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Hecla Mining Company (NYSE:HL)

Q3 2010 Earnings Conference Call

October 27, 2010 10 AM

Executives

Melanie Hennessey – VP of Investor Relations

Phil Baker – President and CEO

Jim Sabala – SVP and CFO

Dean McDonald – VP, Exploration

Mike Dexter – VP and General Manager, Lucky Friday

Analysts

Anthony Sorrentino – Sorrentino Metals

John Bridges – J.P. Morgan

Chris Lichtenheldt – UBS

Operator

Good day, ladies and gentlemen and welcome to the Third Quarter 2010 Hecla Mining Earnings Conference Call. My name is [Morissa] and I’ll be your operator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today’s conference. (Operator Instructions).

I would now like to turn the conference over to, Melanie Hennessey, VP of Investor Relations. Please go ahead.

Melanie Hennessey

Thank you [Morissa]. Welcome everyone. And thank you for joining us for Hecla’s third quarter financial and operation results. Our news release which was issued yesterday after market close and third quarter presentation are available on Hecla’s website.

On today’s call, we have Phil Baker, Hecla’s President and CEO; and he’s joined by Jim Sabala, Senior Vice President and CFO; Dean McDonald, Vice President of Exploration; Mike Dexter, who is the Vice President and General Manager at the Lucky Friday operation and joins us from site, and George Sturgis, the Vice President, Project Development.

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 Chief Executive Officer. Mr. Baker?

Phil Baker

Thanks Melanie. Hello everyone. Thanks for joining the call. I am going to provide a brief overview of our Q3 performance. Jim will speak about our financial results followed by Dean who will give us an update on exploration. I am going to close with an overview of the four Shaft Project and open the door for questions.

If you look at Slide 4, we had another solid quarter producing 2.7 million ounces, slightly higher than the second quarter and unchanged when compared to the same period a year ago. Both operations performed well on all measures. Throughput, recovery, cost per ton and grade. At Greens Creek, the grade is increasing in the second half of the year, as we expect. So, Greens Creek produced 1.9 million ounces of silver and you will continue to see over the fourth quarter a similar grade that we had this quarter.

Lucky Friday saw slightly lower grades producing 800,000 ounces of silver which is within what we expected and the two mines are on track to produce 10 million to 11 million ounces this year. We’d another quarter with negative cash cost to the dollar, one which Jim will discuss in greater detail. These low costs reflect quality of the assets and the capabilities of our operating team.

When you combine that low cost with the third quarter realized silver price of $21.45 per ounce, Hecla generated $42 million in cash flow from operating activities for a total of $115 million year-to-date. The operations have generated more cash just in the nine months than all of 2009 and 2009 was our previous record in our 120-year history for cash flow from operations. So quite an accomplishment this year. Our cash position is now $217 million when combined with our cash flow generation from the mines. It’s going to allow us to pursue opportunities and grow our business.

And so, with that, I will turn it over to Jim.

Jim Sabala

During the third quarter of 2010, the company continued the trend started in 2009 of reporting solid operating and financial results. We continued to deliver on plan with regard to production, profitability (inaudible) another key benchmarks, and particular is noted on slide 5, the company continues to be the lowest cost silver producer in North America with total cash cost of negative $1 per ounce.

Third quarter, we reported adjusted net income of $29.6 million and net income applicable to common shareholders of $16.4 million or $0.06 per share. We achieved cash flow from operating activities during the quarter of $419 million and finished trade with an exceptional balance sheet with $217 million in cash and no debt, I will cover these items additionally on succeeding slides.

On slide 6 is a snapshot of production for the quarter. As you can see silver production was solid at 2.7 million ounces, which represents a 9% increase in quarterly production over that reported for the first quarter of this year and a 3% increase. Coal is up 7% from the corresponding period of last year and zinc and lead production were up 3% and 11% respectively over last year’s comparable quarter. Of course, good prices don’t hurt either (inaudible) metals prices and you can see that our realized price was up 31% and realized gold price was up 29% from last year’s comparable quarter. Zinc and lead prices were down marginally by 2% and 6% respectively.

On slide 8 we show we continued to see expansion of our record margins that we are achieving. As previously discussed, we continue to experience a loss (inaudible) in the industry. Our per ounce cash cost were a negative $1.1 for the third quarter. While they are up slightly from the previous quarter, as primarily the result of an increase in certain price related operating cost such as labor cost, which are subject to silver price premium participation, profit sharing, mine license taxes and two additional smelter cost (inaudible) participation costs.

However the benefits of our metals prices for (inaudible) margin increased from the $22.46 per ounce of silver produced compared to $20.78 just last quarter and $13.72 for the entire calendar year of 2009. All of this results in higher revenues and pretax income.

On slide 9 we show the revenue increased 22% from the third quarter of 2009 to the third quarter of this year. Income before income tax has increased to $27.9 million compared to $26.5 million in last year’s corresponding quarter. And this is in spite of a mark-to-market adjustment for certain base metal contracts of $13.2 million, which I will discuss in more detail shortly. On an adjusted net income basis adding back the loss on the derivative contracts, pretax income would have been $41.1 million from the three months.

During the quarter we recorded a tax provision of approximately $8.1 million compared to $0.6 million in last year’s third quarter. The increased tax provision is due to the fact that higher prices have resulted in the utilization of alternative minimum tax loss carry forwards. A combination of this utilization plus the benefit we receive from percentage depletion for regular income tax purposes results in the increased tax provision for AMT purposes.

On a conservative basis, net income applicable to common shareholders at $16.4 million [inaudible] reported for the third quarter of 2009, $22.5 million, and can be directly attributed to two items, which is the aforementioned loss on non-cash mark-to-market derivative contracts and the increased tax provision. I will have more to say on these items in subsequent slides.

On slides 10 and 11, we set forth a few other financial metrics. In the third quarter we saw operating cash flow as previously mentioned of $41.9 million, a 30% increase over 2009’s third quarter level. That brings the nine month cash flow to $115 million, a 122% increase over the 2009 level.

During the quarter we had capital expenditures at our operations of $23.2 million, which is higher than normal due primarily to the Lucky Friday 4 Shaft project of $11.4 million. For the quarter other sustaining capital is $11.8 million and exploration was $6.9 million. Consequently, based on operating cash flow during the quarter of approximately $42 million, the company was able to completely fund its capital expenditures and increase cash available in the treasury to $217 million.

The company has no significant debt outstanding and a $60 million line of credit available; therefore, a total liquidity available for investment stands at $270 million.

I mentioned that I wanted to talk about a couple of other items, which are the base metal hedging program and I’m using that term hedge in the economic sense not the accounting definition and income taxes. We announced last quarter that we’re going to do some additional hedging which is designed to reduce fluctuations in cash flow due to changes in base metal prices. This will have the effect of allowing us to fund the Lucky Friday expansion program out of operating cash flow.

The program consists of two components; first is a short-term program designed to manage the exposure at the time of sale and final settlement for concentrate shipment. Under that program we sell lead and zinc upon shipment from the same quotational period as the underlying forward sales contract thereby reducing the gain or loss associated with subsequent price movements.

During the quarter the program was 94% affective, which means we’re able to isolate 94% of all price movements and any gains or losses related to the difference between provisional sales and final settlements are offset by the corresponding contract.

Our second program is longer dated, is designed to reduce price volatility on future lead and zinc production with our goal being ultimately to reduce exposure of up to 50% of production of those metals over a two to three year timeframe.

As noted above, the contracts are marked-to-market earnings each period. We commenced that program in April and in the second quarter reported a mark-to-market gain of approximately $2 million. During this quarter, we saw base metal prices rebound, as a consequence reported a mark-to-market loss of $13.2 million.

At the end of the third quarter, the company had entered into financially settled forward contracts [inaudible] the longer dated program totaling 25,750 metric tons of zinc to be delivered between now and early 2002 at an average price – excuse me 2012 at an average price of $0.94 and 17,650 metric tons of lead to be delivered between now and late 2011 at an average price of $0.92.

As base metals prices have continued to improve, we have continued selling into the strong market. So you can expect to see additional activity in future periods. When prices rally, you will see mark-to-market net losses and when prices retreat you can expect to see mark-to-market gains from this portfolio.

The key component in this program is that due to the intricacies of accounting for derivatives, you’ll see some movement on our P&L but we have actually reduced risk in the business by establishing a stable cash flow target and price, which assists in providing good stable long-term performance.

Lastly, I’ll talk a little bit about income taxes which I alluded to earlier. As indicated, during the quarter the company reported income taxes of approximately $8.1 million, which includes approximately $6.3 million of tax liabilities paid in cash, which was higher than previously expected. This is the direct result of the higher prices we are seeing, which is causing the company to be in a position of an alternative minimum tax payer for 2010.

For the fourth quarter, we would expect to see a tax provision on income statement of again around 28% of pretax income and we expect our Q4 tax payments to be approximately $6 million.

Moving into 2011, and we would again expect to see the tax rate hover plus or minus between 25% and 28% and would expect our cash taxes to also approximate that rate. With that, I would like to turn the call over to Dean McDonald to talk about exploration.

Dean McDonald

Thank you Jim. During the third quarter $6.9 million was spent on exploration and it is anticipated we will spend $20 million this year. This exploration is strategically focused on drilling activities on Hecla’s District-sized land positions.

These activities include underground and surface drilling at Greens Creek, continued expansion of Lucky Friday resource to depth and to the east. Drilling underground rehabilitation and sampling at the Noonday vein west of the Lucky Friday. Drilling of the Equity, Bulldog, and Amethyst veins at the San Juan joint venture property in Creede, Colorado and drilling of the Pedernalillo project in Mexico in combination with 3D modeling of the past producing Andrea and Don Sergio veins to define a near surface mining area.

It has been an active quarter for underground exploration at Greens Creek with drill programs refining and expanding the northwest west zone resources located in the upper left corner of the 3D view of the Greens Creek Slide 13.

As listed in the assay table in the press release, we have some very impressive intersections. Not only in the northwest west zone but we have also been successful in extending resources in the 200 South and 5250 zones which are shown in the lower portion of Slide 13. Additional drilling along strike of these zones could provide new reserves and resources.

During the quarter two drill rigs were active on surface at the Northeast Contact East Ridge and little Sore targets in the central part of the Greens Creek property. Drilling intersected a number of mineralized mine horizons and assays are pending.

As I’ve described in earlier conference calls, drilling continues to expand the resources east and at depth of the current reserves and resources at the Lucky Friday mine.

As you can see from slide 14, the rapid expansion of the Lucky Friday resource in the last three years. When you look at the NSR by thickness contours, where hot red colors represent higher values, the 2009 resource appears to show a decline in grade at depth. However, this is simply a reflection of the lack of drilling.

Recent drilling in the central resource down to 8000 feet continues to intersect a wide and high grade 30 Vein.

To the east of the current resource below the 7000 level, the 30 vein is narrow but high grade and the 40, 90 and 110 Veins appear strong with good width and grade. As described in the last conference call, the intermediate veins of this depth are now crossing more component rock, which allows the development of wider veins.

We anticipate additions to the Lucky Friday resource both at depth and to the east.

Drilling in the Silver Valley of Idaho is concentrated along mineralized structures east and west of the Lucky Friday mine as shown in Slide 15. Silver bearing mineralization has been intersected along the You Like/30 vein trend to the west but particular emphasis in the last quarter has been on the Noonday and Noonday split, which are just south of the task producing Star Morning mine.

In the 3D view of the Noonday vein shown in slide 16, drilling is targeting the up-dip continuation of mineralization above stopes that were last mined in the late 1980s. All of the holes in this program as shown by pierce points in the model have intersected good silver base metal mineralization. Due to these intersection ramp access was reopened and detailed underground sampling has been completed in order to estimate a resource on the Noonday and Noonday split by year end. At our San Juan joint venture property in Creede, Colorado recent surface drilling locations are shown in slide 17. In the central part of the property, drilling has intersected both the east and west trends of the Amethyst Vein, which represent 5 and 30 foot wide zones of veins and breccias respectively. Drilling at the north (inaudible) site intersected a multi-stage quartz veins with fine-grained pyrite and black sulfides, which may represent the west trend and the mineralized vuggy quartz pyrite zone is interpreted to be the east trend.

At the West Equity site, we have cored into a very significant 300-foot wide hydrothermal vein in breccias zone with bands of galena, sphalerite and pyrite and fine-grained black sulfides within the (inaudible) bearing veins. Although assays are pending, this style of mineralization is a positive sign since this was commonly observed in the Amethyst Vein during historic mine production.

In Mexico, drilling in the third quarter shifted to the Pedernalillo target area, which is shown in slide 18 and we are a vein similar to the nearby pass producing Don Sergio and Andrea veins have been intersected. The Don Sergio mine averaged 16 grams per ton gold and 93.6 grams per ton silver during production in 2003 and 2004 and it’s a mere surface unmined areas have drill intersections up to 120 grams per ton gold in core. The Andrea vein has zones averaging 7 grams per ton gold and 60 grams per ton silver with the localized areas that ran up to 12 grams per ton gold and 200 grams per ton silver. Initial modeling suggest an economic target may be developing near surface in this area. A follow-up drill program at Pedernalillo is advancing as we speak.

And with that, I will pass you back to Phil for further remarks.

Phil Baker

Thanks, Dean. Not only introduced Mike and George and I have asked them to join us today because Mike has been the GM at the Lucky Friday for the past decade, which has been a period of intense change. I think that he now has this operation prepared for the next change that will come as a result of the development of the four shaft. And George has been working on shafts and other major construction projects for the past 30 years including the development of the silver shaft.

If you go to slide 19, you will see that silver shaft in the picture. It’s the green line that’s on the left hand side of that picture. I want to talk more about the picture and the number but first we are just very excited about this project and its economics. We issued a press release Monday providing some specifics at the projects very strong economics. Using a relatively low price deck of $15 silver and $0.80 lead/zinc, the internal rate of return pretax is 20%. If you consider the 50 million of (inaudible) cost, the IRR is 15%. And because the operating costs are so low even at a $11 silver, it generates 11% return. The returns are strong because silver production increases 50% from 3 million to 5 million ounces. When the shaft is complete, which is expected in 2014, production will ramp up to full capacity after a year of sublevel development of the 6500 level, and you can see that 6500 level on the picture.

The capital expenditures for the project is going to be between $150 million and $200 million and $50 million will already be spent by year end. Now we have approached this project incrementally for a number of reasons including the need to engineer and organize the building and the infrastructure of a new mine inside on that is operating at full capacity. We wanted to methodically build and test the process for dealing with the additional min [ph], materials, and waste rock that has to go to the surface through that silver shaft. So that line that you see to the left in that picture, everything has to go up and down via that shaft and of course, we are operating at full capacity. And after working the better part of the year, we think George, Mike and their teams have the firm handle on it and have substantially reduced the risks of either production interruption or slowdown of construction.

Now we are still indicating a $150 million to $200 million range of CapEx pending to completion of engineering study feasibility and advisability of constructing the shaft to an ultimate depth of 8800 feet. If we proceed with the latter, the CapEx would be on the higher end of our range. If we don’t and everything goes perfect, if we don’t use the escalation of contingency, which is 20% of our total cost, we will be at the lower end. We are currently 9% under budget and of course, we are very early in this project.

Now the key drivers for the increase in silver production and reduction in costs are a 35% increase in the silver ore grade and a throughput increase from 350,000 to 375,000 tons. The total cash cost for the first five years would be less than $4 per ounce and with the addition of the four shaft, the life of mine would extend we think well beyond 2030.

If you turn to slide 20, we have provided you some highlights on the project itself. There will be a 18 foot diameter shaft that will be approximately 3000 to 4000 deep and then there will be more than twice as much off shaft development that’s going to include access to the shaft, the primary stations on four levels, two new levels and related sub levels, bends [ph] and hoist room. All of this is included in this capital estimate that we provided. The study is underway to determine the feasibility of constructing the shaft through the 8800 level. There are a number of issues including substantially more refrigeration as we go below 7500. These aren’t insurmountable that requires study to get it right. And as I said a moment ago, we have been methodically but aggressively moving project forward including excavation of the hoist room and if you look at the picture at the top of the slide, it’s a sizable space that has dimensions of about 61 feet long, 50 feet wide and 30 feet high and represents about quarter of the off shaft development. The team has done a good job with the excavation of the hoist room with it slightly ahead of schedule and the foundations for the main production hoist are currently under construction.

Finally, I expect the Board to approval no later than mid-2011 but the project in the meantime will be moving ahead incrementally. We know the economics support the project and the work we are doing is substantially reducing the project risks and I think ultimately will result in a better facility that maximizes the ore body by going as deep as possible without impacting production.

Now if you turn to slide 21, the four shaft is a big part of our organic growth strategy and we are going to continue to develop both Greens Creek and the Lucky Friday operations to extend mine life. Our cash position combined with the cash flow generation gives us flexibility to look at M&A opportunities and we are certainly doing that. We are focused mainly on precious metals assets in the Americas and we are looking for advanced projects (inaudible) mines.

Moving to slide 22, we continue to reiterate our silver production guidance of 10 million to 11 million ounces and given the strength of the base metals prices we have seen year-to-date, we are updating our cash cost guidance to a negative $0.50 per ounce. This assumes that we will be average $1100 per ounce of gold and $0.80 for lead and zinc in the fourth quarter. So there is an opportunity to be even lower than that.

And with that, I would like to open the line for questions.

Question-and-Answer Session

Operator

(Operator Instructions) You do have your first question from the line of Anthony Sorrentino from Sorrentino Metals.

Anthony Sorrentino – Sorrentino Metals

If you decide to complete the number four shaft project at Lucky Friday, could you give us some idea of what the production profile would be at Lucky Friday? Would it be linear or would it be kind of steady in the first year or two and then have a sharp increase by 2014?

Phil Baker

What happens is between now and 2014, we have the actual construction of the shaft in all of the off shaft development. We then have a period of about a year where the focus of the work is on the sub-level development of the 6500 and then the following year, which would be 2016 is when we will see production ramping up to the 5 million ounces, and we would expect that to be producing at that level for a substantial length of time after that.

Anthony Sorrentino – Sorrentino Metals

Okay.

Phil Baker

So by 2016, you are at that 4-5 million ounces.

Anthony Sorrentino – Sorrentino Metals

And you are at about 3 million ounces now, and you said you are going to do what you can to make sure that existing production would not be impacted by loss of efficiency and productivity.

Phil Baker

Yes, and I think we’ve got a great handle on that, Mike and George and their people, you know, have been working with having the two activities happening concurrently for the most part of, almost all of this year. So we really do have things working well. So I am not anticipating either production being interrupted or shaft development being delayed as people get in the way of one another. We are avoiding that.

Anthony Sorrentino – Sorrentino Metals

Okay, very good. And with regard to exploration, would you expect to significantly add to your resources at Greens Creek and Lucky Friday, based on year-to-date exploration results?

Phil Baker

You know, I’d let Dean make a few comments, but certainly at the Lucky Friday, we have seen a substantial increase in the resource over the course of the last three years, and drilling tends to come in, or increases in resources tend to come in big chunks at really both operations, these underground operations that you tend to have step up drilling and then in-fill and grow the resource and reserves that way. And it takes a bit of time to develop drill stations to get there. So, Dean, do you want to add anything.

Dean McDonald

Yes, Anthony, just, you know, the quick answer is yes I would anticipate growth in the resources both at Greens Creek and Lucky Friday. We are in the process, you know, some of the assays that you may have seen in the press release are just coming in the door and there’s quite a few more assays yet that we anticipate to be, you know, show good strong mineralization. So, the reality is that that we are going to be modeling new resources probably till the end of the year. And so, you know, I can’t give you any sense of magnitude of the resource additions but, you know, I am certainly very confident that we will have some good high grade resources added.

Operator

And your next question comes from the line of John Bridges from J.P. Morgan, please proceed.

John Bridges – J.P. Morgan

All right. May be I am demonstrating my accounting deficits here. But I wonder if you could sort of walk us through the big production and big prices that you reported this quarter presumably you have been pulling down pipeline material?

Phil Baker

I am not sure.

Dean McDonald

If you look at the key factors for us in terms of pulling down pipeline factors in our 10-Q and also our press release, we’ve got it. And you can see that we did have a little bit of an inventory shift during the quarter. I think we had about 2.8 million ounces of silver sales versus the production of 2.7. But other than that, this is just normal inventory fluctuations.

John Bridges – J.P. Morgan

But your production in the concentrates than normally you would only sell about (inaudible) something centered [ph] that.

Dean McDonald

It’s just depending on the lumpy shipments as they go out of the Greens Creek. 2.8 million ounces of sales versus 2.7 million ounces of production is a pretty normal number and I don’t have it in front of me, I think it was last quarter, it was just the opposite by 100,000 or 200,000 ounces.

John Bridges – J.P. Morgan

The price of silver you have got was significantly above the average for the quarter.

Dean McDonald

Again, it dependent upon the lumpy shipments out of Greens Creek, number one. And number two, it’s also based on the fact that while we hedge provisional sales of lead and zinc, we do not hedge the precious metals. And during the quarter we had just over $6 million of adjustments to previous provisional sales for precious metals. So that adds to the realized price for the quarter.

John Bridges – J.P. Morgan

Okay, that’s helpful. And then, perhaps the shipments were skewed towards the end of the period when the prices were high?

Phil Baker

That’s correct.

John Bridges – J.P. Morgan

And Dean was talking about sun line [ph] and finding (inaudible) in those veins. Those are manganese mineral, isn’t it?

Dean McDonald

It is.

John Bridges – J.P. Morgan

That does create issues with respect to penalties on a concentrate?

Phil Baker

We haven’t got to that point yet. We are still waiting for assays.

John Bridges – J.P. Morgan

Sorry, I look forward to the answers next quarter then maybe.

Phil Baker

(Inaudible) developing the – no, okay.

Operator

And your next question comes from the line of (Inaudible).

Unidentified Analyst

On page 22, you sort of outlined your M&A approach. But could you maybe expand on that a little bit? You said precious metals. Would you venture into gold or you want to stick pretty much with silver. And how far would you go, you mentioned the Americas, I assume that’s north and south. Would you go to Turkey or – could you put a little more meat on the bones here?

Phil Baker

We have always had gold exposure and I expect we always will when we look at opportunities that can use our underground mining expertise. We see a number of gold opportunities and we see those in Canada and the US and to a degree in Mexico. So for gold opportunities, we consider underground opportunities in those jurisdictions. With respect to silver, we are looking at things in North and South America, Central America. We are not looking at things otherwise.

Unidentified Analyst

And at what stage would you want something that’s close to production or in production or exploration stage, what’s sort of your ideal target?

Phil Baker

We are spending $20 million on exploration on our four properties, which we think and we have four district size properties, pretty unusual for a company our size to have as extensive of land packages in the sort of geologic environments that they are in. So when we look at opportunities they are later stage, we are not engaging really in early stage exploration.

Operator

(Operator Instructions) And your next question comes from the line of Chris Lichtenheldt from UBS.

Chris Lichtenheldt – UBS

I think my question was largely answered but I just wanted to double check on the – you had 6.1 million positive pricing adjustments in the quarter that went through your revenue. So that would have been pretty much all related to silver. Is that right?

Phil Baker

Silver and gold, both.

Chris Lichtenheldt – UBS

Silver and gold, right, okay. Then just a couple of questions with the Lucky Friday expansion. The $15 million that you guys said you will spend by the end of 2010, how much of that are being spent in 2010? Do you know?

Phil Baker

Do you have that forecast in there?

Chris Lichtenheldt – UBS

I guess I am just trying to get – figure out how much the CapEx might look like in the fourth quarter on that?

Phil Baker

Mike or George, I guess, Mike, do you remember what your capital was for the fourth quarter?

Mike Dexter

Yes, in the year had $57.1 million and 4Q is about $19 million, and four shaft is about $14 million of that number.

Chris Lichtenheldt – UBS

In the press release, you have talked about the expectation for the cash cost to be under $4 for the first year. Can you just let me know what (inaudible) you are assuming in that?

Phil Baker

That’s the $0.80 lead and zinc.

Chris Lichtenheldt – UBS

Actually, last one follow-up, on the M&A discussion, you mentioned gold potentially in Canada, US, and then for silver, you are looking right through South America. Is there any particular reason why you are not considering gold outside of North America, but you are for silver assets?

Phil Baker

You know, it’s primarily the opportunities that we see for gold in those jurisdictions that would be attractive to us. You know, they are available. They exist in those jurisdictions. And to the extent that we are going further field and taking on additional risks, we would prefer to do that on silver assets.

Chris Lichtenheldt – UBS

Okay. That’s helpful. Thanks a lot.

Phil Baker

Sure, thing.

Operator

Ladies and gentlemen, at this time, we conclude the question-and-answer portion of today’s call. I would like to turn the call over to Mr. Baker, the President and CEO for closing remarks. Please go ahead, Mr. Baker.

Phil Baker

Thanks for joining us on the call and if you have any questions, feel free to give Melanie a call. Thank you.

Operator

Ladies and gentlemen, that concludes today’s presentation. Thank you for your participation in today’s call. You may now disconnect. Have a great day.

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THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY’S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY’S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY’S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

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Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

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