Hecla Mining Company · NYSE:HL
Hecla Mining — Roth Conference 2019
36 slides from Hecla Mining's conference presentation, March 2019
Slide 1: Roth Conference: Key Value Drivers
ROTH CONFERENCE KEY VALUE DRIVERS March 2019 RESPONSIBLE. SAFE. INNOVATIVE. Hecla Mining Company NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 1
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: Why Invest in Hecla?
WHY INVEST IN HECLA? IMPROVING THE FUNDAMENTALS INCREASES VALUE Key Value Drivers Improvements In 2018/19 Jurisdiction Added Nevada Reserve Quality Growing reserves at industry low price assumptions Mine Life Mine life at our most important mines are long and getting longer Social License Injuries a
Slide 4: Innovating Across North American Focused Assets
INNOVATING ACROSS NORTH AMERICAN FOCUSED ASSETS OPERATIONS IN LOW-RISK & MINING-FRIENDLY JURISDICTIONS NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 4
Slide 5: Safety First
SAFETY FIRST FIRST HARDROCK MINING COMPANY TO COMPLETE NMA CORESAFETY PROGRAM Hecla All Injury Frequency Rate (AIFR) 6 5.41 63% 5 4.57 4 Frequency Rate 3.42 3 2.76 2.00 2 1 0 2014 2015 2016 2017 2018 NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 5
Slide 6: Hecla Has Financial Discipline
HECLA HAS FINANCIAL DISCIPLINE EXPECT TO GENERATE FREE CASH FLOW IN 2019 Estimated Free Cash Flow Generation at $16.00 Ag/$1,350 Au (in millions) $300 $269 $250 $200 $149 $150 $150 $100 $111 $120 $44 $50 $35 $31 $39 $10 $0 Cash Flow from Capital Exploration, Cash, G&A and Interest & Free Cash Flow P
Slide 7: Robust 3 Year Free Cash Flow Generation
ROBUST 3 YEAR FREE CASH FLOW GENERATION STRONG CASH FLOW FROM OPERATIONS INVESTED IN DISCRETIONARY PROJECTS Investment in exploration, technology and innovation has generated robust double digit returns: Much higher than dividends, share buybacks, debt repayment Total 3 year Discretionary Expenditur
Slide 8: Exploration: Discretionary But a Key Driver of Returns
EXPLORATION: DISCRETIONARY BUT A KEY DRIVER OF RETURNS Silver Reserves Gold Reserves 48% Growth* 108% Growth* 50.1 1.4 190.9 0.1 2.8 175.4 (34.6) (0.7) 2.1 48% 108% 2016 Beginning Reserves Gold Produced, Additions Reserves, 2016 Beginning Reserves Added, Silver Produced, Reserves, Reserves Added, 20
Slide 9: Solid Returns from Discretionary Expenses
SOLID RETURNS FROM DISCRETIONARY EXPENSES RETURNS QUANTITATIVE/FOUNDATIONS FOR SAFETY AND EFFICIENCY Discretionary Item Returns Recovery Improvements driven by PH control using CO2 & Lead scalping Increased Silver recoveries 6% to 7% per year, has returned $50M cash to date process - GC and another
Slide 10: Record Reserves/Resources
RECORD RESERVES/RESOURCES RECORD SILVER, GOLD AND LEAD RESERVES Reserves Increase Measures & Indicated Increase Resources Silver 191 Moz 8% Silver 208 Moz 65% Gold 2.8 Moz 26% Gold 7 Moz 47% Lead 773,740 Tons 5% Lead 837,880 Tons 27% Zinc 931,730 Tons 11% Zinc 771,070 Tons 73% Inferred Resources Inc
Slide 11: Silver Reserves & Cumulative Ounces Mined
SILVER RESERVES & CUMULATIVE OUNCES MINED 200 MILLION SILVER RESERVE OUNCES ADDED; NO OUNCES FROM ACQUISITIONS Gain in Reserve oz Reserves 191 Moz (Total Gain 200 Moz) Production Cumulative Production 142 Moz NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 11
Slide 12: Silver and Gold Reserve Price Comparisons
SILVER AND GOLD RESERVE PRICE COMPARISONS COMPANY COMPARISON - HECLA AT LOW END OF KNOWN PEER RANGE NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 12
Slide 13: Diversified Revenue Stream 2018
DIVERSIFIED REVENUE STREAM 2018 MITIGATES RISK AND ENHANCES ECONOMICS #1 Silver and #3 Lead and Zinc Producer in the U.S. Zinc Production: 56 Ktons Realized Price: $1.27/lb Silver Production: 10.4 Moz 17% Cost of Sales: $241.6 M2 24% Cash Costs, after by-product Lead Production: 20 Ktons Realized Pr
Slide 14: Condensed Consolidated Income Statement and Cash Flow Statement
CONDENSED CONSOLIDATED INCOME STATEMENT AND CASH FLOW STATEMENT ($ millions) FY 2018 FY 2017 Revenues $ 567 $ 578 Cost of Sales (Production Costs and DD&A) 488 425 Earnings from mine operations 79 152 Other Operating Exp (Corp Admin, Exploration, Pre-Development, Other) 118 92 (Loss) income from ope
Slide 15: Hecla's Track Record of Adding Value
HECLA’S TRACK RECORD OF ADDING VALUE AN EXTENSIVE HISTORY OF OPTIMIZING ASSETS Casa Berardi Greens Creek San Sebastian Operational enhancements and mill Increased recoveries/ low cost Prudent, high impact capital optimization production differentiated mining model • Throughput has increased by 91% s
Slide 16: Greens Creek Has Generated +$1B of Free Cash Flow
GREENS CREEK HAS GENERATED +$1B OF FREE CASH FLOW SIGNIFICANT IMPROVEMENT IN PERFORMANCE SINCE HECLA BECAME OPERATOR Cumulative Net Cash Flow Greens Creek throughput has grown 15% since purchase in 2008 Hecla became operator Hecla became operator Hecla became operator • Automation drive beginning in
Slide 17: Greens Creek: Our Best Mine Is Getting Better
GREENS CREEK: OUR BEST MINE IS GETTING BETTER LONGER LIFE, MOVING REVENUE FORWARD, REDUCED DEVELOPMENT EXPECTED Definition • 15 to 20% increase in silver, gold, lead and zinc reserves from drilling and more data Exploration 4th Quarter • Improved plan has 8% higher grades over the next four years, a
Slide 18: Casa Berardi: Growing Reserves, Production and Cash Flow
CASA BERARDI: GROWING RESERVES PRODUCTION AND CASH FLOW AGGRESSIVE EXPLORATION ADDS TO RESERVE AND RESOURCE BASE Casa Berardi throughput and reserves have grown 111% Casa Berardi Longitudinal Section and 163% since purchase in 2013 Hecla became operator • Successfully stabilized, then increased thro
Slide 19: Series of Open Pits at Casa Berardi
SERIES OF OPEN PITS AT CASA BERARDI WEST MINE CROWN PILLAR (WMCP) LATEST ADDITION TO THE PITS • 28% increase in gold reserves • WMCP pit is the 2nd largest and 2nd highest grade • Infilling on the WMCP and data to steepen the pit walls • Advancing underground exploration on the East portion of the m
Slide 20: Proposed West Mine Crown Pillar Pit
PROPOSED WEST MINE CROWN PILLAR PIT CONVERGENCE OF LOWER INTER AND 105 ZONES NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 20
Slide 21: Nevada Assets: 2018 Activities and 2019 Plan
NEVADA ASSETS: 2018 ACTIVITIES AND 2019 PLAN FOCUS ON IMPROVING OPERATIONS, INVESTING IN THE MINES 2018 Activities: Midas Mill • Reorganized assets, put Midas on care and maintenance, relocated employees and equipment to Fire Creek and Hollister. • Completed installation of the CIL circuit to improv
Slide 22: Fire Creek Development Increasing
FIRE CREEK DEVELOPMENT INCREASING SETS THE STAGE FOR RESTORING THE MINE DEVELOPED STATE Fire Creek Development Advance (Feet) by Month 1400 1,237 1200 1000 799 831 800 701 618 600 441 362 394 400 307 302 288 280 200 110 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2018 Development Feet 2019
Slide 23: San Sebastian: Testing Hugh Zone
SAN SEBASTIAN: TESTING HUGH ZONE • Mine restarted in 2016 with an 18 month mine life • Great return on $15 million of capital invested by using leased mill and contract miners • Oxide production into 2020 • Continuing to explore for oxide mineralization • Starting the test of the Hugh Zone sulfides
Slide 24: 2019 Outlook
2019 OUTLOOK LOWERING CASH COST AND AISC, AFTER BY-PRODUCT CREDITS, PER SILVER OUNCE Production Outlook Silver Production (Moz) Gold Production (Koz) Silver Equivalent (Moz)1 Gold Equivalent (Koz)1 Greens Creek 7.7 50 24.0 305 Lucky Friday 0.2 n/a 0.2 n/a San Sebastian 2.0 14 3.0 40 Casa Berardi n/a
Slide 25: Appendix
APPENDIX Midas San Sebastian Lucky Friday Greens Creek Fire Creek Hollister Casa Berardi NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 25
Slide 26: Endnotes
ENDNOTES 1. Silver and gold equivalent is calculated using the average market prices for the time period noted. 2. Cost of sales and other direct production costs and depreciation, depletion and amortization. 3. Cash cost, after by-product credits, per silver and gold ounce represents a non-GAAP mea
Slide 27: Free Cash Flow Reconciliation to GAAP
FREE CASH FLOW RECONCILIATION TO GAAP Reconciliation of Cash Flow from Operations (GAAP) to Free Cash Flow (Non GAAP) In thousands 2014 2015 2016 2017 2018 Cash flow from Operations $ 83,124 $ 106,445 $ 225,328 $ 115,878 $ 94,221 Capital (122,537) (137,443) (164,788) (98,038) (145,221) Dividends (4,
Slide 28: Cash Cost and AISC Reconciliation to GAAP: Silver Operations
CASH COST AND AISC RECONCILIATION TO GAAP SILVER OPERATIONS 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, Be
Slide 29: Cash Cost and AISC Reconciliation to GAAP: Gold Operations
CASH COST AND AISC RECONCILIATION TO GAAP GOLD OPERATIONS 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, Befo
Slide 30: Cash Cost and AISC Reconciliation: 2019 Estimates, Silver Operations
CASH COST AND AISC RECONCILIATION TO GAAP 2019 ESTIMATES – SILVER OPERATIONS 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 Sus
Slide 31: Cash Cost and AISC Reconciliation: 2019 Estimates, Gold Operations
CASH COST AND AISC RECONCILIATION TO GAAP 2019 ESTIMATES – GOLD OPERATIONS 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 Susta
Slide 32: Greens Creek Free Cash Flow Reconciliation
GREENS CREEK FREE CASH FLOW RECONCILIATION Greens Creek Free Cash Flow Reconciliation (in thousands) 1 2018 1987-2018 Gross profit $ 75,288 $ 1,408,990 Non-cash elements in gross profit: Depreciation, depletion and amortization 49,908 718,288 Other (1) 1,339 Working capital changes (57) (17,573) Net
Slide 33: Proven & Probable Mineral Reserves
PROVEN & PROBABLE MINERAL RESERVES (ON DEC. 31, 2018 UNLESS OTHERWISE NOTED) Proven and Probable Reserves – 12/31/18(1) 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) 6 13.8 0.10 2.8
Slide 34: Measured and Indicated Mineral Resources
MEASURED AND INDICATED MINERAL RESOURCES (ON DEC. 31, 2018 UNLESS OTHERWISE NOTED) NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 34
Slide 35: Inferred Mineral Resources
INFERRED MINERAL RESOURCES (ON DEC. 31, 2018 UNLESS OTHERWISE NOTED) Inferred 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 (6) 2,470 14.6 0.09 3.0 7.3 - 35,982 219 74,410 181,400 - Lucky
Slide 36: 2008 – 2018 Reserve Table
2008 – 2018 RESERVE TABLE Silver Gold Gold Silver Gold Gold 2014 Proven Reserves Tons (oz/ton) (oz/ton) Silver (ounces) (ounces) 2008 Proven Reserves Tons (oz/ton) (oz/ton) Silver (ounces) (ounces) Greens Creek 4,700 15.70 0.100 74,000 5,000 Greens Creek - - - - - Lucky Friday 3,840,000 13.70 - 52,5