Hecla Mining Company · NYSE:HL
Hecla Mining — John Tumazos Very Independent Research Conference (June 2021)
113 slides from Hecla Mining's conference presentation, Jun 15, 2021
Slide 1: Company Overview: United States' Leading Silver Producer
COMPANY OVERVIEW United States’ Leading Silver Producer June 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: Hecla: Unique Precious Metals Miner
Hecla: Unique Precious Metals Miner NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 4
Slide 5: Why Invest in Hecla?
WHY INVEST IN HECLA? Hecla is unique to other silver miners, ETFs and physical silver Primarily U.S based operations – the right jurisdiction for risk and ESG Two of the largest and highest-grade silver mines in the world Silver dominates reserves and cash flow Long-lived mines with decades
Slide 6: America Needs to Produce the Metals at Home
AMERICA NEEDS TO PRODUCE THE METALS AT HOME If copper is the “new oil” - silver is like the spark • Biden Administration’s Build Back Better counts on shorter supply chain • Hecla metals are the foundation of a low carbon future • Silver, copper, and other metals are essential for wind, solar, batte
Slide 7: Hecla Has a Small Footprint
HECLA HAS A SMALL FOOTPRINT Small geographic, environmental & safety risk footprint Less than 3,900 acres = less than one large open pit mine in Nevada • Very low energy use and greenhouse gas emissions • Total energy use = 1800 bitcoins (18.7 M in circulation) • GHG emissions = 9,500 cars (280M car
Slide 8: Hecla Changes Lives
HECLA CHANGES LIVES Largest employer with jobs and benefits that last a lifetime and charity too • Direct economic impact of $550+ million annually in 3 small communities • More than a living wage – longevity, benefits • Each Hecla job creates more jobs - 3,000+ • Support for communities during COVI
Slide 9: Hecla Is the Leader in Metal Produced per Ton of GHG
HECLA IS THE LEADER IN METAL PRODUCED PER TON OF GHG Highest grade silver mines generate more benefit with smaller footprint Silver-equivalent ounces /Ton GHG Gold-equivalent ounces/Ton GHG 1.2 500 450 1.2 6 1 400 350 1 5 0.8 300 0.8 4 0.6 250 200 0.6 3 0.4 150 0.4 2 100 0.2 0.2 1 50 0 0 0 0 Hecla C
Slide 10: High-Grade Silver Mines of Size Are Scarce
HIGH-GRADE SILVER MINES OF SIZE ARE SCARCE Hecla’s world’s second and seventh largest silver mines have the highest silver equivalent grade 400 AgEq* AgEq Grade 40 (Moz) (opt) 350 35 300 30 250 25 200 20 150 15 100 10 50 5 0 0 Cannington Greens Creek Fresnillo Saucito Rochester Ying Lucky Friday La
Slide 11: Hecla Mines a Third of All Silver Produced in the USA
HECLA MINES A THIRD OF ALL SILVER PRODUCED IN THE USA Half of the world’s production is from Mexico, Peru and China; U.S. production is scarce 2020 U.S. Silver Production) Hecla’s Share of U.S. Production (Moz) 13.5 34.0% 66.0% Hecla Other 6.5 3 Countries . Produce 50% of World Production U.S. Produ
Slide 12: Hecla Is Increasing Silver Production
HECLA IS INCREASING SILVER PRODUCTION Lucky Friday production tripled over last year, expected to be 75% more in 2021 and 5 million ounces by 2023, 2.5 times 2020 production 30 Vein - *AgEq Grade (opt) 20 Years Past Mining < 10 10 - 20 Almost 20 - 30 6500 Level 30 - 35 1000 feet > 35 @ +35 Oct. 12,
Slide 13: Leading Dividend Policy Is Improved Further
LEADING DIVIDEND POLICY IS IMPROVED FURTHER More cash returned to shareholders as dividend yield increases synchronously with silver prices At $25/oz realized price, an implied dividend yield of 7.4% of silver price $9.0 17.5% 20.00% $8.0 15.4% 18.00% $7.0 16.00% 12.6% 14.00% $6.0 12.00% $5.0 9.0% 7
Slide 14: Reddit Silver Squeeze Demonstrated Brand Value
REDDIT SILVER SQUEEZE DEMONSTRATED BRAND VALUE Highest performer with a small short position and continued outperformance Share Price Performance on February 1st & Share Price Performance on January 29th – June 11th Shares Short as a % of Total Float* 70% 30% 28% 25.0% 60% Hecla: +59% 26% 25% 50% 21
Slide 15: A Very Short History of Silver Demand
A VERY SHORT HISTORY OF SILVER DEMAND Despite declining photography demand, silver industrial and investment demand has been in a secular bull market since 2000 and is stronger in 2021 and the future Five distinct periods of silver demand, three that are strengthening • Monetary by governments (2000
Slide 16: Renewable Energy Gains Momentum
RENEWABLE ENERGY GAINS MOMENTUM – SOLAR PROJECTED FOR THE LARGEST GROWTH Global policies are favoring renewable energy • In the U.S., renewable energy accounts for 21% of total electricity generation and is projected to increase to 42% of total domestic electricity generation by 2050. • Solar energy
Slide 17: Silver Use in Solar Panels
SILVER USE IN SOLAR PANELS Thrifting is a threat but has its limits, silver use in photovoltaics to be stabilized • Silver is key in solar panels because of its incredibly low electrical resistance and other closely related metals cannot sufficiently match silver’s conductivity for solar panels. • P
Slide 18: Solar Energy & Photovoltaics
SOLAR ENERGY & PHOTOVOLTAICS Infrastructure stimulus globally is tilting towards solar – silver is the beneficiary • Photovoltaics (PVs) have significant support in renewable energy due to cost reductions and supportive policy measures. PVs have seen a CAGR of 15% over the past 5 years • As PV appli
Slide 19: Silver – Widening Gap Between Supply & Demand
SILVER – WIDENING GAP BETWEEN SUPPLY & DEMAND Gap expected to increase with continued trend of industrial demand growth of 2.0% • 2019 saw a total supply of 1,023 Moz and total demand of 1,074 Moz • Silver’s total demand in 2030 is expected to reach ~1,147 Moz if demand stays on the last decade tren
Slide 20: Financial
Financial NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 20
Slide 21: Solid First Quarter 2021: Highlights
SOLID FIRST QUARTER 2021: HIGHLIGHTS Strong operational performance from steady production, low costs and high margins • Record Adjusted EBITDA(1) of $86.1 million, Cash Gross Margin(2) of Record Quarter $114.1 million, second highest Sales of $210.9 million Strong Operating • Solid production, Lowe
Slide 22: Hecla's Tax Characteristics Are Unique
HECLA’S TAX CHARACTERIESTICS ARE UNIQUE Tax expense and paid taxes among the lowest and a tax asset that is not on the balance sheet Current Tax Expense: Hecla & Peers 2018-2020 ($ millions) Pan American Fresnillo Silver Coeur Hecla SSR Mining First Majestic Silver Fortuna Silver (7) (8) (5) (7) (8)
Slide 23: Operations
Operations NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 23
Slide 24: Operational Review
OPERATIONAL REVIEW Continued performance despite COVID-19 challenges NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 24
Slide 25: Hecla Is Among the Safest of Mining Companies
HECLA IS AMONG THE SAFEST OF MINING COMPANIES Hecla’s commitment and NMA CORESafety started in 2012, moved from underperformance to industry leader • Reduced AIFR by 24%, the lowest in company history • Reduced AIFR by 80% since 2012 • Hecla 1.22 rate in 2020 nearly 50% better than national average
Slide 26: Silver Reserves
SILVER RESERVES (contained ounces of silver) Hecla’s silver reserves continue to increase while world reserves react to current metal prices 4.00 $40.00 3.50 $35.00 3.00 $30.00 World 1.9 Billion 2.50 World 3.3 Billion Hecla 212 Million $25.00 World in Billions Hecla 150 Million Silver Price 2.00 $20
Slide 27: Silver Reserve Grade Comparison
SILVER RESERVE GRADE COMPARISON Hecla’s reserves are stable and high grade 16 Silver Reserve Grade (opt) Hecla Mining Co 14 12 First Majestic Silver Corp 10 Fortuna Silver Mines Inc 8 6 Pan American Silver Corp 4 Coeur Mining Inc 2 Fresnillo PLC 0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 NY
Slide 28: Greens Creek: Continues Strong
GREENS CREEK: CONTINUES STRONG Consistent performance, low costs cement solid free cash flow generation • 2021 estimated silver production of 9.5-10.2 million • Lowering guidance for Cash Costs and All-in Sustaining Costs due to higher by-product credits, lower treatment charges, and the reclassific
Slide 29: Hecla's Strongest Mine - Greens Creek Is Growing
HECLA’S STRONGEST MINE - GREENS CREEK IS GROWING 13.5 Moz silver production, $181.1 M in cash flow Cumulative Gross Profit and Cumulative Net Cash Flow* Greens Creek Throughput has Grown 15% Since Purchase in 2008 Cumulative Gross Profit and Net Cash Flow Greens Creek Production and Reserves 900 16
Slide 30: Greens Creek: Over 30 Years and Still Exploring and Adding Reserves
GREENS CREEK: OVER 30 YEARS AND STILL EXPLORING AND ADDING RESERVES Upgrading Resources (Upper Plate, 9A, and East Ore), Exploring (Gallagher and Lil’Sore) From 1989 to 2020, Greens Creek has mined 20 million tons containing: • 322m ounces of silver • 2.7m ounces of gold • 4b pounds of zinc • 1.5b p
Slide 31: Lucky Friday: Performing per Plan
LUCKY FRIDAY: PERFORMING PER PLAN On track to increase production to 5 million ounces by 2023 • 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 • Continue to test and optimize n
Slide 32: Hecla Is Increasing Silver Production
HECLA IS INCREASING SILVER PRODUCTION Lucky Friday production tripled over last year, expected to be 75% more in 2021 and 5 million ounces by 2023, 2.5 times 2020 production 30 Vein - *AgEq Grade (opt) 20 Years Past Mining < 10 10 - 20 Almost 20 - 30 6500 Level 30 - 35 1000 feet > 35 @ +35 Oct. 12,
Slide 33: Casa Berardi: Investments Are Delivering Results
CASA BERARDI: INVESTMENTS ARE DELIVERING RESULTS Strong production coupled with cost improvements • Business improvement activities continue in 2021; expected to reduce costs and increase cash flow over next two years • Investments already yielding results as mill availability remains consistently >
Slide 34: 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 35: Casa Berardi Acquired in 2013 – Exploration Is Still New
CASA BERARDI ACQUIRED IN 2013 – EXPLORATION IS STILL NEW Positive drilling results in the West, Principal, and East Mine areas Positive Drilling Results C’ WMCP C • Extending mineralization up dip A’ towards the Overburden-Bedrock surface. A 123 Zone • Expanding mineralization up and down dip 148 Zo
Slide 36: Exploration/Pre-development
Exploration/Pre-development NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 36
Slide 37: Hecla's Exploration and Development Assets
HECLA’S EXPLORATION AND DEVELOPMENT ASSETS NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 37
Slide 38: Green Racer Sinter Longitudinal Section
GREEN RACER SINTER LONGITUDINAL SECTION High-grade mineralization open for expansion along strike and at depth 5000 ft 4000 ft NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 38
Slide 39: Midas Green Racer Sinter – Identified with Field Work
MIDAS GREEN RACER SINTER – IDENTIFIED WITH FIELD WORK Detailed mapping and sampling led to the identification of the Spicular Geyserite Sinter Outcrop Green Racer Sinter Discovery Outcrop • Identified by detailed mapping and sampling • Sinter forms at surface and indicates a fully preserved epitherm
Slide 40: Midas: A 100-Year History of Discovery and Mining
MIDAS: A 100-YEAR HISTORY OF DISCOVERY AND MINING Green Racer Sinter is the newest discovery – first modern exploration on the East Graben Corridor NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 40
Slide 41: Midas Exploration Is Just Starting
MIDAS EXPLORATION IS JUST STARTING Continue to advance Green Racer Sinter discovery and additional East Graben Corridor targets Target Areas Green Racer Sinter Discovery Extensions • On strike extensions to the northwest and southeast from currently known mineralization CSAMT – Sinter Target • Inter
Slide 42: San Sebastian: 20 Years of Exploration, 10 Years of Mining
SAN SEBASTIAN: 20 YEARS OF EXPLORATION, 10 YEARS OF MINING, DISCOVERING COMPLETELY NEW DEPOSITS High-grade results at El Bronco, focusing in on favorable horizon at El Tigre NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 42
Slide 43: El Bronco Vein – Silver Equivalent Grade Contours
EL BRONCO VEIN – SILVER EQUIVALENT GRADE CONTOURS Grades and widths not previously seen NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 43
Slide 44: Rock Creek & Montanore
ROCK CREEK & MONTANORE Final stages of permitting, expecting to advance subject to further litigation Permitting Overview Site Overview • Rock Creek ROD* for evaluation remanded by district court on ESA procedural issue • Will step back at Rock Creek and focus on Montanore • Montanore final EIS and
Slide 45: Guidance
Guidance NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 45
Slide 46: Guidance 2021-2023
GUIDANCE 2021-2023 Silver production to increase 2021 to 2023 Production Outlook Silver Production (Moz) Gold Production (Koz) Silver Equivalent (Moz)9 Gold Equivalent (Koz)9 Greens Creek* 9.5 – 10.2 40 – 43 20.5 – 21.5 227 – 237 Lucky Friday* 3.4 – 3.8 n/a 6.2 – 6.4 67 – 70 Casa Berardi n/a 125 – 1
Slide 47: Appendix
Appendix NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 47
Slide 48: ESG
ESG NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 48
Slide 49: ESG Is Built in Our Culture but Is Still Improving
ESG IS BUILT IN OUR CULTURE BUT IS STILL IMPROVING Primary operations in the U.S. and Canada provides the strongest ESG commitment Best Jurisdiction To Protect The Environment • Completed reclamation of 97% of the Troy Tailings Facility returning lands to productive uses such as wildlife habitat • S
Slide 50: ESG Is Built in Our Culture but Is Still Improving
ESG IS BUILT IN OUR CULTURE BUT IS STILL IMPROVING Primary operations in the US and Canada provides the strongest ESG commitment Best Jurisdictions For A Collaborative Social Engagement • Signed Collaboration Agreement with Pikogan First Nation at Casa Berardi Mine • Initiated a buy local voucher pr
Slide 51: Safety: Steady Focus, Excellent Safety Record
SAFETY: STEADY FOCUS, EXCELLENT SAFETY RECORD 2020 lowest AIFR in Hecla’s history; improvements despite pandemic distractions Hecla All Injury Frequency Rate (AIFR) 7 72% 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 1.71 1.61 1.22 1 0 2012 2013 2014 2015
Slide 52: Hecla Has Small Energy and GHG Emissions Footprint
HECLA HAS SMALL ENERGY AND GHG EMISSIONS FOOTPRINT Hecla lowering our emissions per ton milled • Achieved more than our multi-year 5% energy reduction goal • Low Greenhouse Gas (GHG) Emissions • Achieved a 36% reduction in GHG emissions from 2019 • 32% of Total GHG Emissions from Line Power • 75% fr
Slide 53: Hecla Provides Oversized Benefits
HECLA PROVIDES OVERSIZED BENEFITS Contributions to our world, country, communities and employees • Metals America needs • Silver, copper, zinc, lead, gold • Embrace families • Good paying jobs and “uncommon” benefits • Multi-generations work for the company • Active community partner • Develop innov
Slide 54: Innovation That Improves Mines and Society
INNOVATION THAT IMPROVES MINES AND SOCIETY Lead the way for dry stack tailings, tier IV engines improved air quality for all, and better-safer jobs • Pioneered dry stack tailings management at Greens Creek is industry “best practice” today 2 • Hecla established internal tailings standard in 2014 and
Slide 55: Environmental Stewardship from Beginning to End
ENVIRONMENTAL STEWARDSHIP FROM BEGINNING TO END Troy tailings reclamation considered “gold standard” in Montana • Troy Tailings Storage Facility reclamation completed (300 acres). Nearly $8 million in 2017 financial assurance released by state • More than 200,000 shrubs and trees planted at Troy; la
Slide 56: Operations
Operations NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 56
Slide 57: Diverse Asset Portfolio in Mining Friendly Jurisdictions
DIVERSE ASSET PORTFOLIO IN MINING FRIENDLY JURISDICTIONS Significant value in the fundamental operations, moving projects toward becoming fundamental operations Fundamental Operations Greens Creek Casa Berardi Lucky Friday Location/Fraser Ranking1 5 - Alaska, USA 6 - Quebec, Canada 9 - Idaho, USA Pr
Slide 58: Large Reserves Despite Conservative Valuation
LARGE RESERVES DESPITE CONSERVATIVE VALUATION Hecla among the lowest marginal ounce in 2020 at $16.00 silver price Price assumption is at the discretion of management $18.00 $18.00 $18.25 HL Reserve $17.00 $17.00 $17.00 $17.00 $17.00 Year $16.00 $16.00 $16.00 Prices 2012 $26.50 2013 $20.00 Silver 20
Slide 59: Silver/Gold Reserves Growth
SILVER/GOLD RESERVES GROWTH Despite being more conservative: growth with low price assumptions is exceptional Silver Reserves Growth (millions of ounces) Gold Reserves Growth (millions of ounces) 131.0 2.0 1.5 2.4 188.4 (90.2) 147.7 250%** 0.7 (1.8) 645%*** 2013 Beginning Reserves Silver 2020 Ending
Slide 60: 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 61: Increasing Silver Reserves and Resources
INCREASING SILVER RESERVES AND RESOURCES 4x for reserves and M&I, almost 10x for inferred 250 500 Ag Ag (Moz) (Moz) 450 200 400 350 150 300 250 100 200 150 50 100 50 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 200420052006200720082009201020112012201320142
Slide 62: Labor Relations Much Improved
LABOR RELATIONS MUCH IMPROVED Employee productivity and training increasing • Smooth transition during the ramp-up • Training all employees on conflict resolution and setting expectations made an impact • Improved communication and working relationship with local union • More production than planned
Slide 63: Exploration Update
Exploration Update NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 63
Slide 64: Adding Reserves from Discoveries, Extensions
ADDING RESERVES FROM DISCOVERIES, EXTENSIONS 224 million silver reserve ounces added since 2008; <1% from acquisitions 250 188 Moz Gain in Reserve oz 200 Reserves 150 (Total Gain 224 Moz) 100 Silver Ounces (millions) 50 ‐ Production (50) (100) Cumulative (150) Production 168 Moz (200) 2008 2009 2010
Slide 65: Greens Creek – District and Near Mine Growth Potential
GREENS CREEK – DISTRICT AND NEAR MINE GROWTH POTENTIAL In-mine mineralization open for expansion and district potential for new deposits Continuation of resource expansion along mineralized trends • Ore tons have doubled in the past 15 years • Pace is driven by development access • 5250 exploration
Slide 66: Casa Berardi – New Discovery in the 160 Zone
CASA BERARDI – NEW DISCOVERY IN THE 160 ZONE New intercept is 500 feet from current resource blocks and open in all directions NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 66
Slide 67: Nevada: Focus on Long-Term Value Creation
NEVADA: FOCUS ON LONG-TERM VALUE CREATION Bulk sample test nearing completion • Q1 Gold production of 2,548 ounces from stockpiled bulk sample • Additional anticipated production of 17,000 – 19,000 ounces through the remaining year • Nevada operations to go on care & maintenance in Q2/2021 • Activit
Slide 68: Hecla Exploration Drilling
HECLA EXPLORATION DRILLING Mine/project exploration drilling expected to add mineral reserves and resources Mine/Project Results/Expectations Casa Berardi, Quebec Will continue to add Mineral Resources to both underground and open-pit mining areas Mexico Further define two new vein discoveries south
Slide 69: Silver Market
Silver Market NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 69
Slide 70: U.S. Current Electricity Consumption Trends
U.S. CURRENT ELECTRICITY CONSUMPTION TRENDS Solar is projected to be the largest beneficiary, currently accounts for 1.3% of total U.S. energy consumption NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 70
Slide 71: Silver – Widening Gap Between Supply & Demand
SILVER – WIDENING GAP BETWEEN SUPPLY & DEMAND Gap expected to increase with continued trend of industrial demand growth of 2.0% • 2019 saw a total supply of 1,023 Moz and total demand of 1,074 Moz • Silver’s total demand in 2030 is expected to reach ~1,147 Moz if demand stays on the last decade tren
Slide 72: Federal Reserve's Growing Balance Sheet
FEDERAL RESERVE’S GROWING BALANCE SHEET Monetary policy expected to remain accommodative bullish for gold Fed Balance Sheet 2007 - February 2021 . “Fair“Fair to sayto you say simply flooded you simply the system flooded with money?” the system “Yes.“Yes. with money?” We print it. Weit.are We print
Slide 73: Trillions of Government Spending and Growing
TRILLIONS OF GOVERNMENT SPENDING AND GROWING Current programs are three times greater than the 2008-9 programs $1.9 trillion $350bn: Aid to state & local governments, $225 bn: stimulus checks, $130 bn: school funding, Stimulus bill: Additional jobless benefits, Vaccine tracing and testing, Health in
Slide 74: Significant Monetary Growth Compared to 1970s
SIGNIFICANT MONETARY GROWTH COMPARED TO 1970s M2 money supply is highly correlated with inflation US M2 year over year % change, Q1/1960 – Q4/2020 Source: Reuters Eikon, Incrementum AG NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 74
Slide 75: Gold Markets Since Nixon Closed the Gold Window
GOLD MARKETS SINCE NIXON CLOSED THE GOLD WINDOW Last Bull market driven by the Dot.com bust, 9/11 and Global Financial Crisis Gold Bull and Bear Markets 01/1971-05/2020 10 49 months 512% 125 months 583% 31 months 218% 13 months 34 months 94% 62% 53 months 59% 1 4 months -21% 20 months 160 months 51
Slide 76: Replaying the Past
0 100 200 300 400 500 600 12/1/2001 NYSE: HL 3/1/2002 6/1/2002 9/1/2002 12/1/2002 3/1/2003 6/1/2003 Source: Bloomberg 9/1/2003 12/1/2003 3/1/2004 6/1/2004 9/1/2004 12/1/2004 3/1/2005 REPLAYING THE PAST 6/1/2005 9/1/2005 12/1/2005 • 1/1/2000 to 3/31/2004 – 50% appreciation 3/1/2006 6/1/2006 9/1/2006
Slide 77: Gold and Silver Linked Throughout History
GOLD AND SILVER LINKED THROUGHOUT HISTORY Highest known ratio in last 300 years, close in 1941 120 100 80 60 2020: G/S ratio = 108 ~ 3x above average 40 ~ 5x above median 20 0 1718 1738 1758 1778 1798 1818 1838 1858 1878 1898 1918 1938 1958 1978 1998 2018 Gold/Silver ratio Average Median Source: Nic
Slide 78: Rising Inflation Is Negative for Most Asset Classes
RISING INFLATION IS NEGATIVE FOR MOST ASSET CLASSES Gold and mining shares are among the best performers in inflation regimes Compound annual growth rates of different asset classes in different inflation regimes Source: Wellington Asset Management, Incrementum AG NYSE: HL RESPONSIBLE. SAFE. INNOVAT
Slide 79: Silver Supply Comes from Mine Production & Recycling
SILVER SUPPLY COMES FROM MINE PRODUCTION & RECYCLING Significant disruptions expected in mine supply in 2020 Mine production accounts for 80-85% of total silver supply • 2019 saw lower mine production due to grade declines and temporary mine suspensions due to community action • Greater challenges e
Slide 80: Silver Mine Production Declining for Fourth Year
SILVER MINE PRODUCTION DECLINING FOR FOURTH YEAR Despite strong U.S. dollar, silver production has peaked Million Ounces Source: World Silver Survey 2020 NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 80
Slide 81: Silver Mine Supply Dependent on Other Metals
SILVER MINE SUPPLY DEPENDENT ON OTHER METALS Over half of supply is a by-product of copper, lead and zinc mines 100% 90% 80% 70% 60% 50% 40% 30% 20% 31% 32% 32% 30% 30% 31% 31% 26% 28% 29% 27% 27% 28% 10% 23% 22% 23% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020e
Slide 82: Silver Mine Supply Has Jurisdiction Risk
SILVER MINE SUPPLY HAS JURISDICTION RISK 50% from four countries – 4% from the U.S. Troy Ounces mn Source: The Silver Institute, Incrementum AG NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 82
Slide 83: Silver Demand Has Three Main Components
SILVER DEMAND HAS THREE MAIN COMPONENTS Green energy demand is new and growing Silver Demand Consumer Products/Industrial Other 64.3 Moz 13% Investment 267.8 Moz 25% Photovoltaics 98.7 Moz Consumer Products/ 19% Electronics Industrial* 297.6 Moz 544.6 Moz 58% Jewelry & 51% Silverware 261.1 Moz Brazi
Slide 84: Silver Is Outperforming Many Metals
SILVER IS OUTPERFORMING MANY METALS Caught up to gold in July, overshot in August, strong since February Price Performance since Jan 2, 2020 80% 60% Silver +52% Copper +48% 40% Zinc +24% 20% Gold +18% Lead +13% 0% -20% -40% 1/2/2020 2/2/2020 3/2/2020 4/2/2020 5/2/2020 6/2/2020 7/2/2020 8/2/2020 9/2/
Slide 85: Hecla Outperformed in the Last Bull Market
HECLA OUTPERFORMED IN THE LAST BULL MARKET Very strong share reaction to the latest financial upheavals Hecla in the Last Bull Market Percentage Appreciation 800 700 600 500 400 300 200 100 0 -100 -200 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 Hecla Gold Silver Source: Bloomberg NYSE: HL RESPONSIB
Slide 86: Financial
Financial NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 86
Slide 87: Financial Strength and Flexibility
FINANCIAL STRENGTH AND FLEXIBILITY Increasing cash balance driven by free cash flow generation, leverage below our target of 2.0x Cash Balance Available liquidity of $389.8 million(*) ($ millions) 139.8 129.8 98.7 75.9 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Net Debt/Adjusted EBITDA(3) Third quarter of meet
Slide 88: Focused on Free Cash Flow Generation
FOCUSED ON FREE CASH FLOW GENERATION Free cash flow of $121 million over the past four quarters driven by superior margins and steady production Solid Silver Margins ($ per silver ounce) Cost of Sales(4) $73.1 M $78.5 M $86.0 M $76.1 M ($ millions) $9.11 $9.81 $13.79 $18.45 $9.33 $15.35 $11.53 $7.21
Slide 89: Diverse Portfolio with Margin Generation
DIVERSE PORTFOLIO WITH MARGIN GENERATION #1 silver and #3 lead and zinc producer in the U.S. Silver Production: 3.5 Moz Cost of Sales: $76.1 M Cash Costs, after by-product credits(8): $1.40/oz 13% AISC, after by-product credits(6): $7.21oz Realized Price: $25.66/oz 7% 35% Gold Production: 52.0 Koz C
Slide 90: Generating Substantial Margins
GENERATING SUBSTANTIAL MARGINS Silver AISC expected to be lower in 2021 with Lucky Friday in full production Silver Margins Gold Margins 4% 39% 54% 44% 27% 26% 72% 17% 14% 49% Cost of Sales (000s)4 AISC, After By-Product Credits, per Ag-Au/Oz6 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 2021 Outloo
Slide 91: Very Liquid – Very Long Dated Debt
VERY LIQUID – VERY LONG DATED DEBT Liquidity, tenor and coverage have improved Liquidity Position Long Dated Debt Net Debt/Adjusted EBITDA(3) At 03/31/21 1 Revolver IQ Notes 7.25%Senior Notes 2.0x Revolver $475 1.8x $250 1.7x Cash 1.4x $130 ~$380 M $250 $37 2021 2022 2023 2024 2025 2026 2027 2028 Q2
Slide 92: Diverse Portfolio with Margin Generation
DIVERSE PORTFOLIO WITH MARGIN GENERATION #1 silver and #3 lead and zinc producer in the U.S. Silver Production: 13.5 Moz Cost of Sales: $297.9 M Cash Costs, after by-product credits(5): $5.70/oz 13% AISC, after by-product credits(4): $11.89/oz Realized Price: $21.15/oz 6% 34% Gold Production: 209 Ko
Slide 93: Strong Free Cash Flow Generation
STRONG FREE CASH FLOW GENERATION Positive free cash flow generation from all mines except Nevada in the fourth quarter Greens Creek San Sebastian Lucky Friday ($ 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 94: Appendix
Appendix NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 94
Slide 95: Endnotes
ENDNOTES 1. Adjusted EBITDA is a non-GAAP measurement, a reconciliation of which to net income, the most comparable GAAP measure, can be found in the Appendix. Adjusted EBITDA is a measure used by management to evaluate the Company's operating performance but should not be considered an alternative
Slide 96: 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-Mar-21 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
Slide 97: 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 thousands 30-Jun-20 30-Sep-20 31-Dec-20 31-Mar-21 Cash Flow from Operations $ 37,526 $ 73,439 $ 64,901 $ 37,936 Less: Additions to properties, plants, equipment and
Slide 98: Cash Gross Margin (Non-GAAP) Reconciliation
CASH GROSS MARGIN (NON-GAAP) RECONCILIATION Reconciliation of Gross Profit (GAAP) to Cash Gross Margin (non-GAAP) in thousands (except per ounce amounts) 31-Mar-21 Sales of products $ 210,852 Cost of sales and other direct production costs 96,709 Depreciation, depletion and amortization 49,331 Gross
Slide 99: Adjusted EBITDA Reconciliation to GAAP
ADJUSTED EBITDA RECONCILIATION TO GAAP Reconciliation of Net Income (Loss) (GAAP) and Debt (GAAP) to Adjusted EBITDA (non-GAAP) in thousands (except per ounce amounts) 30-Jun-20 30-Sep-20 31-Dec-20 31-Mar-21 Net income (loss) $ (58,705) $ (25,561) $ (16,790) $ 19,366 Plus: Interest expense 54,587 53
Slide 100: 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 101: 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 102: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP Total Silver and Gold 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 103: Cash Cost and AISC Reconciliation to GAAP
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 104: Cash Cost and AISC Reconciliation to GAAP
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 105: 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 106: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP Lucky Friday 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 107: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP Casa Berardi 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 108: 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 109: 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 110: 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 111: 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 112: 2009 – 2019 Reserve Table
2009 – 2019 RESERVE TABLE Silver Gold Silver Gold Silver Gold Silver Gold 2009 Proven Reserves Tons (oz/ton) (oz/ton) (ounces) (ounces) 2016 Proven Reserves Tons (oz/ton) (oz/ton) (ounces) (ounces) Greens Creek - - - - - Greens Creek 9,000 15.50 0.090 140,000 1,000 Lucky Friday 1,358,200 12.30 - 16,
Slide 113: Company Overview
COMPANY OVERVIEW END June 2021 RESPONSIBLE. SAFE. INNOVATIVE. NYSE: HL
Hecla Mining Company — John Tumazos Very Independent Research Conference (June 2021) on 6ix