Good day, ladies and gentlemen. And welcome to the Fourth Quarter and 2018 Hecla Mining Company Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time [Operator Instructions]. I would like to turn the call over to our host, Mike Westerlund, Vice President of Investor Relations. You may begin, sir.

Thank you very much. Welcome everyone and thank you for joining us for Hecla’s fourth quarter and year-end 2018 financial and operations results conference call. Our results and results news release issued last week and the financial results news release issued this morning before market open along with today’s presentation are available on our website. On today’s call, we have Phil Baker, President and CEO; Lindsay Hall, Senior Vice President and CEO; Larry Radford, 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 2. Such statements include projections and goals, which could involve risks detailed in our Form 10-K, Form 10-Q, and in the forward-looking disclaimer included in the earnings and exploration releases and at the beginning of the presentation. These risks could cause results to differ from those projected in the forward-looking statements. In addition, during this call, we may disclose non-GAAP financial measurements. You can find reconciliations of these measurements to the nearest GAAP measurements in the accompanying presentation, which is available on our Web site at hecla-mining.com. Finally, in our filings with the SEC, we’re only allowed to disclose mineral deposits that can economically and legally extract or produce. Investors are cautioned about our use of terms such as measured, indicated and inferred resources, which are not reserves and we urge you to consider the disclosures that we make in our SEC filings. I will now pass the call to Phil Baker.

Thanks, Mike, and good morning everyone. There is a couple of things I want to highlight for you this morning before turning the call over to the Tim for specifics. We're going to start on Slide 3. The first thing is that our best mines are getting even better. We set records for the highest level of silver, gold and lead reserves in our history and it was done with the drill bit, not through acquisitions. But by the way, our zinc reserves would have also been a record that fell 3,000 tons short. Realize these reserves we're done with some of the lowest price assumptions for calculating reserves in the industry and are still went up significantly and price assumptions matter, it means our least profitable ounces have more margins. So when you consider reserves remember that not all answers are created equal, we have high margin ounces largely in Alaska and Quebec, great margins in great jurisdictions. In addition, we also had the most measured and indicated resources in our history as well as the most inferred. My expectation is for more reserved increases in the future, particularly, notable was Greens Creek was about 15% to 20% increase in reserves of all metals and an extension of the reserve mine life to around 2030. If you consider the resources, the mine life could be five to 10 years longer. This mine produces about half our revenues and over the last 10 years of billion dollars of free cash flow. My expectation is that over the next couple of decades, it might produce maybe 2 billion of free cash flow. Greens Creek is a remarkable mine, but sometimes I think the market has just taken it for granted. Also notable is Casa Berardi which produces about 35% of our…

Thanks, Phil, and good morning everyone. Turning to Slide 6, we reported net loss applicable to common shareholders of $27 million or $0.06 per share with almost all the loss occurring during the last quarter. The adjusted net loss of $0.11 per share, adjusted EBITDA was $212 million versus $232 million in 2017. Gold cash cost and all-in sustaining cash cost both after byproduct credits came in at $871 and $1,226 per ounce respectively. While lower cash cost and all-in sustaining cash cost after byproduct credits were $1.08 and $11.44 per ounce. We're happy with our cost at our operating units other than Nevada operations which we reported higher cost, while we work through what we believe are transitional issues. Slide 7 shows our revenue streams that are nicely diversified with gold at 53%, sliver 24%, zinc at 17% and lead at 6%. Green Creek again continues to be the dominant source of revenues contributing 47% of our total revenues. We realized that we had more normal silver gold ratio of the revenue of the two metals that are almost be equal. Moving to Slide 8. Revenues for the year totaled $567 million versus $578 million last year. We had record gold sales of $248,000 ounces at the slightly higher realized gold price this year with our acquisition of Nevada operations effective July 23rd, contributing towards that record offsetting the reduced silver production, primarily at San Sebastian and lower silver prices realized this year. Earnings from mining operations amounted to $79 million, which is $73 million lower than last year. This reduction is not surprising as it primarily due to completely pit mining at our San Sebastian operation in 2017 and moving to an underground operation in 2018 where the grades are lower and the mining cost are higher. Lower…

Thanks, Lindsay, and good morning. So start with, I want to highlight that our all injury frequency rate for 2018 declined 28% companywide, as you can see on the Slide 10. This is a statistic that we are very proud of and frankly will work to reduce it again this year. Also of note, Casa Berardi recently reached 1 million man hours without loss time accident. This is an incredible improvement from 2013, the year that we acquired the mine. Our Lucky Friday supervisory staff is also to be commanded, having operated the mine since the strike again without an injury. I also want to highlight the good work done at Greens Creek on Slide 11, which is still notes as our most important mine that generates about half of our cash flow. With a big jump in reserves that we have reported and the resulting three years or so of mine life addition, the team is working hard on a new technical report. With a revised mine time reducing the development in the next few years and moving the highest margin material from the end of the mine life to the next two years, we should see a significant increase in the value of the mine. Greens Creek as can be seen on Slide 12 had another strong year, producing over 8 million ounces of silver at a cash cost after byproduct added of $0.66 per silver ounce, contributed to this performance was record throughput of 2,301 tone time per day. Moving onto Casa Berardi on Slide 13. This mine just keeps performing better and better. The 157,000 ounces of gold produced was the highest since we acquired the operation. Fourth quarter production level was a bit lower than the previous quarter in part due to the removal of…

Thanks Larry. Last week, we announced the highest levels of silver, gold and lead reserves in our 128 year history. Total gold reserves reached 2.85 million ounces with an increase of 26% from last year, mostly due to increases in open pits at Casa Berardi as a result of successful silver drilling. Silver reserves grew by 8% to 191 million ounces primarily from Greens Creek due to a combination of good drilling results, advanced resource modeling techniques and improved smelter terms. The increase in the resources is also important because this suggest the potential for increasing reserves in the future. We continued with aggressive drill programs in the fourth quarter, following the successes at Casa Berardi, Nevada, Greens Creek and San Sebastian. A list of drilling intersection is provided in the Appendix B of exploration release on February 14, giving insights into the high-grade resources we are confirming and expanding. As you can see from Slide 19 had the reserve price assumptions of 1,450 per silver ounce and 1,200 for gold ounce are some of the lowest commodity prices used in the industry and have been for many years. On Slide 20, you can see that over the past 11 years, we have consistently replaced or grown silver reserves from 130 to 191 million ounces in addition to the 142 million ounces of cumulative production over that time. This means we have actually added a total of 200 million silver ounces in the past 11 years with no contributions from acquisitions. At Casa Berardi, we had considerable drilling success again along the main trends particularly in near surface and this has resulted in the new West Mine Crown Pillar as shown on the left hand of Slide 21 and expanded East Mine Crown Pillar and Principal pits with a total…

Thanks Dean. We're going to go head and just go straight to questions operator.

Thank you. [Operator Instructions] Our first question comes from Cosmos Chiu from CIBC. Your line is now open.

If I may, my questions are mostly on Fire Creek here. I understand that Fire Creek and the entire sort of Nevada complex is still a work in progress, but certainly in 2018 a transitional year, there were some disappointments with the decrease of reserves beyond what was produced. I'm just trying to get a better understanding in terms of what has been the biggest surprise to you at these Nevada assets in terms of reserves, in terms of production, as ownership has handed -- since ownership has been handed over to Hecla?

Well, I'll start and then I'll let Larry and Dean, jump in. But I think the biggest surprise and disappointment was the Klondex didn't follow the budget that they had presented to us. And so as a result, the amount of development that was done was significantly less than it was supposed to be done. And so as a result, it really has caused us to have to really focus and reestablish the mine. That's probably the biggest thing from my perspective, Larry?

Certainly, operationally, the biggest challenge is getting the development [indiscernible] despite down conditions that's you're challenging, we are on acceleration track.

Cosmos for just to comment on reserves and we hit them pretty hard. Clearly, there was mining depletion. There was no drilling in the first half of the year. And so, there really wasn't time to refine and identify new reserves. But the other thing, we knew that there was a challenge in reconciling the production grades with the mill and so we really relooked at the modeling. We narrowed the vein or the size of the vein within the models, and so, we actually -- and changed the tapping or top cut and consequently that represented about half the reserve loss is that we are very conservative in our modeling of those of the existing resources and reserves.

Yes, we want to make sure that we have a base to build from in terms of reserves, in terms of resources. The development we want to, it's still work in progress to figure out the development hence why we're looking at a roadheader to go in and do the development in advance. So, we're not -- we think, there's a lot of different levers to pull before we will optimize this mine and similar to what we saw at Casa Berardi.

Of course and Phil and Dean, you know, it's great that you brought up the reserves and resources. Looking at a year and you talked about spirals 2, 3, 4 and 9 and a number of different zones Vonnie, Joyce, Karen, Honey and others. I'm just trying to understand you know what of these zones that you've identified are considered categorize I'd say new zones versus an extension of current mineralization. I think Dean sort of touched on that spiral 9, looks like it could be an extension in terms of drilling platform for current mineralization. I’m just trying to get a better understanding and trying to gauge the difficulty in terms of adding to reserve and resources based on are they new zones on extensions and whatnot?

I’ll let Dean answer the question.

Well, Cosmos, I'd say, it's really all of the above. There are clearly extensions to the existing. You've mentioned Vonnie and Joyce the veins that have been key producers in the past. There are extensions to the North and South, in fact there may be opportunities up dip, but as you go to the North you have what refer to as, let me step back. So, for those zones, we know they're there there's been some preliminary drilling to define them and now we're getting the development in place to drill them all. From an exploration point of view particularly to the North, you have spiral 9, you have the North zone that the North zone is really a Northern extension of the known veins. We're seeing in the Titan zone a series of new veins there and then in spiral 9, surface drilling to the Northwest with Zeus, I think are defining some new veins that certainly look encouraging. We're going to need to drill them out, but as you see kind of near-term upgrading expansion along trends and then with spiral 9 Zeus and others things that are going to come in the next few years.

And then maybe that leads into my next question here in terms of timing. When would you be ready to potentially put out a reserve resource update? Again, there are you know and there are market concerns in terms of the low ounces on current reserves at this point in time. Again, understanding that you know Nevada still work in progress and all the other issues that we had talked about in the past on just now, but I'm just wondering. When would you be ready to potentially put on a new reserve resource?

We have not actually made a determination. Our typical schedule is year-end and I'm not envisioning that we're planning to change that.

Yes, at this point, Cosmos, I'd say, we'd stay with our traditional schedule, but depending on what transpires that make change.

And maybe one last question on Fire Creek here. We've been given the production guidance for 2019 for Nevada as a whole as a complex, but I'm just wondering of how much of the 69,000 ounces of reserves from Fire Creek have you sort of incorporated into that 2019 guidance that be incorporated anything beyond reserves into that guidance?

Yes, the answer is yes. Some of this would be beyond reserves as first what that percentage as that could give you, but it's I don't know if there is anybody know?

Yes I don't know the exact number on that?

But there is some, but a lot of it the bulk of it I guess will be based on reserves.

Yes. Well, it is a combination, I mean, and this was part of the calculus we did in acquiring this that you have to convert inferred into reserves. And frankly what happened is going to be similar to what we've seen at other mines where we are producing mineralization that maybe even doesn't even make it category. We certainly see that at Greens Creek a lot, we don't seeing that this would be any different than that.

And sorry, I lied, maybe one last question on Fire Creek here. You talked about increasing undermine underground throughput, I think 350 ton per day to 520 by mid-2019. Is that as simple as Larry said getting ahead on development, getting your 1,200 feet per month in place? Is that really the bottleneck?

It's a key the key to expanding throughput is in expanding development without a doubt. Obviously, we need to also drill ahead of ourselves, get our definition drilling in place, confirm the stopes before we dive into all that's driven by developments.

And you're happy with the 1,200 feet per month level Dean or Larry?

Yes, I mean, we exceeded it in January. We're little bit behind in February only because we're driving raise as right now, so we're doing less capital lateral footage. But we see this is staying on plan. It was a matter of injecting more miners and more machines. And that's on track. And now we actually have some opportunity to improve our actual cycle at the phase that's the next challenge that we will take on.

And I just wanted to just make sure that people understand. You're still trying new things and you don't have a standard development plan yet for cycle yet. You're still working through that.

Yes, we're still working through that. We're still doing conventional drilling blast, which are typically very short rounds at fire Creek to hit the ground [indiscernible]. So, we have to have run a lot of hitting, shooting short blast and so there's opportunity there. The roadheader and the first trial was very successful, it got some material very well and left behind very solid back at rib and so, we're just -- we're learning as we go, we're injecting we have our VP tech services on site pretty much full time now we've taken Lucky Friday expertise down and we're making the improvements that we should be.

And our next question comes from Matthew Fields from Bank of America Merrill Lynch. Your line is now open.

So in the back since you've issued the bonds in 2013, in your EBITDA reconciliation, you've added back or taken away as is the case begins or losses unrealized on derivative contracts. So for the first nine months to see that was basically a 40 million hits in your EBITDA because you gain that in your income statement, but all of a sudden for the fourth quarter you know most of that’s gone away. So, it looks like you only take away about 8 million instead of 40. So, you're looks like you're inflating your EBITDA by about $32 million. Can you help me understand why that's not the case?

Well the first thing I'd say is that, the derivative contracts that we had we closed out in the third quarter and generated 35 million, 32 million of cash from this contract. So, we have not -- the price of zinc and lead fell and we were able to generate that, that cash. And so, we were monetizing that hedge, so we've done that. Now, prices have come back up for zinc and lead and so, we're putting new positions in place. So to the extent that prices continue to rise, we will have that -- that number will grow as we put in more contracts and to the extent those go underwater. But, Lindsay, anything to add to that.

Yes, Matthew, maybe you’re seeing, we detected 40 million and arriving adjusted net income, we take that gain out. Then we include in our EBITDA calculation, that's still alluded to the cash we received on the closing of the hedges, it's much the same kind of following covenants which allowed.

Right but the first nine months of 2018 basically you add back, you take away 40 million and then all of a sudden that disappears in the full year. I'm just…

You’re talking about segment or balance sheet or cash flow.

Income statement is for the first nine months, you've gained 40 million on derivatives that shows up in the full year income statement as well, but in…

Not much happened in the fourth quarter, Matthew.

Right, agreed. And the EBITDA reconciliation when you look at you know your third quarter release that entire 40 million from the income statement was taken away, but now all of a sudden on the fourth quarter before only 8 million have taken away.

Yes, I think what you're saying maybe in the third quarter we didn't add back the cash games on the cast out. Head's right, is that what you're alluding to, we'll look back in and check that, but…

Yes, but if I look at your cash flow statement, it looks like you've only gained monotype $15 million. So, there is a lot of distant screw numbers going on and just maybe we can take this offline because it you reported $156 million of EBITDA for the first 9 months, $28 million in the fourth quarter and something how that's supposed add up to 2011. Happy to take this offline.

I might argue, they're not screwing numbers. They're just discounting and cash flow being next. We'll be with it.

Thank you. Our next question comes from Heiko Ihle from H.C. Wainwright. Your line is now open.

I promised myself I wouldn't ask possible already question this time for one. So going over to Nevada, you mentioned the asset should be cash flow positive this year. Are you willing to qualify this just a little bit more especially given that your all and sustaining cost estimate there is 1,325 an ounce?

No, what we've said is that the operations will be cash flow positive with the exception of the exploration and the development for the Hatter Graben. So, when you look at and basically we're saying that, we're right at positive cash flow from Nevada and if you look at the all-in sustaining cost, you see that.

And then, the decline is about 15% complete so there is still bunch of work to do obviously. And speaking of…

We'll do 5,000 feet of development at Hatter Graben.

And speaking of Nevada and following up from the question that Cosmos have asked. I mean you mentioned, the increasing the throughput at Fire Creek from 350 tons per day to 520 tons per day by 2019. You've also been stated your focus on and this is from your lease, maintaining the development grade and all ground conditions. Am I reading something into here that's not there? Is there something I missing? I thought the ground conditions are into that mine as the ground conditions at Fire Creek are actually pretty solid. Is there -- are there pockets that need extra ground support? Or again am I missing something there?

Yes, when you remember when we brought it, we talked about fact that we have this tough that created weather conditions that we have to come in with the synthetic liner and go to road base. Well, that's -- so, we dealt with the road conditions, but you have that same condition on the back and on the rigs. And so that's what Larry is alluded to with shaft treating that we've have to do and that's why we're contemplating the road header going through this soft material. Larry?

Yes, it fits variable, you can see very good ground conditions for albeit 24 feet a day and a given heading. And then times we run into altered tuffs and very clay like material that take short rounds and requires a fair amount of support. And the additional [indiscernible] it's variable.

And then you also have the introduction of water into this tough, which again -- if you think about if you look at those pictures of the road, you get a sense of how soupy it becomes and difficult to operate in. And so, we're trying to figure out the best way to deal with the changing ground conditions. And so, that's why I continue to make a point that we're experimenting, we're trying new things. I'm more interested in Larry coming to a series of standards depending on the ground conditions rather than just being so worried about getting the development. But, Larry.

You've mentioned water, there's perks water in certain pockets and we're looking at a bit more of a mobile dewatering plans so that we're not managing the water underground. So, yes, we've shown, as Phil alluded, we've shown photos of some of the poor conditions and what we're doing to manage them. We've got the right team there. I mentioned the roadheader, it's actually a very small roadheader that we're trialing right now. And if it continues to perform as well as it seems to be, we may go all in for a large roadheader, I'm a really large roadheader and really jack up the advanced grade.

Thank you and our next question comes from Anthony Sorrentino from Sorrentino Metals. Your line is now open.

You're estimating 2019 capital expenditures at $150 million and 2019 exploration expenditures at $25 million. Would you break those down by property?

Sure. Someone had it handy or…

Well, I’ll talk about the exploration. So, you know that 25 million, Anthony, the half of it will be in Nevada and the remainder will be split between Casa Berardi, San Sebastian, and Greens Creek. There'll be very little exploration outside of those four areas.

And Casa Berardi in Mexico was roughly 3 million.

Yes, Casa’s 3.6 sense of…

And as far as the capital goes, it's that 12 million for the Lucky Friday, about 15 million each board Greens Creek and Nevada and then about 40 million for Casa Berardi.

Thank you and our next question comes from Ajay Lele from Southpaw. Your line is now open.

I just wanted to ask about the Casa Berardi medium term cost outlook as you move from underground what looks like into more of an open pit mine plan for your recent reserve announcement?

Yes, there's really no change in the percentage of surface and underground planned anytime soon. We'll have a number of years of the underground based on the current reserve and we're adding to reserves you know periodically. So, those will not change, it's still roughly 50-50 and the grade will be underground about twice the grade of the open pit maybe a little more and not much. The new stuff that we've added from the West mine is a bit higher grade than the surface average. So, all in all, our expectation is sort of maintain the cost structure that you see as we develop both the underground and the surface.

So, all of that's premised on a permit limit at 1.4 million tons, metric tons per year, and we are going to apply for an addition to that. Should we successfully raise the permit at limit and make some adjustments in the mill and we could increase the amount of open pit going into the mill.

Yes, that's right. And that would be increases to how much?

Well, we're applying for $1.6 million.

So, 0.2 million more?

Yes.

Thank you. And our next question comes from Trevor Turnbull from Scotiabank. Your line is now open.

I just had one quick question, very simple question with respect to Nevada. Is there any chance you're going to have a site visit this year, might make it simpler to understand some of the stuffs that's been discussed on the call so far?

Yes. I'm sure we will have one this year. We haven't made any specific plans at the moment. I want Larry and his team to have the opportunity to get there SAPs for the development in the different conditions resolved before we start bringing people onto the site. So while we're still in this learning phase, it's probably better to wait.

My other question is we're really more for Larry with respect to Greens Creek. Larry and Dean, I guess the first thing, you've got some exploration and potential reserve additions coming at Greens. Can you give us a sense Dean what that's going to look like in terms of the reserve grade you've got there at Greens Creek? I think you're on the order of what 400 grams silver now. Are these areas likely to be consistent with that and kind of maintain a similar level of silver?

Yes, Trevor, so last year and I think announced this per ton, but last year our reserves were 11.8 and we're at 11.5 this year. My expectation is that you're going to see that 11.5 to 12 with potential resources converting to reserves. We are exploring upper plate, that's narrowed with the very high grade the same true for East ore. And both of those areas are higher up in the mind. And Deep 200 South is overall more precious metal rich, so that you will see with the couple of these areas higher grade precious metals than the reserve grade and slightly lower base metals, but that's going to fluctuate. Overall, I don't see huge changes in the grade, the reserve grade overall.

So maybe the better way to think about it really given all the base metals is that, NSR is unlikely to change a whole lot in terms of the value per ton of the stuff you're looking at versus what you've already got.

Yes, I think that's good comment.

So I guess what I'm also wondering is, you talked about certainly on the slide and the presentation, looking to move some high-grade material forward in the mine plan and it feels like you you've been just kind of little ahead of reserve grade recently. Are you looking to kind of still kind of maintain that? Are you looking for a pretty significant bump in the grade you're moving forward? And I guess my question really is trying to get at, are you going to kind of be above the reserve grade in aggregate there for a few years and then kind of to what degree such that I kind of understand to what degree of might deliver -- sorry, it might dip below reserve grade going forward?

Over the next sort of four years, 2020 through 2023 reserve grades will be or production grades will be higher than what they it has been. I don’t, off the top of my head, have can't remember what that will be. But as a result, we will have higher ounce production. Larry, generally speaking, and we'll have those in the 43-101, you'll be able to see that, but generally speaking, Dean.

Yes, in next year. This will not match the technical report exactly because this is more of an internal.

This includes inferred everything.

Yes, this is not going to match the technical report, but it'll give you a kind of an idea of what will be we should be next year in the 12.5 ounce per ton, silver.

So call it announced that are and for the next two years.

A healthy 10% or so better than where it's been. And then Larry, I guess also just referring to that Slide 11 in the deck. You show the old design with a ramp, looks like you've been able to get away without having to put in that ramp which is obviously a huge savings and you've gone to this what looks to be a much more simplified design. I'm just curious, it looks almost too good to be true that you could get rid of all that development and do what you need to do using existing workings. Can you just explain a little bit about how that came to pass that you could eliminate all that development and still achieve what you needed to?

The graphic that we included is just one example. This is the East Ore and the very high end of the mine where we anticipate when we published our report, if there'll be 15,000 peer development pit and a part of it is coming from this section we're showing in the graph, but not all of it. Some of its just a good three thins of, how we are actually have seen, what are complicated or bodies, these things are geometrically complex. And the more we can come off of the existing access as we have in this example, the less development we're going to do. So 15,000 feet capitalized is no small amount of money it's actually its quite significant.

But to the to the point I think some of this as come as a result of being able to take more data and build a clear picture of where these ore bodies are. I think I don't mean to give advertisement for Leap Frog, but I think it's been very helpful.

As you know the geometry of the ore bodies at Greens Creek are challenging particularly when you're trying to model using Leap Frog primarily we've been able to create wireframe models of the ore bodies that incorporate, not only the drilling, but all the underground sampling and really been able to develop I think a lot more realistic 3D model. And I think that's contributing as well to mine planning and optimization is that historically Greens Creek had a lot of mining ore zones outside of the modeling which of course causes adjustments and time delays. I think we're doing a much better job of recreating that geometry in our models now.

And so as a result of that, we're put the development and where we can be much more efficient with what we're how we're designing it. That Larry has.

Yes, just the last thought is if the Fire mine plan, we have 15 foot high cuts and they were horizontal cuts. And so, as we designed them, we -- as soon as you got towards the fringes and it no longer paid you just cut off the stope, we've not adjusted our center lines more to the actual geometry of the ore bodies. And it's made for well more ore and more efficient development.

Thank you. And I'm showing no further questions at this time, I will now like to turn the call back to Mr. Phil Baker for any further remarks.

The only thing I'll say is, I know, it's busy day for you guys with lots of calls. So feel free later in the day to give Mike or I, a call, we'll be happy to answering more question that you might have. Thanks very much. Have a good day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.