Hecla Mining Company · NYSE:HL
Hecla Mining — European Gold Forum 2018
57 slides from Hecla Mining's conference presentation, Apr 17, 2018
Slide 1: Adding High-Grade Nevada Gold Mines
April, 2018 NYSE:HL Adding High-Grade Nevada Gold Mines The Acquisition of Klondex Mines Ltd.
Slide 2: Cautionary Statements
Cautionary Statements NYSE:HL Cautionary Statement Regarding Forward Looking Statements, Statements made or information provided in this presentation that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and "forward
Slide 3: Cautionary Statements
Cautionary Statements NYSE:HL Additional Information About the Transaction and Where to Find It This material relates to Hecla’s proposed acquisition (the “Transaction”) of Klondex. Shares of Hecla’s common stock (the “Hecla Shares”) issued in connection with the proposed Transaction may be register
Slide 4: Another Step in the Strategy
Another Step in the Strategy Klondex’s assets can be improved, grow and deliver the value we see NYSE:HL Hecla’s strategy is to realize the potential of long-lived, low-cost assets with large land packages in favorable jurisdictions, Klondex is all of that. Hecla is known in the industry as an inn
Slide 5: Transaction Summary
Transaction Summary NYSE:HL Transaction Hecla has agreed to acquire all of the issued and outstanding common shares of Klondex pursuant to a Plan of Structure Arrangement Consideration to consist of either 0.6272 Hecla shares or US$2.47 in cash – 59% premium based on Klondex’s 30-day volume-weig
Slide 6: Benefits to Hecla Shareholders
Benefits to Hecla Shareholders NYSE:HL Significant production in Nevada, one of the most prolific gold mining jurisdictions in the world Increases 2017 pro-forma production by 27% (~162 koz AuEq or ~11.5 Moz AgEq)1,2 Fire Creek is a cornerstone producing asset with robust cash flows and signific
Slide 7: Benefits to Klondex Shareholders
Benefits to Klondex Shareholders NYSE:HL Immediate and significant premium of approximately 59% (30 day VWAP) with ongoing participation in upside through Hecla shares and Klondex Canada shares Meaningful ownership in a stronger pro-forma company Hecla is well capitalized, making possible critic
Slide 8: Adding Nevada to a Strong Portfolio
Adding Nevada to a Strong Portfolio Large land packages in five of the world’s best mining districts NYSE:HL Nevada “Heart of the Nevada gold district” Midas N Hollister Fire Creek –8– Source: Company disclosures.
Slide 9: The Leading Intermediate Precious Metals Producer
The Leading Intermediate Precious Metals Producer Peer leading production, with diversified revenue and NAV exposures NYSE:HL Strongest production base among peer group (2017A Production1) AuEq Production (koz) AgEq Production (Moz) 755 762 2 711 2 663 596 600 607 554 571 524 361 224 241 123 8.7 15.
Slide 10: Hecla Will Have Industry Leading Reserves
Hecla Will Have Industry Leading Reserves Unmatched combination of reserves and reserve grade NYSE:HL AuEq Reserve Grade for Select Precious Metal Producers (oz/ton AuEq) 0.323 0.291 0.210 0.117 0.085 Average: 0.086 oz/ton AuEq1 0.082 0.051 0.039 0.028 0.028 0.027 0.021 0.016 Kirkland Pro Forma Hoch
Slide 11: Hecla Retains Significant Focus on Silver
Hecla Retains Significant Focus on Silver Transaction increases Hecla’s exposure to precious metals by 6% NYSE:HL Standalone Hecla1,2 Hecla Pro Forma1,2 Hecla Long Term 20% 15% 5% 30% Silver exposure 35% 6% expected to increase through development of Rock Creek and 39% 50% Montanore Silver Gold Lead
Slide 12: Increasing Cash Flow and Improved Credit Metrics
Increasing Cash Flow and Improved Credit Metrics Transaction improves financial flexibility, moving towards credit upgrade NYSE:HL Transaction additive to operating cash … taking Hecla’s already strong credit flow1 … metrics (2017A Operating Cash Flow US$ million) Ratio Moody’s Moody’s Hecla “B” “Ba
Slide 13: Fire Creek is a Premier Asset in a Top Tier Jurisdiction
Fire Creek is a Premier Asset in a Top Tier Jurisdiction Grade drives low cash costs and strong cash flow NYSE:HL Producing, narrow vein mine located in Lander County, Nevada, ~63 miles west of Elko, Nevada Commenced production in 2014 and has undergone extensive geological testing since 1981
Slide 14: Upside Grade Potential at Fire Creek
Upside Grade Potential at Fire Creek Assumed 15% grade upside despite history of 98-530% increase NYSE:HL Drilling Only Historical Results Drilling Mining Difference GRADE GRADE GRADE VEIN AuEq (Oz) AuEq (Oz) AuEq (Oz) Joyce 2.34 4.64 98% Karen 1.86 4.81 159% Vonnie 2.94 18.53 530% Main 2.21 5.41 14
Slide 15: Fire Creek Vein Networks Offer Extensive Opportunities
Fire Creek Vein Networks Offer Extensive Opportunities Production centers and vein networks are open in all directions NYSE:HL Mineralized structures have predictive sigmoid pattern VTEM conductor Current reserves and resources provide mining trends inventory out to 2023 Identified veins are o
Slide 16: Excellent Land Position Near Many Large Gold Mines
Excellent Land Position Near Many Large Gold Mines Located along significant trends NYSE:HL N Twin Creeks - NEM Midas Turqoise Ridge - ABX Pinson - Waterton Hollister Hollister Exodus - NEM Goldstrike - ABX Winnemucca Valmy - NEM Gold Quarry - NEM Marigold - SSR Battle Mountain Mule Canyon - NEM Pho
Slide 17: Hollister & Midas Expected To Benefit From Hecla's Operational Expertise
Hollister & Midas Expected To Benefit From Hecla’s Operational Expertise NYSE:HL Overview Upside Potential Hollister / Hatter Graben Producing, high-grade gold and Hatter Graben provides the next leg of growth; silver mine located ~18 miles – Mineralized veins: 1,400 ft. vertically and 2,000 ft.
Slide 18: Hecla's Track Record of Adding Value
Hecla’s Track Record of Adding Value An extensive history of optimizing assets NYSE:HL Casa Berardi Greens Creek San Sebastian Operational enhancements and Increased recoveries/ low cost Prudent, high impact capital mill optimization production differentiated mining model Throughput has increased
Slide 19: Culture of Innovation Drives Productivity Improvements
Culture of Innovation Drives Productivity Improvements Technology and best practices expect to be leveraged across K’s assets NYSE:HL Autonomous Haulage Jumbo/Stope Drill in Operation at Casa Automation: Drilling Berardi During Shift Change 24 hour truck Adds 15 meters/day operation drives cost
Slide 20: A History of Adding Reserves
A History of Adding Reserves 263 million reserve ounces added; 22% added by Greens Creek acquisition NYSE:HL 250 200 Reserves Greens Creek 177 Moz Production Acquisition 150 Silver Ounces ( millions) (Total Gain 263 Moz) 100 50 Gain in Reserve oz ‐ (50) (100) Cumulative Production (150) 138 Moz (200
Slide 21: A Roadmap for Further Growth and Value Creation
A Roadmap for Further Growth and Value Creation NYSE:HL Robust Near Term Growth Longer Term Development Hollister Ramp Up • Production to reach full steady Fire Creek Mine Plan state capacity in 2018 • Potential for significant upside and increased production through New Open Pits at Casa developing
Slide 22: Klondex Canada – Highlights
Klondex Canada – Highlights NYSE:HL Highlights Asset Locations Klondex Canada will hold Klondex’s Canadian assets which are located primarily in Manitoba and are comprised of the True North Mine, the Bison Manitoba properties and 10% buy-back rights on Snow Lake Property. Various early-stage Ontar
Slide 23: A Further Transformation of Hecla
A Further Transformation of Hecla Consistent with strategy and expertise NYSE:HL Now with seven large land positions located in Alaska, Quebec, Nevada, Mexico and Idaho which are some of the safest and most prolific mining jurisdictions in the world Proven operational excellence to be leveraged ac
Slide 24: Appendix
Appendix NYSE:HL Midas San Sebastian Greens Creek Lucky Friday Fire Creek Hollister Casa Berardi –24–
Slide 25: Fire Creek Asset Overview
Fire Creek Asset Overview A company-making asset in Nevada NYSE:HL Underground Mine – Nevada, USA Fire Creek Site Overview Commenced production in 2014 Narrow vein mine located in Ladner Country, Nevada Underground mine utilizing traditional long-hole/ drift and fill stoping, in conjunction wi
Slide 26: Midas Asset Overview
Midas Asset Overview Well-located mill ties Nevada assets together NYSE:HL Underground Mine – Nevada, USA Midas Site Overview Commenced production in 2014 Narrow vein mine located in Elko Country, Nevada Underground mine utilizing traditional longhole, shrinkage, and cut and fill methods Con
Slide 27: Midas – Potential to the South
Midas – Potential to the South Systematic vein orientations define new target in vicinity of mine NYSE:HL 27
Slide 28: Hollister / Hatter Graben Asset Overview
Hollister / Hatter Graben Asset Overview Significant upside at Hatter Graben NYSE:HL Underground Mine – Nevada, USA Hollister Site Overview Re-started production in Q4-2017 Narrow vein mine located in Elko Country, Nevada Underground mine utilizing traditional longhole, and cut and fill method
Slide 29: Hollister Mine – near term targets
Hollister Mine – near term targets Vein extensions and parallel structures NYSE:HL 29
Slide 30: Hollister – Upside at Hatter Graben
Hollister – Upside at Hatter Graben Potential of one vein = 1.1 million gold ounces; Multiple veins identified NYSE:HL WEST PLAN VIEW EAST A Hollister Mine A’ Gloria 425k AuEq Oz Hatter Graben Hatter Graben Veins Tertiary Unconformity OPEN ~ 600 ft. OPEN Ordovician HATTER GRABEN INTERCEPTS OPEN Dril
Slide 31: Greens Creek Asset Overview
Greens Creek Asset Overview One of the world’s top silver mines NYSE:HL Underground Mine – Admiralty, Alaska Greens Creek Site Overview Commenced production in 1996, and is one of the world’s largest low-cost primary silver mines, located in Alaska, US Underground mine utilizing traditional long
Slide 32: Greens Creek: Adding to the Known Trends
Greens Creek: Adding to the Known Trends Drilling expected to continue to convert resources into reserves NYSE:HL Trends of Mineralization -32-
Slide 33: Casa Berardi Asset Overview
Casa Berardi Asset Overview Open pits are increasing throughput and mine life NYSE:HL Underground/Open Pit Mine – Quebec, Canada Casa Berardi Site Overview Commenced commercial production in 2007 Located 59 miles north of La Sarre, Quebec Acquired from Aurizon Mines in 2013 Casa Berardi enco
Slide 34: Autonomous Haulage In Operation
985 Drift Autonomous Haulage In Operation Truck runs 24 hours a day; cost savings expected NYSE:HL Control room Loading 40-tonne autonomous Sandvik truck -34-
Slide 35: Casa Berardi: Open Pit Potential
Casa Berardi: Open Pit Potential Surface view showing potential series of open pits NYSE:HL Surface Drilling -35-
Slide 36: Lucky Friday Asset Overview
Lucky Friday Asset Overview Positioning for growth and longevity NYSE:HL Underground Mine – Idaho, USA Lucky Friday Site Overview Located in Idaho, Hecla has owned and operated the asset since 1958 Deep polymetallic underground mine, utilizing traditional cut and fill mining methods with associa
Slide 37: #4 Shaft Gives Access to the High Grade Zone
#4 Shaft Gives Access to the High Grade Zone At least 30 more years of mine-life expected NYSE:HL 20 Years Past Mining ORE GRADE VALUES *AgEq Grade (opt) Mine Face (Galena) > 24 97.2 opt Silver 18 - 24 6500 Level 47.5% Lead 12 - 18 6 - 12 <6 7500 Level 900’@ +24 opt Dec. 31, 2015 AgEq *Ag Equivalent
Slide 38: Continuous Mechanical Cutting To Eliminate Drill/Blast
Continuous Mechanical Cutting To Eliminate Drill/Blast Delivery late 2019: Could revolutionize the Lucky Friday NYSE:HL Could Improve Safety and Productivity Atlas Copco Test Mine 2016 3D Graphic of Remote Vein Miner -38-
Slide 39: San Sebastian Asset Overview
San Sebastian Asset Overview Very low capital, very high return, mine life extending NYSE:HL Open Pit/Underground Mine – Durango, San Sebastian Site Overview Mexico Located in Durango, Mexico, Operation entails a high-grade, near surface open pit as well as underground workings Free digging of
Slide 40: Underground Design Layout
Underground Design Layout Ore haulage ramping up NYSE:HL N North Ramp –40–
Slide 41: Francine Vein Polymetallic Potential
Francine Vein Polymetallic Potential Polymetallic mineralization traced for over 5,000 feet of strike length NYSE:HL FRANCINE VEIN LONGITUDINAL SECTION (Looking NE) Limit of Current Hugh Zone West Francine Vein Resource Target Area PROSPECTIVE FOR POLYMETALLIC MINERALIZATION Polymetallic 9.1 oz/ton
Slide 42: Middle Vein Polymetallic Potential
Middle Vein Polymetallic Potential Predicting a horizonal polymetallic zone below the oxide reserve NYSE:HL MIDDLE VEIN LONGITUDINAL SECTION (Looking NE) MIDDLE VEIN MIDDLE VEIN NORTH RAMP OPEN PIT SHELL $NSR VALUE PER TON (5.9 FT DILUTED) 97 ZONE POLYMETALLIC PROSPECTIVE FOR MINERALIZATION POLYMETA
Slide 43: Rock Creek & Montanore Asset Overviews
Rock Creek & Montanore Asset Overviews Final stages of permitting, expecting to advance in 2018 NYSE:HL Mine overview Rock Creek Site Overview Montanore, a silver-copper mine located in Libby, Montana, was acquired from Mines Management in 2016 Rock Creek, a silver-copper mine located in Noxon,
Slide 44: Zeus Exemplifies High-Grade Opportunities at Fire Creek
Zeus Exemplifies High-Grade Opportunities at Fire Creek Geophysical anomalies successfully identify high-grade mineralization NYSE:HL The Zeus target was identified by a geophysical anomaly ~0.75 miles away from current mine workings Follow up drilling outlined significant high-grade mineralizat
Slide 45: Significant Fire Creek District Targets and Potential
Significant Fire Creek District Targets and Potential Successful geophysical model and structural patterns provide target-rich environment NYSE:HL Proven repeatability of vein structural N pattern VTEM and IP Resistivity geophysical techniques and soil geochemistry can be used to trace extension
Slide 46: Klondex Canada – Exploration and Identified Targets
Klondex Canada – Exploration and Identified Targets NYSE:HL True North Mine: Exploration and Identified Bison Manitoba Properties: Potential Targets Exploration Upside 710 / 711 zones Property contains a large land package with over ~14.3 – 64,227ft of drilling completed square miles – Intercept
Slide 47: Klondex Canada – Management, Board and Capital Structure
Klondex Canada – Management, Board and Capital Structure NYSE:HL Proposed Management Team Capital Structure John Antwi, CEO (All figures shown are in US$mm) Implied Share Price US$1.89 – Previously SVP, Corporate Development and Implied Share Price C$2.45 Planning at Klondex 1 Basic Shares Outstan
Slide 48: Endnotes
Endnotes NYSE:HL 1. Hecla’s cost of sales include all direct and indirect operating costs related to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site general and administrative costs, royalties and mi
Slide 49: Production Cash Cost per GEO Sold Reconciliation to GAAP
Production Cash Cost per GEO Sold Reconciliation to GAAP NYSE:HL Fire Creek Years ended December 31, All amounts in thousands except per ounce amounts 2015 2016 2017 Average realized price per gold ounce sold $1,156 $1,250 $1,261 Average realized price per silver ounce sold $15.77 $17.00 $17.15 Silv
Slide 50: Production Cash Cost per GEO Sold Reconciliation to GAAP
Production Cash Cost per GEO Sold Reconciliation to GAAP NYSE:HL Midas Years ended December 31, All amounts in thousands except per ounce amounts 2016 2017 Average realized price per gold ounce sold $1,252 $1,260 Average realized price per silver ounce sold $17.48 $17.30 Silver ounces equivalent to
Slide 51: Production Cash Cost per GEO Sold Reconciliation to GAAP
Production Cash Cost per GEO Sold Reconciliation to GAAP NYSE:HL Hollister Years ended December 31, All amounts in thousands except per ounce amounts 2017 Average realized price per gold ounce sold $1,273 Average realized price per silver ounce sold $16.69 Silver ounces equivalent to revenue from on
Slide 52: Cash Cost Reconciliation to GAAP
Cash Cost Reconciliation to GAAP NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, After By-product Credits (non-GAAP) Lucky Friday All amounts are in thousands (USD) except per ounce amounts For the Twelve Mon
Slide 53: Cash Cost Reconciliation to GAAP
Cash Cost Reconciliation to GAAP NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, After By-product Credits (non-GAAP) Greens Creek All amounts are in thousands (USD) except per ounce amounts For the Twelve Mon
Slide 54: Cash Cost Reconciliation to GAAP
Cash Cost Reconciliation to GAAP NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, After By-product Credits (non-GAAP) Casa Berrardi (Gold Operations) All amounts are in thousands (USD) except per ounce amounts
Slide 55: Cash Cost Reconciliation to GAAP
Cash Cost Reconciliation to GAAP NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, After By-product Credits (non-GAAP) San Sebastian All amounts are in thousands (USD) except per ounce amounts For the Twelve Mo
Slide 56: Proven & Probable Mineral Reserves
Proven & Probable Mineral Reserves (on Dec. 31, 2017 unless otherwise noted) NYSE:HL –56–
Slide 57: Klondex Proven & Probable Mineral Reserves
Klondex Proven & Probable Mineral Reserves NYSE:HL Reserves 11/30/2017 Proven Reserves Asset Tons (000) Gold (oz/ton) Gold (g/tonne) Silver (oz/ton) Silver (g/tonne) Gold Equiv. (oz/ton) Gold Equiv. (g/tonne) Gold (000 oz) Silver (000 oz) Gold Equiv. (000 oz) Midas 141 0.261 8.95 9.18 314.8 0.388 13