Hecla Mining Company · NYSE:HL
Hecla Mining — PDAC 2014 International Convention
43 slides from Hecla Mining's conference presentation, Mar 3, 2014
Slide 1: PDAC 2014
NEW HECLA FINANCIAL STRENGTH HECLA PROPERTIES STRONG INVESTMENT FUNDAMENTALS PDAC 2014 March 3, 2014
Slide 2: Cautionary Statements
HECLA MINING COMPANY Cautionary Statements Cautionary Statement Regarding Forward Looking Statements, Including 2014 Outlook 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
Slide 3: 2013 At A Glance
HECLA MINING COMPANY 1 2013 At A Glance What We Did: What We Didn’t Do: Increased silver and gold reserves Project impairments and resources despite using lower Write-down of reserves prices Cut our dividend policy Acquired the Casa Berardi gold mine Brought the Lucky Friday back into fu
Slide 4: 2013 Reserve Prices
HECLA MINING COMPANY 2013 Reserve Prices1 2013 Reserve Silver Price/Oz 2013 Reserve Gold Price/Oz $25.00 $25.00 $24.00 $22.00 $22.00 $22.00 $22.00 $1,450 $20.00 $1,400 $1,320 $1,300 $1,300 $1,300 $1,200 Hecla Kinross Endeavour Pan Goldcorp Fortuna Coeur Silver Kinross Hecla Pan Goldcorp Endeavour Fo
Slide 5: 2013 Resource Prices
HECLA MINING COMPANY 2013 Resource Prices1 2013 Resource Silver Price/Oz 2013 Resource Gold Price/Oz $35.00 $1,600 $1,500 $1,452 $1,392 $1,400 $1,400 $29.00 $1,300 $25.14 $26.00 $24.20 $25.00 $24.00 $20.00 Hecla Goldcorp Endeavour Fortuna Silver Kinross Coeur Pan Hecla Fortuna Pan Kinross Endeavour
Slide 6: Silver Reserve Growth 2012-2013
HECLA MINING COMPANY Silver Reserve Growth 2012- 2013 2012 - 2013 Changes in Peer Silver Reserves 30% 20% 16% 13% 10% 2012-2013 Silver Reserve Growth % 2% 0% -2% -10% -15% -20% -30% -40% -50% -50% -60% Coeur Hecla Pan American Silver Standard Fortuna Endeavour 1. Data from public filings 6
Slide 7: Strong Reserve Growth 2003 - 2013
HECLA MINING COMPANY 1 Strong Reserve Growth 2003 - 2013 Silver Ounces (millions) Gold Ounces (millions)2 170 2.1 277% 163% 0.8 45 2003 2013 2003 2013 1. See Proven and Probable reserves data in the Appendix. 2. Acquired Aurizon Mines in 2013 7
Slide 8: Reserve Growth vs Mined Production 2004 - 2013
HECLA MINING COMPANY 1 Reserve Growth vs Mined Production 2004 - 2013 Silver Ounces 10-Year Cumulative Reserves and Ounces Mined 200,000,000 Lucky Friday reserves 150,000,000 Greens Creek reserves Lucky Friday production 100,000,000 Greens Creek production 50,000,000 0 (50,000,000) (100,000,000) (15
Slide 9: Greens Creek - Large and Low Cost
HECLA MINING COMPANY Greens Creek - Large and Low Cost Overview Location Admiralty Island, Alaska Deposit Polymetallic, stratiform, massive sulfide Ownership (Since) 1987 Type Underground 1 Expected Life of Mine 9 years Primary Metal Produced Silver Reserves & Resources (at December 31, 2013) 2P Res
Slide 10: Lucky Friday - Back to Full Production
HECLA MINING COMPANY Lucky Friday - Back to Full Production Overview Location Mullan, Idaho Deposit Silver & base metal bearing vein structures Ownership (Since) 1958 Type Underground 1 Expected Life of Mine 25 years Primary Metal Produced Silver Reserves & Resources (at December 31, 2013) Key Highl
Slide 11: Casa Berardi - Great New Addition
HECLA MINING COMPANY Casa Berardi - Great New Addition Overview Location La Sarre, Quebec Deposit Archean, shear & vein hosted gold deposit Ownership (Since) June 2013 Type Underground 1 Expected Life of Mine 9 years Primary Metal Produced Gold Reserves & Resources (at December 31, 2013) 2P Reserves
Slide 12: Appendix
NEW HECLA FINANCIAL STRENGTH HECLA PROPERTIES STRONG INVESTMENT FUNDAMENTALS Appendix
Slide 13: Table of Contents
HECLA MINING COMPANY Appendix Table of Contents Appendices Page 1. Management 14 2. Q4 2013 Update 15 3. Financial Information 27 4. Silver and Gold Overview 33 5. Zinc Overview 39 6. Reserves and Resources 40 13
Slide 14: Seasoned Management Team with Significant Experience
HECLA MINING COMPANY Appendix 1 Seasoned Management Team with Significant Experience Phillips S. Baker, Jr., has 26 years of Dr. Dean W.A. McDonald, is a geologist with mining experience. He was previously over 30+ years experience. He was VP and CFO of Battle Mountain Gold previously VP of Explorat
Slide 15: 2014 Expectations
HECLA MINING COMPANY Appendix 2 2014 Expectations 2014E1 Silver 2014E2 Gold Cash Cost, After By-Product Mine Production (Moz) Production (oz) Credits, Per Silver/Gold Ounce2 Greens Creek 6.5-7.0 55,000 $6.00 per silver oz Lucky Friday 3.0 n/a $9.00 per silver oz Casa Berardi n/a 125,000 $900 per gol
Slide 16: North American Focused Asset Portfolio
HECLA MINING COMPANY Appendix 2 North American Focused Asset Portfolio All operations in lower-risk, mining-friendly jurisdictions 16
Slide 17: Continued Strong Margins
HECLA MINING COMPANY Appendix 2 Continued Strong Margins $40 $35.30 Cash Cost, After By-Product Credits, Per Silver Ounce $35 Strong Cash Margins $32.11 $28.86 $30 $25 $22.70 $22.22 97% $21.28 92% $20.13 $20 $16.27 $15.63 $34.15 $21.84 $29.41 $15 76% $14.82 106% $12.80 $14.44 $24.16 67% 64% 68% $10.
Slide 18: Cash Flow Flexibility 2010 - 2013
HECLA MINING COMPANY Appendix 2 Cash Flow Flexibility 2010 - 2013 Cash Bridge 2010 - 2013 (US$M) $1,200 Largely Discretionary $597.3M $1,000 $818.0 1 $800 $600 One-time Expenses $418.8 $234.4M $400 $140.4 $38.1 $212.2 $177.6 $200 $104.7 $208.0 $26.4 $- $56.3 2010 Beginning Adjusted Capex Exploration
Slide 19: Diversified Revenue: Silver, Gold, Lead and Zinc
HECLA MINING COMPANY Appendix 2 Diversified Revenue: Silver, Gold, Lead and Zinc Diversified revenue stream (silver, gold, lead and zinc) from Consolidated Revenue by Metal 3 mines Q4 2013 Policy allows hedging of 60% of 15% the next 3 years of lead and zinc 33% 12% production Currently have ~
Slide 20: Greens Creek - Consistent Performance
HECLA MINING COMPANY Appendix 2 Greens Creek - Consistent Performance 2.5 $6 Cash Cost, After By-Product Credits, Per Silver Ounce $5.02/oz $5.00/oz $5.15/oz 2.00 Moz $5 2.0 1.80 Moz 1.80 Moz 1.80 Moz $4 Silver Production 1.5 $2.71/oz $3 1.0 $2 0.5 $1 0.0 $- Q1/2013 Q2/2013 Q3/13 Q4/13 Silver Produc
Slide 21: Greens Creek - Underground Exploration
HECLA MINING COMPANY Appendix 2 Greens Creek - Underground Exploration A Cross Section A’ East East Ore Ore Deep 200 South Block Model Deep 200 South Block Model Deep 200 South N A’ Cross section A Deep 200 South 1000 Feet 21
Slide 22: Lucky Friday - Higher Production, Lower Cost
HECLA MINING COMPANY Appendix 2 Lucky Friday - Higher Production, Lower Cost 0.70 $40 $36.55/oz 0.64 Moz Cash Cost, After By-Product Credits, Per Silver Ounce 0.60 $35 $32.19/oz $30 0.50 0.48 Moz $25 Silver Production 0.40 $20 0.30 $16.50/oz $15 0.22 Moz 0.20 $13.59/oz $10 0.12 Moz 0.10 $5 - $- Q1/1
Slide 23: Lucky Friday - Unlocking Value at Depth
HECLA MINING COMPANY Appendix 2 Lucky Friday - Unlocking Value at Depth Silver Shaft 30 Vein #4 Shaft 4050 level Current mining from 4900 level 5900 level access 5900 level 6500 level 7500 level Looking NW 23 *Assuming prices of $20.00/oz silver, $0.90/lb lead, and $0.80/lb zinc
Slide 24: Lucky Friday - #4 Shaft
HECLA MINING COMPANY Appendix 2 Lucky Friday - #4 Shaft #4 Shaft project is engineered to access higher-grade ore zones with potential to take Lucky Friday silver production to 5 million ounces per year in 2017 #4 Shaft construction resumed in Q1/13 Currently at the 6500 level, working on one
Slide 25: Casa Berardi - Higher Q4 Production, Lower Costs
HECLA MINING COMPANY Appendix 2 Casa Berardi - Higher Q4 Production, Lower Costs 35 $1,400 32 koz $1,152/oz 30 $1,200 Cash Cost, After By-Product Credits, Per Gold Ounce $1,065/oz 25 $1,000 23 koz Gold Production 20 $800 $824/oz 15 $600 10 $400 8 koz 5 $200 0 $- Jun-13 Q3/13 Q4/13 Gold Production Ca
Slide 26: Casa Berardi - Great Exploration Potential
HECLA MINING COMPANY Appendix 2 Casa Berardi - Great Exploration Potential 26
Slide 27: Cash Cost GAAP Reconciliation
HECLA MINING COMPANY Appendix 3 Cash Cost GAAP Reconciliation Reconciliation of cash cost, after by-product credits, per silver ounce to Generally Accepted Accounting Principles (GAAP) for Greens Creek & Lucky Friday (dollars and ounces in thousands, except per ounce - unaudited) Q4/2013 Q3/2013 Q2/
Slide 28: Total Cash Cost GAAP Reconciliation
HECLA MINING COMPANY Appendix 3 Total Cash Cost GAAP Reconciliation 1. Includes all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site genera
Slide 29: Total Cash Cost GAAP Reconciliation
HECLA MINING COMPANY Appendix 3 Total Cash Cost GAAP Reconciliation 1. Includes all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site genera
Slide 30: Cash Cost Reconciliation to GAAP - Casa Berardi
HECLA MINING COMPANY Appendix 3 Cash Cost Reconciliation to GAAP - Casa Berardi Reconciliation of Cash Costs per Ounce to Generally Accepted Accounting Principles (GAAP) (dollars and ounces in thousands, except per ounce - unaudited) Q1/2013 2012 2011 2010 2009 2008 2007 2006 (1) Cash Operating Cost
Slide 31: Total Cash Cost GAAP Reconciliation
HECLA MINING COMPANY Appendix 3 Total Cash Cost GAAP Reconciliation Reconciliation of cash cost, after by-product credits, per gold ounce to Generally Accepted Accounting Principles (GAAP) for Casa Berardi (dollars and ounces in thousands, except per ounce - unaudited)(2) 2013 Q4/2013 Q3/2013 June 2
Slide 32: Hecla Adjusted EBITDA Reconciliation
HECLA MINING COMPANY Appendix 3 Hecla Adjusted EBITDA Reconciliation Reconciliation of Adjusted EBITDA (non-GAAP) to Net Income (GAAP) Twelve Months Ended December 31, 2013 2012 2011 2010 Net Income $ (25,130) $ 14,954 $ 151,164 $ 48,983 Plus: Interest expense, net of amount capitalized 21,689 2,427
Slide 33: Gold: Physical vs. Financial
HECLA MINING COMPANY Appendix 4 Gold: Physical vs. Financial EAST vs. WEST 1,200 2,500 1,000 Net Imports (China) 2,000 Gold Tonnes 800 600 1,500 400 1,000 200 Gold ETF Holdings 500 - Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 2009 2010 2011 2012 2013 Source: Bloomberg, 2013 data until 11/30/2013 Sour
Slide 34: Silver - The Metal of This Age
HECLA MINING COMPANY Appendix 4 Silver - The Metal of This Age Has the highest electrical conductivity of all the metals 80% more conductive than aluminum 50% more conductive than gold, 6% more conductive than copper Critically important in the miniaturization of circuits as electronic items
Slide 35: Mine Production is Key to Silver Supply
HECLA MINING COMPANY Appendix 4 Mine Production is Key to Silver Supply 1200 Producer Hedging 1992 – 2012 Silver Production (mm oz) Implied Net Disinvestment Increase 1000 Net Government Sales 70% 800 Old Silver Scrap 600 400 60% Mine Production 200 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 200
Slide 36: Increasing Share of Modern Demand
HECLA MINING COMPANY Appendix 4 Increasing Share of Modern Demand Modern demand increased from 260 mm oz in 1992 to 465 mm oz in 2012, an increase of 80%, and an annualized increase of 3.0% 5% 16% 36% 46% 30% 9% Modern Modern 23% 29% 6% 1992 2012 Modern Investment Jewelry & Photography Coins & Med
Slide 37: Silver Consumption per Capita Increases
HECLA MINING COMPANY Appendix 4 Silver Consumption per Capita Increases Increasing Silver Consumption Per Person in China and India 0.80 0.80 Japan 0.70 0.70 South Korea 0.60 0.60 Silver Ounce Per Capita Silver Ounce Per Capita 0.50 0.50 United Japan 0.40 0.40 States Germany 0.30 0.30 United 0.20 St
Slide 38: Silver Fundamentals - 2013E vs. 2012
HECLA MINING COMPANY Appendix 4 Silver Fundamentals - 2013E vs. 2012 700 80 2012 2013E 70 600 Silver - Million oz 500 60 50 400 40 300 30 200 High/Low: 67/32 20 100 Average: 53 10 Current: 62 - Gold/Silver Ratio Jewelry & Modern Coins & ETFs Other Photographic 0 Silverware Medals Investment 3-Jan-11
Slide 39: Zinc Supply - Mining
HECLA MINING COMPANY Appendix 5 Zinc Supply - Mining Forecasted mine production vs. forecasted market demand Demand is expected to exceed mine production around 2018 Major Mine Shutdowns Annual Mine Capacity (MT) Perseverance 115K Brunswick 240K Century 510K Lisheen 175K Source: Wood Mackenzie J
Slide 40: Reserves & Resources Update
HECLA MINING COMPANY Appendix 6 Reserves & Resources Update (on Dec. 31, 2013 unless otherwise noted) Proven Reserves Silver Gold Lead Zinc Silver Gold Lead Zinc Asset Location Ownership Tons (000) (oz/ton) (oz/ton) % % (000 oz) (000 oz) Tons Tons Greens Creek (a) United States 100.0% 14 12.9 0.13 3
Slide 41: Reserves & Resources Update
HECLA MINING COMPANY Appendix 6 Reserves & Resources Update (on Dec. 31, 2013 unless otherwise noted) Measured Resources Silver Gold Lead Zinc Silver Gold Lead Zinc Asset Location Ownership Tons (000) (oz/ton) (oz/ton) % % (000 oz) (000 oz) (Tons) (Tons) Greens Creek (2)(a) United States 100.0% 6.7
Slide 42: Reserves & Resources Update
HECLA MINING COMPANY Appendix 6 Reserves & Resources Update (on Dec. 31, 2013 unless otherwise noted) Inferred Resources Silver Gold Lead Zinc Silver Gold Lead Zinc Asset Location Ownership Tons (000) (oz/ton) (oz/ton) % % (000 oz) (000 oz) (Tons) (Tons) Greens Creek (9)(a) United States 100.0% 2,38
Slide 43: Historical Reserves
HECLA MINING COMPANY Appendix 6 Historical Reserves Silver Gold Silver Gold Silver Gold Silver Gold 2003 Tons (oz/ton) (oz/ton) (ounces) (ounces) Tons (oz/ton) (oz/ton) (ounces) (ounces) Proven Reserves 2008 Proven Reserves Greens Creek (29.73%) ‐ ‐ ‐ ‐ ‐ Greens Creek - - - - - Lucky Friday 400,930
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