Hecla Mining Company · NYSE:HL
Hecla Mining — Q1 2021 Earnings Presentation
38 slides from Hecla Mining's earnings presentation, May 6, 2021
Slide 1: First Quarter 2021 Earnings Conference Call
FIRST QUARTER 2021 Earnings Conference Call May 6, 2021 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 Statement Regarding Forward Looking Statements (Cont’d) In addition, material risks that could cause actual results to differ from forward-looking statements include, but are not limited to: (i) gold, silver and other metals price volatility; (ii) operating
Slide 4: Solid First Quarter: Highlights
SOLID FIRST QUARTER: HIGHLIGHTS Strong operational performance from steady production, low costs and high margins • Record Adjusted EBITDA(1) of $86.1 million, Cash Gross Margin(10) of Record Quarter $114.1 million, second highest Sales of $210.9 million Strong Operating • Solid production, Lowering
Slide 5: Financial Review
Financial Review NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 5
Slide 6: Financial Strength and Flexibility
FINANCIAL STRENGTH AND FLEXIBILITY Increasing cash balance driven by free cash flow generation, leverage below our target of 2.0x Cash Balance Available liquidity of $389.8 million (*) ($ millions) 139.8 129.8 98.7 75.9 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Net Debt/Adjusted EBITDA(2) Third quarter of mee
Slide 7: Focused on Free Cash Flow Generation
FOCUSED ON FREE CASH FLOW GENERATION Free cash flow of $121 million over the past four quarters driven by superior margins and steady production Solid Silver Margins ($ per silver ounce) Cost of Sales(3) $73.1 M $78.5 M $86.0 M $76.1 M ($ millions) $9.11 $9.81 $13.79 $18.45 $9.33 $15.35 $11.53 $7.21
Slide 8: Leading Dividend Policy Is Improved Further
LEADING DIVIDEND POLICY IS IMPROVED FURTHER More cash returned to shareholders as dividend yield increases synchronously with silver prices At $25/oz realized price, an implied dividend yield of 7.4% of silver price $9.0 17.5% 20.00% $8.0 15.4% 18.00% $7.0 16.00% 12.6% $6.0 14.00% 12.00% $5.0 9.0% 7
Slide 9: Operations Review
Operations Review NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 9
Slide 10: Safety: Steady Focus, Excellent Safety Record
SAFETY: STEADY FOCUS, EXCELLENT SAFETY RECORD Lowest AIFR in Hecla’s history; improvements despite pandemic distractions Hecla All Injury Frequency Rate (AIFR) 7 72% reduction 6.06 since SHMS 6 inception 5.35 5.41 5 4.57 Frequency Rate 4 3.42 3 2.76 2.00 2 1.71 1.61 1.22 1 0 2012 2013 2014 2015 2016
Slide 11: Greens Creek: Continues Strong
GREENS CREEK: CONTINUES STRONG Consistent performance, low costs cement solid free cash flow generation • 2021 estimated silver production of 9.5-10.2 million • Lowering guidance for Cash Costs and All-in Sustaining Costs due to higher by-product credits, lower treatment charges, and the reclassific
Slide 12: Lucky Friday: Performing Per Plan
LUCKY FRIDAY: PERFORMING PER PLAN On track to increase production to 5 million ounces by 2023 • Ramp-up to full production complete at year- end 2020 • 2021 production guidance exceeds 3.4 Moz • Grade increases at depth, pursuing initiatives to increase productivity • Continue to test and optimize n
Slide 13: Casa Berardi: Investments Are Delivering Results
CASA BERARDI: INVESTMENTS ARE DELIVERING RESULTS Strong production coupled with cost improvements • Business improvement activities continue in 2021; expected to reduce costs and increase cash flow over next two years • Investments already yielding results as mill availability remains consistently >
Slide 14: Nevada: Focus on Long-Term Value Creation
NEVADA: FOCUS ON LONG-TERM VALUE CREATION Bulk sample test nearing completion • Q1 Gold production of 2,548 ounces from stockpiled bulk sample • Additional anticipated production of 17,000 – 19,000 ounces through the remaining year • Nevada operations to go on care & maintenance in Q2/2021 • Activit
Slide 15: Guidance
Guidance NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 15
Slide 16: Silver Production Growth Is All in the United States
SILVER PRODUCTION GROWTH IS ALL IN THE UNITED STATES Growing cash flow from increasing silver production and higher prices Consolidated Production Outlook * Silver Production (Moz) Gold Production (Koz) Silver Equivalent (Moz)8 Gold Equivalent (Koz)8 2021 Total 12.9 – 14.0 185 - 193 40.0 – 41.6 439
Slide 17: Silver – Widening Gap Between Supply & Demand
SILVER – WIDENING GAP BETWEEN SUPPLY & DEMAND Gap expected to increase with continued trend of industrial demand growth of 2.0% • 2019 saw a total supply of 1,023 Moz and total demand of 1,074 Moz • Silver’s total demand in 2030 is expected to reach ~1,147 Moz if demand stays on the last decade tren
Slide 18: First Quarter 2021 Earnings Conference Call
FIRST QUARTER 2021 Earnings Conference Call May 6, 2021 RESPONSIBLE. SAFE. INNOVATIVE. NYSE: HL
Slide 19: Appendix
Appendix NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 19
Slide 20: Endnotes
ENDNOTES 1. Adjusted EBITDA is a non-GAAP measurement, a reconciliation of which to net income, the most comparable GAAP measure, can be found in the Appendix. Adjusted EBITDA is a measure used by management to evaluate the Company's operating performance but should not be considered an alternative
Slide 21: Q1 Free Cash Flow Generation
Q1 FREE CASH FLOW GENERATION Positive free cash flow generation from all three operating mines ($ millions) Working capital changes 44.4 ($29.3) 42.6 Includes $18.4 million in 25.7 interest payments 16.5 11.8 10.9 37.9 5.0 (1.8) (5.9) (13.8) (21.4) Consolidated Greens Creek Casa Berardi Lucky Friday
Slide 22: Our ESG Commitment Is: Continuous Improvement
OUR ESG COMMITMENT IS: CONTINUOUS IMPROVEMENT Continuing decades of strong performance Environment • Completed reclamation of 97% of the Troy Tailings Facility returning lands to productive uses such as wildlife habitat • State to released nearly $8M in financial assurance • Advanced “Zero-Discharge
Slide 23: Our ESG Commitment Is: Continuous Improvement
OUR ESG COMMITMENT IS: CONTINUOUS IMPROVEMENT Continuing decades of strong performance Social • Signed Collaboration Agreement with Pikogan First Nation at Casa Berardi Mine • Initiated a buy local voucher program in partnership with community chambers of commerce to support local vendors during the
Slide 24: Third Highest Reserves in Hecla's History
THIRD HIGHEST RESERVES IN HECLA’S HISTORY Strong resource base; Reduction in reserves due to COVID-19 limitations, new mine plans and smelter terms • COVID-19 disrupted exploration programs company wide with significant third-party assay laboratory delays • Reduction in silver reserves at Greens Cre
Slide 25: Free Cash Flow (Non-GAAP) Reconciliation
FREE CASH FLOW (NON-GAAP) RECONCILIATON Reconciliation of Cash provided by operating activities (GAAP) to Free Cash Flow (non-GAAP) 3 Months Ended Dollars are in thousands 31-Mar-21 31-Dec-20 30-Sep-20 30-Jun-20 31-Mar-20 31-Dec-19 30-Sep-19 Greens Creek Cash provided (used) by operating activities
Slide 26: Free Cash Flow (Non-GAAP) Reconciliation
FREE CASH FLOW (NON-GAAP) RECONCILIATON Reconciliation of Cash provided by operating activities (GAAP) to Free Cash Flow (non-GAAP) in thousands 30-Jun-20 30-Sep-20 31-Dec-20 31-Mar-21 Cash Flow from Operations $ 37,526 $ 73,439 $ 64,901 $ 37,936 Less: Additions to properties, plants, equipment and
Slide 27: Cash Gross Margin (Non-GAAP) Reconciliation
CASH GROSS MARGIN (NON-GAAP) RECONCILIATION Reconciliation of Gross Profit (GAAP) to Cash Gross Margin (non-GAAP) in thousands (except per ounce amounts) 31-Mar-21 Sales of products $ 210,852 Cost of sales and other direct production costs 96,709 Depreciation, depletion and amortization 49,331 Gross
Slide 28: Adjusted EBITDA Reconciliation to GAAP
ADJUSTED EBITDA RECONCILIATION TO GAAP Reconciliation of Net Income (Loss) (GAAP) and Debt (GAAP) to Adjusted EBITDA (non-GAAP) in thousands (except per ounce amounts) 30-Jun-20 30-Sep-20 31-Dec-20 31-Mar-21 Net income (loss) $ (58,705) $ (25,561) $ (16,790) $ 19,366 Plus: Interest expense 54,587 53
Slide 29: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP Total Silver and Gold Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs
Slide 30: Cash Cost and AISC Reconciliation: Greens Creek
CASH COST AND AISC RECONCILIATION TO GAAP Greens Creek Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before
Slide 31: Cash Cost and AISC Reconciliation: Lucky Friday
CASH COST AND AISC RECONCILIATION TO GAAP Lucky Friday Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before
Slide 32: Cash Cost and AISC Reconciliation: Casa Berardi
CASH COST AND AISC RECONCILIATION TO GAAP Casa Berardi Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before
Slide 33: Cash Cost and AISC Reconciliation: 2021 Silver Estimates
CASH COST AND AISC RECONCILIATION TO GAAP 2021 Silver Estimates Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs
Slide 34: Cash Cost and AISC Reconciliation: 2021 Gold Estimates
CASH COST AND AISC RECONCILIATION TO GAAP 2021 Gold Estimates Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs,
Slide 35: Proven & Probable Mineral Reserves
PROVEN & PROBABLE MINERAL RESERVES(1) (On December 31, 2020 unless otherwise noted) Proven Reserves Tons Silver Gold Lead Zinc Copper Silver Gold Lead Zinc Copper Asset (000) (oz/ton) (oz/ton) % % % (000 oz) (000 oz) Tons Tons Tons Greens Creek (2) 3 21.8 0.10 3.7 7.8 - 70 0.3 120 250 - Lucky Friday
Slide 36: Measured and Indicated Mineral Resources
MEASURED AND INDICATED MINERAL RESOURCES (On December 31, 2020 unless otherwise noted) Measured Resources Tons Silver Gold Lead Zinc Copper Silver Gold Lead Zinc Copper Asset (000) (oz/ton) (oz/ton) % % % (000 oz) (000 oz) (Tons) (Tons) Tons Greens Creek (5) 297 12.9 0.11 3.1 10.3 - 3,837 33 9,310 3
Slide 37: Inferred Mineral Resources
INFERRED MINERAL RESOURCES (On December 31, 2020 unless otherwise noted) Inferred Resources Tons Silver Gold Lead Zinc Copper Silver Gold Lead Zinc Copper (000 Asset (000) (oz/ton) (oz/ton) % % % (000 oz) (Tons) (Tons) Tons oz) Greens Creek (5) 1,767 13.2 0.08 2.8 7.0 - 23,370 145 49,670 123,480 - L
Slide 38: Mineral Resources (Notes)
MINERAL RESOURCES (NOTES) (On December 31, 2020 unless otherwise noted) Note: All estimates are in-situ except for the proven reserves at Greens Creek and Fire Creek which are in surface stockpiles. Resources are exclusive of reserves. (5) Mineral resources are based on $1500 gold, $21 silver, $1.15