Hecla Mining Company · NYSE:HL

Hecla Mining — Roth Capital Partners 27th Annual Growth Stock Conference (March 2015)

61 slides from Hecla Mining's conference presentation, Mar 9, 2015

  1. Slide 1: Roth Capital Partners 27th Annual Growth Stock Conference

    Q U AL I TY AS S E TS U P S I D E P O TE N TI AL F I N AN C I AL S TR E N G TH U N D E R VAL U E D Roth Capital Partners 27th Annual Growth Stock Conference March 9, 2015

  2. Slide 2: Cautionary Statements

    HECLA MINING COMPANY Cautionary Statements Cautionary Statement Regarding Forward Looking Statements, Including 2015 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

  3. Slide 3: Hecla's Outperformance YTD

    HECLA MINING COMPANY Hecla’s Outperformance YTD 2015 Relative Price Performance 25% 20% 21% 15% 10% 5% 4% 3% 0% Price Performance -5% Hecla: 21% Intermediate Silver Index: 4% -10% -9% Junior Silver Index: 9% Silver Spot: 3% -15% 2-Jan-15 17-Jan-15 1-Feb-15 16-Feb-15 Hecla Intermediate Silver Index J

  4. Slide 4: 2014 Highlights and Achievements

    HECLA MINING COMPANY 2014 Highlights and Achievements $501M revenue 31%1 Record 34.5M silver equivalent production 50%2 Record 11.1M ounces silver production 24% Record 187K ounces gold production 56% P & P silver reserves 173M ounces 1.9% Record Adjusted EBITDA $174M 29%3 Cash at year end $210M vs.

  5. Slide 5: Hecla: A Transformed Company Since 2012

    HECLA MINING COMPANY Hecla: A Transformed Company Since 2012 2012 2014 % Change Silver production 6.4Moz 11.1Moz +73% Silver equivalent production 14.3Moz 34.5Moz +142% Gold production 56Koz 187Koz +237% Revenue $321M $501M +56% Operating cash flow $69M $138M1 +101% 1. Pro-forma 2014 OCF includes th

  6. Slide 6: 2015 Expectations

    HECLA MINING COMPANY 2015 Expectations 2015E1 Silver 2015E1 Gold Cash cost, after by-product Mine Production (Moz) Production (oz) credits, per silver/gold ounce2 Greens Creek 7.3 55,000 $4.50 Lucky Friday 3.2 n/a $8.75 Casa Berardi n/a 130,000 $825 Total 10.5 185,000 $6.00 Equivalent Production: In

  7. Slide 7: What Differentiates Hecla From Its Peers

    HECLA MINING COMPANY What Differentiates Hecla From Its Peers Quality assets and strong reserves – no impairments or write-downs of our properties Our mines are strong cash flow generators All our mines and pre-development projects have further upside Financially strong Undervalued 7

  8. Slide 8: HL Using Lower 2014 Reserve/Resource Prices

    HECLA MINING COMPANY HL Using Lower 2014 Reserve/Resource Prices1 2014 Reserve Silver Price/oz 2014 Reserve Gold Price/oz $22.00 $18.50 $19.00 $1,300 $17.25 $18.00 $1,260 $1,275 $1,250 $1,225 Hecla Endeavour Pan Coeur Goldcorp Hecla Pan American Endeavour Coeur Goldcorp American 2014 Resource Silver

  9. Slide 9: Conventional Wisdom

    HECLA MINING COMPANY Conventional Wisdom “Precious metals companies don’t generate free cash flow.” “Precious metals companies have projects with large cost and time overruns.” 9

  10. Slide 10: Hecla Is A Strong Cash Flow Generator

    HECLA MINING COMPANY Hecla Is A Strong Cash Flow Generator Cash Bridge 2010 – 2014 (US$ Millions) Partially Discretionary $752.7M Available $971.9 1 1 Cash Flow $219.2M Other Expenses $265.3M $550.4 $160.1 $42.2 $209.7 $151.2 $104.7 $263.4 $1.92 2010 Beginning Adjusted EBITDA Capex Exploration + Pre

  11. Slide 11: Our Mines Are Strong Cash Flow Generators

    HECLA MINING COMPANY Our Mines Are Strong Cash Flow Generators 2014 (USD Millions) Greens Creek Casa Berardi Lucky Friday 72% Conversion 15% Conversion 48% Conversion to FCF1 to FCF1 to FCF 2 $104.0 $60.9 $29.3 $69.1 $33.8 $50.4 $17.5 $16.3 $10.6 $34.5 OCF* Capex FCF** OCF* Capex FCF** ($18.2) OCF*

  12. Slide 12: North American Focused Asset Portfolio

    HECLA MINING COMPANY North American Focused Asset Portfolio Operations In Low-Risk + Mining-Friendly Jurisdictions 12

  13. Slide 13: Higher Grade Mines Than Peers

    HECLA MINING COMPANY Higher Grade Mines Than Peers Higher Grade Source: Company filings, MEG, BMO Capital Markets (02/12/2015) 13

  14. Slide 14: Greens Creek: High Grade & High Margin

    HECLA MINING COMPANY Greens Creek: High Grade & High Margin Gold Cash cost, after by-product Silver Production Production credits, per silver oz1 2014 Actual 7.8 Moz 58,753 oz $2.89/oz 2015E 7.3 Moz 55,000 oz $4.50/oz 2015E Capital $40M Ownership 1987(29.7%) / 2008(100%) 2P Reserves 94.0 Moz silver

  15. Slide 15: Greens Creek: Strong Financial Performance

    HECLA MINING COMPANY Greens Creek: Strong Financial Performance 30 Vein Past 25 Years1 Revenue $4.4 billion Consistently Net Income $1.1 billion Generates Free Cash Flow $941 million Positive Free Cash Flow 22% Free Cash Flow Conversion Historical Production Past 25 Years Silver Production: Zinc Pro

  16. Slide 16: Greens Creek: Expanding Reserves and Resources

    HECLA MINING COMPANY Greens Creek: Expanding Reserves and Resources Definition Drilling Exploration Drilling Deep Deep 200 200 South South Deep 200 Exploration Exploration South Definition 16

  17. Slide 17: Lucky Friday: Back at Full Production

    HECLA MINING COMPANY Lucky Friday: Back at Full Production Cash cost, after by-product Silver Production credits, per silver oz1 2014 Actual 3.2 Moz $9.44/oz 2015E 3.2 Moz $9.75/oz 2015E Capital $58M Ownership 1958 2P Reserves 78.9 Moz silver @ 13.4 oz/t M+I Resources 125.0Moz silver @ 5.7 oz/t 171.

  18. Slide 18: #4 Shaft: Expected to Grow Production 60%

    HECLA MINING COMPANY #4 Shaft: Expected to Grow Production 60%  As of Q4/14:  75% completed  $165 million spent  Excavation completed Q3/15  Operational shaft expected in Q3/16 at a 7580 Level total cost of $215 million Current Excavation  On schedule and on budget 18

  19. Slide 19: Casa Berardi: Great New Addition

    HECLA MINING COMPANY Casa Berardi: Great New Addition Cash cost, after by-product Gold Production credits, per gold oz1 2014 Actual 128,244 oz $826/oz 2015E 130,000 oz $825/oz 2015E Capital $44M Ownership June 2013 2P Reserves 1.3 Moz gold @ 0.14 oz/t M+I Resources 1.4 Moz gold @ 0.12 oz/t 191. Cash

  20. Slide 20: Casa Berardi: Exploration Upside

    HECLA MINING COMPANY Casa Berardi: Exploration Upside Composite Longitudinal Section 20

  21. Slide 21: Casa Berardi: Increasing Resources

    HECLA MINING COMPANY Casa Berardi: Increasing Resources Southwest Zone 124 Zone 113 Zone New Zone 117 118 Zone 985 Level 4.0 gpt Au/4.6 m 123 Zone 15.8 gpt Au/4.5 m 21

  22. Slide 22: San Sebastian: Near-Term Growth Opportunity

    HECLA MINING COMPANY San Sebastian: Near-Term Growth Opportunity Could Potentially Become a 100M AgEq oz. District  Mined 11.6 million oz Ag and 177,541 oz Au from 2001-05  Total inferred resources 46% to 37.7 Moz AgEq in 2014  Total inferred resources 18% to 34.9 Moz AgEq in 2015  Near surface,

  23. Slide 23: San Sebastian: Significant New Discoveries

    HECLA MINING COMPANY San Sebastian: Significant New Discoveries SAN SEBASTIAN CONCESSIONS Aerial View Looking West Focus Area 0 500 LEGEND 1 : 500 Approximate Scale New Veins Past Producing Veins 23

  24. Slide 24: San Sebastian: High Grade Near Surface

    HECLA MINING COMPANY San Sebastian: High Grade Near Surface 3D Cross Section Vein NE SW EAST FRANCINE NORTH VEIN 328 ft FRANCINE MIDDLE VEIN 0 500 Feet Surface to 328 feet (100 meters): Silver Equivalent (Oxide) • 16.2 million ounces indicated resources HUGH ZONE • average grade of 0.11 oz/ton gold

  25. Slide 25: Financial Strength: 2014 Highlights

    HECLA MINING COMPANY Financial Strength: 2014 Highlights Silver Equivalent Production1 +50% 34.5 Moz 23.0 Moz 2013 2014 2013 2014 Revenue $383 M $501 M +31% Adjusted EBITDA2 $135 M $174 M +29% Cash cost, after by-product credits, per silver oz3 $6.84/oz $4.81/oz -30% Cash cost, after by-product cred

  26. Slide 26: Improving On Already Strong Margins

    HECLA MINING COMPANY Improving On Already Strong Margins Silver Margins Casa Berardi Margins $1,298 $1,291 $1,275 $1,262 $35.30 $1,195 $32.11 32% $339 26% $412 $377 30% $436 35% 47% $560 $21.28 97% $18.46 $34.15 92% $29.41 68% $952 $14.44 74% $826 $13.65 $886 $898 $635 $6.84 $2.70 $4.81 $1.15 2011 2

  27. Slide 27: Strong Liquidity

    HECLA MINING COMPANY Strong Liquidity $384 $367 $312 $310 $291 $284 $267 $191 $212 $210 2010 2011 2012 2013 2014 (US$ millions) 27

  28. Slide 28: Reasonable Debt Level In Capital Structure

    HECLA MINING COMPANY Reasonable Debt Level In Capital Structure  Senior notes due in 2021 are the only Capitalization substantial indebtedness Actual Q4/2014  Limited covenants Cash and cash equivalents $210  No off balance sheet arrangements Capital lease liability 23  Credit Metrics Borrowing,

  29. Slide 29: High Yield is "Good" Debt

    HECLA MINING COMPANY High Yield is “Good” Debt $500M in high yield notes gives us: Growth Purchased Casa Berardi, a long life gold mine Flexibility No restrictive financial covenants Low cost 6.875% coupon or ~5% after tax capital Long term Zero repayment obligations until 2021 borrowings Minimal A

  30. Slide 30: Diversified Revenue - Silver, Gold, Lead and Zinc

    HECLA MINING COMPANY Diversified Revenue - Silver, Gold, Lead and Zinc #1 Silver and #3 Lead and Zinc Producer in the U.S.  Diversified revenue - 3 mines (silver, gold, lead and zinc) Consolidated Revenue by Metal 2014  Hedge up to 60% of the next 3 years of lead and zinc payable 17% 31% productio

  31. Slide 31: Zinc Supply Shortage Expected

    HECLA MINING COMPANY Zinc Supply Shortage Expected  Hecla is the 3rd largest zinc supplier in the US  Demand is expected to exceed mine production around 2017 Major Mine Shutdowns Annual Capacity Mine (MT) CLOSED Perseverance 115K (2013) CLOSED Brunswick 240K (2013) EXPECTED Century 510K TO CLOSE

  32. Slide 32: Hecla is Undervalued

    HECLA MINING COMPANY Hecla is Undervalued % Undervalued Per Consensus Estimates P/CFPS – 2015 -8% EV/PRODUCTION (Silver Eq.) -5% EV/RESERVES (Silver Eq.) -38% P/CF - 2015 16.8x 13.6x 13.0x Average, 11.0x 10.5x 10.0x 10.1x 8.8x 5.1x Silver Standard Endeavor Silver Pan American Hecla -Hecla Consensus

  33. Slide 33: What Differentiates Hecla From Its Peers

    HECLA MINING COMPANY What Differentiates Hecla From Its Peers Quality assets and strong reserves – no impairments or write-downs of our properties Our mines are strong cash flow generators All our mines and pre-development projects have further upside Financially strong Undervalued 33

  34. Slide 34: Appendix Table of Contents

    HECLA MINING COMPANY Appendix Table of Contents Appendices Page 1. Management 35 2. Greens Creek 36 3. Lucky Friday 40 4. Casa Berardi 42 5. Exploration/Pre-Development 44 6. Silver and Gold Overview 48 7. Zinc Overview 52 8. Reserves & Resources 53 9. Financial Information 57 34

  35. Slide 35: The Team: 300+ Years of Experience

    HECLA MINING COMPANY Appendix 1 The Team: 300+ Years of Experience 35

  36. Slide 36: Greens Creek: Consistent, Low Cost Production

    HECLA MINING COMPANY Appendix 2 Greens Creek: Consistent, Low Cost Production Historical Production Past 25 Years Silver Production: Zinc Production: 191.4 Moz (7.68 Moz avg/yr) 1.4 M tons (56k tons avg/yr) Gold Production: Lead Production: 1.4 Moz (60k avg/yr) 0.5 M tons (20k tons avg/yr) Cash Cost

  37. Slide 37: Greens Creek - Location and Layout

    HECLA MINING COMPANY Appendix 2 Greens Creek - Location and Layout Auke Bay Juneau Douglas Island Hawk Inlet Young Bay Marine Terminal (Cannery) “A” Road Tailings Admiralty Island Facility 920 Portal Site “B” Road 37

  38. Slide 38: Overview - Greens Creek Surface Exploration

    HECLA MINING COMPANY Appendix 2 Overview - Greens Creek Surface Exploration Surface Drill holes 38

  39. Slide 39: Greens Creek: Advancing Killer Creek

    HECLA MINING COMPANY Appendix 2 Greens Creek: Advancing Killer Creek  Drilling has defined copper, silver, zinc, lead bearing stockwork veins  Drilling has defined base metal mineralization at mine contact  Mineralization within 1 mile of mine infrastructure A A’ Azimuth 51 39

  40. Slide 40: Lucky Friday: It's Back!

    HECLA MINING COMPANY Appendix 3 Lucky Friday: It’s Back! 3.5 $25 3.2 Moz Cash Cost, After By-Product Credits, Per Silver Ounce 3.0 $19.21/oz $20 Silver Ounces Produced (Moz) 2.5 $15 2.0 1.5 Moz 1.5 $10 $9.44/oz 1.0 $5 0.5 0.0 $0 2013 2014 1 Silver Production Cash Cost, After By-Product Credits, Per

  41. Slide 41: Lucky Friday #4 Shaft: Progressing Well

    HECLA MINING COMPANY Appendix 3 Lucky Friday #4 Shaft: Progressing Well  Top of shaft at 4900 feet below surface, bottom at 8800 below surface  #4 Shaft is 5,000 feet northwest of the Silver Shaft  Work began Q4 2009 with lateral development  Hoisting facility complete Q4 2011  Completion forec

  42. Slide 42: Casa Berardi: A Hecla Mine Delivering Improved Performance

    HECLA MINING COMPANY Appendix 4 Casa Berardi: A Hecla Mine Delivering Improved Performance 45 $952/oz $1,000 $886/oz $898/oz 39 koz $900 40 $824/oz Cash Cost, After By-Product Credits, Per Gold Ounce $800 35 32 koz 31 koz $635/oz $700 30 29 koz 29 koz Gold Production (koz) $600 25 $500 20 $400 15 $3

  43. Slide 43: Casa Berardi - Located In A Golden Neighborhood

    HECLA MINING COMPANY Appendix 4 Casa Berardi - Located In A Golden Neighborhood 43

  44. Slide 44: San Sebastian: Successful 2014 RAB Drilling

    HECLA MINING COMPANY Appendix 5 San Sebastian: Successful 2014 RAB Drilling 44

  45. Slide 45: San Sebastian North Vein Intersection

    HECLA MINING COMPANY Appendix 5 San Sebastian North Vein Intersection SW NE SS-523 SS-524 SS-521 SS-525 EXT EXT EXT SS-536 SS-532 SS-552 SS-590 13.3 ft, 0.08 opt Au, 2.0 opt Ag 12.6 ft, 0.10 opt Au, 4.4 opt Ag 16.2 ft, 0.19 opt Au, 4.4 opt Ag 14.7 ft, 0.08 opt Au, 2.2 opt Ag 11.3 ft, 0.06 opt Au, 3.

  46. Slide 46: San Juan Silver (Colorado)

    HECLA MINING COMPANY Appendix 5 San Juan Silver (Colorado) Bulldog Surface Infrastructure  Includes historic Bulldog mine: produced 25 million ounces of silver before closing in 1985  7.6 million ounces of silver indicated resources¹  33.1 million ounces of silver inferred resources  Bulldog dec

  47. Slide 47: Good Early Stage Exploration Potential

    HECLA MINING COMPANY Appendix 5 Good Early Stage Exploration Potential Heva (Au): 100% Hecla: $0.7M proposal 20 holes, 6,750 m Extend high-grade resource blocks and change perception. Fayolle JV (Au): $0.5M proposal 24 holes, 8,100 m proposal Test the Cinco and Paré areas for new deposits. Opinaca (

  48. Slide 48: Gold & Silver: Physical vs. Financial

    HECLA MINING COMPANY Appendix 6 Gold & Silver: Physical vs. Financial EAST vs. WEST 1,200 3,000 Tonnes Gold (thousands) 1,000 Net Imports (China) 2,500 Gold Tonnes 800 2,000 600 1,500 400 1,000 Total Known ETF 500 Holdings of Gold 200 0 - 2009 2010 2011 2012 2013 Source: Bloomberg, Source: Bloomberg

  49. Slide 49: Silver - The Metal of This Age

    HECLA MINING COMPANY Appendix 6 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

  50. Slide 50: Increasing Share of Modern Demand

    HECLA MINING COMPANY Appendix 6 Increasing Share of Modern Demand  Modern demand increased from 260 M oz in 1992 to 537 M oz in 2013, an increase of 106%, and an annualized increase of 4.0% 1% 5% 22% 36% 49% 30% Modern Modern 23% 29% 5% 1992 2013 Modern Investment Jewelry & Photography Coins & Meda

  51. Slide 51: Silver Consumption per Capita Increases

    HECLA MINING COMPANY Appendix 6 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

  52. Slide 52: Zinc Supply - US Production

    HECLA MINING COMPANY Appendix 7 Zinc Supply - US Production  Hecla is the 3rd largest zinc producer in the US % of USA Zinc Production 2013 Comparison of 2013 Zinc Production Doe Run East 3.92% Tennessee Mines 125 9.37% Zinc Production (thousands tonnes) Gordonsville 6.61% 87 Greens Creek 56 6.90%

  53. Slide 53: 240 Million Ounces

    HECLA MINING COMPANY Appendix 8 Added 240 million Ounces of Reserves Over Past 11 Years1 Silver Ounces Discovered or Acquired 240 Moz Over the Past 11 Years 200 Millions 11-Year Reserves and Cumulative Ounces Mined 173 Moz 150 240 Million Ounces 100 Reserve Additions 50 0 (50) Cumulative Production

  54. Slide 54: Proven & Probable Reserves

    HECLA MINING COMPANY Appendix 8 Proven & Probable Reserves 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% 4.7 15.7 0.10 3.7 9.2 74 0.5 180 440 Lucky Friday (a) Uni

  55. Slide 55: Reserves & Resources Update

    HECLA MINING COMPANY Appendix 8 Reserves & Resources Update (on Dec. 31, 2014 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 (b) United States 100.0% - - - -

  56. Slide 56: Reserves & Resources Update

    HECLA MINING COMPANY Appendix 8 Reserves & Resources Update (on Dec. 31, 2014 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 (b) United States 100.0% 3,452 1

  57. Slide 57: Cash Cost GAAP Reconciliation

    HECLA MINING COMPANY Appendix 9 Cash Cost GAAP Reconciliation Reconciliation of cash cost, after by-product credits, per silver ounce to cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparable GAAP measurements, for Greens Creek & Lucky Frida

  58. Slide 58: Cash Cost GAAP Reconciliation

    HECLA MINING COMPANY Appendix 9 Cash Cost GAAP Reconciliation Greens Creek Lucky Friday Q4/2014 Q3/2014 Q2/2014 Q1/2014 Q4/2013 Q4/2014 Q3/2014 Q2/2014 Q1/2014 Q4/2013 $ 51,828 $ 50,415 $ 50,405 $ 46,599 $ 50,906 Cash costs, before by-product credits (1) $ 18,361 $ 21,668 $ 19,646 $ 17,920 $ 18,766

  59. Slide 59: Hecla Adjusted EBITDA Reconciliation

    HECLA MINING COMPANY Appendix 9 Hecla Adjusted EBITDA Reconciliation Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (non-GAAP) Three Months Ended Twelve Months Ended 31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13 Net income (loss) $ 12,340 $ (2,908) $ 13,259 $ (25,130) Plus: Interest expense

  60. Slide 60: Hecla Adjusted EBITDA Reconciliation

    HECLA MINING COMPANY Appendix 9 Hecla Adjusted EBITDA Reconciliation Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (non-GAAP) Twelve Months Ended December 31, 2014 2013 2012 2011 2010 Net Income (Loss) $ 17,824 $ (25,130) $ 14,954 $ 151,164 $ 48,983 Plus: Interest expense, net of amo

  61. Slide 61: HL: No Debt Repayment Obligations Until 2021

    HECLA MINING COMPANY Appendix 9 HL: No Debt Repayment Obligations Until 2021 Peer Comparison Date Gross Current Issuer Issued Coupon Maturity Proceeds 1 Rating Hecla 12-Apr-13 6.875% Sr. Unsecured 1-May-21 $500 B3/B AuRico Gold 17-Mar-14 7.750% Sr. Secured 1-Apr-20 $315 B3/B Coeur 24-Jan-13 7.875% S

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