Hecla Mining Company · NYSE:HL
Hecla Mining — The Silver and Gold Summit 2017
56 slides from Hecla Mining's conference presentation, Nov 21, 2017
Slide 1: Hecla Mining Company: Mining Innovation Is Here
November 21, 2017 NYSE:HL Hecla Mining Company Mining Innovation Is Here (there will be winners) Mike Westerlund Vice President – Investor Relations
Slide 2: Cautionary Statements
Cautionary Statements NYSE:HL 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
Slide 3: A Tipping Point
A Tipping Point Changing mining practices NYSE:HL 1. Not All Ounces Have the Same Value 2. Why Invest in Hecla? Mining companies give leverage to metal Our strategy is to acquire long-lived and through reserves/resources low-cost assets that we can invest in and improve But not all reserves ar
Slide 4: Not All Ounces Have the Same Value
NYSE:HL Not All Ounces Have the Same Value –4–
Slide 5: Reserves Have Grown Dramatically
Reserves Have Grown Dramatically Hecla Added 299 M oz of silver reserves in past 10 years NYSE:HL 250 200 Reserve Additions 172 Moz 150 100 Silver Ounces (millions) 299 Million Ounces 50 - (50) (100) Cumulative Production 127 M oz (150) (200) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 –5–
Slide 6: Gold & Silver 2016 Reserve Prices
Gold & Silver 2016 Reserve Prices Hecla’s price assumption assures high margin ounces NYSE:HL HL Reserve $20.00 Year $18.50 Prices $17.50 $18.00 $18.00 $18.00 $16.29 $16.50 2012 $26.50 $14.50 $15.00 2013 $20.00 2014 $17.25 2015 $14.50 2016 $14.50 Hecla Fresnillo Endeavour Agnico Coeur Silver Goldcor
Slide 7: Higher Grades Increase Operating and Financial Flexibility
Higher Grades Increase Operating and Financial Flexibility NYSE:HL 1,600 800 Higher Grades Silver Eq. Reserves (Moz) 1,200 600 Reserve Grade (g/t) 800 400 400 200 0 0 FRES THO BCM PAAS* HL* CDE* SSRI* FVI HOC FR EDR* MAG Silver Other Metals Silver Eq Grade *Reserve and resource update released for 2
Slide 8: Ounces in North America Are Worth More Than in 3rd World Countries
Ounces in North America Are Worth More Than in 3rd World Countries NYSE:HL –8–
Slide 9: Why Invest in Hecla?
NYSE:HL Why Invest in Hecla? -9-
Slide 10: Strategy Created Per Share Value In 2016
Strategy Created Per Share Value In 2016 2017 focus is on improving productivity through innovation NYSE:HL Growth Captive Extend Price Cycles Mine Life Production Reserves & Cash-Flow Resources Long-Lived Capture Price Cycles Low-Cost Mines Improve High Productivity High Return Investment
Slide 11: Strong Financial Performance
Strong Financial Performance Driven by mine throughput and base metal prices NYSE:HL Strong mine performance Cash Cost per Silver Ounce1 AISC – per Silver Ounce2 (After By-Product Credits) (After By-Product Credits) Good silver and gold production $12.58/oz Record gold revenue $3.68/oz 47% A
Slide 12: Diversified Revenue Stream Q3/2017
Diversified Revenue Stream Q3/2017 Mitigates risk and enhances economics NYSE:HL #1 Silver and #3 Lead and Zinc Producer in the U.S. #4 Gold Producer in Quebec, Canada Greens Creek Silver Production: 3.3 Moz 43% of Cash Costs, after by-product Total Revenue credits: $(0.63)/oz1 Realized Price: $17.0
Slide 13: Strong Silver and Gold Margins
Strong Silver and Gold Margins 104% silver cash margin is one of the industry’s highest NYSE:HL Silver Margins Gold Margins $19.53 $1,341 $17.90 $17.16 $17.01 $1,260 $1,283 $17.14 $1,202 $1,221 $426 $288 23% 42% $15.85 $335 32% $402 33% 27% $533 $14.16 81% 82% $17.06 95% $16.88 98% $17.64 104% $915
Slide 14: Innovation is Here: And It's a Game Changer
NYSE:HL Innovation is Here: And It’s a Game Changer -14-
Slide 15: The Need to Improve Productivity
The Need to Improve Productivity What percentage of variable cost was labor in 1900? Today? NYSE:HL The future of mining: Moving miners back from the face Shaft operator also operates rock breakers from surface –15–
Slide 16: Creating Value During The Shift Change
Creating Value During The Shift Change Automated LHD operates during shift change/blasting increasing productivity NYSE:HL Blasting & Blasting & Shift Change Shift Change Utilization Operating Operating Operating Hours in the Day -16-
Slide 17: Greens Creek
Greens Creek Consistent low-cost production in a wilderness area / National Monument NYSE:HL 2016 Q3 2016 Q3 2017 2017E Silver Production (Moz) 9.3 2.4 2.3 7.8 - 8.2 Gold Production (koz) 54 12 12.6 51 – 53 Cost of Sales $191.3 M $58.4 M $41.9 M $201 M Cash cost, after by-product credits, per silver
Slide 18: First We WIFI the Mines
First We WIFI the Mines Is key to increased safety & productivity NYSE:HL Improving Mining Based On Data Ventilation on Demand Will Be Functioning in 2017 -18-
Slide 19: Teleremote LHD at Greens Creek – Jumbo Drill at Casa Berardi
Teleremote LHD at Greens Creek – Jumbo Drill at Casa Berardi Increase Productivity NYSE:HL –19–
Slide 20: Hecla Has Significantly Improved Recoveries
Hecla Has Significantly Improved Recoveries Expect further improvements from Woodgrove SFR flotation cells NYSE:HL Increases payable silver and gold by having it report to bulk con instead of the zinc con Cost approx. $1.3 million Payback expected in 6-12 months IRR in excess of 100% Commi
Slide 21: Lucky Friday
Lucky Friday Positioning for growth and longevity NYSE:HL 2016 Q3 2016 Q3 2017 2017E Silver Production (Moz) 3.6 .887 .088 0.8-0.9 Cost of Sales $76.2 M $19.5 M -- $15 M Cash cost, after by-product $8.89/oz $9.07/oz $11.60/oz $7.50/oz credits, per silver oz1 AISC, after by-product $20.66/oz $20.22/o
Slide 22: Lucky Friday Strike Update
Lucky Friday Strike Update NYSE:HL The current bid system needs to be changed with the demands of mining at greater depths. The changes we proposed will help ensure the long-term future of the mine. In order to increase the financial return the mine currently generates, we need to increase pro
Slide 23: #4 Shaft Gives Access to the High Grade Zone
#4 Shaft Gives Access to the High Grade Zone Reserve grade 4 ounces higher than 2013, production grade increasing 0.5oz/yr 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
Slide 24: Testing Battery Powered LHD
Testing Battery Powered LHD Could reduce ventilation needs versus diesel NYSE:HL -24-
Slide 25: Continuous Mechanical Cutting To Eliminate Drill/Blast
Continuous Mechanical Cutting To Eliminate Drill/Blast A 5-Year investment that could revolutionize the Lucky Friday NYSE:HL Could Improve Safety and Productivity Atlas Copco Test Mine 2016 -25-
Slide 26: Casa Berardi: Record Gold Production
Casa Berardi: Record Gold Production Improving performance with higher grades and throughput NYSE:HL 2016 Q3 2016 Q3 2017 2017E Gold Production (koz) 146 31.9 44.1 155 – 157 Cost of Sales $155.7 M $36.3 M $48.6 M $181 M Cash cost, after by- product credits, per gold $764/oz $915/oz $750/oz $800/oz o
Slide 27: Casa Berardi
Casa Berardi Increased throughput more than 100% since acquisition NYSE:HL Trendline -27-
Slide 28: EMCP Pit is Transforming Casa Berardi
EMCP Pit is Transforming Casa Berardi The first in a growing number of pits that will operate for years to come NYSE:HL Optimizing the mill: ~2,300 tpd (2015) to ~3,600 tpd (Q2 2017) Increasing operating flexibility: More consistent operations Strong Returns: IRR of 90%* Location of EMCP Pit *
Slide 29: Automation in 2017
985 Automation in 2017 Two 40 tonne Sandvik trucks should save $5M, lessons for other operations NYSE:HL 123 & 118 Lower 985 Automated Drift -29-
Slide 30: Drift Haulage Under Construction
985 Drift Haulage Under Construction First automated truck now on site: Should result in cost savings NYSE:HL Optical scanner & camera Surface control room 40 tonne Sandvik truck -30-
Slide 31: San Sebastian
San Sebastian “Just-in-time mining” features very low cash costs, after by-product credits NYSE:HL 2016 Q3 2016 Q3 2017 2017E Silver Production (Moz) 4.3 .976 .881 3.0 – 3.4 Gold Production (koz) 34 8.2 6.3 24 – 25 Cost of Sales $31.2 M $6.5 M $6.7 M $24 M Cash cost, after by-product $(3.35)/oz $(4.
Slide 32: Current Underground Design Layout
Current Underground Design Layout San Sebastian NYSE:HL North Ramp -32-
Slide 33: New Polymetallic Mineralization Discovered
New Polymetallic Mineralization Discovered 2,500 feet west of current Hugh Zone Resources NYSE:HL FRANCINE VEIN LONGITUDINAL SECTION $NSR VALUE (Looking NE) PER TON (6.6 FT DILUTED) Newly defined Limit of Current Polymetallic Hugh Zone Mineralization Resource Existing Mine Workings Hugh Zone 0.01 oz
Slide 34: Rock Creek & Montanore
Rock Creek & Montanore Final stages of permitting, expecting to advance in 2018 NYSE:HL Rock Creek Montanore Potential Mine Life 20-30 years each Hecla stock acquisition cost $19 M $54 M 148.1 Moz Ag / 183.4 Moz Ag / Big potential 1.3 Blbs Cu 1.5 Blbs Cu Advanced permitting SEIS Final EIS, RODs** We
Slide 35: Revised 2017 Estimates
Revised 2017 Estimates Lowering cash cost and AISC, after by-product credits, per silver ounce NYSE:HL Production Outlook Silver Production (Moz) Gold Production (Koz) Silver Equivalent (Moz)6 Gold Equivalent (koz)6 Greens Creek 7.8 – 8.2 51 - 53 23.0 – 23.6 325 - 332 Lucky Friday 0.8 – 0.9 - 1.8 –
Slide 36: Thank You
MINING COMPANY NYSE:HL =] \o) > = = © <= = -36-
Slide 37: Appendix
MINING COMPANY NYSE:HL Appendix -37-
Slide 38: Endnotes
Endnotes NYSE:HL 1. Cash cost, after by-product credits, per silver and gold ounce represents a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization (sometimes referred to as "cost of sales" in this release),
Slide 39: Improving Debt Metrics
Improving Debt Metrics Q3 2017 NYSE:HL 4 5 LTM* Adjusted EBITDA Net Debt/LTM Adjusted EBITDA $265 M $272 M 1.4x $236 M $242 M $226 M 1.2x 1.1x 1.3x 1.4x LTM Q3 2016 LTM Q4 2016 LTM Q1 2017 LTM Q2 2017 LTM Q3 2017 LTM Q3 2016 LTM Q4 2016 LTM Q1 2017 LTM Q2 2017 LTM Q3 2017 Total liquidity ~$306 M
Slide 40: Proven & Probable Mineral Reserves
Proven & Probable Mineral Reserves (on Dec. 31, 2016 unless otherwise noted) NYSE:HL (a) Mineral reserves are based on $1200 gold, $14.50 silver, $0.90 lead, $1.05 zinc, unless otherwise stated. (1) Mineral reserves are based on $1200 gold and a US$/CAN$ exchange rate of 1:1.4 Reserve diluted to an
Slide 41: Measured and Indicated Mineral Resources
Measured and Indicated Mineral Resources (on Dec. 31, 2016 unless otherwise noted) NYSE:HL -41-
Slide 42: Inferred Mineral Resources
Inferred Mineral Resources (on Dec. 31, 2016 unless otherwise noted) NYSE:HL (b) Mineral resources are based on $1350 gold, $21 silver, $0.95 lead, $1.10 zinc and $3.00 copper, unless otherwise stated. (2) Measured and indicated resources from Gold Hunter and Lucky Friday vein systems are diluted an
Slide 43: 2006 – 2015 Reserve Table
2006 – 2015 Reserve Table NYSE:HL Silver Silver Gold Silver Gold Proven Reserves Tons (oz/ton) Gold (oz/ton) (ounces) (ounces) 2011 Proven Reserves Tons (oz/ton) Gold (oz/ton) Silver (ounces) (ounces) 2006 Proven Reserves Greens Creek - - - - - Greens Creek (29.73%) - - - - - Lucky Friday 2,345,500
Slide 44: Cash Cost Reconciliation to GAAP
Cash Cost Reconciliation to GAAP Silver Operations NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization, the most comparable GAAP measurement, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sus
Slide 45: Cash Cost Reconciliation to GAAP
Cash Cost Reconciliation to GAAP Silver Operations NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization, the most comparable GAAP measurement, After By-product Credits, per Silver Ounce for Greens Creek, Lucky Friday and San Sebastian
Slide 46: Cash Cost Reconciliation to GAAP
Cash Cost Reconciliation to GAAP Greens Creek NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Oun
Slide 47: AISC Reconciliation to GAAP
AISC Reconciliation to GAAP Greens Creek NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ounce (n
Slide 48: Cash Cost Reconciliation to GAAP
Cash Cost Reconciliation to GAAP Lucky Friday NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Oun
Slide 49: AISC Reconciliation to GAAP
AISC Reconciliation to GAAP Lucky Friday NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ounce (n
Slide 50: Cash Cost Reconciliation to GAAP
Cash Cost Reconciliation to GAAP San Sebastian NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ou
Slide 51: AISC Reconciliation to GAAP
AISC Reconciliation to GAAP San Sebastian NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ounce (
Slide 52: Cash Cost Reconciliation to GAAP
Cash Cost Reconciliation to GAAP Casa Berardi NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Oun
Slide 53: AISC Reconciliation to GAAP
AISC Reconciliation to GAAP Casa Berardi NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ounce (n
Slide 54: Adjusted EBITDA Reconciliation and Net Debt Reconciliation to GAAP
Adjusted EBITDA Reconciliation and Net Debt Reconciliation to GAAP NYSE:HL Dollars are in thousands Three Months Ended Nine Months Ended Twelve Months Ended Sept 30, Sept 30, Sept 30, Sept 30, Sept 30, Sept 30, 2017 2016 2017 2016 2017 2016 Net income (loss) $ 1,412 $ 25,789 $ 4,230 $ 49,285 $ 24,49
Slide 55: Adjusted EBITDA Reconciliation and Net Debt Reconciliation to GAAP
Adjusted EBITDA Reconciliation and Net Debt Reconciliation to GAAP NYSE:HL Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (non-GAAP) Dollars in thousands (USD) For the Twelve Months Ended 30-Sep-17 30-Jun-17 31-Mar-17 31-Dec-16 30-Sep-16 Net income (loss) $ 24,492 $ 48,867 $ 96,999 $
Slide 56: Greens Creek Free Cash Flow Reconciliation
Greens Creek Free Cash Flow Reconciliation NYSE:HL Greens Creek Free Cash Flow Reconciliation (in thousands) 2017 YTD** 2016 1987-2016* Gross profit $ 51,009 $ 69,149 $ 1,337,900 Non-cash elements in gross profit: Depreciation, depletion and amortization 46,183 52,564 612,052 Other (195) 2,544 (1,02
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