Hecla Mining Company · NYSE:HL
Hecla Mining — Q1 2020 Earnings Presentation
34 slides from Hecla Mining's earnings presentation, May 7, 2020
Slide 1: First Quarter 2020 Earnings Conference Call
FIRST QUARTER 2020 Earnings Conference Call May 7, 2020 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: Hecla Response to COVID-19 Outbreak
HECLA RESPONSE TO COVID-19 OUTBREAK Commitment to employees and community's health and safety allow rapid action, continued production • Responded early operationally & financially • 4 of 5 mines operational (95% of production) • The balance sheet is strong with no near-term debt maturities and stro
Slide 5: 2020 Estimates
2020 ESTIMATES Production Outlook Silver Production (Moz) Gold Production (Koz) Silver Equivalent (Moz)1 Gold Equivalent (Koz)1 Original Current Original Current Original Current Original Current Greens Creek 8.9 – 9.3 8.9-9.3 46-48 46-48 21.5-22.1 21.5-22.1 240 – 246 240 – 246 Lucky Friday 1.4 – 1.
Slide 6: Financial Review
Financial Review NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 6
Slide 7: Leading Precious Metal, Lead and Zinc Producer with Diverse Assets and Commodity Mix
LEADING PRECIOUS METAL, LEAD AND ZINC PRODUCER WITH DIVERSE ASSETS AND COMMODITY MIX #1 silver and #3 lead and zinc producer in the U.S. Silver Production: 3.0 Moz Cost of Sales: $62.7 M Cash Costs, after by-product credits: $6.66/oz 11% AISC, after by-product credits: $12.45/oz 4% 25% Realized Pric
Slide 8: Greens Creek Revenue and Operating Cash Flow Reduction
GREENS CREEK REVENUE AND OPERATING CASH FLOW REDUCTION nd Casa Berardi and Nevada operations also contributed but 2 half is stronger $ in millions • Volume lower from one less lead concentrate shipment in 2020 (2 vs. 3) totaling 4,250 less lead concentrate tonnage. • Realized zinc prices 32% lower (
Slide 9: Refinanced Bonds Have a 2028 Maturity
REFINANCED BONDS HAVE A 2028 MATURITY Reduced $31 million of leverage (in millions) * Includes $13.9 million of interest paid for redemption of 6.875% notes. ** Cash used in refinancing: $475 mm in 7.25% notes - $5.5 mm in underwriting fees - $506.5 mm in redemption of 6.875% notes *** Includes divi
Slide 10: Operations Review
Operations Review NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 10
Slide 11: Excellent Safety Record
EXCELLENT SAFETY RECORD Lowest AIFR in Company history Hecla All Injury Frequency Rate (AIFR) 5 4.57 75% 5 4 4 3.42 Frequency Rate 3 2.76 3 2.00 2 1.61 2 1.14 1 1 0 2015 2016 2017 2018 2019 YTD 2020 NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 11
Slide 12: Greens Creek Business as Usual
GREENS CREEK BUSINESS AS USUAL New schedule helps protect the operation against the pandemic • Safely remained in operation, 380 days without a reportable injury (a record in 30 years of operating) • Changed schedule • 14 days in quarantine • 28 days on island • 14 days off Quarantine social distanc
Slide 13: Casa Berardi Resuming Normal Operations
CASA BERARDI RESUMING NORMAL OPERATIONS New estimate for production reduced by 16,000 ounces due to pandemic Security – Employee screening includes questionnaire with • Quebec government mandated closure from March temperature check 24 to April 15, 2020 • Annual production expectations lowered16,000
Slide 14: Lucky Friday Ramp-Up Continues
LUCKY FRIDAY RAMP-UP CONTINUES Full production rate expected by year end • Mining deemed essential in Idaho • Minimal effect on workforce • All returning workers have returned; proceeding with hiring to fill vacancies • No known COVID-19 cases in Shoshone County • Caused delay in #2 hoist project –
Slide 15: Advances in Nevada
ADVANCES IN NEVADA Bulk sample milling agreement with Nevada Gold Mines; favorable hydrology study • Complete mining of oxide resource • Processing agreement with Nevada Gold Mines for 30,000-ton bulk sample of Type 2 ore • Can test larger scale long-hole stoping • Establish recovery rate for Type 2
Slide 16: Hecla Protecting Our People and Communities
HECLA PROTECTING OUR PEOPLE AND COMMUNITIES Supporting local charities in the communities in which we operate NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 16
Slide 17: Appendix
Appendix NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 17
Slide 18: 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 19: 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 20: 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 21: Cash Cost and AISC Reconciliation: 2020 Silver Estimates
CASH COST AND AISC RECONCILIATION TO GAAP 2020 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 22: Cash Cost and AISC Reconciliation: 2020 Gold Estimates
CASH COST AND AISC RECONCILIATION TO GAAP 2020 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 23: Other Supporting Information
Other Supporting Information NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 23
Slide 24: Responsible. Safe. Innovative.
RESPONSIBLE. SAFE. INNOVATIVE. Believe in earning and maintaining our social license to operate • We must be responsible operators in the communities where we live and work • We provide career jobs for our 1,800 employees • Create a culture where safety is non-negotiable • Protect and partner with t
Slide 25: Our Priority: ESG
OUR PRIORITY: ESG Implement SASB Standards on ESG • Our core values of being responsible, safe and innovative are reflected in our commitment to operating as a responsible, ethical and sustainable business • Utilize the industry-specific SASB standards to report on the ESG aspects of our company • C
Slide 26: Our Commitment: Environment
OUR COMMITMENT: ENVIRONMENT Reducing greenhouse gas emissions and conserving energy • Typically 60% less diesel fuel consumption at Greens Creek through the use of interruptible hydropower • The biomass heating project installed at the Casa Berardi Mine is expected to reduce 2,732 tonnes of greenhou
Slide 27: Our Commitment: Tailings Management
OUR COMMITMENT: TAILINGS MANAGEMENT Emphasis on safety and stability • Design, construct, operate, decommission and close our tailings facilities to ensure stability • Approximately half of the tailings produced is used as backfill at Greens Creek, Lucky Friday, and Casa Berardi • Early adopter of t
Slide 28: Our Commitment: Reclamation
OUR COMMITMENT: RECLAMATION Every mine begins with a reclamation plan • Begin each mine with a reclamation plan to restore the land to its natural state for productive uses • More than $175 million committed to ensuring mined lands are successfully reclaimed following operations Before • Completed r
Slide 29: Our Commitment: Water Management
OUR COMMITMENT: WATER MANAGEMENT Robust program of sampling, quality analysis and audits • All water output must meet applicable federal and state (or provincial) water quality permit conditions • More than 95 percent of the process plant water needs at our Casa Berardi Mine are met by recycling wat
Slide 30: Our Commitment: Safety
OUR COMMITMENT: SAFETY Safety is non-negotiable at Hecla • Practice continuous improvement where we adapt/change to minimize risks of injury or an accident SAFETY IS EMBEDDED IN OUR CULTURE • Goal is always 0 injuries/fatalities • First hardrock mining company to achieve NMA’s CORESafety certificati
Slide 31: Our Commitment: Safety
OUR COMMITMENT: SAFETY All Injury Frequency Rate is lowest in Company history Injury frequency rates have been on a steady decline since 2014 NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 31
Slide 32: Our Commitment: Communities and Education
OUR COMMITMENT: COMMUNITIES AND EDUCATION Investing in future generations and communities Charitable Donations and Volunteerism • More than $2.9 million in Hecla Charitable Foundation contributions since 2009 • Foundation is focused on four areas: education, community programs, youth activities, and
Slide 33: Our Commitment: Communities and Education
OUR COMMITMENT: COMMUNITIES AND EDUCATION Investing in future generations and communities Education and Training • $900,000 toward sustainable career development programs at Greens Creek Mine since 2011 • More than $1 million in donations toward student scholarships by the Hecla UQAT Foundation in Q
Slide 34: Our Commitment: Indigenous Peoples
OUR COMMITMENT: INDIGENOUS PEOPLES We partner with First Nations in local communities • Hecla Quebec and the Gitanyow Band in upper British Columbia have entered into an exploration agreement that addresses mutual benefits from future exploration activity in the area – including employment, contract