Hecla Mining Company · NYSE:HL

Hecla Mining — BMO Capital Markets Global Metals & Mining Conference 2013

60 slides from Hecla Mining's conference presentation, Feb 27, 2013

  1. Slide 1: BMO Capital Markets Global Metals & Mining Conference

    C R E ATI N G V AL U E HECLA PROPERTIES O R G AN I C G R O W TH KEY MILESTONES BMO Capital Markets Global Metals & Mining Conference February 27, 2013

  2. Slide 2: Cautionary Statements

    HECLA MINING COMPANY Cautionary Statements Cautionary Statements Statements made which are not historical facts, such as anticipated payments, litigation outcome, production, sales of assets, exploration results and plans, prospects and opportunities including reserves, resources, and mineralization

  3. Slide 3: Growth and Value in Silver – NYSE:HL

    HECLA MINING COMPANY Growth and Value in Silver – NYSE:HL Largest U.S. Primary Silver Producer Expected 25% silver growth in 2013 with re-opened Lucky Friday mine Among lowest operating cost per ounce of major producers Lower risk North American focus Strong cash position – no significant debt; revo

  4. Slide 4: Delivering Growth & Value in a Strong Silver Market

    HECLA MINING COMPANY Delivering Growth & Value in a Strong Silver Market NYSE:HL Record Production Exploration and Cash Flow and Pre- Growth Development Strong Silver Market Low Political Low Cost Risk Producer Strong Balance Sheet 4

  5. Slide 5: North American Focus

    HECLA MINING COMPANY North American Focus  Two long-lived silver mines  150 million ounces of high-grade silver reserves  Largest U.S. silver producer  2nd largest zinc  3rd largest lead  Lucky Friday mine has resumed production – Expected 2 million ounces of silver production in 2013  Total

  6. Slide 6: Re-Opened and Renewed Lucky Friday (Idaho)

    HECLA MINING COMPANY Re-Opened and Renewed Lucky Friday (Idaho)  Operations and production resumed in Q1/13  $29.8 million rehabilitation of 6100 foot Silver Shaft – MSHA clearance  $26.2 million in other capital projects invested during 2012  Expected to produce 2 million ounces of silver in 20

  7. Slide 7: Lucky Friday Re-Opened and Renewed (cont’d)

    HECLA MINING COMPANY Lucky Friday Re-Opened and Renewed (cont’d)  Bypass drift completed at 5900 level  7.5 miles of underground workings upgraded  Incorporation of recently developed ground support bolting products  All employees necessary for full production recalled  Continuous safety traini

  8. Slide 8: #4 Shaft Work Resumed - the Future of Lucky Friday

    HECLA MINING COMPANY #4 Shaft Work Resumed - the Future of Lucky Friday  Work has also resumed on $200 million #4 Shaft Project – currently about 45% complete  Access to higher grades  Currently 55.5 million ounces of Proven and Probable silver reserves  Additional 108.7 million ounces of silver

  9. Slide 9: Greens Creek (Alaska) - 6.4 million ounces in 2012

    HECLA MINING COMPANY Greens Creek (Alaska) - 6.4 million ounces in 2012  One of the largest and lowest cost primary silver mines in the world  Expected full-year 2013 production of over 6 million silver ounces at estimated $3.25 per ounce cash costs  Large and under-explored 27- square-mile land

  10. Slide 10: 58% Growth in Silver Production from Q1/12

    HECLA MINING COMPANY 58% Growth in Silver Production from Q1/12 Greens Creek Silver Production 2.1 1.6 1.4 1.3 Million oz. Q1/2012 Q2/2012 Q3/2012 Q4/2012 10

  11. Slide 11: Low Cash Costs – 2012 Margin of $29.41 Per Ounce

    HECLA MINING COMPANY Low Cash Costs – 2012 Margin of $29.41 Per Ounce $40 $36.59 $35.30 $35.00 $35 Strong Cash Margins $32.11 $29.20 $30 $27.05 $34.35 97% $25 $22.70 $34.15 94% 90% 92% 96% 88% $20 106% $31.48 $/oz $15.63 $29.41 $14.40 $24.16 $25.75 $15 $26.02 88% $10 71% $13.72 $10.20 $5 $4.20 $2.24

  12. Slide 12: Cash Flow

    HECLA MINING COMPANY Cash Flow Cash Provided by Operating Activities (millions) $237.91 $197.8 $168.0 $119.2 $94.02 $65.0 $25.0 $69.0 $14.8 $69.9 2007 2008 2009 2010 2011 2012 Actual Pro-forma 1. Operating cash flow for 2011 was $69.9 million after environmental litigation settlement payment of $168

  13. Slide 13: Strong Balance Sheet

    HECLA MINING COMPANY Strong Balance Sheet Cash and Cash Equivalents (millions) $279 $266 $233 $232 $191 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 13

  14. Slide 14: Silver Reserve and Resource Growth 2003 - 2012

    HECLA MINING COMPANY Silver Reserve and Resource Growth 2003 - 2012 Proven & Probable Reserves +230% Mineralized Material +274% 172 Other Resources +179% 150 127 62 45 34 Silver Ounces (millions) 2003 2012 Other Resources Mineralized Material Proven & Probable Reserves 14

  15. Slide 15: $51.5 million in 2013 Exploration and Pre-development

    HECLA MINING COMPANY $51.5 million in 2013 Exploration and Pre-development  Converting Greens Creek resources to reserves  Lucky Friday drilling on resources  San Sebastian drilling to further expand the Middle Vein and North Vein potential  Scoping study  Ramp engineering  San Juan Silver dri

  16. Slide 16: Strong Silver Market Fundamentals

    HECLA MINING COMPANY Strong Silver Market Fundamentals 16

  17. Slide 17: New Innovation has Changed Silver Demand

    HECLA MINING COMPANY New Innovation has Changed Silver Demand  February 1900  Long-running popular series of simple and inexpensive cameras  Introduced the concept of the “snapshot”  Transformed the demand of silver  Today new innovation has changed demand again 17

  18. Slide 18: Silver - The Metal of This Age

    HECLA MINING COMPANY 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 become inc

  19. Slide 19: Growing Silver Demand

    HECLA MINING COMPANY Growing Silver Demand Uses of Silver Medicine: silver is added to Solar Panels: 90% of crystalline bandages and wound-dressings, silicon photovoltaic cells use silver catheters and other medical paste; over 100 mm ounces of silver instruments and is a key part of are estimated f

  20. Slide 20: Silver Consumption per Capita

    HECLA MINING COMPANY Silver Consumption per Capita 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 States 0.20 Germany Sou

  21. Slide 21: Silver Price Past Decade

    HECLA MINING COMPANY Silver Price Past Decade Silver Price 2002-2012 $50.00 $45.00 $40.00 $35.00 Silver Price - $/oz $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $- 2002 2004 2006 2008 2010 2012 Source: Bloomberg 21

  22. Slide 22: Outlook

    HECLA MINING COMPANY Outlook

  23. Slide 23: Development Driving Production Growth

    HECLA MINING COMPANY Development Driving Production Growth Silver Production 15 Historical Forecasted 14 Change in production due to lower 13 grade in mine plan sequence 12 11 10 Silver - mm oz 9 8 7 6 5 4 3 2 1 - 2007 2008 2009 2010 2011 2012 1 2013E 2014E 2015E 2016E 2017E 1. No production at Luck

  24. Slide 24: Growth and Value in Silver – NYSE:HL

    HECLA MINING COMPANY Growth and Value in Silver – NYSE:HL Largest U.S. Primary Silver Producer Expected 25% silver growth in 2013 with re-opened Lucky Friday mine Among lowest operating cost per ounce of major producers Lower risk North American focus Strong cash position – no significant debt; revo

  25. Slide 25: Appendix

    C R E ATI N G V AL U E HECLA PROPERTIES O R G AN I C G R O W TH KEY MILESTONES Appendix

  26. Slide 26: Total Cash Cost GAAP Reconciliation

    HECLA MINING COMPANY Total Cash Cost GAAP Reconciliation Reconciliation of Cash Costs per Ounce to Generally Accepted Accounting Principles (GAAP) (dollars and ounces in thousands, except per ounce - unaudited) 2012 Q4/2012 Q3/12 Q2/12 Q1/12 2011 2010 2009 2008 (1) Total cash costs $ 17,262 $ 7,175

  27. Slide 27: Total Cash Cost GAAP Reconciliation

    HECLA MINING COMPANY Total Cash Cost GAAP Reconciliation Q4/12 Q4/11 2012 2011 1 Total cash costs $ 7,175 $ 5,677 $ 17,262 $ 10,934 Divided by silver ounces produced 2,081 2,490 6,394 9,483 Total cash cost per ounce produced $ 3.45 $ 2.28 $ 2.70 $ 1.15 Reconciliation to GAAP Total cash costs $ 7,175

  28. Slide 28: Adjusted Earnings GAAP Reconciliation

    HECLA MINING COMPANY Adjusted Earnings GAAP Reconciliation Reconciliation of Net Income Applicable to Common Shareholders (GAAP) to Earnings After Adjustments(1) (dollars and ounces in thousands, except per share amounts - unaudited) Three Months Ended Twelve Months Ended December 31, December 31, 2

  29. Slide 29: Capital Structure & Financial Position

    HECLA MINING COMPANY Capital Structure & Financial Position Share Price $5.451 Market Capitalization $1.6 billion Shares Outstanding 285 million1 Analyst Coverage 9 3-month Weighted Average Daily Volume 2.82 million1 Cash & Cash Equivalents $191 million2 Revolving Credit Agreement (Undrawn) $150 mil

  30. Slide 30: Dividend Policy

    HECLA MINING COMPANY Dividend Policy  Silver-linked dividend policy commenced in Q3/11  Minimum annual dividend of $0.01 per share paid quarterly (when declared) Annual Dividend Per Share ($) $0.30 $0.25 $0.20 $0.15 $0.10 $0.05 $0.00 $30.00 $35.00 $40.00 $45.00 $50.00 $55.00 $60.00 Average Realize

  31. Slide 31: Silver Space

    HECLA MINING COMPANY Silver Space 31 Source: MEG, BMO Capital Markets (02/04/13)

  32. Slide 32: Silver Space

    HECLA MINING COMPANY Silver Space 32 Source: Company Filings, BMO Capital Markets (02/04/13)

  33. Slide 33: Silver Space

    HECLA MINING COMPANY Silver Space 33 Source: Company Filings, BMO Capital Markets (02/04/13)

  34. Slide 34: Greens Creek (Alaska) - 2012 Overview

    HECLA MINING COMPANY Greens Creek (Alaska) - 2012 Overview 2012 Proven & Probable Silver Reserves (mm oz) 94.6 Mineralized Material Silver (mm oz) 2.7 Other Resources Silver (mm oz) 43.0 Cash Costs (net of by-products) $3.45/oz1 Silver Grade (oz/t) 11.1 Tons Milled 789,569 Ag Produced (oz) 6,394,235

  35. Slide 35: Lucky Friday - #4 Shaft

    HECLA MINING COMPANY Lucky Friday - #4 Shaft  #4 Shaft construction resumed - focus on shaft sinking & station development activities  Total project is 40% complete and 80% of major procurements have been ordered or installed  Total project capital is expected to be approximately $200 million Hoi

  36. Slide 36: 2012 Reserve/Resource Highlights

    HECLA MINING COMPANY 2012 Reserve/Resource Highlights Highlights of 2012 Reserve/Resources report:  For the seventh consecutive year silver reserves and resources increased to 150 million ounces (reserves), 127 million ounces (mineralized material) and 172 million ounces (other resources), respecti

  37. Slide 37: 2012 Exploration Program Highlights

    HECLA MINING COMPANY 2012 Exploration Program Highlights Highlights of 2012 exploration program consist of:  At Greens Creek, the 200 South zone contains a resource of 24 million ounces of silver and 247,000 ounces of gold. Over the next two years, in-fill drilling is anticipated to convert many of

  38. Slide 38: 2013 - Exploration Programs

    HECLA MINING COMPANY 2013 - Exploration Programs Highlights of 2013 exploration programs consist of:  At Greens Creek, underground drilling expects to convert resources to reserves and define extensions to the 200 South, Southwest Bench and NNW. Surface drilling at Killer Creek may define a new min

  39. Slide 39: 2013 - Pre-Development Programs

    HECLA MINING COMPANY 2013 - Pre-Development Programs Pre-development programs consist of: San Sebastian:  Further scoping studies are in progress to determine the production viability, rate and sequencing of mining the three areas and are expected to be completed in the third quarter.  A ramp is b

  40. Slide 40: Reserves & Resources Update (on Dec. 31, 2012)

    HECLA MINING COMPANY Reserves & Resources Update (on Dec. 31, 2012) Silver Gold Lead Zinc Silver Gold Lead Zinc Mine Tons (Oz/ton) (Oz/ton) (%) (%) (Ounces) (Ounces) (Tons) (Tons) Proven and Probable Reserves Proven Ore Reserves Lucky Friday, USA 2,206,600 12.1 — 7.4 2.7 26,778,900 — 163,350 58,560

  41. Slide 41: Organic Growth - Greens Creek (Alaska)

    HECLA MINING COMPANY Organic Growth - Greens Creek (Alaska)  Very large and under-explored 27- square-mile land position  Over 30 miles of unexplored mine contact (red-trace) with multiple targets  Surface exploration only resumed East Ridge in 1999 due to establishment of Lil’ Sore North Land Ex

  42. Slide 42: Exploration - Greens Creek (Alaska)

    HECLA MINING COMPANY Exploration - Greens Creek (Alaska) Underground Exploration Targets Looking NE East Ore extension SW Bench 5250 South Resource Extension Gallagher 200 South Resource extensions 42

  43. Slide 43: Exploration - Lucky Friday & Silver Valley

    HECLA MINING COMPANY Exploration - Lucky Friday & Silver Valley 43

  44. Slide 44: Organic Growth - Lucky Friday (Idaho)

    HECLA MINING COMPANY Organic Growth - Lucky Friday (Idaho) Lucky Friday Expansion Area - Increased Grade and Thickness at Depth *As of 2010 44

  45. Slide 45: Organic Growth - Star Pre-development (Idaho)

    HECLA MINING COMPANY Organic Growth - Star Pre-development (Idaho)  Hecla has re-opened the Star for definition & exploration drilling  Portal rehabilitation and ventilation adit have been successfully completed  A Preliminary Economic Assessment (PEA) of the “Upper Country” Star mine complex is

  46. Slide 46: Organic Growth - Star Pre-development (Idaho)

    HECLA MINING COMPANY Organic Growth - Star Pre-development (Idaho) Silver Valley (Star) – Moffitt & Noonday Vein Resource 2011 Noonday NSR Block Model Potential Resource Additions Moffitt Star Noonday Stopes Morning Diamond Drill Hole Diamond Drill Hole Potential Resource Additions Noonday Star 2000

  47. Slide 47: Delivering Growth - San Sebastian (Mexico)

    HECLA MINING COMPANY Delivering Growth - San Sebastian (Mexico) 185 Square Mile Land Package Middle Vein Hugh Zone 1 Km Andrea Vein 47

  48. Slide 48: Reserve and Resource Growth - Middle Vein (Mexico)

    HECLA MINING COMPANY Reserve and Resource Growth - Middle Vein (Mexico) Longitudinal of Middle Vein  Middle Vein at San Sebastian defined over 3,000 feet along strike, from surface to over 1,000 feet in depth  New other resources of 8.8 million silver ounces and 45,000 ounces gold appears open alo

  49. Slide 49: Organic Growth - San Juan Silver (Colorado)

    HECLA MINING COMPANY Organic Growth - San Juan Silver (Colorado)  Historic Bulldog mine produced 25 million ounces of silver before closing in 1985  Acquired 100% interest in defined mineralization of San Juan Silver property  7.6 million ounces silver Mineralized 21 Square Mile Land Material Pac

  50. Slide 50: Delivering Growth - San Juan Silver (Colorado)

    HECLA MINING COMPANY Delivering Growth - San Juan Silver (Colorado) Advance of the Bulldog Decline Shotcrete Application • Bulldog underground infrastructure now advanced over 800 feet • Completion expected in 4th Quarter 50

  51. Slide 51: Organic Growth - San Juan Silver (Colorado)

    HECLA MINING COMPANY Organic Growth - San Juan Silver (Colorado) Bulldog Development Vent Fan & Line Portal Sets & Face 51

  52. Slide 52: Organic Growth - San Juan Silver (Colorado)

    HECLA MINING COMPANY Organic Growth - San Juan Silver (Colorado) Bulldog Development Rock Bolting Flash Coating 52

  53. Slide 53: Organic Growth - San Juan Silver (Colorado)

    HECLA MINING COMPANY Organic Growth - San Juan Silver (Colorado) Bulldog Infrastructure Batch Plant, Shop & Admin Buildings 53

  54. Slide 54: Coeur d’Alene Basin Litigation

    HECLA MINING COMPANY Coeur d’Alene Basin Litigation  Court approved consent decree for the Coeur d’Alene River Basin environmental litigation on September 8, 2011  Settled Hecla Limited’s historic environmental liability in the Basin and the remaining obligations in the Box  Hecla expects to pay

  55. Slide 55: Strong Silver Market Fundamentals

    HECLA MINING COMPANY Strong Silver Market Fundamentals Silver Demand*  Mine production rise of 40% over past 20 years to 700 mm ounces 1,900 Technology  Modern/technology-driven demand up 1,700 Photography Jewelry & Silverware 78% in same period to nearly 500 mm Coins & Medals ounces – nearly half

  56. Slide 56: Supply & Demand Conclusions

    HECLA MINING COMPANY Supply & Demand Conclusions Silver Supply and Demand  Present silver supply is approximately 950 mm oz and Total Silver Supply Silver Demand (Excl. Investment) should increase by 90 mm oz to 1,400 Investment Demand 1.05 bn oz by 2015 1,200  Silver demand of 1.06 bn oz today is

  57. Slide 57: Silver Demand

    HECLA MINING COMPANY Silver Demand Silver Demand 900 1990 – 2011 Increase 800 Coins & Medals 248% 700 Jewelry & Silverware 9% 600 500 MM oz -70% 400 Photography 78% 300 200 Industrial Demand 100 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201

  58. Slide 58: Silver Demand

    HECLA MINING COMPANY Silver Demand Increasing Share of Industrial Demand  Industrial demand increased from 274 mm oz in 1990 to 487 mm oz in 2011, an increase of 78%, and an annualized increase of 3.5% 5% 16% 26% 38% 47% 11% Industrial Industrial 20% 31% 6% 1990 2011 Industrial Investment Jewelry &

  59. Slide 59: Properties of Silver

    HECLA MINING COMPANY Properties of Silver A Precious Metal…A Currency…A Lifestyle Metal Source – Clear Science 2010 59

  60. Slide 60: ETFs Demonstrate Strong Investment Demand

    HECLA MINING COMPANY ETFs Demonstrate Strong Investment Demand Silver ETF Holdings 700 Other** Central Fund of Canada 600 ETF Securities* ZKB 500 iShare Silver Ounces (mm) 400 300 200 100 0 2006 2007 2008 2009 2010 2011 2012 *Includes ETFs London, Australia, NYSE, Glitter and WITE ** Includes Julius

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