Hecla Mining Company · NYSE:HL

Hecla Mining — BMO Capital Markets Global Metals & Mining Conference 2014

61 slides from Hecla Mining's conference presentation, Feb 25, 2014

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

    NEW HECLA FINANCIAL STRENGTH HECLA PROPERTIES STRONG INVESTMENT FUNDAMENTALS BMO Capital Markets Global Metals & Mining Conference February 25, 2014

  2. Slide 2: Cautionary Statements

    HECLA MINING COMPANY Cautionary Statements Cautionary Statement Regarding Forward Looking Statements, Including 2014 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: A New Hecla

    HECLA MINING COMPANY A New Hecla Long Life Assets, Strong Reserve Growth Low Cost, High Margins Growing Silver and Gold Production Mining-Friendly Jurisdictions 3

  4. Slide 4: North American Focused Asset Portfolio

    HECLA MINING COMPANY North American Focused Asset Portfolio All operations in lower-risk, mining-friendly jurisdictions 4

  5. Slide 5: Strong Reserve Growth 2003 - 2013

    HECLA MINING COMPANY 1 Strong Reserve Growth 2003 - 2013 Silver Ounces (millions) Gold Ounces (millions)2 170 2.1 277% 163% 0.8 45 2003 2013 2003 2013 1. See Proven and Probable reserves data in the Appendix. 2. Acquired Aurizon Mines in 2013 5

  6. Slide 6: Reserve Growth vs Mined Production 2004 - 2013

    HECLA MINING COMPANY 1 Reserve Growth vs Mined Production 2004 - 2013 Silver Ounces 10-Year Cumulative Reserves and Ounces Mined 200,000,000 Lucky Friday reserves 150,000,000 Greens Creek reserves Lucky Friday production 100,000,000 Greens Creek production 50,000,000 0 (50,000,000) (100,000,000) (15

  7. Slide 7: Continued Strong Margins

    HECLA MINING COMPANY Continued Strong Margins $40 $35.30 Cash Cost, After By-Product Credits, Per Silver Ounce $35 Strong Cash Margins $32.11 $28.86 $30 $25 $22.70 $22.22 97% $21.28 92% $20.13 $20 $16.27 $15.63 $34.15 $21.84 $29.41 $15 76% $14.82 106% $12.80 $14.44 $24.16 67% 64% 68% $10.71 66% $10

  8. Slide 8: Cash Flow Flexibility 2010 - 2013

    HECLA MINING COMPANY Cash Flow Flexibility 2010 - 2013 Cash Bridge 2010 - 2013 (US$M) $1,200 Largely Discretionary $597.3M $1,000 $818.0 1 $800 $600 One-time Expenses $418.8 $234.4M $400 $140.4 $38.1 $212.2 $177.6 $200 $104.7 $208.0 $26.4 $- $56.3 2010 Beginning Adjusted Capex Exploration + Dividend

  9. Slide 9: Strong Balance Sheet

    HECLA MINING COMPANY Strong Balance Sheet Cash and Cash Equivalents (US$ millions) Available Credit Facility $396 $338 Cash and Cash Equivalents $312 $269 $296 $238 $212 $169 Q1/13 Q2/13 Q3/13 Q4/13 9

  10. Slide 10: Diversified Revenue: Silver, Gold, Lead and Zinc

    HECLA MINING COMPANY Diversified Revenue: Silver, Gold, Lead and Zinc  Diversified revenue stream (silver, gold, lead and zinc) from Consolidated Revenue by Metal 3 mines Q4 2013  Policy allows hedging of 60% of 15% the next 3 years of lead and zinc 33% 12% production  Currently have ~$300 millio

  11. Slide 11: Increasing Production

    HECLA MINING COMPANY Increasing Production Silver Production Gold Production (millions) (thousands) 60.0 3.0 50.0 47.1 2013 Silver Production (Moz) 2013 Gold Production (Koz) 32% 2.5 344% 2.5 40.0 37.0 2.3 2.2 30.0 22.21 2.0 1.9 20.0 13.7 10.0 1.5 - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1. Acquisition of Aurizon

  12. Slide 12: Large and High Quality Silver Assets

    Silver Reserves - Moz 0 100 120 20 40 60 80 12 1. Pitarilla (SSRI)* 477 San Bartolome (CDE)* Greens Creek (HL) La Colorada (PAA) Reserves capped at 120M ounces Ying (SVM) Lucky Friday (HL) Dolores (PAA)* Huaron (PAA) Pirquitas (SSRI)* Silver Reserves Source: Public filings, *Open pit mines - Palmare

  13. Slide 13: Greens Creek - Large and Low Cost

    HECLA MINING COMPANY Greens Creek - Large and Low Cost Overview Location Admiralty Island, Alaska Deposit Polymetallic, stratiform, massive sulfide Ownership (Since) 100% Hecla (2008) Type Underground 1 Expected Life of Mine 9 years Primary Metal Produced Silver Reserves & Resources (at December 31,

  14. Slide 14: Greens Creek - Consistent Performance

    HECLA MINING COMPANY Greens Creek - Consistent Performance 2.5 $6 Cash Cost, After By-Product Credits, Per Silver Ounce $5.02/oz $5.00/oz $5.15/oz 2.00 Moz $5 2.0 1.80 Moz 1.80 Moz 1.80 Moz $4 Silver Production 1.5 $2.71/oz $3 1.0 $2 0.5 $1 0.0 $- Q1/2013 Q2/2013 Q3/13 Q4/13 Silver Production Cash C

  15. Slide 15: Greens Creek - World-Class Silver Mine

    HECLA MINING COMPANY Greens Creek - World-Class Silver Mine 2013: Another Strong Year At Greens 30 Vein Creek In A History Of Many $60 #4 Shaft 4050 level $50 Past 24 Years1 Next 10 Years $40 Revenue: $3.3 billion 4900 level Continued Strong Silver Price ($/oz) Net Income: $1.1 billion Performance E

  16. Slide 16: Greens Creek - Underground Exploration

    HECLA MINING COMPANY Greens Creek - Underground Exploration A Cross Section A’ East East Ore Ore Deep 200 South Block Model Deep 200 South Block Model Deep 200 South N A’ Cross section A Deep 200 South 1000 Feet 16

  17. Slide 17: Lucky Friday - Back to Full Production

    HECLA MINING COMPANY Lucky Friday - Back to Full Production Overview Location Mullan, Idaho Deposit Silver & base metal bearing vein structures Ownership (Since) 100% Hecla (1958) Type Underground 1 Expected Life of Mine 25 years Silver Production (oz) Silver Reserves & Resources (at December 31, 20

  18. Slide 18: Lucky Friday - Higher Production, Lower Cost

    HECLA MINING COMPANY Lucky Friday - Higher Production, Lower Cost 0.70 $40 $36.55/oz 0.64 Moz Cash Cost, After By-Product Credits, Per Silver Ounce 0.60 $35 $32.19/oz $30 0.50 0.48 Moz $25 Silver Production 0.40 $20 0.30 $16.50/oz $15 0.22 Moz 0.20 $13.59/oz $10 0.12 Moz 0.10 $5 - $- Q1/13 Q2/13 Q3/

  19. Slide 19: Lucky Friday - Unlocking Value at Depth

    HECLA MINING COMPANY Lucky Friday - Unlocking Value at Depth Silver Shaft 30 Vein #4 Shaft 4050 level Current mining from 4900 level 5900 level access 5900 level 6500 level 7500 level Looking NW 19 *Assuming prices of $20.00/oz silver, $0.90/lb lead, and $0.80/lb zinc

  20. Slide 20: Casa Berardi - Great New Addition

    HECLA MINING COMPANY Casa Berardi - Great New Addition Overview Location La Sarre, Quebec Deposit Archean, shear & vein hosted gold deposit Ownership (Since) 100% Hecla (June 2013) Type Underground 1 Expected Life of Mine 9 years Primary Metal Produced Gold Reserves & Resources (at December 31, 2013

  21. Slide 21: Casa Berardi - Higher Q4 Production, Lower Costs

    HECLA MINING COMPANY Casa Berardi - Higher Q4 Production, Lower Costs 35 $1,400 32 koz $1,152/oz 30 $1,200 Cash Cost, After By-Product Credits, Per Gold Ounce $1,065/oz 25 $1,000 23 koz Gold Production 20 $800 $824/oz 15 $600 10 $400 8 koz 5 $200 0 $- Jun-13 Q3/13 Q4/13 Gold Production Cash Cost, Af

  22. Slide 22: Casa Berardi - Great Exploration Potential

    HECLA MINING COMPANY Casa Berardi - Great Exploration Potential 22

  23. Slide 23: 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

  24. Slide 24: 2014 Expectations

    HECLA MINING COMPANY 2014 Expectations 2014E1 Silver 2014E2 Gold Cash Cost, After By-Product Mine Production (Moz) Production (oz) Credits, Per Silver/Gold Ounce2 Greens Creek 6.5-7.0 55,000 $6.00 per silver oz Lucky Friday 3.0 n/a $9.00 per silver oz Casa Berardi n/a 125,000 $900 per gold oz Compan

  25. Slide 25: Appendix

    NEW HECLA FINANCIAL STRENGTH HECLA PROPERTIES STRONG INVESTMENT FUNDAMENTALS Appendix

  26. Slide 26: Appendix Table of Contents

    HECLA MINING COMPANY Appendix Table of Contents Appendices Page 1. Management 27 2. Financial Information 28 3. Reserves and Resources 35 4. Silver Landscape 39 5. Exploration 40 6. Silver and Gold Overview 50 7. Zinc Overview 60 26

  27. Slide 27: Seasoned Management Team with Significant Experience

    HECLA MINING COMPANY Appendix 1 Seasoned Management Team with Significant Experience Phillips S. Baker, Jr., has 26 years of Dr. Dean W.A. McDonald, is a geologist with mining experience. He was previously over 30+ years experience. He was VP and CFO of Battle Mountain Gold previously VP of Explorat

  28. Slide 28: Cash Cost GAAP Reconciliation

    HECLA MINING COMPANY Appendix 2 Cash Cost GAAP Reconciliation Reconciliation of cash cost, after by-product credits, per silver ounce to Generally Accepted Accounting Principles (GAAP) for Greens Creek & Lucky Friday (dollars and ounces in thousands, except per ounce - unaudited) Q4/2013 Q3/2013 Q2/

  29. Slide 29: Total Cash Cost GAAP Reconciliation

    HECLA MINING COMPANY Appendix 2 Total Cash Cost GAAP Reconciliation 1. Includes all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site genera

  30. Slide 30: Total Cash Cost GAAP Reconciliation

    HECLA MINING COMPANY Appendix 2 Total Cash Cost GAAP Reconciliation 1. Includes all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site genera

  31. Slide 31: Cash Cost Reconciliation to GAAP - Casa Berardi

    HECLA MINING COMPANY Appendix 2 Cash Cost Reconciliation to GAAP - Casa Berardi Reconciliation of Cash Costs per Ounce to Generally Accepted Accounting Principles (GAAP) (dollars and ounces in thousands, except per ounce - unaudited) Q1/2013 2012 2011 2010 2009 2008 2007 2006 (1) Cash Operating Cost

  32. Slide 32: Total Cash Cost GAAP Reconciliation

    HECLA MINING COMPANY Appendix 2 Total Cash Cost GAAP Reconciliation Reconciliation of cash cost, after by-product credits, per gold ounce to Generally Accepted Accounting Principles (GAAP) for Casa Berardi (dollars and ounces in thousands, except per ounce - unaudited)(2) 2013 Q4/2013 Q3/2013 June 2

  33. Slide 33: Hecla Adjusted EBITDA Reconciliation

    HECLA MINING COMPANY Appendix 2 Hecla Adjusted EBITDA Reconciliation Reconciliation of Adjusted EBITDA (non-GAAP) to Net Income (GAAP) Twelve Months Ended December 31, 2013 2012 2011 2010 Net Income $ (25,130) $ 14,954 $ 151,164 $ 48,983 Plus: Interest expense, net of amount capitalized 21,689 2,427

  34. Slide 34: Hecla: Zero Debt Obligations Until 2021

    HECLA MINING COMPANY Appendix 2 Hecla: Zero Debt Obligations Until 2021 Peer Comparison Date Gross Current 1 Issuer Issued Coupon Maturity Proceeds Rating Hecla 12-Apr-13 6.875% Sr. Notes 1-May-21 $500 B2/B Coeur 24-Jan-13 7.875% Sr. Notes 1-Feb-21 $300 B3/BB- Eldorado Gold 10-Dec-12 6.125% Sr. Note

  35. Slide 35: Reserves & Resources Update

    HECLA MINING COMPANY Appendix 3 Reserves & Resources Update (on Dec. 31, 2013 unless otherwise noted) 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% 14 12.9 0.13 3

  36. Slide 36: Reserves & Resources Update

    HECLA MINING COMPANY Appendix 3 Reserves & Resources Update (on Dec. 31, 2013 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 (2)(a) United States 100.0% 6.7

  37. Slide 37: Reserves & Resources Update

    HECLA MINING COMPANY Appendix 3 Reserves & Resources Update (on Dec. 31, 2013 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 (9)(a) United States 100.0% 2,38

  38. Slide 38: Historical Reserves

    HECLA MINING COMPANY Appendix 3 Historical Reserves Silver Gold Silver Gold Silver Gold Silver Gold 2003 Tons (oz/ton) (oz/ton) (ounces) (ounces) Tons (oz/ton) (oz/ton) (ounces) (ounces) Proven Reserves 2008 Proven Reserves Greens Creek (29.73%) ‐ ‐ ‐ ‐ ‐ Greens Creek - - - - - Lucky Friday 400,930

  39. Slide 39: Higher Silver Reserve Grade Among Peers

    HECLA MINING COMPANY Appendix 4 Higher Silver Reserve Grade Among Peers 39 Source: Company Filings, BMO Capital Markets (01/27/14)

  40. Slide 40: Organic Growth - Greens Creek (Alaska)

    HECLA MINING COMPANY Appendix 5 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 No

  41. Slide 41: Greens Creek - Surface Exploration

    HECLA MINING COMPANY Appendix 5 Greens Creek - Surface Exploration 41

  42. Slide 42: Greens Creek - Post Deposition

    HECLA MINING COMPANY Appendix 5 Greens Creek - Post Deposition 42

  43. Slide 43: Greens Creek - Surface Exploration (Killer Creek)

    HECLA MINING COMPANY Appendix 5 Greens Creek - Surface Exploration (Killer Creek) 43

  44. Slide 44: Lucky Friday & Silver Valley - Exploration

    HECLA MINING COMPANY Appendix 5 Lucky Friday & Silver Valley - Exploration 44

  45. Slide 45: Lucky Friday - #4 Shaft

    HECLA MINING COMPANY Appendix 5 Lucky Friday - #4 Shaft  #4 Shaft project is engineered to access higher-grade ore zones with potential to take Lucky Friday silver production to 5 million ounces per year in 2017  #4 Shaft construction resumed in Q1/13  Currently at the 6500 level, working on one

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

    HECLA MINING COMPANY Appendix 5 Organic Growth - Star Pre-Development (Idaho) Longitudinal Section Looking North Water level - Water level #4 Shaft behind Lucky Friday expansion area 46

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

    HECLA MINING COMPANY Appendix 5 Organic Growth - San Sebastian (Mexico)  185-square-mile land package  Potential extensions to both Middle Vein and Hugh Zone structures  Andrea Vein remains open along strike and at depth 47

  48. Slide 48: Organic Growth - San Juan Silver (Colorado)

    HECLA MINING COMPANY Appendix 5 Organic Growth - San Juan Silver (Colorado)  Includes historic Bulldog mine: produced 25 million ounces of silver before closing in 1985  7.6 million ounces of silver Indicated Resources  33.1 million ounces of silver Inferred Resources • Bulldog decline has broken

  49. Slide 49: New Quebec Gold Assets

    HECLA MINING COMPANY Appendix 5 New Quebec Gold Assets  Gold producer and exploration portfolio in western Quebec  Heva and Hosco West extension  Large in-pit gold resource at Hosco  Additional gold resources at Heva and Hosco West Extension  Attractive exploration potential  Growth potential

  50. Slide 50: Gold: Physical vs. Financial

    HECLA MINING COMPANY Appendix 6 Gold: Physical vs. Financial EAST vs. WEST 1,200 2,500 1,000 Net Imports (China) 2,000 Gold Tonnes 800 600 1,500 400 1,000 200 Gold ETF Holdings 500 - Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 2009 2010 2011 2012 2013 Source: Bloomberg, 2013 data until 11/30/2013 Sour

  51. Slide 51: Gold Fundamentals

    HECLA MINING COMPANY Appendix 6 Gold Fundamentals 2,000 Q1 - Q3 2012 Q1 - Q3 2013 1,500 Gold Tonnes 1,000 500 - (500) (1,000) Jewelry Technology Physical bar Official coin Medals ETF's & similar Central bank net demand products purchases  Jewelry consumption: Up 20% in the first nine months of 2013

  52. Slide 52: Cash Margins at Casa Berardi

    HECLA MINING COMPANY Appendix 6 Cash Margins at Casa Berardi $1,800 $1,658 $1,621 $1,578 $1,600 $1,400 $1,335 $1,317 $1,267 $1,200 $1,145 $809 $269 20% $962 66% 50% 35% $366 28% $1,041 58% $443 $1,000 $915 $847 $/oz 53% $604 $800 $514 56% $600 $448 53% $696 $1,066 $400 $824 $951 $401 $812 $200 $399

  53. Slide 53: Solid Gold Grade and Reserves

    HECLA MINING COMPANY Appendix 6 Solid Gold Grade and Reserves Gold Reserves and Grades of Several Canadian Gold Mines 4.50 18.00 4.00 16.00 3.50 14.00 Gold Reserves - Moz 3.00 12.00 Gold Grade - g/t 2.50 10.00 2.00 8.00 1.50 6.00 1.00 4.00 0.50 2.00 - 0.00 Gold Reserves (Moz) Gold Grade (g/t) 53 Sou

  54. Slide 54: Mine Production is Key to Silver Supply

    HECLA MINING COMPANY Appendix 6 Mine Production is Key to Silver Supply 1200 Producer Hedging 1992 – 2012 Silver Production (mm oz) Implied Net Disinvestment Increase 1000 Net Government Sales 70% 800 Old Silver Scrap 600 400 60% Mine Production 200 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 200

  55. Slide 55: Top Producing Countries (10 years)

    HECLA MINING COMPANY Appendix 6 Top 5 Producing Countries (10 years)  Mining produced a total of 597.2 mm oz of silver globally in 2003 and nearly 787.0 mm oz in 2012.  Mexico became the largest single country producer in 2010 and produced 162.2 mm oz in 2012. 5% 7% 14% 21% 38% 43% 16% 14% 10% 7%

  56. Slide 56: Increasing Share of Modern Demand

    HECLA MINING COMPANY Appendix 6 Increasing Share of Modern Demand  Modern demand increased from 260 mm oz in 1992 to 465 mm oz in 2012, an increase of 80%, and an annualized increase of 3.0% 5% 16% 36% 46% 30% 9% Modern Modern 23% 29% 6% 1992 2012 Modern Investment Jewelry & Photography Coins & Med

  57. Slide 57: 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

  58. Slide 58: Silver Fundamentals - 2013E vs. 2012

    HECLA MINING COMPANY Appendix 6 Silver Fundamentals - 2013E vs. 2012 700 80 2012 2013E 70 600 Silver - Million oz 500 60 50 400 40 300 30 200 High/Low: 67/32 20 100 Average: 53 10 Current: 62 - Gold/Silver Ratio Jewelry & Modern Coins & ETFs Other Photographic 0 Silverware Medals Investment 3-Jan-11

  59. Slide 59: Modern Silver Demand Increases with Increasing Income

    HECLA MINING COMPANY Appendix 6 Modern Silver Demand Increases with Increasing Income 30% 2010 Silver Consumption per Capita 1.4 India World Average Income 25% per Capita Distribution of Population 1.2 China 20% 1.0 0.8 (oz) 15% 0.6 10% Brazil, United Russia States 0.4 5% 0.2 0% 0.0 $50000+ $0 $2,00

  60. Slide 60: Zinc Supply - Mining

    HECLA MINING COMPANY Appendix 7 Zinc Supply - Mining  Forecasted mine production vs. forecasted market demand  Demand is expected to exceed mine production around 2018 Major Mine Shutdowns Annual Mine Capacity (MT) Perseverance 115K Brunswick 240K Century 510K Lisheen 175K Source: Wood Mackenzie J

  61. Slide 61: Zinc Supply - US Production

    HECLA MINING COMPANY Appendix 7 Zinc Supply - US Production  Greens Creek is the 3rd largest zinc producer in the US % of USA Zinc Production 2012 Comparison of 2012 Zinc Production 140 Doe Run 4.00% 122 Gordonsville 120 Zinc Production (thousands tonnes) 6.62% Greens 100 Creek 80 8.04% 80 58 60 Ea

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