line of Anthony Sorrentino with Sorrentino Metals. Please proceed.

With regard to the #4 Shaft at Lucky Friday, when that's complete in 2016, what will your annual silver production be from Lucky Friday?

Once we complete the shaft and we do the development then we think we have the ability to operate at roughly a 5 million ounce a year rate. And there will be years ups and downs from that number, but what happens is the grade of the Lucky Friday increases as we go deeper. So generally speaking, that's the sort of range that we would see this mine operating at.

Okay. And that would probably come in 2017 which would be the first full year of the use of the #4 Shaft?

At that rate you wouldn't see that level of production because you have got to do the development on the 6500 and 7500. But sort of post '17, again we have years that are higher, we have years that are lower but that's the sort of rate, general rate that we would expect to see post 2017.

Okay, fine. And talking about San Sebastian. You had mentioned about the possibility that there might be 100 million ounce equivalent there at San Sebastian. Have you decided over how many years you would try to bring that into production? Would you try to do that over 5 years, or 10 years or 15 years?

You know it's hard to say how long you will -- what rate you can mine at. Clearly surface mining would be easier and you can have a higher tonnage then you can from underground. But we think this -- when you think of the combination of surface and underground, we think this will have a long mine life. I mean it's going to be significant. Once we make the decision and should it be positive, it will be not be short. It will certainly be in excess of 5-10 years.

And our next question comes from the line of Matthew Fields with Bank of America. Please proceed.

Just wondering, looking at your EBITDA reconciliation, there's a $5 million add back for other that's sort of unspecified. Can you just give us a little color on what that is?

Yes, we can do that. Jim, would you want to take that?

Off the top of my head I don't know -- to be quite frank. I will need to get back to you on it.

Okay, that's fine. And then just looking at the 2014 guidance and what that implies for the fourth quarter. At Lucky Friday it looks like to stay at that $9.75 cash cost. It looks like fourth quarter costs are going to go way up at Lucky Friday and production will be a little down. Is there something going on there at the mine this quarter?

No. Look, I think that the production level will be in that 3 to -- or the total would get us to 3 million to 3.2 million ounces. Cost wise, and there is nothing particularly extraordinary that I can think of, Larry?

It's all volume given.

Yes.

And it's really a, it's a mine sequencing...

So it really becomes a question of grade. So you can't say that -- but we will run through the same tons, I don’t think, I don't have it in front of me, but I do think the grade is probably somewhat lower in the fourth quarter. You have that, Larry?

Yes, the grade is down around 11 to 11.4 [variant] (ph), a little each month in the fourth quarter.

Okay. That's helpful, thanks. And then just, finally, a lot of San Sebastian questions have been asked and you guys are not ready to give very specific color on this. Can we expect- ?

Yes, because the story -- Matthew, the story at this point is the exploration. That's the thing that's so remarkable, is the success that we had with that exploration.

No, absolutely. Can we expect a more concrete plan in fourth quarter results? Maybe with the 2015 CapEx estimate and all that? (indiscernible)

That's certainly what we are working towards.

Okay.

That's what we're working towards. Part of the problem that our mine planners, operators have is, that this thing keeps growing. They keep putting a pin in it and then two months later it's significantly larger. So we are trying to deal with the good news that's coming out of the exploration effort.

All right. Well, I guess that's a good problem to have.

Absolutely.

Thank you very much.

And to follow up on your EBITDA question. It's related to the impairment on some miscellaneous stock positions that we have and also some non-cash accruals for reclamation.

To that $5 million.

And our next question comes from the line of Scott Murray with Black Stone Financial. Please proceed.

Two quick questions. The first one is, your thoughts and comments about stock buyback based on the price of Hecla's stock today. And the other one would be your thoughts and comments regarding supply-demand of silver over the next 1 to 5 years. Thank you.

Sure. With respect to stock buybacks, we have authorization to buy shares back. And in periods when we are not in blackout, the way we have utilized that authorization has been in on days our share price is performing materially worse than our peers for no apparent reason, then we will buy some shares back. And I would anticipate that we will continue that program. We thing that's a good use of some of the cash on the balance sheet. With respect to making a big call on buying lots of shares back in just sort of a broad way, you are really making a call along the metals price. And while we are very bullish about silver, gold, lead and zinc, we don't know when those prices will turn. And that's not business that we are in. So we are inclined to do the sort of share buyback that we have done in the past. With respect to what we think about the supply-demand fundamentals for silver over the next five years, it's extraordinarily good, from the standpoint that there are so many new applications that are consuming silver. And those new applications are being applied to significantly more people. I guess China has slowed down its growth but it's of a much, much larger base. And so the impact of that on silver consumption is huge. You have got 300-400 million people in China whose lifestyle is very similar to the lifestyle in the Western world and the people in the Western world consume roughly 4/10 of an ounce of silver per annum. And so the perspective, the outlook for silver seems to us to be very very good. And it will continue to improve beyond that five-year timeframe. So, hence, why you see us making so much of an investment in the Lucky Friday, talking so much about San Sebastian, having so much a focus on silver relative to the other metals. I think he's off the line, so...

And our next question comes from the line of Joseph Reagor with Roth Capital Partners. Please proceed.

Congrats on a strong quarter despite obviously a weak environment. Just one follow-on to what the last caller was asking. On the share buyback, can you remind us what's available on that, still?

It's a lot. It's roughly 20 million shares, if I recall, was the authorization. And I believe we had executed about 1.5 million shares of that. So those aren't the exact numbers but that's pretty darn close.

Okay. So about 18.5 million shares left.

Yes.

Okay. And then there's been varying degrees of conversation about you guys on the industry consolidation side. At times it sounded like you guys have invested in small caps thinking that you get a foothold early. Now you guys were mentioning on today's call about being able to fund mines that aren't fundable internally coming out the back side of, let's say to 24 month poor price environment. Given that kind of thought process what about today, next 6 to 12 months, even if we stay in this kind of 1100s gold price environment, $15 silver. Are you guys looking to do your own consolidation, buying up local projects? Are you looking to potentially buy operating asset etcetera?

The answer is yes to all those things. But we are going to protect our balance sheet. We're going to make sure that’s assets that we have confidence that we can turn around in this price environment. But, yes, we are certainly looking at things. And don't have a sort of a ban on acquiring assets for a couple of years. We are prepared to use a portion of our balance sheet to do that.

Would you be...?

Jim, you want to add anything?

Would you guys be willing to take on additional debt as you did in the Aurizon transaction?

So long as we maintain the coverage ratios that we are targeting, which is roughly, Jim, two times the EBITDA?

Three times.

Three times on a gross basis.

Ladies and gentlemen, this concludes the question-and-answer portion of today's call. I would now turn the call back to Phil Baker for any closing comments.

Well, I want to thank everyone for being on the call. If you have any questions, please contact Mike or me. And, again, just rest assured that we recognize the price environment that we're in and we certainly are tightening the business down accordingly And we are fortunate in that we start with a business that has good margins and so the amount of tightening that we need to do is not traumatic but we do do that. And we think we are in a great position to continue to grow the business as well as add new assets to the company. So thanks very much for participating on the call. Have a good day.