"You had a great year"

COEUR d'ALENE - Hecla Mining Co. just had the best year in its history, leaving some shareholders to wonder why the stock has not done better. Among them is former chief executive officer and board chairman Art Brown, who posed the question to current president and chief executive officer Phillips S. Baker Jr. on Friday at the company's annual meeting of shareholders at the Kroc Center.

"You had a great year, with production at a record, and prices at a historic high," Brown said. "So why is the stock $5?" Hecla has been through some tough times in its recent history, Baker told about 100 who turned out for the meeting. But in the last year the 120-year-old company managed a drastic turnaround after falling $360 million in debt with the acquisition of what is now its most promising property, the Greens Creek unit in Juneau, Alaska.

"When we acquired Greens Creek, it was bad timing," Baker said. "We ended up on the wrong side of the financial market. "That deal closed only days before Lehman Bros. collapsed in the early stages of the Wall Street meltdown.

But low-cost production of silver, zinc, lead and gold, along with high prices and demand for the metals, have taken the company out of debt, with $116 million in cash reserves, Baker said. "Except for one area of Mexico, we are the most prolific silver producer in the world," he said in a video shown to the group. "We are now in a position we have never been in before."

That, he said, was the reason for the title of the presentation, "Undaunted, Undeterred, Poised for Growth in 2010." The Greens Creek acquisition is the primary reason for the turnaround, Baker said. Its probable reserves of 8.3 tons of minerals will likely see the company continuing to operate as the lowest cost producer, and the largest silver producer in the U.S. with nearly 30 percent of all silver mined in the country, Baker said.

In 2009, it produced 7.5 million ounces of silver, making it the sixth largest silver mine in the world. That year a total of 10.9

million ounces of silver at an average cost of $1.91 per ounce was taken from the company's mines. But the Lucky Friday Mine in Mullan, in operation since 1942, is expected to continue to provide low-cost reserves through 2028.

Drilling deeper and further than ever into Hecla's Silver Valley mining holdings, and watching the positive results, has been a very satisfying experience, Baker said. "Lucky Friday is getting better," he said. "It has survived all kind of different price environments."

Brown and Baker agree there are external reasons for the stock price. "You can talk all you want about growth," he said after the meeting. "There is some underlying reason."

He believes a more realistic price for Hecla stock is $15 to $20 per share, in keeping with historical share prices that closely matched the price of silver, which closed Friday at $17.631 per troy ounce on the New York Mercantile Exchange."Everybody is concerned about precious metals, and what could happen on the world scene," Brown said.

Baker believes the stock will gain value as the company is recognized for its position in the market. "There was some downward momentum that is behind us," he said. "If prices fall our costs are better than most competitors."

He attributes much of the success of Hecla to its "family" of managers and employees. Among them is Linda Debo of Coeur d'Alene, retiring at the end of May after 23 years with the company as an executive assistant under several managers, including Brown, whom she worked with for 15 years, and Baker. "He (Brown) stole you from me," said Ralph Noyes, former vice president of metal mining.

In 2009, Hecla recorded a net income of $54.2 million, and $21.8 million in the first quarter of 2010. Seeing the company doing well had Debo smiling and joking with her old bosses after the meeting. "It feels great, but scary," she said. But leaving with the company in such good shape "is a high note."

Some stockholders wondered when the company will begin paying dividends on its common stock, and Baker said that will happen when there is enough stability to make the payment a regular occurrence. Others were pleased with the company's turnaround.

Daniel Mann, who now lives in Seattle, is a former Coeur d'Alene forest ranger who comes from four generations of mining, and his grandfather was the former owner of Day Mines, acquired by Hecla in 1981. "To do what they did is impressive," he said.