Hecla Mining Co (HL) 2013 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first-quarter 2013 Hecla Mining Company earnings conference call. My name is Chantillay and I will be your facilitator for today's call.

At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference (Operator Instructions). I would now like to turn the conference 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 first-quarter 2013 financial and operations results conference call. Our news release was issued this morning before market open and 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 Vice President, Operations; and Dean McDonald, Vice President, Exploration.

Any forward-looking statements made today by the management team come under the Private Securities Litigation Reform Act as shown on slide two. Such statements include projections and goals which are likely to involve risks detailed in our Form 10-K, Form 10-Q, and in the forward-looking disclaimer included in the earnings release and at the beginning of the presentation. These risks could cause results to differ from those projected in the forward-looking statements.

In addition, in our filings with the SEC we are only allowed to disclose mineral deposits that we can economically and legally extract or produce. Investors are cautioned about our use of terms such as measured, indicated, and inferred resources, and we urge you to consider the disclosures that we make in our SEC filings.

With that, I will pass the call to Phil Baker.

Thanks. Hello, everyone. Glad you could join us. I will be starting on slide three.

Since January 2013, Hecla has accomplished some of the most transformational and growth-oriented initiatives in its history, setting the stage for growing gold and silver production, robust cash flow, new reserves, and organic growth into the future. We have successfully restarted the Lucky Friday in February after a year of rehabilitating and upgrading the silver shaft and underground workings. The startup of operations and production has largely proceeded as planned.

While the number of ounces produced in the quarter at Lucky Friday was limited, we continue to ramp up operations and expect to meet our target of 2 million ounces of silver production this year. Next year we expect to produce approximately 3 million ounces of silver at the mine.

Also as expected, costs were higher at Lucky Friday due to the number of ounces produced at this early stage of the startup, which skewed our overall cash costs higher in the quarter. We expect these costs will come down as production continues to ramp up during the year to normal operating levels.

Greens Creek had a solid first quarter, producing 34% more silver than the first quarter a year ago. Cash costs at Greens Creek were higher due to lower base metals production relative to much higher silver production, which generated less byproduct credits. Even with silver prices lower than last year by some 27%, we still had very strong margins at the mine. Greens Creek remains one of the lowest cost and largest primary silver mines in the world.

As you know, in the first quarter we initiated the acquisition of Aurizon Mines Limited, whose principal asset is Casa Berardi gold mine in Quebec. Yesterday, shareholders of Aurizon approved the transaction in a special meeting, and so we expect this transaction to close in the coming weeks. Aurizon is projected to produce between 125,000 and 130,000 ounces of gold this year at a cash cost of approximately $810 an ounce.

I will have more to say about this acquisition which transforms Hecla, but suffice it to say that the combination of these new assets with our existing operations will further build on Hecla's foundation of low-cost, long-life precious metals assets. Our exploration and predevelopment programs in Mexico and Colorado continue to advance in the first quarter, and we further extended mineralization at Greens Creek and San Sebastian in Mexico.

These are discretionary expenses. There are a lot of strong intersections listed in the first-quarter press release, and I will highlight some of them from Greens Creek, taken from the newly discovered Deep Southwest, which returned 27.1 ounces per ton silver, 0.39 ounces per ton gold, 13% zinc, and 6.1% lead over 8.6 feet.

Deep Southwest is a zone below and further west of the Southwest zone. The geometry of this body is currently being defined. It's open down dip along strike to the Southwest. We are very encouraged that we continue to find extensions to existing ore bodies and discovering new zones at Greens Creek.

Finally, subsequent to the first quarter, but important to mention is the successful completion in April of a $500 million notes offering which was increased from $400 million during the quarter, or during the offering, and underscores the market's confidence that only in the merits of the Aurizon acquisition but also in Hecla's diverse North American asset base. As a result of these transactions, Hecla's balance sheet is getting stronger and we expect to have more than $300 million in cash in the treasury at the close of the acquisition, which should give us the financial power to continue to grow both through acquisitions as well as our organic growth projects.

During the quarter we generated adjusted EBITDA of $33 million and anticipate that Lucky Friday --- that with Lucky Friday in full production and having Aurizon's Casa Berardi mine, we will add to this number significantly going forward. This is an important number in our business because in times of price volatility and uncertainty we believe companies like Hecla, with low-cost, high margins, and flexibility to scale back our increased discretionary expenses as required, such as exploration, predevelopment, our capital, will fare the best. And Jim is going to talk about that more in a minute.

Now going to slide four, this demonstrates graphically the new combination of assets, cash flow generation, and risk diversification created by the Aurizon acquisition.

So why did we do the Aurizon deal? We have a 122-year history as a silver miner and a 30-year history as a gold miner, and Casa Berardi is an asset we have followed since 2006. We like how it complements our core competency of a high-value, low tonnage underground miner.

About a month ago our team visited the Casa Berardi mine in Quebec, and as we thought, they are just like us. They are professional minors. We don't believe that this is an asset that's broken or one that needs significant changes, but rather it's a solid performing asset with a skilled group of professionals operating it.

And Casa Berardi is accretive on just about any measure. We believe that once it gets back into full production next year it will produce approximately 150,000 ounces of gold with about a 50% cash margin, and we think it will do that for more than a decade. We believe that we will get a return of our equity investment within a few years.

And the mine is expected to generate substantially higher returns once you take into account the after-tax cost of our 6 7/8% bonds. We think there's more to discover at Casa and potentially opportunities with Aurizon's other assets as well.

Despite announcing a change in mining taxation in Quebec, it is a very good jurisdiction to operate in. Our early assessment of the change in the mining taxation is that it will not be a material change to our taxation at current prices. It will mean a small increase in our tax burden, but we don't believe it's going to be debilitating to the mine or to our returns.

With completion of the acquisition, Hecla will have two producing silver and gold mines in mining-friendly jurisdictions. These are all long-lived assets with mine lives of 10 years or more.

Our annual gold production is expected to increase as a result of the deal to approximately 180,000 to 200,000 ounces annually. Importantly, each mine also has strong organic growth potential, which, when combined with our predevelopment projects, gives us confidence of our goal of 15 million ounces of silver production by 2017.

Our silver mines are low cost and Casa Berardi is a medium-cost gold mine, and all three mines are expected to generate robust free cash flow in the coming years. The capital that we expect to invest in developing new production is manageable and sustaining capital at the three mines is anticipated to be about $100 million a year.

Importantly for investors, this furthers the North American low risk profile and offers downside revenue production with our base metals hedging policy.

On slide five, which is a comparative chart showing how favorably the Hecla notes offering compares to recent other offerings in the precious metal space, feedback from the bond market was quite positive and our offering was completed at that 6 7/8%, which was at the low end of our coupon range expectations. So during the course of the offering we upsized it to $500 million, $100 million more than we initially planned to do. The details of their offering compares favorably to these other bond offerings.

And this bond offering replaces the previously contracted bank debt. It gives us eight-year money, which more closely matches the life of the asset, and it eliminates the requirement to hedge our gold production.

With that, I will turn the call over to Jim.

Thank you, Phil. During the first quarter, total revenues were $76.5 million, which were about 16% lower than the previous year's first quarter, due to lower metals prices and, importantly, to the timing of shipments. The revenue breakout by metal and by mine is shown on slide seven, which approximates 72% attributable to precious metals.

As mentioned, the reduction was also the result of approximately $30.5 million of revenue being shifted into the second quarter due to the timing of a barge shipment from the Greens Creek mine. Consolidated silver production was 1.9 million ounces of silver with 1.8 million ounces coming from Greens Creek, which was 34% higher than the previous year's first quarter.

At Lucky Friday, where startup began in February, first-quarter silver production totaled 120,000 ounces. We believe that we are still on track to produce more than 2 million ounces of silver at the Lucky Friday and between 8 million and 9 million ounces of silver companywide during 2013.

As you can see on slide 8, silver and gold prices were down about 27% and 8%, respectively, from the first quarter last year with zinc down 2%. And while lead prices increased about 7% from a year earlier period. Subsequent to the end of the quarter, silver, gold, lead, and zinc prices have fallen substantially. However, remember we have a policy of hedging some of our base metals price exposure to soften the blow of their price fluctuations.

Even with the decline in metals prices and the higher-than-normal costs from the start up of Lucky Friday, our cash margins remain very strong. As shown on slide nine, our margins on a consolidated basis were an excellent $21.84 per ounce of silver, or 76%, based on the average silver price of $28.86 per ounce during the quarter. Over the last six years, we have seen our cash margins vary from 71% to 120%, an important factor when you consider today's volatile metals market. More on that later.

Cash costs on a consolidated basis were $7.02 per ounce. This was higher due largely to the startup of Lucky Friday. At Greens Creek, operating costs averaged $5.02 per ounce, impacted by higher mining and milling costs per ton resulting mostly from the use of diesel power generation instead of hydroelectric power, but mostly by lower byproduct credits as a result of lower byproduct production and lower zinc and gold prices.

We are anticipating operating costs at both properties to be lower going forward this year, especially as Lucky Friday ramps up production through the first half, as average consolidated cash costs estimated to be approximately $5 per ounce for the full year. However, we will need to see base metals prices return to higher levels in order to achieve this $5 cash cost target.

We have generated $11 million of operating cash flow during the quarter as shown on slide 10. However, it's worth noting again that approximately $30 million of revenue and $12 million in gross profit has been shifted into the second quarter due to the timing of the barge shipment. The shipment, had it occurred in March as anticipated, would have significantly impacted gross profit and cash flow.

Lower metals prices were the principal impact during the period and current metals prices with production increasing at Lucky Friday and operating costs improving, we would expect to see improvement in operating cash flow as well.

Net income and earnings per share were comparable from the previous year's first quarter. This year's first quarter includes exploration and predevelopment expenses that are 26% higher than last year's period as we accelerate the search for additional resources and advance our predevelopment properties in Colorado and Mexico toward our goal of increasing production to 15 million ounces by 2017.

Hecla's balance sheet remains strong with $160 million in cash on March 31 as shown on slide 12. This does not reflect the $500 million notes offering in April or the cash that will be brought over from Aurizon upon closing the transaction.

On slide 13, you can see that during the quarter we generated adjusted EBITDA of $33 million. During the quarter we invested $4.8 million of predevelopment, $5.3 million on Aurizon acquisition costs, and $6.5 million for exploration spending. I highlight this because several of these expenses are nonrecurring and because the exploration of predevelopment spending is completely discretionary, so during times of weakness in core metals prices, we can scale this back as required.

To date, we have reduced our expected spending on exploration and predevelopment by $9 million relative to original budgets. And another area of flexibility we have is capital expenditures. We have reduced our expected capital expenditures for 2013 by $7 million to $145 million, which is approximately equally divided between Greens Creek and Lucky Friday. We are closely monitoring metals prices and we will take additional steps if we deem it necessary.

We expect our cash flow generation and cash on hand will allow us to continue our growth, both through acquisitions as well as through our organic growth projects. And with that I would like to turn the call over to Larry now for a review of operations during the fourth quarter. Larry?

Thanks, Jim. Going to slide 15, on the operating side we are pleased to report that operations and production have resumed at the Lucky Friday mine as planned and with all the needed clearances from MSHA.

In February, Lucky Friday recommenced production upon completion of the 6,100-foot silver shaft restoration project, the main haulage way at the mine. In the first quarter, a total of 120,000 ounces of silver was produced during approximately six weeks of production. Cash costs were $36.55 per ounce as a result of the higher costs associated with restarting an operation and batch processing of limited amounts of ore.

We anticipate a ramp up in mine output during the first half of the year as additional production areas come online with a return to full production levels expected in mid-2013. We are still targeting full-year production of more than 2 million ounces of silver. Next year we expect to produce 3 million ounces of silver during a full year of normal operations.

Going to slide 16, two of seven production areas have restarted and the 5900 bypass was completed during the first quarter. You can see on slide 16 the extent of the work conducted to date in green and what remains to be done to open up the rest of the stopes in red.

We also resumed sinking of the #4 Shaft in 2013 and it is now 47% complete. This $200 million project is an internal shaft at the Lucky Friday mine and is expected to provide deeper access to higher-grade material in order to extend the mine's operational life and to increase silver production to 5 million ounces per year.

Going to slide 17. Operations are going well at Greens Creek. Silver production was 1.8 million ounces in the first quarter, which was 34% higher than the 1.3 million ounces in the same period in 2012. The increase in silver production year-over-year was due primarily to 20% higher tonnage and 15% higher grades compared to last year.

Mining and milling costs per ton were up by 13% and 16%, respectively, in the first quarter compared to the same period a year ago. The increase in milling costs was primarily due to diesel costs relating to the generation of more power on-site as a result of lower availability of less expensive hydroelectric power, the result of lower precipitation levels in Southeastern Alaska.

Both mining and milling costs were also impacted by an increase in labor costs as a result of higher costs of medical and other benefits and higher salary costs. Higher mining costs were also the result of increased maintenance costs.

The cash cost per ounce of silver increased to $5.02 per ounce compared with $2.24 per ounce in the first quarter of last year, due primarily to lower byproduct credits as a result of lower byproduct production and lower gold and zinc prices. Also during the first quarter, crews finished the deep 200 South development and began rehabilitation of 29 ramp as part of the East Ore project. For both Greens Creek and Lucky Friday, the Company will need to realize higher than current base metal prices in order to reach total consolidated costs of $5 per ounce of silver in our cash cost guidance.

I will now turn over the call to Dean for exploration and predevelopment during the first quarter.

Thanks, Larry. Hecla had a very successful quarter on the exploration front with drill programs that could add or upgrade resources at San Sebastian and Greens Creek. Work at the predevelopment projects includes optimization studies on the Middle Vein and Hugh Zones at San Sebastian and advancement of the decline on the Bulldog vein at the San Juan Silver project.

It has been an active quarter with three drills operating underground at Greens Creek. As shown on slide 19, definition and exploration drillings have been concentrated at the south end of the mine, where the 200 South diverges into a large vertical limb and the sub-horizontal bench that consists of an upper and lower limb. Definition drilling is upgrading the northerly portion of the bench and vertical limb and should provide the confidence to convert much of this high-grade resource into reserves over the next two years.

Exploration drilling continues to extend all of these zones further to the south, as displayed by the blue arrows. Assays from this drilling are expected to come in during the second quarter and through the remainder of 2013.

In addition to recent drilling successes at the 5250 and Gallagher zones, the most significant new discovery is the Deep Southwest zone, as shown in slide 20. Preliminary drilling defines a high-grade west dipping zone that is below the Southwest zones and northwest of the 200 South reserve. This [barritic] mineralization is very high in precious metals, with gold and silver assays up to 0.4 ounces per ton and 27.1 ounces per ton, respectively. A more complete summary of assay intersections is provided in tables at the end of the quarterly release.

The longitudinal section of the Middle Vein at San Sebastian in slide 21 shows a continuous vein that is defined for over 6,000 feet along strike and from surface to over 1,000 feet depth. The contours defining silver equivalent by thickness show a near-surface high-grade zone of over 2,300 feet of strike length into 1,000 feet depth. The infill drilling program is nearly complete and should provide the confidence to convert the central part of the resource to indicated category that will be used in the upcoming scoping study.

Exploration to the southeast continues to define mineralization and expand the current resource. Drilling in the next quarter will continue on the Middle Vein as well as evaluate targets along strike of the Hugh Zone.

Due to the proximity of the Middle Vein and Hugh Zone, as shown in slide 22, optimization studies will look at a common mining infrastructure for the two zones and how they can integrate with mining of the Andrea Vein, which is 4.5 miles to the south. Preparations have begun on dewatering and the rehabilitation of the ramp access to the Middle Vein and deeper Hugh Zone. Preliminary ramp designs, as shown in slide 22, will build off pre-existing ramps from when San Sebastian was in production from 2001 to 2005.

Metallurgical test work and studies will determine the ore characteristics and select the appropriate processing methods and mill design. Hydrological and geotechnical studies are now in progress to determine the mine rate and sequencing to optimize the exploitation of these veins.

As shown in slide 23, the development of the ramp into the Bulldog underground infrastructure is now advanced over 1,300 feet of the projected 2,800 feet and is expected to be completed in the fourth quarter of this year. Once this access is established, underground sampling and drilling are expected to commence in an effort to confirm the resource and provide platforms to expand these resources. The refinement of scoping studies and economic models continues with the preliminary economic study in progress.

With that, I will pass the call back to Phil for some closing comments.

Thanks, Dean. Let's go to slide 25; just a few final comments on what we think is creating the new Hecla.

We've got the Lucky Friday coming back into production, and with that, the deepening of the #4 Shaft to allow us to access new, higher-grade material. We will continue to have that cash flow engine from Greens Creek. And with the acquisition of Aurizon, we now have a more diversified North American precious metals producer with these operations in these very mining-friendly jurisdictions.

We now have three operations plus these predevelopment projects that fit our expertise as an underground miner. We have got a lot of focused expertise on shafts and we will be doing that work both at the Lucky Friday and at Casa Berardi.

Going to slide 26, in conclusion, we think that Hecla Mining Company is really a unique investment vehicle in the precious metals space. All of our assets are high quality, long-lived, low political risk jurisdictions, and they will generate a substantial amount of cash flow. This allows the investor an even more secure risk profile with a very strong and experienced management team delivering multiple secure revenue streams.

And, finally, a theme that we consistently hear in the mining industry is the need to generate real returns that can be realized by shareholders. We believe the Aurizon acquisition is exactly what the market has been asking for. It is an acquisition of an operating asset with the ability to fund its own capital requirements. In fact, we expect, even in 2013, to have free cash flow from Casa Berardi.

In 2014 we expect that it will continue to generate returns that's going to exceed the cost of the debt, and, depending on prices, we will see it exceed the cost of equity capital. So it's going to help us enhance Hecla's ability to grow and deliver future returns to shareholders and returns that will include dividends. So we look forward to reporting the news of the new consolidated company, beginning in the second quarter when the Aurizon transaction is complete.

With that, I would like to open the line for questions, operator.

Jeffrey Wright, Global Hunter Securities.

Good morning, Phil. Thanks for taking my question. Couple quick ones; I just wasn't fast enough with my pen. What was the specific number of concentrate sales that was moved into the second quarter?

It was $30.5 million, Jeff.

$30.5 million. Okay, got it. Secondly, looking at Casa, I know you guys are targeting the 50% margin. What would you base --- what gold price are you basing that off of and does that include sustaining CapEx?

No, that's just the cash cost of production, and sustaining capital at Casa Berardi we think is order of magnitude about $30 million. And that's --- today, this year cash costs are around $800 an ounce. Next year we expect cash costs to be around $700 an ounce going forward, so that's off of a $1,400, $1,500 gold price.

Okay. Looking at Aurizon, pre-acquisition they had a fairly robust exploration program. Not only at Casa, but at the other projects. Are we to assume that you have curtailed or halted the exploration outside Casa with that basket of projects?

We haven't acquired it yet. It hasn't closed, so we haven't done anything, but what we have said is that we will evaluate those other projects. We will let our budgeting process sort of determine our long-term requirements and how we should be set up and what it is we should be doing.

With respect to some of these joint venture arrangements, we are starting to engage those joint venture partners, or we will start to engage those guys at closing, and determine how we proceed with them. We do not have a definite plan at this point, but we are --- we will be very engaged on that and making decisions quite quickly.

Final question on Greens Creek. Obviously, the costs were up due to lack of hydro availability. Has that hydro come back in the second quarter or --? What's your thoughts on that?

We have been back on Hydro in the month of May, but it's a pretty pessimistic outlook for the rest of the year. We are thinking that we will get another two or three months in the balance of the year. But it's, obviously, completely dependent on the weather.

Correct. So, conservatively, we should probably model higher electricity costs?

Correct, correct.

Got it. Thanks, I will jump back in the queue.

Ron Mayers, Laurentian Securities.

Turn to the Aurizon transaction for a moment, as you stated in your press release this morning, the final condition appears to be approval of Investment Canada. According to the circular, AcquireCo filed that on March 22, which would mean the original 45-day initial review period has expired, and we are now into the additional 30-day election period which Investment Canada is permitted to take.

My question is have you been in contact with Investment Canada? Do you have any sense of when approval may be forthcoming? Number one. Number two, have there been any additional requests for information or documentation since the expiry of the 30-day period? Have they communicated with you at all?

Look, there has been an ongoing interaction with the staff of Investment Canada. And we cannot predict when it will be completed other than it will be prior to June 5.

It will be prior to June 5. Okay, I understand that because that because (multiple speakers)

So that's all I am able to tell you. It's --- there's interaction between us and them and they will sign it when they are ready to sign it.

Is there any indication that they are not inclined to approve the transaction? Is there any hesitance on their part or are they just [looking for] greater assurance?

It is a process that they go through and it takes the time that a bureaucracy will take, but there is no reason to think that this will not be approved. This is -- if you think about other decisions Investment Canada has made, this is a pretty easy one. This is not a strategic asset to the country and we certainly are continuing to go forward with the plans that Aurizon had laid out. So this will --- our expectation is this will be approved.

Is there any reason to expect that approval before next Friday, before the trigger date for re-election?

I have no ability to guess when they will approve it.

Thank you.

Jorge Beristain, Deutsche Bank.

Good morning, Phil. My question is more about the recent change or proposed change in Quebec mining taxation. You had said that this does not really impact the project returns, but I'm just trying to understand is that because we are now to a lower gold price and this would more kick in at higher gold prices?

Could you just talk about what you think is really the dollar value impact that this tax change could bring about in terms of annual, for example, lost EBITDA?

I will let Jim answer, but realize that it's not finalized. You don't have all the details, so there is devil in the details and we will have to see where those things come out. But, generally speaking, at these prices it does not materially change the tax that we will pay. I think it's a couple of percent difference at these prices. Jim?

Yes. When you look at it there is two provisions of the tax. One is a royalty, and that one occurred at lower prices, and the second is profitability tax. Profitability tax steps up in percentage from 16% up to I believe it's 22.5%.

When we take a look, for example, at 2012, which was a pretty good year in the mining business, Casa Berardi would have fallen in that 16% tax rate, which is about where it's at now, and the lower tax, the mining tax would not have applied because the income tax was a higher rate.

Okay. What kind of --- just to pick a number, say at $1,500 gold, what would your effective tax rate be in Quebec and what would the effective royalty be?

Well, the royalty would be zero. It would be the 16% rate. I can't tell you off the top of my head when you cross that threshold to where you drop into the royalty rate.

And the effective tax rate then would be ---?

Overall, for all of the asset, including all the taxes in Canada, it's about 40%.

Got it. You had mentioned during your operational review that at Greens Creek you would need higher than current base metal prices in order --- it sounded like --- to make your current guidance. Could you just provide some more color as to, with current zinc prices where they are at, what would be the potential higher upside to your net cash cost guidance at Greens Creek?

I guess I will answer the question a different way. To achieve that $5 we would expect the lead and zinc prices need to be above about $1.

Okay, thank you.

Tony Christ, Capitol Securities.

Thank you. (technical difficulty) Just a couple quick points. According to my work, we are within 10% of the completion of a silver correction. I am looking for it to maybe touch [19], not quite -- a little bit more in gold, possibly down to [11]. But I think it could occur before the next conference call. And I think if you are not at your computer and blink, you will miss it.

Then I think -- it's a very painful thing for me to say, but on the other hand I think it's going to be one directional after that with every central bank on the globe participating in revaluing us upwardly by devaluing their currencies. So I expect that to occur.

But the thing that is somewhat -- I have a favorite ask. Could you guys show your silver cost by itself and not net of the other things that we are pulling out of the ground, if you don't mind?

Tony, we do. It's in our 10-Q.

Oh, it is. And what is it?

Do you have that in front of you?

Answered another way, the byproduct credit for the last quarter was $25.25 and our cost was $5, so it's about $30.

It's $30, okay. (multiple speakers)

Of course, we can't do that because the material that we produce is amalgamated underground, and no matter what happens, the lead, zinc, and the gold is going to come with the silver.

Okay, I didn't catch that. I didn't know you actually showed it. And I understand your point; I take your point.

The other thing I wanted to bring up is that the average mining company, I think from the high is down 55%. We are down almost 80%, and that in numbers is about $1 to $1.25 to get to the average. And I, in my mind, attributed it to certain things and I don't know how to explain it, but I think we are higher quality. I am just speaking of the gap between us and the average decline in this very stealth correction we have been undergoing for almost countless months.

And I would like to know -- well, first of all, I would like to bring it up. And then, secondly, I'd like to know if we can recapture that or if there's any plan or any movement to recapture it. I have even made some suggestions to you guys in writing as to how it might be done. Most of which centered around with even more diligent information and releases, particularly till all the acquisition is completed and everything is sort of shook out.

I would hope that the Board and you guys could work toward capturing that difference, because I think it would be fair to say that we are of at least equal quality of the average mining company and we shouldn't trade at a discount. There may be reasons we are that I'm not aware of.

Then the last thing I would like to --- and I've been like a broken record recent months on this. I understand we have been in a very extended quiet period. I still haven't seen the memorandum, and don't know if I ever will, for the bond purchase. A lot of information has not been out there, a good chunk of which is coming out now, or at least not available to me.

If in fact --- and this is unusual for the Board, but I can tell you -- and this is an unrelated industry -- when the tenant healthcare board equity was trading at $3 -- it's now $40-some; it's a similar company, incidentally, in the healthcare field -- and the Chairman and the Board bought stock when their window opened -- and I make the point now we are finally getting out of extended quiet periods, I think; your lawyers will know better than me -- it started a fresh outlook and a fresh stock -- a fresh approach for that stock.

Now they also had fundamentals going with them and they also had a 4-for-1 reverse split, but the stock is $50 today, which is 300% to 400% higher, and that occurred about 18 months ago.

Tony, let me stop you there. Why don't you jump off the line and I will answer your questions and make a couple of comments. Then we can let (multiple speakers)

Thank you, I'm done.

With respect to --- I think the essence of Tony's questions and comments are with respect to the information that we will put out and what's available. Everything that is material we have disclosed in our Q and press release, so there is nothing else out there.

I think the key thing is the execution of our plans, particularly the restart of the Lucky Friday and the integration of Casa Berardi. We have a laser focus on those things.

I can tell you that our operating management is on-site and underground at all of our operations. And even before the acquisition of Casa Berardi is complete, we have been on-site making sure that we are aware of the things that are going on. So we will continue to do that and we will continue to provide the market with the information that it needs in order for it to make its investment decisions.

I think all of us sitting here in this room, and I think I can speak for the Board, are very excited about where Hecla Mining Company is. We have --- in some cases, we have got people here that have seen this company their whole lives, and I think they can attest to the fact that the Company is in the best position that it's in and that the market is not fairly valuing the Company. It will certainly get out and tell the story, and to the extent people are able to and it fits their requirements, they will, I'm sure, make investments in the Company. But the key thing is for us to execute on our plans and that is what we will be focused on.

Is there another question? Okay. Next question, please.

Steven Butler, Canaccord.

Good morning, guys. Phil, a question for you or Jim on any debt covenants, if you can disclose and maybe there in the 10-Q which we haven't seen yet, but any specific debt covenants applicable to the new debt facility?

Jim, why don't you?

Yes, Steve, there are no maintenance type covenants that you are aware of and then there are just general incurrence covenants. We have baskets which give us the flexibility that need to operate to make additional investments, to make additional acquisitions, to take into account additional debt to the extent that it meets certain parameters. And so the financing that we did, as compared to the initial one that we got committed from the bank group, is much, much more flexible with the longer term and the lack of covenants that can trip us up. And that's the reason we went for it.

Okay. So no typical sort of interest coverage ratios and the like?

No.

Okay. Phil, if you close or, excuse me, if you get Investment Canada review by June 5 or before, let's say June 5, what might be your earliest possible effective closing date from which point I assume you would then start the clock ticking on accumulating production from Aurizon?

It's almost immediate, the closing. So I don't know if it's --- I don't know if the fifth is a -- the fifth is a Wednesday, so conceivably it would be the sixth.

Okay, okay. That's it. Thanks, guys.

Daniel Drum, GHK Capital.

Congratulations on completion of the acquisition, the Aurizon. That is just great news and I think it's great long-term for the Company. Just one quick question; I believe you said $300 million in cash pro forma as of closing.

Yes, roughly speaking, you put the two companies together and we will have $300-million-ish in cash.

Okay, and we've got pretty loose debt covenants, which is a positive. So where are we on the buyback in the quarter? I believe we had about $300,000 done as of the end of the year.

Look, we have -- at various times when we have had the ability to buy shares back, we have done that. There's certainly, like Jim mentioned, there's occurrence covenants that limit the ability to do certain levels of buybacks. But as I have said a moment ago, the thing that we are focused on is getting the Lucky Friday, getting up and running completely, and getting Casa Berardi integrated into Hecla. That's where we think we generate the most value for shareholders and so that will continue to be our focus.

Any heads up on the number through 1Q on the buyback thus far, or no?

We were, for all intents and purposes, blacked out.

Okay, thanks.

Jorge Beristain, Deutsche Bank.

Just to circle back, we've talked about the potential accretion of Casa Berardi, but I just wanted to understand from an SG&A point of view what kind of corporate overhead Aurizon has and if there would be any potential savings in merging that company with yours.

Sure, Jorge. The office they have in Vancouver will be closed July 31. There will be a handful of people that will continue on with Hecla. We are in that process right now of talking to people with what our plans are, so you will eliminate that Vancouver-based capital or expenditures.

In Quebec, the infrastructure that they have in place we're, at this point, keeping in place. We will go through our budgeting process and see if there is a change going forward, but we are not anticipating any changes in 2013.

And so, roughly, how much is the dollar value of their corporate overhead now and what do you think you could say about that?

It's about $2 million to get saved as a result of closing the Vancouver office.

And what is their aggregate corporate overhead right now, SG&A?

It runs about $20-million-ish, if I recall.

Thank you.

At this time, there are no further questions in queue and I would like to turn the conference back over to Mr. Phil Baker for closing remarks. Please proceed, sir.

Thanks very much for being on the call. We look forward to the completion of this quarter with the acquisition of Aurizon just about in hand. So thank you and feel free to give Mike or me a call if you have any further questions. Thanks a lot. Goodbye.

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