Hecla Mining Company · NYSE:HL
Hecla Mining — Scotiabank Mining Conference 2022
60 slides from Hecla Mining's conference presentation, Nov 30, 2022
Slide 1: Hecla Mining Company
HECLA MINING COMPANY United States’ Largest Silver Producer and Soon To Be Canada’s Scotiabank Conference, November 2022 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) Notice Regarding Reserves and Resources Unless otherwise stated herein, the reserves stated in this release represent estimates at December 31, 2021, which could be economically and legally extracted or produced at the time of the reserve determination. Estimates of pr
Slide 4: Hecla is the Fastest Growing Silver Miner
HECLA IS THE FASTEST GROWING SILVER MINER Expect 17-20 Moz silver production growth in USA and Canada by 2024 Largest U.S. Silver Producer • Produces 40% of U.S. Silver • On track to be Canada’s largest silver producer by 2024 • Largest silver reserve base in the U.S. Best in Class Silver Mines • Si
Slide 5: Greens Creek: Premier Silver Mine
GREENS CREEK: PREMIER SILVER MINE 35 years of strong free cash flow generation supported by steady production and stable costs Since 1987, Greens Creek has: Reserve life of 14 years, had a reserve mine life of 7 years at start-up – 35 years ago Mined more than Generated more than • 20 million tons,
Slide 6: Greens Creek: Free Cash Flow Engine
GREENS CREEK: FREE CASH FLOW ENGINE Low-cost structure and high grades generate significant margins Greens Creek throughput has grown 15% since purchase in 2008 Since 1987: Cumulative Cash Flow from Greens Creek Production and Reserves Operations and Free Cash Flow*, $ millions 900 Production Reserv
Slide 7: Lucky Friday: On Track to be +5 Moz/yr Producer
LUCKY FRIDAY: ON TRACK TO BE +5 Moz/YR PRODUCER Setting production and throughput records, capital investments for growth Reserve mine life of 17 years Two consecutive quarters of > 1 Moz silver production 5 million ounces/year average is 2x the best average production rate of the last 80 years* Und
Slide 8: Lucky Friday: Positioned for Long-Term Value
LUCKY FRIDAY: POSITIONED FOR LONG-TERM VALUE Higher grades at depth are supported by success of UCB mining method Lucky Friday: Long Section 30 Vein – *AgEq Grade (opt) < 10 10 - 20 20 - 30 30 - 35 > 35 December 31, 2021 *Ag Equivalent Values Based on metal prices of $17/oz Ag, $0.90/lb Pb, and $1.1
Slide 9: Underhand Closed Bench Mining Method
UNDERHAND CLOSED BENCH MINING METHOD Large scale blasting proactively manages seismic risk and increases throughput UCB Method Uses advanced drilling and blasting techniques to fragment the mineralized ore zone Is safer: miners work below engineered backfill and above a de-stressed zone Is more prod
Slide 10: Lucky Friday: Best Decade in History is Ahead
LUCKY FRIDAY: BEST DECADE IN 80 YEAR HISTORY IS AHEAD UCB expected to contribute to productivity improvements UCB method’s success and higher grades mined at depth position Lucky Friday to be a flagship asset for the next decade Lucky Friday: Silver Production by Decade* (Millions oz) ~2x 51 30 28 2
Slide 11: Casa Berardi: Stable Production, Cost Focus
CASA BERARDI: STABLE PRODUCTION, COST FOCUS Costs are more prone to inflation due to surface operations Reserve mine life of 14 years, an additional New throughput record 1.8 million ounces in M&I and Inferred resources. of 4,856 tons per day in September Innovation Achievements: • Mill throughput h
Slide 12: Alexco Acquisition Consistent with Strategic Drivers
ALEXCO ACQUISITION CONSISTENT WITH STRATEGIC DRIVERS Achieves the 8 key factors that Hecla considers for internal and external investments Highly Prospective and Top-Rated Mining Jurisdiction Among the World’s Highest-Grade Silver Deposits Long Mine Life KENO HILL SILVER DISTRICT Increase Throughput
Slide 13: Keno Hill: Consistent and Full Production by Year End 2023
KENO HILL: CONSISTENT AND FULL PRODUCTION BY YEAR END 2023 Larger deposit - Bermingham development on plan 2022 YTD and projected by End of year: Development plan: Looking southeast Production shapes: Arctic Zone Initial Production Area Bear Zone Bermingham Deep ~100m NYSE: HL RESPONSIBLE. SAFE. INN
Slide 14: Keno Hill: Flame & Moth to Supplement Bermingham
KENO HILL: FLAME & MOTH TO SUPPLEMENT BERMINGHAM Development and drilling focused on the 2 million oz upper lightning zone 2022 YTD and projected by End of Year: Development plan: Looking northwest Production shapes: Christal Zone Initial Lightning Zone Production Areas ~100m NYSE: HL RESPONSIBLE. S
Slide 15: Committed to a Strong Balance Sheet
COMMITTED TO A STRONG BALANCE SHEET Investing free cash flow in operations, positioned for production growth Cash and equivalents of $145 million, Net debt to adjusted EBITDA of 1.9, below Year to date: Free cash flow from three liquidity in excess of $260 million at target of 2.0(1) operations is $
Slide 16: 2022 Guidance: Production and Costs by Operation
2022 GUIDANCE: PRODUCTION AND COSTS BY OPERATION Silver Production (Moz) Gold Production (Koz) Silver Equivalent (Moz)6 Gold Equivalent (Koz)6 Greens Creek* 9.3 – 9.6 40 – 48 21.8 – 22.4 282 – 290 2022 Production Lucky Friday* 4.3 – 4.5 N/A 8.6 – 8.8 112 – 114 Outlook Casa Berardi N/A 125 - 132 9.7
Slide 17: Endnotes
ENDNOTES 1. Net debt to adjusted EBITDA is a non-GAAP measurement, a reconciliation of adjusted EBITDA and net debt to the closest GAAP measurements of net income (loss) and debt can be found in the appendix. It is an important measure for management to measure relative indebtedness and the ability
Slide 18: Appendix
APPENDIX NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 18
Slide 19: Hecla Mines 40% of All Silver Produced in the USA
HECLA MINES 40% OF ALL SILVER PRODUCED IN THE USA Half of the world’s production is from Mexico, Peru and China; U.S./Canadian production is scarce 2021 U.S. Silver Production, (Million ounces) Hecla’s Share of U.S. Production* 12.9 Hecla, 40% Other, 60% 6.5 3 Countries Produce ~50% of World Product
Slide 20: Largest U.S. Reserve Base with Highest Ore Grades
LARGEST U.S. RESERVE BASE WITH HIGHEST ORE GRADES 3rd largest reserve base with the highest grade among peers, Keno Hill is even higher grade Reserves and Reserve Grade** Silver Eq. Reserves (MM oz)* Silver Eq. Grade (g/t) 1,124 1,099 551 * Hatched area represents US reserves 1,150 600 950 500 393 4
Slide 21: Low-Cost Profile Silver Assets
LOW-COST PROFILE SILVER ASSETS Greens Creek in the best 15th percentile, Lucky Friday in best 33rd percentile of primary silver mines in 2022 Silver AISC Curve of Primary Silver Mines 6 Months Ended June 30th, 2022 90 80 70 60 50 40 US$/oz 30 20 10 0 -10 -20 0 25 50 75 100 Greens Creek Lucky Friday
Slide 22: Leading Dividend Policy with Silver Linked Dividend
LEADING DIVIDEND POLICY WITH SILVER LINKED DIVIDEND More cash returned to shareholders as dividend yield increases synchronously with silver prices Industry’s only silver-linked dividend policy pays an annual normal dividend (15 cents per share) plus a silver price-linked dividend that starts at $20
Slide 23: Operational Review
OPERATIONAL REVIEW NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 23
Slide 24: Diverse Asset Portfolio in Tier Regions
DIVERSE ASSET PORTFOLIO IN TIER 1 REGIONS Low cost, high margin, low tonnage assets in best jurisdictions Fundamental Operations Greens Creek Casa Berardi Lucky Friday Location/Fraser Ranking1 4 - Alaska, USA 6 - Quebec, Canada 7 - Idaho, USA Primary Product Silver Gold Silver 2021 % Revenue Contrib
Slide 25: Keno Hill Silver District: Excellent Potential
KENO HILL SILVER DISTRICT: EXCELLENT POTENTIAL Historical Production of over 200 million ounces of silver at 40 oz Ag per ton: 2x Greens Creek Property contains excellent exploration potential to host deposits similar in size and grade to the Hector-Calumet, Bermingham, or Flame and Moth deposits Nu
Slide 26: Financial Review
FINANCIAL REVIEW NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 26
Slide 27: Revenue, Production and Cost Highlights: Q1-Q3/2022
REVENUE, PRODUCTION AND COST HIGHLIGHTS: Q1-Q3/2022 Silver Gold Lead Zinc Silver Production: 10.5 Moz Total Cost of Sales(7): $246.4 M Cash Costs, after by-product credits(5): $1.11/oz AISC, after by-product credits(4): $10.17/oz 17% Realized Price: $21.25/oz 32% Gold Production: 132 Koz Total Cost
Slide 28: Cost Inflation, Tight Labor Market Continues
COST INFLATION, TIGHT LABOR MARKET CONTINUES By-product credits offset impact partially, but are price dependent Year to date, key inputs like diesel, ground Labor availability remains constrained with Lower by-product credits due to lower support, cyanide have increased more a shortage of skilled t
Slide 29: Guidance
GUIDANCE NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 29
Slide 30: Guidance: 2022 Production Guidance Increased
GUIDANCE: 2022 PRODUCTION GUIDANCE INCREASED Cost guidance affirmed with strong margin generation at silver operations Silver Production (Moz) Gold Production (Koz) Silver Equivalent (Moz)6 Gold Equivalent (Koz)6 Consolidated 2022 Total 13.6 – 14.1 169 - 180 40.1 – 41.4 519 – 536 Production Outlook
Slide 31: ESG
ESG NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 31
Slide 32: Commitment to Responsible Mining
COMMITMENT TO RESPONSIBLE MINING Complementary ESG Vision and Track-Record Safety Small Environmental Footprint Large Community Benefit Net zero on emissions in 2021* Well-established safety culture Hecla Charitable Foundation 43.7% reduction in Scope 1&2 from 2019 baseline levels Casa Berardi award
Slide 33: Hecla is Among the Safest Mining Companies
HECLA IS AMONG THE SAFEST MINING COMPANIES Implemented NMA’s CORESafety in 2012, became industry leader All – injury frequency rate (AIFR) 7 6 76% reduction since SHMS 5 inception 4 3 2 1 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 ~49,000 hours of safety and health Reduced AIFR by 76% Hecla
Slide 34: Hecla Changes Lives
HECLA CHANGES LIVES Largest private employer within the communities we operate, jobs and benefits that last a lifetime • Total direct economic impact of $700 million in 2021 Total economic impact – Hecla 2021 • More than $845K in scholarships and donations • More than a living wage – longevity, bene
Slide 35: Exploration
EXPLORATION NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 35
Slide 36: Montana Assets: 3rd Largest Copper Deposit in U.S.
MONTANA ASSETS: 3rd LARGEST COPPER DEPOSIT IN U.S. Working to advance underground data collection and permitting Permitting Strategy – Taking a reset Site Overview • Executing strategy to expedite authorization for underground evaluation and data collection via existing infrastructure. – Focus on pe
Slide 37: Hecla's 2022 Exploration
HECLA’S 2022 EXPLORATION Company wide focus on expanding and discovery of resources Greens Creek Focused on resource expansion and conversion to expand and upgrade multiple ore zones Casa Berardi Drilling to expand resources in the West, Principal, and East Mines Keno Hill Exploration drilling on un
Slide 38: Keno Hill: High Grade Mineralization Discovered at Coral Wigwam Target
KENO HILL: HIGH GRADE MINERALIZATION DISCOVERED AT CORAL WIGWAM TARGET Plan View showing HC-BM-CW vein system components in thick-line. Favorably oriented 4 miles (TRANSVERSE) veins Unfavorably oriented (LONGITUDINAL) veins Post-mineral faults (displace veining) KENO HILL CLAIM OUTLINE: TARGET AREA
Slide 39: Greens Creek: Over Years of Exploration and Extending Mineralization
GREENS CREEK: OVER 30 YEARS OF EXPLORATION AND EXTENDING MINERALIZATION From 1989 to 2020, District Exploration Targets Greens Creek has mined 20 Mtons containing: • 322 Moz of silver • 2.7 Moz of gold • 4 Blbs of zinc • 1.5 Blbs of lead Upgrading Resources (200 South and East), Exploring (East, 525
Slide 40: Casa Berardi: Focus on Underground Definition and Exploration Drilling
CASA BERARDI: FOCUS ON UNDERGROUND DEFINITION AND EXPLORATION DRILLING Positive Drilling Results 113 Zone Expanding mineralization 118 Zone Expanding mineralization in the 118-14 and 15 lenses up and down dip 119 Zone Mineralization open at depth 148 Zone Offsetting mineralization intersected in the
Slide 41: Aurora: High Grade Vein Mineralization Confirmed
AURORA: HIGH GRADE VEIN MINERALIZATION CONFIRMED Positive Drilling Results Martinez Zone Multiple vein zones intersected Juniata Zone Intersects wide high-grade zone open for expansion Chesco Zone Mineralization open for expansion along strike and at depth Mill Opalite Strong acid sulfate alteration
Slide 42: Republic: High Grade Mineralization Discovered
REPUBLIC: HIGH GRADE MINERALIZATION DISCOVERED Positive results from both Tom Thumb and Lone Pine-Blacktail Target Areas NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 42
Slide 43: Silver Market
SILVER MARKET NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 43
Slide 44: A Very Short History on Silver Demand
A VERY SHORT HISTORY ON 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 45: Silver Supply Comes from Mine Production & Recycling
SILVER SUPPLY COMES FROM MINE PRODUCTION & RECYCLING Mine production accounts for more than 80% of supply 2021 saw an increase in mined silver as COVID-19 disruptions from 2020 recovered Silver Supply (Millions oz) Mine Production Recycling Net Hedging Supply Net Official Sector Sales 1,047 1,012 1,
Slide 46: 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 Lead/Zinc Copper Gold Primary Silver 29% 29% 30% 31% 32% 32% 31% 21% 23% 23% 23% 23% 25% 25% 17% 15% 15% 16% 16% 16% 16% 33% 33% 31% 29% 29% 27% 28% 2015 2016 2017 2018 2019 2020 2021 Sour
Slide 47: Silver Demand Has Three Main Components
SILVER DEMAND HAS THREE MAIN COMPONENTS Green energy demand is new and growing – bolstered by photovoltaics and EVs Silver Demand Consumer Products/Industrial (Millions oz) (Millions oz) 4.5% CAGR over 5 years Brazing Alloys 48 Other Jewelry & 9% 35 6% Photovolt Silverwar aics e 127 255 24% 23% Indu
Slide 48: Silver: Widening Gap Between Supply & Demand
SILVER – WIDENING GAP BETWEEN SUPPLY & DEMAND Gap expected to increase even if industrial demand growth is only 1.5% 2021 saw a total supply of 1,056 Moz and Silver’s total demand in 2030 is expected to Supply needs to grow by >70 Moz per year total demand of 1,183 Moz reach ~1,223 Moz if demand sta
Slide 49: GAAP Reconciliations
GAAP RECONCILIATIONS NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 49
Slide 50: Adjusted EBITDA Reconciliation to GAAP
ADJUSTED EBITDA RECONCILIATION TO GAAP Reconciliation of Net Income (GAAP) to Adjusted EBITDA (non-GAAP) Dollars in thousands (USD) Trailing twelve months as of September 30 Net (loss) income $ (21,021) Plus: Interest expense 42,246 Plus/(Less): Income and mining tax provision (benefit) (29,287) Plu
Slide 51: Cash Cost and AISC Reconciliation to GAAP: Silver
CASH COST AND AISC RECONCILIATION TO GAAP Silver Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ounce (n
Slide 52: Free Cash Flow (non-GAAP) Reconciliation
FREE CASH FLOW (NON-GAAP) RECONCILIATON Greens Creek, Lucky Friday, and Casa Berardi Reconciliation of Cash provided by operating activities (GAAP) to Free Cash Flow (non-GAAP) in thousands YTD 2022 Greens Creek Cash provided (used) by operating activities $ 105,852 Add: Exploration 4,870 Less: Addi
Slide 53: Cash Cost and AISC Reconciliation to GAAP: Greens Creek
CASH COST AND AISC RECONCILIATION TO GAAP Greens Creek Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, In tho
Slide 54: Cash Cost and AISC Reconciliation to GAAP: Lucky Friday
CASH COST AND AISC RECONCILIATION TO GAAP Lucky Friday Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ou
Slide 55: Cash Cost and AISC Reconciliation to GAAP: Casa Berardi
CASH COST AND AISC RECONCILIATION TO GAAP Casa Berardi Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ou
Slide 56: Cash Cost and AISC Reconciliation: 2022 Estimates
CASH COST AND AISC RECONCILIATION TO GAAP 2022 silver and gold estimates Reconciliation of Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non- GAAP) and All-In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Co
Slide 57: Proven & Probable Mineral Reserves
PROVEN & PROBABLE MINERAL RESERVES(1) (On December 31, 2021 unless otherwise noted) Investors are cautioned that Reserves and Resources are as of December 31, 2021, and are dynamic during the year due to mining depletion, changing metal prices, changing costs or project NYSE: HL economics, and new d
Slide 58: Measured and Indicated Mineral Resources
MEASURED AND INDICATED MINERAL RESOURCES (On December 31, 2021 unless otherwise noted) Measured Resources (8) Silver Gold Lead Zinc Copper Silver Gold Lead Zinc Copper Asset Location Ownership Tons (000) (oz/ton) (oz/ton) % % % (000 oz) (000 oz) (Tons) (Tons) Tons Greens Creek (11,12) United States
Slide 59: Inferred Mineral Resources
INFERRED MINERAL RESOURCES (On December 31, 2021 unless otherwise noted) Inferred Resources (10) Silver Gold Lead Zinc Copper Silver Gold Lead Zinc Copper Asset Location Ownership Tons (000) (oz/ton) (oz/ton) % % % (000 oz) (000 oz) (Tons) (Tons) Tons Greens Creek (11,12) United States 100.0% 2,152
Slide 60: Mineral Resources Footnotes
MINERAL RESOURCES FOOTNOTES NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 60
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