Good day ladies and gentlemen and welcome to the Hecla Mining Company first quarter 2011 earnings conference call. My name is Mary, and I will be your coordinator for today. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Ms. Melanie Hennessey, Vice President, Investor Relations, please proceed.

Thank you, Mary, and welcome everyone, and thank you everyone for joining us for Hecla’s first quarter financial and operations results. Our news release which was issued this morning before market opened and presentation are available on Hecla’s website. You will note that it can be located on the events calendar section under Investor Relations on our website and has been uploaded a few minutes ago. On today’s call we have Phil Baker, Hecla’s President and CEO and Jim Sabala Senior VP and Chief Financial Officer. Before we get started I need to remind you that any forward-looking statements made today by the management team comes under the Private Securities Litigation Reform Act. It involves a number of risks that could cause results to differ from projections. In addition to our filings at the SEC we are 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 those disclosures that are provided in our SEC filings. With that I have the great pleasure of introducing Phil Baker, Hecla’s President and CEO, Mr. Baker?

Thanks, Melanie, and thank you for joining the call. Please go to Slide 3. I’m going to provide a brief overview of the first quarter results, Jim will speak about our financial results, I’ll close with an update on the silver market, Hecla’s organic growth opportunities and open the floor for questions. But before I speak about the quarter’s financial and operating results I want to talk about the tragic fatality of Larry Marek, a miner who was killed in a ground fall at the Lucky Friday on April 15th, Larry was a 30 year veteran of the mining industry and had been with Hecla for 12 years. For nine days, our full attention at the Lucky Friday was his rescue and recovery, I was able to see the strength of his family, a family with at least 10 miners in it. I was able to see the skill, passion and collaboration of our miners, operators and engineers. We saw the support of the industry with companies who came to our aide. There were a number of them but I’ll just mention two, Cementation [ph], our contactor on the #4 shaft helped engineer and procure equipment and execute plans. Stillwater, a mine not too far away from us in Montana lent us a remote mucker with mechanics and operators. We also received the support of MSHA who gave us suggestions on how to handle different aspects of the incident. I also received emails and calls of support from investors and followers of our company and I’m sure some of you are on this call. I want to thank everyone for their thoughts and prayers. It’s made a difficult situation just a little bit easier. Now we are in the investigation phase of the incident. I don’t know how long it…

Thank you, Phil. Excellent metals prices across all four metals that we produce resulted in a strong financial performance for our 2011 first quarter. On Slide 5, we present the realized metal prices for the quarter and you can see that our realized silver price is up by 116% and realized gold price is up by 27% over the first quarter in 2010. Zinc and lead prices in the first quarter were also up by 13% and 28% respectively over the same period in 2010. As a consequence, on Slide 6, you can see we continue to see expansion in our margins that we were achieving. We continue to experience among the lowest per ounce cash costs in the industry, our per ounce cash costs were $1.03 for the first quarter 2011. Cash costs are up quarter over quarter due to lower gold, zinc and lead ore grades resulting in lower byproduct credits relative to our silver production and that silver production was comparable for both quarters. Increased mine license taxes, profit sharing due to higher metals prices and increased production costs also contributed. However, the benefits of higher metal prices far out stripped the costs associated there with and our margin increased to $35.46 per ounce of silver produced from $24.16 per ounce in the first quarter of 2010. Moving to Slide 7, net income applicable to shareholders more than doubled to $43.2 million for the first quarter compared to $18.4 million for the same period of 2010 and net income per common share was $0.16 in the first quarter in 2011 compared to $0.08 in the same period of 2010. On Slide 8, we see the benefits of low operating costs and very strong metals prices. Hecla reported operating cash flow of $60.9 million in the first quarter of 2011, more than three fold over that reported in the first quarter of 2010 even after a $13.4 million increase in working capital which is the result of increased accounts receivable, a product of higher prices and our shipping schedule. This has allowed us to continually accumulate funds in the treasury which is set forth on Slide 9. After an excellent quarter of cash flow generation Hecla was able to fund all capital requirements and increase cash available in the treasury to $322 million. The company has no significant outstanding debt and a $60 million underlying line of credit, therefore total liquidity available for investment stands at $382 million which we expect will be more than sufficient to continue the capital projects we have on our plate, exploration expenditures and to fund the environmental settlement which we previously discussed with that I would like to turn the call back over to Phil.

Thanks, Jim. I want to comment on silver given its volatility last week and I’ve got two comments. First, the volatility will continue to be significant because the silver market is very small. It’s changing rapidly and I’ll talk more about that in a moment and the knowledge of investors given the changes and given the size is relatively low. I suspect no one has a full appreciation for the metal and its supply demand characteristics because it has changed so dramatically over the last five years. We still have the same characteristics of silver that made it trade with – that makes it trade with gold but as shown on Slide 10, the investor demand is growing at a rate no one expected. When I started working for Hecla 10 years ago, no one had an appreciation for how quickly photographic demand would fall and new industrial consumer uses which would more than take their place. Today we had a similar thing occurring. The market generally does not understand how the unique characteristics of silver are allowing new demands to explode. Characteristics like it being the most conductive of all metals, more than copper, more than gold, the next two most conducted metals and when silver tarnishes it maintains its high conductivity. Silver is also the most thermally conductive as well as the most light reflecting elements and we can talk about a lot of the new uses but one that one that is having the biggest impact on the market is the photovoltaic or solar panels. In 2004, only four million ounces were consumed and that increased to 40 million ounces last year and GFMS’s study says they expect it to double in the next five years times. This means that while investors in mining companies will likely…

(Operator Instructions), your first question comes from the line Michael Dudas of Jefferies; Michael your line is open.

Good morning, everybody.

Hi, Mike.

Our thoughts and prayers with the miner’s family, of course.

Thank you.

The 327 on the balance sheet, the market’s been a bit volatile, how do you analyze and depict some of the opportunities you have been looking at over the past few months to years and on the acquisition on given such volatility you’ve seen in the metal’s price. You’ve seen – are you raising your long-term price to analyze your net present value of opportunities? Is that what we reflect here in some of the numbers you’ve put forth? Maybe give a little bit of help on where Hecla’s thinking to you know put some of this cash work into leverage and balance sheet?

Sure, Mike, two things. One is we’ll continue with the development of our existing assets. As I describe we actually have accelerated that activity. Use the Bulldog for example, at sub-$20 silver we would have had the view that we needed to grow the resource base to put that mine back into production in order for it to carry all the capital necessary.

Sure.

At higher than $20 that – I think we will see the economics of that to be very, very robust and without adding any additional resources and we still think we will. We still think we’ll add those resources but in the meantime we’re going to try to push that project forward. So that’s the first place that we will be evaluating the opportunity to generate returns because clearly as we look at acquisition opportunities it’s going to be rare for us to find something that will generate the same returns that assets in hand will likely generate. That’s not to say we will not acquire new assets. In fact, we think we should be acquiring assets. We think we have an asset base that can afford to take on assets that may be or not of the same quality of what we have but will provide us with that needed growth. So when we’re looking at things and we’re considering what price do we need, long-term price do we need, it depends on the nature of the asset. If it’s an extraordinarily large asset with lots of capital then it probably should be of a higher quality and therefore able to sustain itself at a lower silver price than if it’s a smaller asset. And if the risk profile of the asset is high then it better be of a very high quality and so it’s a – there’s kind of a sliding scale if you will of for how we’re evaluating these acquisition opportunities. Jim, do you want to add to my comments?

Oh, I think one of the key things, Mike, is when we look at all these things you have to evaluate risk and so when we evaluate relative opportunities we’ll look at net asset value. But we look at net asset value over a spectrum of prices, recognizing if you look at just the last three years the industry has probably been about a 100% wrong. And so we would look at it at today’s prices and look at evaluation, we would look at it consensus prices and we would look at it at long-term prices, which are substantially lower and that’s what I mean by the industry being wrong. If we’d looked at this a couple of years ago and everybody said we’d been approached at $50 for silver I think there’s no doubt we’d all been surprised by that.

And we have the view that long-term the silver business is going to get better and better from the standpoint of the demand for the metal but that doesn’t necessarily mean prices will – it doesn’t determine where prices will be. That will be a function of where supply is at the same time. So we will be using a whole series of prices in evaluating projects. I’m very optimistic for the market, for silver, I’m very optimistic for prices because I recognized the risk of operating properties is a lot higher than sometimes people realize. And we’re not going to see the production that maybe some people expect to see for the industry as a whole.

That was a very good answer. Just but one follow up maybe along the risk theme. I’m going to give you a softball here. I’m guessing you believe the markets not properly reflecting in your evaluation the fact that your assets are in the U.S. and Canada?

It was actually all in the U.S.

I’m sorry, U.S. rather and you know much of the successful opportunities in U.S. and Canada but opportunities you know south of the border where certainly a lot of deposit opportunities are, is that something that you’re talking about when you talk about the risk opportunities and what’s been happening maybe with governments and taxes and those types of issues?

Yeah, look, we are – we’ve operated internationally for a long time, I guess, gosh, it’s close to 20 years. We were in Venezuela for a decade and it doesn’t get much tougher to operate than in Venezuela and that was a very good experience for Hecla. It was a real value driver for us for a long period of time. And so we are very interested in bringing on assets outside the U.S. and we think that there’s a good mix of having the U.S. assets, low risk assets, with assets maybe that are higher risk than other jurisdictions and we don’t think the market differentiates enough with risks. I can tell you that when we evaluate projects we do and we – that’s what we’re spending the majority of our time is understanding the risks of these assets because we’re going to be operating them for you know decades. But having said that we’re more than happy to take on some additional risk with assets in other parts of the world.

Appreciate it, thank you gentlemen.

Thanks, Mike.

Thank you, you’re next question comes from the line of Chris Lichtenheldt, UBS. Chris your line is open.

Morning, thanks, morning everyone, just on the Star, maybe start there can you talk a little bit about what sort of grades you’re working with there and or what sort of silver price you’d be comfortable thinking about long-term to work on something like that?

Yes, the Star has historically been a lower grade silver deposit, higher grade zinc, in fact if you’ll note on that Slide 15, we put in that second column we have the metals and you can look at the order that we put that in, Zinc, Lead, Silver. It’s a mine that had a grade of about four ounces per ton silver, combined lead zinc of close to 10%. In terms of putting it in to production frankly, we’re in a price environment and anything above $20 I suspect is going to be one that will allow it to go back in to production but let us do our work. It’s work that I would expect by the end of the year will be able to give you with a reasonable degree of specificity as to how we’ll move forward on the Star.

Okay, great, and then again I mean it may be a bit early to ask but would you consider given the base metal content ever just selling that forward to maintain the silver exposure and obviously maybe economics would work well at this price, you just sell that forward and lock in some cash flow? Would that be something that you’d consider?

Yeah, well, and then in fact with our hedging program we’re doing that already on existing base metals production. We’ve got about 50% of all of our lead and zinc production hedged for the next two years and then in fact I think a little bit going into – well, I guess that’s still two years into 2013. So we absolutely will be willing to hedge off some of the base metals exposure.

Great, great, thanks. On Lucky Friday, when you talk about potentially expanding the mill beyond 375 when might – and I apologize if you’ve mentioned this, but when might we deal with the cost of being associated with that and timing and everything?

Well the first step is going to be what is the mine capable of doing and we will be able to tell you that by the end of the year. We might hopefully we’ll be able to get some indication of where that’s going even at the end of the third quarter, but certainly by the end of the year. That will then lead us into a mill optimization study, what is the right size of the mill, given what the mine can do? And so I think you’re looking at some time in 2012. I don’t know how long that will take but in 2012 determination of that, which will then lead into the plan for the expansion of the mill and what we will try to do is time that to coincide with the completion of the #4 shaft.

Great, okay, thanks, and then last question on Lucky Friday. Given the unfortunate incident in the subsequent closures of stopes 15 and 12 has that changed your plan at all for this year or grade profile or anything that we might be thinking about?

I doesn’t seem to me it has. Jim, does it…

Not significantly when you look at the global economic.

Yeah, yeah, look it’s you know, there’s probably a couple hundred thousand ounce impact that this has on us and so no. We’re not anticipating any major change.

Okay, all right, thanks a lot.

Thank you, your next question comes from the line of John Bridges – JP Morgan.

Morning everybody.

Hi, John.

Yeah, first with Larry’s family and his extended family at the mine, sorry about all that. I just wondered if there was any significant impact from these higher prices on the concentrate market. I just wondered, Jim, if you had any comments on anything notable going on there?

Yeah, there’s lots notable going on, John. As you know, all Smelter Contracts have price escalators in them, but putting aside price escalators what we’re seeing is the physical having more impact on the market than prices per se. What and I mean they’re going in different directions, for example the zinc market is very, very active. We’ve seen significant improvement in zinc terms. So in terms of the zinc concentrate we have benefited. In terms of the lead concentrate it’s just the opposite. Lead smelting, depending on the quality of your concentrate, is under more pressure and so we are seeing increased charges relative to lead concentrates.

Is there any significant accumulation of concentrates in the pipeline?

In terms of Hecla per se?

More the industry, but both.

I don’t think so because what we’re seeing is smelting capacity is there and so particularly the Far East and China in particular has been very aggressively. If you look at the spot market for concentrates, if you’re not under a frame, spot markets are substantially lower than frame contract levels, which tells you to keep the smelters running, they’re essentially buying that business.

Hmm, interesting and for me speaking with you, Jim, I just wondered given the concentrations, which particular areas are you seeing the most concentrations in?

I – well taxes. The mine license taxes in Alaska in particular is probably one of our biggest one. If we take a look at cost of goods sold year over year about 45%of the increase was directly price driven and a lot of that of course is profit sharing. We have employees on profit sharing and incentive plans and then, also, Alaska license tax’s is a big one for us.

Good news is the prices go up more than the costs do.

So high quality problem.

Yeah.

And then finally, this – your decision about expanding Lucky Friday, it sounds as if the mill decision is not as great problem but one related to what you decided to do with the other operation. So it sounds as if it’s a different calculation.

Well, let me be clear. The mine – what has happened up to this point is we used the mill as the constraint of what we would do, what the production would be and what the through put will be from the mine. So we are now turning that around and we’re going to have the mine determine what size mill we should have. Maybe it’s an expansion of the existing mill, maybe it’s a new mill. So that’s one analysis. The work that we’re doing in the Star and elsewhere in the Silver Valley could also play into what we do with the mill, but at this point it’s too early to say what that might be.

What’s the probabilities?

I think very high. I think very high that we will – I think at the very least, John, we will build – we will expand or build the Lucky Friday Mill to not only carry the feed that we can get from the Lucky Friday but we’ll have some capacity beyond that to take feed from other places.

Okay, cool. Okay, well done guys, great quarter, thank you.

Thanks, John.

Thank you, your next question comes from the line of Anthony Sorrentino from Sorrentino Metals.

Good morning, everyone.

Hi, Tony.

My sympathy to the family and friend of Larry Merrick.

Thank you.

Would you go a little further into the details concerning recent exploration? Starting with Greens Creek at the G200 South Area?

Sure. So what we’re seeing as we’re going down dip on the 200 South is a continuation of what we’ve seen with previous drilling. We are not seeing indications that this – the 200 South is finished and in fact, we have an exploration plan that extends out for a number of years continuing to drill down dip on the 200 South. Now that’s one part of what we’re doing. The other part is the development necessary to do the infill drilling to move it from the resource category into reserves and you will see that happen basically by the end of 2012 where there will be this move from resources to reserves.

Okay, then moving on to the Lucky Friday, what are you finding at below the 40 – 50 level?

Well it’s actually above the 40 – 50 level is where we’re drilling. A few years ago we drilled in the area between the 40 – 50 and surface and we confirmed that the mineralization that was mind in the ‘20s – call it the ‘20s, 1920s is related to and a continuation of the mineralization we’re drilling at the 4900 and below. So as a result of that, we went up – we’ve gone up to 40 - 50 and have been drilling up above us and what we’re finding is not the material on the 30 vein but we’re finding very good material on what we call the intermediate veins and you know over time I think if the drilling continues to play out you’ll see us develop mine plans around that material.

Okay and what do you hope to find when you re-open the equity portal at the San Juan Silver Joint Venture?

Yeah, what we’re looking for there is, and this is very exciting, is the ability to have platforms in order to drill year-round on the discovery we made last year at the intersection of the Equity Vein and the Amethyst Vein and its very high grade gold. I mean we’ve got an intercept of close to four tenths of an ounce. This is very, very exciting material that a low tonnage could be very impactful given the sort of grade that we have. And there’s about a mile of ramp that Home Stake had put into place and what we’re looking to do this summer is to re-open that and determine the condition of that ramp, condition of the ventilation and if we can get in there then we’ll have the ability to drill year round there.

Okay, very good. Thank you very much.

Thank you, Anthony

You’re welcome.

Once again, to ask a question please press star one.

All right, Operator, if you don’t have any other questions, do you have anymore?

We do. We do have a question from Jeffrey Thorpe – Sonoma Capital.

Okay, that’s great, thanks.

Good morning, Phil and Jim.

Hi, there.

Hey, there, congratulations on another good quarter.

Thanks.

Pretty simple questions, they sort of revolve around capital allocation. The first one is it appears to me you can redeem your Series B Preferred and have you thought about doing that?

Yeah, the short answer is we’ve not spent a lot of time considering that it’s relatively small and we did a redemption of that a number of years ago and it was sort of that was the opportunity to do the redemption. I guess at some point maybe we would reconsider it but I’m not envisioning any time soon.

Okay. Yeah, I have a memory of that. The second is have you thought of returning capital to shareholders in the form of dividends or buy-backs?

Yeah, the thing is, Jeffrey, that’s an issue that we talk with the board every time we have a board meeting and we’ve had a number of things that have prevented us from doing anything there. I think once this litigation is behind us, I think it improves the opportunity to do something along those lines and we’ll certainly revisit it at that point.

Thank you and then third, just a little bit more clarification on conceptually your acquisition possibilities? Have you thought about or is there any idea with respect to buying companies or particular assets or are you indifferent depending on your expected evaluation of risk and return?

I think the fact is most opportunities are going to be in publicly traded or privately held companies. There’s going to be ’s very few things I guess that are sitting in other mining companies that you could extract from those companies but, we certainly are open to both and are doing work on both.

Thanks so much.

Thank you, Jeff.

Thank you, you have a question from the line of John Tumazos. John Tumazos – Very Independent Research, LLC.

Hi, John.

Phil, condolences on the loss of your miner.

Thank you.

Two questions – first, could you describe the seismic detection system at the Lucky Friday? And second, if there’s an engineering major of the strength of support systems, could you describe what your standard of practice was? I haven’t been underground at Lucky Friday since I think maybe the ‘80’s but I have a vivid recollection of the core and the galena having in that era the most expensive seismic detection system imaginable. If there was a three Richter on the other side of the world they knew it, et cetera and what the state of the art is in that regard?

Yeah, and I guess we have been the cutting edge on that seismic technology going back to the ‘80s, because when you went underground you went underground on the Lucky Friday vein. That vein has much more seismic events than the Lucky Friday expansion area that we’re in, which is a mile away and in a different rock type. So the system that we have has been the cutting edge in the past and we’re evaluating whether there’s any modifications, updates, to that that we think would be appropriate. With respect to your second question I can’t give you what those standards are and, of course, it will change as the mining conditions change and obviously it will be – its part of the subject of the investigation that we’re conducting. I guess what I can tell you is that we have a long history even in this expansion area; we’ve been mining here since ’97 and exclusively from this area since 2001. So we have lots of experience here to – where we can evaluate what the conditions are and the circumstances of this incident.

Thank you.

Sure, John.

Thank you, you’re next question comes from the line of Chris Lichtenheldt – UBS. Chris your line is open.

Thanks, sorry, just a couple of quick follow ups on the derivative contract. The income statement loss that you reported this quarter, that would be related to you know forward sales in future quarters right? The mark to market, it has nothing to do with this quarter, is that right?

Yes, it has to do with – well, let me just describe our program, Chris. There’s two components. First component is protecting base metals price on shipments during a quarter which will settle in a subsequent quarter. And those gains and losses since you have a perfect hedge and that’s in an economic sense not an accounting sense. Is the gains and losses from changes in provisional pricing are offset by gains and losses in the hedge contract. Those are reported up in the sales number. The number you see on the face of the income statement below represents future hedging on metals that have not shipped yet, in other words, protecting tomorrows production and that is the derivative change that you see on the face of the PNL.

Okay, yeah, that’s great and then just a second question on that did the – any positive effect that would have occurred from positive price movements this quarter on provisional – primitively priced metal from last quarter, did your hedge work to completely wash that out and so there’s really no effect in your EPS?

Yes. I have some …

All do …

… it runs about 95% effectiveness over time, Chris; the difference between the two is a few hundred thousand dollars a quarter on type of revenue that we’re seeing.

Okay, I see. So the results are great this quarter and there really, you know that’s because of the timing of sales and higher than average realized metal prices but that is not because of provisional pricing? Really most of the time your sales …

With one exception, Chris, and it’s in our press release is we do not hedge the provisional portion of precious metals.

Right.

And there was, I think it was $8.4 million pickup on gold and silver that was sold.

Right, okay, great, thanks a lot.

Thank you, your next …

I think we have time for one more question.

… your next question comes from the line of Steve Butler of Canaccord . Steve your line is open.

Oh, good morning, guys, afternoon, almost now. On Slide 15, so you’d outlined five of those initiatives and you said the reaming you’d leave us to ask questions if we’d like on San Sebastian or the Greens Creek ramp or 29 Ramp, what are you thinking about in terms of Greens Creek on this 29 Ramp and how much could this potentially increase production? I assume we’re talking about the new or pre-existing ramp access?

It’s pre-existing ramp access. This ramp we’re having to evaluate, do we just rehabilitate it or do we build a new ramping system? The increase in production comes because of grade being higher, not because we’ll increase through put. This East ore body was the original ore body that started the mine and you know there’s lots of high grade material that was left behind. So we’re going back in. We have a design build contract that we’re negotiating as we speak and I would expect it over the next quarter or so will be put in place and it will probably also include the contract will have the ability to do the 200 South Development as well. At least that’s what we’re hoping we’ll able to design and so it does two things for us. It’s going to allow us to access this higher grade ore and it’s going to extend mine life and you’ll see that reflected next year as we develop the new long range plan.

Okay, thanks, Phil, and did you say in your address the Lucky Friday Mine Optimization Study potentially looking at as good as 10% to 20% higher through put if all goes well?

That’s my guess that’s un-engineered.

Right.

But certainly when we think about the constraints of the mine we know it is a lot more than the 375,000 tons and the reason know that is in 2010 we mined 350,000 tons of ore. We mined the most waste that we’ve ever taken out of the mine because of the mile of lateral development that we did for the fore shaft and we had the most men and materials go down into the mine for the construction of that fore shaft. So we know that there’s more hoisting capacity. We know that – we think that the constraints are going to be ventilation and are going to be rock mechanics. Interestingly enough, if we do re-open the Star Mine, there’s potential for the Star to provide some additional ventilation. It’s been an idea that we’ve been toying with for some time and that could be very exciting for the ultimate determination of how big this mine could be. So I guess stay tuned for that. It’s probably going to come out in phases. We’ll probably determine the Lucky Friday on its own and then there’s and then to the extent we do something on the Star there might be a second phase to our evaluation with what the Lucky Friday can do.

Okay, thanks Phil.

All right, thank you very much, and unfortunately we’re going to have to stop questions there. Melanie Hennessey is available to answer questions should you have any and I appreciate everyone being on the call.

Thank you for your participation in today’s conference. This concludes the presentation and you may now disconnect. Have a wonderful day.