Good day, ladies and gentlemen and welcome to the fourth quarter and 2014 Hecla Mining Company earnings conference call. My name is Crystal and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. I would now like to turn the call over to your host for today. Mr. Mike Westerlund. Please proceed, sir.

Thank you, operator. This is Mike Westerlund, Hecla's Vice President of Investor Relations. Welcome everyone and thank you for joining us for Hecla's fourth quarter and year-end 2014 financial and operations results conference call. Our exploration news release that was issued last Thursday and the financial results news release that was issued this morning before markets 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 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, 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 and hello everyone. When I look back over 2014, the five keywords I think best describes the year are strength, execution, growth, confidence and optimism. Hecla is the strongest it's been since I joined the company, a direct result of having three mines that are executing well, producing a record 34.5 million silver equivalent ounces and a record $0.5 billion in revenue, as you can see on slide three. This production growth, combined with our low-cost, generated a strong increase in operating cash flow, the third most in our history and the 29% increase in adjusted EBITDA allowing us to end the year with $210 million in cash within $3 million of where we started the year. And we achieved this with the second highest level of capital investment in our history and lower gold and silver prices. There are not many precious metals companies in this environment that can grow production, invest with the future and maintain cash. I think it's a testament to both the assets and Hecla's people. And that's why despite the weakness recently in the price of silver and other metals we are confident that we can execute our business plan with its low-cost mines, diversified revenues across four metals, the hedging programs for lead and zinc and a strong balance sheet. And while metal prices have lowered, we continue to invest capital in our mines, first because we can afford to and second, it's in this period of low prices that you get the most bang for the buck, the best opportunity to increase mine life, production, productivity and reduce operating risk at the lowest cost. The biggest line item in our capital program and has been for a number of years is Lucky Friday's #4 shaft, our largest growth project in…

Thank you, Phil. The fourth quarter set a number of new records for Hecla, most quarterly silver production up 29% over last year's fourth quarter, most gold revenue, most profit from a gold operational unit with total gold production up 16% over last year, all as set forth on slide six. Our improved production drives the financial metrics with adjusted EBITDA increased 25% over a year ago quarter and cash cost, after by-product credits for silver decreased 38% and for gold decreased 23% per ounce. And on slide seven, you can see this trend continues with the annual results with silver production of 11.1 million ounces up 24% over last year, a company record. And gold production of 187,000 ounces up 56%. On a silver equivalent basis, Hecla produced 34.5 million ounces, another company record. The record silver equivalent production resulted in record revenue of $500 million and strong cash flow measured as either adjusted EBITDA up 29% or operating cash flow of $83 million, the third best in our history despite including the final payment of $55 million on the basin litigation as shown on slide eight which puts that obligation forever behind us. With the Lucky Friday at full production all year, we saw consolidated silver cash cost, after by-product credits declining 30% to below $5 per ounce which is what we expected to happen. Gold cash cost also declined as a result of improvements we have made at Casa Berardi, completion of disruptive capital projects and a weaker Canadian dollar. On slide nine you can see a few of the items impacting our earnings including foreign exchange gains of $11.5 million due to the weakness of the Canadian dollar and gains on base metal forward contracts of $9.1 million. In addition we had an income tax benefit…

Thanks Jim. I have been in operations for over 30 years including Goldstrike and I can tell you that Greens Creek is a world-class silver mine. Over the past 25 years, Greens Creek has produced the four metals you see at the top of slide 17, including 192 million ounces silver, 1.5 million ounces of gold, 1.4 million tons of zinc and a 0.5 million tons of lead. 2014 annual production was right on the 25-year average which is what you want to see in a long-term asset. What makes it particularly impressive is that we have managed to increase tonnage to offset the gradual grade reduction staying at the long-term average over the period. Greens Creek had another excellent quarter producing 2.5 million ounces at a cash cost, after by-product credits per silver ounce of $2.74. The increase in silver ounces produced is a result of higher silver grades due to mine sequencing and has contributed to lower cost which are very low by industry standards. The cost continued to be helped by the availability of hydro power which lasted throughout the entire year. The planned expansion of the Greens Creek tailings facility continues to work its way through the permitting process. All federal permits have been obtained and the company has completed miner state permits to allow construction to commence. This $44 million capital program will take three-and-a-half years to complete and will provide tailings capacity through 2026, which is sufficient for the current reserve. With the results we are having in 200 South and elsewhere in the mine, we are confident we will need to expand the tailings again in the future. Lucky Friday is definitely back, as you can see on slide 18. 2014 production increased 122% over 2013 and cash cost, after by-product credits fell…

Thanks Larry. During the fourth quarter, we had active exploration programs underground at Greens Creek and Casa Berardi and on surface at San Sebastian. Those results have been summarized in the January 21 and February 12 press releases announcing some spectacular drill results and new reserves and resources. The strong intersections in these releases highlight the bright future of our operations and at the San Sebastian project and I encourage you to read those press releases. Overall, exploration resulted in record high silver reserves for the ninth straight year, up about 2% to 173 million ounces, as shown in slide 22. What makes this achievement even more significant was it happened during the period of declining exploration budgets and we use $17.25 as our silver price. Our silver peers used an average of $22.61 in 2013 for their reserve calculations. So when they report their performances on reserves in the coming days, we would expect you will see reductions in their reserves. It is also noteworthy that we have basically maintained our level of gold reserves at 2.1 million ounces using $1,225 per ounce gold. Slide 23 shows how we have consistently grown silver reserves over the past 11 years. In 2004, we had reserves of 45 million. Today our reserves have increased to 173 million ounces, net of 114 million ounces mined over that time. This means we added a total of 240 million ounces silver over the past 11 years. And with the growth in resources and high conversion rates we have seen, we are confident we can continue to increase silver reserves in the future. We had a very successful exploration drilling program in Mexico at San Sebastian during 2015 and it is exciting to see how quickly the project has become so robust with significant increases…

Thanks Dean. So 2014 was a great year for Hecla as we executed our plans. All three assets are performing well with the record silver production, strong gold production, low cash cost and our key growth initiative, the #4 shaft is on track and on budget. Financially, record revenues, stable cash position, strong operating cash flow. We were happy with the strength of our balance sheet and our diversified revenues and our base metals hedging and we are happy with the fact that we have these long-term bonds. In exploration, we increased our silver reserves, kept gold reserves flat using lower prices for calculations. The resource increases give us comfort that we will continue increase reserves and extend mine life in the future and we have made tremendous advances at our San Sebastian project and are working towards that construction decision. We are well positioned and optimistic going into 2015. We saw a considerable weakness in the silver price yesterday and if price weakens further, we have levers that we can pull to slow down expenditures. If prices strengthened, we are well positioned to benefit from the gains. And we are investing a prudent amount of capital to extend the mine life, increase production or reduce risk. We can afford to do it and we think that's the best way to create shareholder value. I look forward to reporting these results to you in the future. And with that, operator, we will open the line for questions.

[Operator Instructions]. Our first question will come from the line of Jorge Beristain from Deutsche Bank. Please proceed.

Good morning guys and congratulations on a good result. I guess my question is really more about Berardi. We did see a bit of a head shake [ph] there with a very strong sequential drop in unit cost up in Canada. I was just wondering if you could break down how much of that is currency related, how much is grade related? And then based on your year ahead guidance for 2015, it would seem that you are basically looking for full year average cost to be very similar to where they were in 2014. So I am just trying to understand what are you giving up or what is dissipating in terms of that nice cost tailwind that you have in the fourth quarter that you are now expecting to go up in coming quarters again up in Canada? Thanks.

Let me ask Jim and Larry to take that question.

Jorge, first the easy one which just involves math, is the impact of the Canadian exchange rate. The result is almost pro-rata whatever you assume the changes. To give you an idea, if we look at the rate at the end of 2013, it was 0.9349 and if we look at it at the end of 2014, it was 0.862. So if you take the 2013 cost and you apply that delta in exchange rate, you get an impact of about $74 an ounce. So when you compare the actual results that we posted versus the 2013 average, about $74 as a result of the Canadian exchange rate and the balance as a result of operational improvements that we made over the year. No doubt about it, the fourth quarter was absolutely a great quarter for Casa Berardi and the reason for that is volume. If you look at the production level, I think which is about 38,000 ounces, that's continued improvement of what we have done before and really the absolute knock it out of the park quarter that we have for Casa Berardi at a run rate which is about the guidance that we are providing for next year. So what I am saying is, part of it foreign exchange, a lot of it just a result of the great fourth quarter and we bought guidance in for 2015 to a level which is fairly consistent with what we saw for 2014. Larry, anything else?

Yes. The grades for 2015 should be very similar to 2014 over the course of the year. So that's one of the reasons we are looking for similar cost per ounce That said, the mine, I think, is running very well. It's running in a very stable fashion and our continuous improvement initiatives are starting to take root.

And Jorge, I guess the last thing I would mention is, we view this mine as being 125,000 to 150,000 ounce producer. We will not push it to try to exceed that. We need to have everything in balance. And so we see the right place for this thing to be producing is 130,000 ounces for 2015.

Thanks. But just to follow-up, what I am getting at is that I think your full-year guidance is $825 an ounce cash cost for 2015. I think it was $824 for 2014. But you are carrying about $74 per ounce currency tailwind now into 2015. So I am just wondering, are you looking at cost to be higher by that amount because of greater volume or are you just being very conservative and that's kind of a bogey that you are carrying into next year?

I think it's all three. I mean there is an element of conservatism but it wouldn't be all of that tailwind that we have. And I don't know if it would be a third, a third, a third, but it certainly is an element of conservatism. Jim, Larry anything to add?

No.

Okay. Thanks guys.

Our next question will come from the line of John Bridges from JPMorgan. Please proceed.

Hello, everybody. Thanks for the call. Congratulations on the results. The percentage of Canadian dollar exposure at [indiscernible], is there a number that we can stick in our models?

Well, the best place to go, John, would be to our cash cost reconciliation, which is in the press release and in 34 documents. And for Casa Berardi itself, a layout with the cash cost are virtually all Canadian dollars and typically Casa Berardi, to give you an example, in 2014 the cash cost, before by-product credits was about $106 million.

Okay.

So John, when you think about our total cost that we spent, operating costs, it's a little over $300 million. So a third of that is at Casa.

Okay. Great. San Sebastian, I know you are working on modeling and so on, but what's the range of outcomes you are looking at in terms of capital cost for that? The cheap one building the mine and then doing toll treatment and then the other case, where you would be able to build your own mill. What sort of range are we thinking about?

Look, if we toll mill, somewhere and not a huge cost, we would have to absorb the transportation costs and the toll milling charge. So you could expect very little capital, to the extent that we build the mill. And I don't will know, in order to magnitude $100 million-ish. Does that sound about right, Larry?

Yes. It would probably be a little bit under that, I think.

Okay and then really big picture, you have actually got a nice portfolio of projects there. Well, in particular, San Sebastian in front of you. Just thinking, stepping out a bit further in this environment where the silver price is low and presumably you are having visits from people trying to sell you things on a pretty regular basis. Do you see potential just to buy into very early stage things just to put your feet on things for the very long term for the company?

We, of course, have done that to a degree and we will continue to look at those opportunities. The expenditure required to get that exposure is pretty small. So we are willing to consider those things.

What do you think of the quality on things being offered? We have heard from other players that there really aren't many good ones out there.

That's correct. I mean, there's a lot of things, a lot of work that's been done, assuming a much higher price environment and much of that it just cannot hold together at these sorts of levels or in future expected prices. So we are not going to spend a lot of time worrying about those things. We will poke some things that look like they will have legs at a more reasonable price.

And then, of course, you have got all that territory around Lucky Friday, which you can use as another figure?

That's right.

Okay. Cool. Many, many thanks. Very much appreciate it. Well done.

Thanks, John.

Our next question will come from the line of Anthony Sorrentino from Sorrentino Metals. Please proceed.

Good morning everyone. At Lucky Friday, you are looking for cash costs in 2015 of $8.75 per ounce and that's even though you are expecting the production to be about the same, 3.2 million ounces. So I just wanted to know why you are expecting the cash cost per ounce to drop, 2015 versus 2014, at Lucky Friday?

I will let either Jim or Larry take that call.

Sure. Jim will start and then turn it over to Larry. Anthony, it's really a case of the mine hitting its strides and having continuous improvement. If we look at 2014 for the whole year, we were at $9.44 and so we are expecting to see some improvement there. And when we look at the fourth quarter, production was a little bit lower due to a sand cycle that we found ourselves in that occurs from time to time. So we are really just looking at great performance out of Lucky Friday and continuous improvement in 2015. Larry?

Yes. I think you have said it well. We are opening up more stopes and fundamentally we are trying to distribute the daily tonnage amongst more fronts and by doing that we should get out of some of the start stop cycles that Jim mentioned.

Okay. You are estimating 2015 capital expenditures at $145 million. Would you give a break down of that by property?

Yes, Jim, do you have that handy?

Sure. We would expect at Greens Creek to be about $40 million, Lucky Friday to be about $60 million which includes #4 shaft and Casa to be the remainder which is about $45 million.

Okay. Thank you very much and congratulations on the good financial and exploration results.

Thanks, Anthony.

Our next question will come from the line of Vitali Mossounov with Scotiabank. Please proceed.

Hi guys. Congratulations on a strong quarter. At Greens Creek, I guess from time to time, you benefit quite a bit from hydroelectric power. What kind of availability are you pricing into 2015? And what exactly did you see in 2014? How much did you benefit from that?

Well, it was almost all hydro in 2014 and we are not assuming as much hydro, I don't remember. Larry, do you remember what percentage is hydro?

Yes. It's 72%. Obviously, we are quite early in the year right now.

It becomes a function of the dams, how much water have been put into the dams. So that could change.

Do you have a sense of cost, if that was to go from 72% to something like 92% or 100%? How much are we talking about, dollar-wise?

Well, it's still quite relatively small for the Greens Creek. Larry or Jim, you want to give a specific? That's 10% of the total cost is power.

I can take that, Phil. We have to look at the inter-relationship of two things. One is the cost of diesel fuel and of course everybody knows what's been happening with fuel prices here over the last two, three months. But if we look historically, to give you an idea of the impact from year-to-year, is in 2014 we spent a total for fuel and electricity together of about $12.7 million and as indicated that was when we had 100% availability. To give you a couple of other benchmarks, in 2013 we spent a total of $18 million on lower availability. I don't have the exact availability at my fingertips. So it shows that about $5.5 million, $6 million delta on the cost between one year from another. And if you look at it historically, you will see that same sort of change.

Okay. Great. Thanks very much.

Our next question will come from the line of Matthew Fields from Bank of America. Please proceed.

Hi guys. Thanks very much for taking the call. Just real quick on the nitpicky side, what was the $6.5 million add-back in your EBITDA for a provision for closed operations related to?

Yes. That's related to a property in New Mexico called Johnny M that was operated by a predecessor company acquired 30 years ago and it's for the cleanup of that site. And it would be something that would take place over a number of years. And so we did a study and costed it out and we thought we should accrue for that.

So will this be a repeating charge over the next --?

I don't know. So it is just merely booking the expected cost of doing that work.

So it's a one-time charge to you guys?

Correct.

Okay. Next at San Sebastian, it sounds like obviously you are not giving us the full plan here, but it sounds like you are leaning towards starting out on the surface reserves and maybe doing some kind of tolling arrangement with a mill. Obviously the lower expenditure, like you mentioned earlier, but what's the cash cost impact of having a tolling arrangement with a mill?

It's a really good question. The way to really look at this is the East Francine four is such high grade that the real driver is the value of the lock. It's high. The tolling cost, the mining costs on a relative basis are going to be fairly small. So if we can work out an arrangement that makes sense, then we will do that. Otherwise, it will become part of the overall development of San Sebastian. We might decide to do that anyway. So you are just going to have to wait to see where we end up in that analysis.

Okay and just sort of then conceptually, obviously, the #4 shaft at Lucky Friday is the big catalyst here for you, maybe step function up in your earnings, but what are the risks can you talk about of operating at such a big depth, mining at 8,500 feet down?

Well, the issues you have just mining at depth are ventilation. Just having adequate ventilation, dealing with the heat and finally the rock mechanics. We think we have developed very good plans with respect to all three of those things. So we feel quite comfortable with our plans, which at this point only go down to about 8,200 feet below the surface and that's out 30 years. So we have quite a bit of time to further refine, further improve how we operate the property. Once the #4 shaft is complete, what we will be focusing on is developing the 7500 level and getting into higher grade ore that occurs around that level and giving ourselves more working faces to operate from more flexibility and we are able to manage. There is not going to be a huge difference between operating at that level and operating where we are now, which is I guess above as deep as 6,200, 6,300.

So is it reasonable to assume that the higher grade affects on your cost will be more of a driver in cash cost than the increased cost of mining at a deeper level?

That's our expectation. When we look at the long-term plans, we see costs that are below where we have operated in the past. So net, more production and it gives us better economics than driving cost down.

Okay. Thanks very much.

Good talking to you.

Our next question will come from the line of Misha Levental from Cowen. Please proceed.

Hi guys. I was just wondering if you were engaged in any hedging programs for the Canadian dollar?

We are not.

No? And also could you provide a breakout of the total cost per ton for Casa Berardi? Do you guys have those numbers available for cost per ton mining, processing, SG&A for 2014?

We do. I don't know if you have them on hand, Jim, or if you want to give him a call afterwards.

It's on page 12 of the press release.

Yes. But not all. That's just total cost per ton. He was asking for the breakout, right?

Yes.

We have got to handle that offline.

We have got mining and milling and missing only part would be the G&A and I don't know what that is off the top of my head.

Okay.

Jim, maybe you can give him a call.

Okay. Yes, we can take that offline. And I guess finally, sorry if I missed it, but what do you expect throughput to be at Lucky Friday in 2015?

It's going to be roughly the same as this year. Jim or Larry, do you remember what the exact number is?

It is 900 short tons per day.

About 325,000 tons.

Okay. Perfect. All right. So we will just handle the cost per ton stuff offline. Well, that's it for me. Thank you very much.

Sure thing.

Our next question will come from the line of Garrett Nelson from BB&T Capital Markets. Please proceed.

Hi. You provided the break down of 2015 CapEx guidance by mine. But of the $145 million, what's the split between maintenance and development CapEx?

Certainly the biggest portion of development CapEx is the Lucky Friday #4 shaft which is about $40 million. With respect to the other mines, do you guys have an estimate of what you think those are, Larry?

Yes. It will take me just a second here.

Yes. On average, Gary, I think you can think of the mines as on average needing to spend $20 million to $30 million on maintenance capital. We were certainly a little bit beyond that at particularly Casa, but part of that is really catching up on some of the capital expenditures that they had in the past.

Got it. Okay and then what does the cash cost guidance assume in terms of by-product zinc and lead volumes?

Dean, do you have those numbers?

In terms of Casa, we are assuming its $0.90 zinc and $0.95 lead.

So for both, the Lucky Friday -- but he was asking about the volumes.

Okay. They would both be comparable with this year a little bit lower because we have higher throughput this year. But they are pretty comparable to 2014.

Okay. That's great. That's all I had.

Your question on development, it's about $20 million for Greens Creek and $20 million for Casa.

Got it. Okay. Thanks a lot.

And with no further questions, I will like to turn the call back over to Mr. Phil Baker for closing remarks.

Okay. Well, thanks very much for being on the call. We are proud with the results that we had for 2014 and we think we are well positioned for 2015. I am happy to take questions. You can call Mike or I all day today. Thanks very much.