Hecla Mining Company · NYSE:HL
Hecla Mining — BMO Capital Markets Global Metals & Mining Conference 2020
23 slides from Hecla Mining's conference presentation, February 2020
Slide 1: Transformation Gaining Momentum
BMO INVESTOR CONFERENCE Transformation Gaining Momentum February 2020 RESPONSIBLE. SAFE. INNOVATIVE. Hecla Mining Company 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 Has a Solid Foundation
HECLA HAS A SOLID FOUNDATION Transformation providing operating and share price momentum Characteristics are unique among peers Asset Overview • Largest primary silver producer in the US, third largest producer of lead and zinc with proven track record • Best mining jurisdictions: Alaska, Quebec, Id
Slide 5: Achieving Value for Shareholders
ACHIEVING VALUE FOR SHAREHOLDERS Hecla has the six keys to creating long term value Reserves Margins Jurisdictions ESG Financial Flexibility Growth in Reserves, Production, and Cashflow NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 5
Slide 6: Reserves Are Growing
RESERVES ARE GROWING 129-year record for silver; record for gold in 2018 Silver Reserves Growth (millions of ounces) Gold Reserves Growth (millions of ounces) 2.1 (1.6) 1.5 2.7 153.8 (76.7) 212.2 265%3 147.7 629%3 0.7 2013 Beginning Reserves added Gold produced Additions Reserves, 2013 Beginning Res
Slide 7: Not All Reserves Are the Same
NOT ALL RESERVES ARE THE SAME Hecla’s silver reserve price assumption are lower than peer’s Price assumption is at the discretion of management HL Reserve Year Prices $18.00 $18.25 $17.00 $17.00 $17.00 $17.00 $17.00 $17.30 2012 $26.50 $16.00 $16.00 $14.50 2013 $20.00 2014 $17.25 Silver 2015 $14.50 2
Slide 8: Silver Margins Consistently Strong
SILVER MARGINS CONSISTENTLY STRONG Gold margins improved in 2H19 – 2020 outlook is better Silver Margins Gold Margins 3% 19% 20% 7% 27% 35% 26% 51% 54% 41% (35)% (29)% Cost of Sales (000s)2,* AISC, After By-Product Credits, per Ag-Au/Oz4,** 2017 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 2017 2018 Q1 2019
Slide 9: Best of the Best Mining Jurisdictions
BEST OF THE BEST MINING JURISDICTIONS Unique combination of jurisdiction, mine life, margin and capital efficiency Hecla 2019 Revenue by Operation / Geography Hecla 2019 Assets by Operation / Geography Other Nevada Lucky Friday 11% operations 2% San Sebastian 16% 2% Casa Beradi Greens Creek Lucky Fr
Slide 10: Hecla's ESG Starts with Safety
HECLA’S ESG STARTS WITH SAFETY All Injury Frequency Rate is 33% below the U.S. average Hecla All Injury Frequency Rate (AIFR) 6 70% 5.41 5 4.57 2019: 33% 4 below U.S. Frequency Rate 3.42 average 3 2.76 2.00 2 1.61 1 0 2014 2015 2016 2017 2018 2019 Injury frequency rates have been on a steady decline
Slide 11: Refinancing Demonstrates Hecla's Financial Flexibility
REFINANCING DEMONSTRATES HECLA’S FINANCIAL FLEXIBILITY Longer maturity, less interest expense, more liquidity, improved leverage ratio Liquidity Position Components of the Refinancing • Strong 2H19 CF allowed for full repayment of revolver in Q4’19 Cash… • Issued $49mm of equity through an ATM offer
Slide 12: Hecla's Strongest Mine - Greens Creek - Is Growing
HECLA’S STRONGEST MINE - GREENS CREEK - IS GROWING 22% increase in silver reserves, 10mm ounces of silver production, $107mm in cashflow Cumulative Net Cash Flow of $1.2b since Hecla became operator Reserves have grown almost 40% in the past 3 years 900 Greens Creek Production and Reserves 16 $1,353
Slide 13: Lucky Friday Full Production Expected by Yearend Drives Cashflow Growth
LUCKY FRIDAY FULL PRODUCTION EXPECTED BY YEAREND DRIVES CASHFLOW GROWTH Expect 60% more annual silver production compared to historic production as go deeper NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 13
Slide 14: Casa Berardi Mill Operation Improvements Are Expected
CASA BERARDI MILL OPERATION IMPROVEMENTS ARE EXPECTED Increased mill availability will improve throughput, production, and cashflow – reviewing other opportunities • Improvements in availability seen in December continuing • Feed from underground and open pit provides flexibility to reach full capac
Slide 15: Casa Berardi 148 Zone Is Higher Grade
CASA BERARDI 148 ZONE IS HIGHER GRADE Production growth should be driven by higher grades NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 15
Slide 16: Roadmap for Further Growth and Value Creation
ROADMAP FOR FURTHER GROWTH AND VALUE CREATION Largest inventory of growth projects in Hecla’s 129-year history Longer Term Development Fire Creek Mine Plan Robust Near Term Growth • Potential for significant upside and increased production through developing Fire Creek to the north, Zeus and North v
Slide 17: Appendix
Appendix NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 17
Slide 18: Adjusted EBITDA Reconciliation to GAAP
ADJUSTED EBITDA RECONCILLIATION TO GAAP Reconciliation of Net income (Loss) (GAAP) to Adjusted EBITDA (non-GAAP) Dollars in thousands (USD) Three Months Ended 31-Mar-19 30-Jun-19 30-Sep-19 31-Dec-19 Net (loss) income $ (25,533) $ (46,532) $ (19,516) $ (7,976) Plus: Interest expense, net of amount ca
Slide 19: Free Cash Flow Reconciliation to GAAP
FREE CASH FLOW RECONCILIATION TO GAAP Reconciliation of Cash Flow from Operations (GAAP) to Free Cash Flow (Non-GAAP) NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 19
Slide 20: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP Silver operations 2020 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 Susta
Slide 21: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP Gold operations 2020 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 Sustain
Slide 22: 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 23: 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
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