Hecla Mining Company · NYSE:HL
Hecla Mining — Q4 2020 Earnings Presentation
33 slides from Hecla Mining's earnings presentation, Feb 18, 2021
Slide 1: 2020 Year End and Fourth Quarter Earnings Conference Call
2020 YEAR END AND FOURTH QUARTER Earnings Conference Call February 18, 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: Remarkable Year - Despite the Pandemic
REMARKABLE YEAR - DESPITE THE PANDEMIC Driven by robust prices, increasing silver grades & production, margins and COVID protocols Record Year • Highest revenues; 4th highest free cash flow(1); 3rd highest reserves Increasing Silver • 7% Increase in silver production over 2019; Hecla’s US silver pro
Slide 5: Financial Review
Financial Review NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 5
Slide 6: Financial Strength Is Growing
FINANCIAL STRENGTH IS GROWING Robust free cash flows, strong margins and consistent performance. Refinanced senior notes in 2020, $475 million due in 2028. Cash Balance Net Debt/Adjusted EBITDA(**,3) Available liquidity of $380 million(*) Attained our target of < 2.0x ($ millions) 2.6x 129.8 1.8x 62
Slide 7: Operations Review
Operations Review NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 7
Slide 8: 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 80% 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 1.61 1.22 1 0 2012 2013 2014 2015 2016 2017
Slide 9: Greens Creek: Another Exceptional Year
GREENS CREEK: ANOTHER EXCEPTIONAL YEAR Consistent performance and low costs drive robust free cash flow generation • 6% increased silver production over 2019 due to higher grades • Fourth quarter production affected by significant weather event • Hecla brought a lab to Juneau to provide real-time CO
Slide 10: Lucky Friday: Positioned for Growth and Grades
LUCKY FRIDAY: POSITIONED FOR GROWTH AND GRADES More than triple 2019 production - on track for 2021 to nearly double 2020 • 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 Lucky
Slide 11: Casa Berardi: Focused on Long Term Operational Improvement
CASA BERARDI: FOCUSED ON LONG TERM OPERATIONAL IMPROVEMENT Investments in 2020 are yielding results Broke monthly Mill throughput records for three consecutive months with >90% availability ~10% increase in UG active time, leading to improved productivity Reduced UG maintenance backlog by 2.5 weeks,
Slide 12: Nevada: Focus on Long Term Value Creation
NEVADA: FOCUS ON LONG TERM VALUE CREATION Bulk sample test nearing completion, increasing exploration • Fire Creek development pause has been successful • Generated $47.5 million in cash flow from operations and $38.6 million in free cash flow(1) since June 2019 • Improved the geologic model • Unit
Slide 13: Guidance
Guidance NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 13
Slide 14: 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)5 Gold Equivalent (Koz)5 2021 Total 12.9 – 14.0 185 - 193 40.0 – 41.6 439 –
Slide 15: Appendix
Appendix NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 15
Slide 16: Endnotes
ENDNOTES 1. Free cash flow is a non-GAAP measure and is calculated as as cash flow from operations less additions to property, plant and equipment. Reconciliation to GAAP is shown in the appendix. 2. Cost of sales and other direct production costs and depreciation, depletion and amortization. 3. Adj
Slide 17: 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 $8M in financial assurance • Advanced “Zero-Discharge
Slide 18: Our ESG Commitment Is: Continuous Improvement
OUR ESG COMMITMENT IS: CONTINUOUS IMPROVEMENT Continuing decades of strong performance Social • Signed Collaboration Agreement with Pikogan First Nation at Casa Berardi Mine • Initiated a buy local voucher program in partnership with community chambers of commerce to support local vendors during the
Slide 19: Third Highest Reserves in Hecla's History
THIRD HIGHEST RESERVES IN HECLA’S HISTORY Strong resource base; Reduction in reserves due to COVID-19 limitations, new mine plans and smelter terms • COVID-19 disrupted exploration programs company wide with significant third-party assay laboratory delays • Reduction in silver reserves at Greens Cre
Slide 20: Strong Free Cash Flow Generation
STRONG FREE CASH FLOW GENERATION Positive free cash flow generation from all mines except Nevada in the fourth quarter Greens Creek San Sebastian Lucky Friday ($ millions) 61.7 51.1 (10.5) Silver: Total Q4/2020 Cash Flow from Operations: $78.7 M 12.9 Free Cash Flow(1): $57.0 M 4.1 - 4.1 (11.1) 1.7 C
Slide 21: 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 Millions of USD ) Twelve months ending Three months ending 2020 2019 Q4/2019 Q3/2019 Cash provided by operating activities $180.8 $120.9 $57.3 $54.9 Less: Additions
Slide 22: 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-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 61,652 69,
Slide 23: Free Cash Flow (Non-GAAP) Reconciliation
FREE CASH FLOW (NON-GAAP) RECONCILIATON Fire Creek Reconciliation of Cash provided by operating activities (GAAP) to Free Cash Flow (non-GAAP) June 1, 2019 - Dollars are in thousands Q4/2020 Q3/2020 Q2/2020 Q1/2020 Q4/2019 Q3/2019 30-Jun-19 December 31, 2020 Fire Creek Cash provided (used) by operat
Slide 24: Adjusted EBITDA Reconciliation to GAAP
ADJUSTED EBITDA RECONCILIATION TO GAAP Reconciliation of Net Income (Loss) (GAAP) and Debt (GAAP) to Adjusted EBITDA (non-GAAP) NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 24
Slide 25: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP 2019-2020 Silver 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, Bef
Slide 26: Cash Cost and AISC Reconciliation to GAAP
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 27: Cash Cost and AISC Reconciliation to GAAP
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 28: Cash Cost and AISC Reconciliation to GAAP
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 29: 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 30: 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 31: 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 32: 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
Slide 33: Fourth Quarter 2020 Earnings Conference Call
FOURTH QUARTER 2020 Earnings Conference Call February 18, 2021 RESPONSIBLE. SAFE. INNOVATIVE. NYSE: HL