Hecla Mining Company · NYSE:HL
Hecla Mining — Q2 2022 Earnings Presentation
30 slides from Hecla Mining's earnings presentation, Aug 4, 2022
Slide 1: Second Quarter 2022 Earnings Conference Call
SECOND QUARTER 2022 Earnings Conference Call August 4, 2022 RESPONSIBLE. SAFE. INNOVATIVE. NYSE: HL
Slide 2: Cautionary Statements
CAUTIONARY STATEMENTS Cautionary Statement Regarding Forward Looking Statements This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended
Slide 3: Cautionary Statements (cont'd)
CAUTIONARY STATEMENTS (cont’d) Cautionary Note Regarding Reserves and Resources This presentation uses the terms “mineral resources,” “measured mineral resources,” “indicated mineral resources” and “inferred mineral resources.” Mineral resources that are not mineral reserves do not have demonstrated
Slide 4: Positioned for Industry Leading Growth
POSITIONED FOR INDUSTRY LEADING GROWTH Alexco acquisition, Lucky Friday & Greens Creek growth paves the way for 17-20 Moz silver production • Strong production and cost performance with Strong Lucky Friday achieving record throughput Operational • Production guidance affirmed and Financial • Silver
Slide 5: Financial Review
Financial Review NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 5
Slide 6: Financial Strength and Flexibility
FINANCIAL STRENGTH AND FLEXIBILITY Balance sheet fortified by free cash flow generation • Revenues of $191.2 million, +3% over prior quarter • Cash flow from operations $40.2 million, free cash flow of $5.9 million (2) • Cash and equivalents of $198.2 million, liquidity of $335 million* • Net levera
Slide 7: Continued Free Cash Flow Generation
CONTINUED FREE CASH FLOW GENERATION Low-cost silver mines generate margins even at low silver prices • Margin generation from silver mines even at low silver assets due to high grade; strong operational performance offsets inflationary impacts • 9th consecutive quarter of free cash flow generation,
Slide 8: Cost Inflation Tied to Labor and Consumables
COST INFLATION TIED TO LABOR AND CONSUMABLES Increases in key input price assumptions has outpaced guidance assumptions • Included 5% inflation assumption when setting guidance, Year to date, key inputs like diesel, ground support, cyanide have increased more than 15% • Increase in contractors and w
Slide 9: Operations Review
Operations Review NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 9
Slide 10: Greens Creek: Consistent Performance
GREENS CREEK: CONSISTENT PERFORMANCE Strong free cash flow generation supported by steady production and stable costs • Strong production performance due to higher grades • Strong cost performance on a per silver ounce basis as high by-product credits continue to offset inflationary pressures • Prod
Slide 11: Lucky Friday: On Track to Be 5 Moz/Yr Producer
LUCKY FRIDAY: ON TRACK TO BE 5 Moz/YR PRODUCER Record throughput, continuous improvements from UCB method drive cash flow • Record mill throughput, record mined tons achieved in Q2, 38% increase in silver production over Q1, AISC lower by 25% • Investor day hosted to highlight the achievements and f
Slide 12: Casa Berardi: Stable Production, Cost Focus
CASA BERARDI: STABLE PRODUCTION, COST FOCUS Production supported by strong mill performance; Costs prone to inflationary pressures • Steady mill performance, gold production increased 10% over Q1, AISC declined by 9.3% • Inflationary pressures relatively higher due to volume moved and processed; fur
Slide 13: Setting Up Bermingham for Consistent Performance
SETTING UP BERMINGHAM FOR CONSISTENT PERFORMANCE Focus on development & drilling the 8 million oz Bear zone ‘22/’23 Expected Focus: 800m to 1,200m of development 3,000m to 4,000m of infill & definition drilling (~8M Ag oz) Arctic Zone NE Zone Bear Zone Bermingham Deep 2021 Reserves Infill & definiti
Slide 14: Smaller Flame & Moth to Supplement Bermingham
SMALLER FLAME & MOTH TO SUPPLEMENT BERMINGHAM Development and drilling will focus on the 2 million oz upper lightning zone ‘22/’23 Expected Focus: 500m to 600m of development 600m to 700m of infill & definition drilling (~2M Ag oz) Christal Zone Lightning Zone 2021 Reserves Infill & definition (15.6
Slide 15: Guidance: Production & Silver Costs Affirmed
GUIDANCE: PRODUCTION & SILVER COSTS AFFIRMED High silver margins projected despite inflation, Capital increase to support Lucky Friday growth Changes in blue Silver Production Gold Production Silver Equivalent Consolidated Production Outlook * (Moz) (Koz) (Moz)8 Gold Equivalent (Koz)8 2022 Total 12.
Slide 16: Appendix
Appendix NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 16
Slide 17: Endnotes
ENDNOTES 1. Net debt to adjusted EBITDA is a non-GAAP measurement, a reconciliation of adjusted EBITDA and net debt to the closest GAAP measurements of net income (loss) and debt can be found in the appendix. It is an important measure for management to measure relative indebtedness and the ability
Slide 18: 2022 Guidance: Production and Costs by Operation
2022 GUIDANCE: PRODUCTION AND COSTS BY OPERATION Changes in blue 2022 Production Outlook Silver Production Gold Production Silver Equivalent Gold Equivalent (Koz)6 (Moz) (Koz) (Moz)6 Greens Creek* 8.6 – 8.9 40 – 43 20.7 – 21.2 268 – 275 Lucky Friday* 4.3 – 4.6 N/A 8.9 – 9.3 116 – 120 Casa Berardi N/
Slide 19: Adjusted EBITDA Reconciliation to GAAP
ADJUSTED EBITDA RECONCILIATION TO GAAP Reconciliation of Net Income (GAAP) to Adjusted EBITDA (non-GAAP) Dollars in thousands (USD) Trailing Twelve Months Q1 2022 Q2 2022 Net (loss) income $ 17,797 $ 4,920 Plus: Interest expense 41,607 41,841 Plus/(Less): Income and mining tax provision (benefit) (2
Slide 20: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP Silver Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ounce (n
Slide 21: Free Cash Flow (Non-GAAP) Reconciliation
FREE CASH FLOW (NON-GAAP) RECONCILIATON Consolidated Reconciliation of Cash provided by operating activities (GAAP) to Free Cash Flow (non-GAAP) in millions Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Cash provided by operating activities $ 37.5 $ 73.4 $ 64.9 $ 37.9 $ 86.
Slide 22: Free Cash Flow (Non-GAAP) Reconciliation
FREE CASH FLOW (NON-GAAP) RECONCILIATON Greens Creek, Lucky Friday, and Casa Berardi Reconciliation of Cash provided by operating activities (GAAP) to Free Cash Flow (non-GAAP) Three Months Ended in thousands Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Greens Creek Cash provided (used) by operat
Slide 23: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP Greens Creek Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ou
Slide 24: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP Lucky Friday Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ou
Slide 25: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP Casa Berardi Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ou
Slide 26: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP 2022 silver and gold estimates Reconciliation of Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non- GAAP) and All-In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Co
Slide 27: Proven & Probable Mineral Reserves
PROVEN & PROBABLE MINERAL RESERVES(1) (On December 31, 2021 unless otherwise noted) Investors are cautioned that Reserves and Resources are as of December 31, 2021, and are dynamic during the year due to mining depletion, changing metal prices, changing costs or project NYSE: HL economics, and new d
Slide 28: Measured and Indicated Mineral Resources
MEASURED AND INDICATED MINERAL RESOURCES (On December 31, 2021 unless otherwise noted) Measured Resources (8) Silver Gold Lead Zinc Copper Silver Gold Lead Zinc Copper Asset Location Ownership Tons (000) (oz/ton) (oz/ton) % % % (000 oz) (000 oz) (Tons) (Tons) Tons Greens Creek (11,12) United States
Slide 29: Inferred Mineral Resources
INFERRED MINERAL RESOURCES (On December 31, 2021 unless otherwise noted) Inferred Resources (10) Silver Gold Lead Zinc Copper Silver Gold Lead Zinc Copper Asset Location Ownership Tons (000) (oz/ton) (oz/ton) % % % (000 oz) (000 oz) (Tons) (Tons) Tons Greens Creek (11,12) United States 100.0% 2,152
Slide 30: Mineral Resources Footnotes
MINERAL RESOURCES FOOTNOTES NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 30