Hecla Mining Company · NYSE:HL
Hecla Mining — RBC Capital Markets Global Mining & Materials Conference 2023
60 slides from Hecla Mining's conference presentation, Jun 15, 2023
Slide 1: Hecla Mining Company June 2023 Update
HECLA MINING COMPANY United States’ Largest Silver Producer and Soon To Be Canada’s June 2023 Update 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, 2022, 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 Established Silver Miner
HECLA IS THE FASTEST GROWING ESTABLISHED SILVER MINER 17Moz silver production in USA and Canada in 2023, 20Moz by 2025 Largest U.S. Silver Producer • Produces 45% of U.S. Silver • On track to be Canada’s largest silver producer by 2024 • Largest silver reserve base in the U.S.; largest and highest p
Slide 5: Fastest Growing Established Silver Miner
FASTEST GROWING ESTABLISHED SILVER MINER Production growth in tier 1 jurisdictions is accretive on a per share metric Silver Eq. Production and Reserves** Average Silver Production: 2008-2025E per Share: 2008-2022 Million oz Average Silver Eq. Reserve per share 5 0.32 0.35 5 ~1.8x Silver Eq. ~2x Pro
Slide 6: Hecla Mines 45% of All Silver Produced in the USA
HECLA MINES 45% 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 2022 U.S. Silver Production* (Moz) Hecla’s Share of U.S. Production** 14.2 Hecla, 44% Other, 56% 6.6 3 Countries Produce ~51% of World Production U.S. P
Slide 7: Largest U.S. Reserve Base with Highest Grades
LARGEST U.S. RESERVE BASE WITH HIGHEST GRADES 3rd largest reserve base with the highest grade among peers Reserves and Reserve Grade** Silver Eq. Reserves (Moz)* Silver Eq. Grade (g/t) 1,124 889 * Hatched area represents US reserves 635 1,150 600 950 500 393 406 382 387 750 400 592 550 530 300 350 3
Slide 8: Low-Cost Profile Silver Assets
LOW-COST PROFILE SILVER ASSETS Greens Creek in the best 15th percentile, Lucky Friday in best 30th percentile of primary silver mines in 2022 Silver AISC Curve of Primary Silver Mines: 12 Months Ended December 31, 2022 US$/oz 70 70 60 60 50 50 Greens Creek: Lucky Friday: 40 Best 30th 40 Best 15th Pe
Slide 9: 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 (1.5 cents per share) plus a silver price-linked dividend that starts at $2
Slide 10: Operational Review
OPERATIONAL REVIEW NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 10
Slide 11: Greens Creek: Flagship Mine
GREENS CREEK: FLAGSHIP MINE Consistent performance, low costs drive robust free cash flow generation Since 1987, Greens Creek has: Reserve Life: 13 Years Mined more than Generated more than • 20 million tons, containing • $2.8 billion in cash flow from • 345Moz Silver operations • 2.8Moz Gold • $1.9
Slide 12: Greens Creek: Free Cash Flow Engine
GREENS CREEK: FREE CASH FLOW ENGINE 2022: Record mill throughput, 9.7Moz in silver production Low-cost structure, high grades generate significant free cash flow Greens Creek throughput has grown 15% since purchase in 2008 Since 1987: Cumulative Cash Flow from Greens Creek Production and Reserves Op
Slide 13: Lucky Friday: Innovation Driven Production Growth
LUCKY FRIDAY: INNOVATION DRIVEN PRODUCTION GROWTH Recognized for innovation by Society for Mining, Metallurgy and Exploration (SME) • Record year 2022 in throughput, highest silver production in the past 20 years Reserve Life: 17 Years • Ratified 6-year contract with the Union • Underhand Closed Ben
Slide 14: 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 15: Union Ratification of Labor Contract Solidifies Lucky Friday's Growth
UNION RATIFICATION OF LABOR CONTRACT SOLIDIFIES LUCKY FRIDAY’S GROWTH Six-year agreement reflects a strong working relationship No material changes, work rules largely unchanged Key Terms Term of Agreement - 6 years and 4 months • Longest contract in the history of the Union and Hecla Increase in wa
Slide 16: 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 17: Lucky Friday: Best Decade in 80 Year History Is Ahead
LUCKY FRIDAY: BEST DECADE IN 80 YEAR HISTORY IS AHEAD UCB is contributing to productivity and safety 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* (Million oz) ~2x 50 30 2
Slide 18: Keno Hill: Largest Primary Silver Reserves in Canada
KENO HILL: LARGEST PRIMARY SILVER RESERVES IN CANADA 2023 Silver production to exceed 2.5Moz • 33% increase in silver 33% increase in reserves to nearly silver reserves 50Moz50Moz to nearly at 22.5atoz/ton 22.5 oz/ton Reserve Life: 8+ Years • Full production to 440to Full production tons 440per day
Slide 19: Keno Hill: 440 Tons per Day by Year End 2023
KENO HILL: 440 TONS PER DAY BY YEAR END 2023 Larger deposit - Bermingham development on plan Development plan: Looking southeast Production shapes: Arctic Zone Initial Production Area Bear Zone Bermingham Deep ~100m NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 19
Slide 20: Keno Hill: Flame & Moth to Supplement Bermingham
KENO HILL: FLAME & MOTH TO SUPPLEMENT BERMINGHAM Development and drilling focused on the 2Moz Upper Lightning zone Development plan: Looking northwest Production shapes: Christal Zone Initial Lightning Zone Production Areas ~100m NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 20
Slide 21: Casa Berardi: Investing for the Future
CASA BERARDI: INVESTING FOR THE FUTURE Period of investment as mine begins transition to open pit operation • Reserve mine life of 14 years, an additional 2.0Moz in M&I and Inferred resources Reserve Life: 14 Years • Transitioning to a full surface operation, mill performance remains strong as a res
Slide 22: 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 23: Financial Review
FINANCIAL REVIEW NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 23
Slide 24: Committed to a Strong Balance Sheet
COMMITTED TO A STRONG BALANCE SHEET Silver revenues are now the largest source Q1/2023: Free cash flow from Net debt to adjusted EBITDA of Cash and equivalents of $96 three operations is $52 million(2) 1.9, below our target of 2.0(1) during million, liquidity ~ of $240 million this investment period
Slide 25: Silver Margins Are Best in the Industry
SILVER MARGINS ARE BEST IN THE INDUSTRY Strong free cash flow generation deployed in production growth • From 2020 – Q1/2023, Greens Creek, Lucky Friday* and Casa Berardi have generated: • $922 million in cash flow from operations • $623 million in free cash flow2 Free Cash Flow*: Greens Creek, Luck
Slide 26: Revenue, Production and Cost Highlights: FY 2022
REVENUE, PRODUCTION AND COST HIGHLIGHTS: FY 2022 Silver Gold Lead Zinc Silver Production: 14.2Moz Total Cost of Sales(7): $349.3M Cash Costs, after by-product credits(5): $2.06/oz 16% AISC, after by-product credits(4): $11.25/oz Realized Price: $21.53/oz 34% Gold Production: 175.8Koz Total Cost of S
Slide 27: Silver Market
SILVER MARKET NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 27
Slide 28: The World's Growing Needs for Silver
THE WORLD’S GROWING NEEDS FOR SILVER Demand increased by almost 500Moz in two decades 23 YEAR CHANGE IN DEMAND PERIODS OF SILVER DEMAND Moz 1999 2022 % Increase Industrial 343 576 68% Five distinct periods of silver demand, three are strengthening Photography 246 28 -89% Jewelery/Silverware 260 255
Slide 29: Silver Supply Comes from Mine Production & Recycling
SILVER SUPPLY COMES FROM MINE PRODUCTION & RECYCLING Mine production accounts for more than 80% of supply 51% of mine production comes from Mexico, China and Peru Silver Supply (Millions oz) Mine Production Recycling Net Hedging Supply Net Official Sector Sales 1,012 1,000 999 1,004 1,005 1,025 958
Slide 30: 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 Primary Silver Gold Copper Lead/Zinc 29% 29% 30% 32% 33% 31% 31% 30% 21% 23% 23% 23% 23% 26% 25% 26% 17% 15% 15% 15% 16% 16% 15% 16% 32% 32% 31% 29% 28% 27% 28% 28% 2015 2016 2017 2018 201
Slide 31: 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) 11.7% CAGR 2022: 1,117Moz 2022: 557Moz over 5 years Other 45 4% Other 136 24% Photovoltaics Jewelry & 140 Silverw
Slide 32: Solar Energy Is Expected to Grow
SOLAR ENERGY IS EXPECTED TO GROW 1 GW of solar capacity requires half a million ounces of silver Solar could account for 33% of total U.S. energy generation by 2050 U.S. Electricity Generation by Fuel: 2000 - 2050 gigawatt 2022 history projections Over the next 28 years need ~750 Moz 6,000 just for
Slide 33: Silver's Photovoltaic (PV) Demand Is Growing
SILVER’S PHOTOVOLTAIC (PV) DEMAND IS GROWING Compounded growth rate of >14% from 2013 to 2024F PV Installations (Gigawatts) and Silver Loadings*,** Silver used in PVs, 2013 - 2024F** PV Installations Ag Loading Million oz PV Installations Silver Loading 200 195 Gigawatts Index 2013 = 100 450 100 180
Slide 34: 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% 2022 saw a total supply of 1,005Moz and Silver’s total demand in 2030 is expected to Supply needs to grow by >70Moz per year total demand of 1,117Moz reach ~1,187Moz if demand stays o
Slide 35: Exploration
EXPLORATION NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 35
Slide 36: Hecla's 2023 Exploration
HECLA’S 2023 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 Underground exploration drilling to expand resources in the West, East Mines and the Principal pit Keno
Slide 37: Keno Hill Silver District: Excellent Potential
KENO HILL SILVER DISTRICT: EXCELLENT POTENTIAL Historical Production of over 200Moz 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 Numerous untes
Slide 38: Keno Hill: 2022 Exploration Success at 3 Targets
KENO HILL: 2022 EXPLORATION SUCCESS AT 3 TARGETS Initial exploration drilling confirms significant exploration potential within large district Plan Map Showing the Location of 3 Exploration Targets Coral Wigwam Longitudinal Section Looking NW 101.5 oz/ton silver over 7.3 feet Including: 2,522.1 oz/t
Slide 39: Greens Creek: Underground Drilling Is Adding Resources
GREENS CREEK: UNDERGROUND DRILLING IS ADDING RESOURCES Underground Surface District Exploration Targets From 1989 to 2022, Greens Creek has mined 22 Mtons containing: • 345Moz of silver • 2.8Moz of gold • 4.0Blbs of zinc • 1.6Blbs of lead Upgrading Resources (200 South and East), Exploring (East, 52
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: ESG
ESG NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 41
Slide 42: 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 and 2022* San Sebastian Mine received the Casa Berardi awarded the John 20
Slide 43: 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 80% 6 reduction 5 since SHMS inception 4 3 2 1 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 ~45,000 hours of safety and health Reduced AIFR by 80%
Slide 44: Hecla Changes Lives
HECLA CHANGES LIVES Significant private employer within the communities we operate, jobs and benefits that last a lifetime Total economic impact – 2022 Hecla Charitable Foundation $833M $4+ million to area non-profits Nevada Operations Hecla Corporate $38M $103M Grouse Creek Greens Creek $564K Local
Slide 45: Guidance
GUIDANCE NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 45
Slide 46: Guidance – 18% Production Increase in 2023 to ~17Moz
GUIDANCE – 18% PRODUCTION INCREASE IN 2023 TO ~17Moz Strong margins and free cash flow generation at silver operations Silver Production (Moz) Gold Production (Koz) Silver Equivalent (Moz)6 Gold Equivalent (Koz)6 2023 Total 16.0 – 17.5 160 - 170 41.5 – 44.0 505 – 535 Consolidated 2024 Total 17.5 – 1
Slide 47: 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 48: GAAP Reconciliations
GAAP RECONCILIATIONS NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 48
Slide 49: Adjusted EBITDA Reconciliation to GAAP
ADJUSTED EBITDA RECONCILIATION TO GAAP Reconciliation of Net Income (GAAP) to Adjusted EBITDA (non-GAAP) Trailing Twelve Months Dollars in thousands (USD) Q4 2022 Q1 2023 Net (loss) income $ (37,348) $ (44,674) Plus: Interest expense 42,793 42,552 Plus/(Less): Income and mining tax provision (benefi
Slide 50: Cash Cost and AISC Reconciliation to GAAP
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 51: 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 FY 2020 FY 2021 FY 2022 Greens Creek Cash provided (used) by operating activities $ 176,975 $ 208,715 $ 150,62
Slide 52: Cash Cost and AISC Reconciliation to GAAP
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, per Ou
Slide 53: Cash Cost and AISC Reconciliation to GAAP
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 54: Proven & Probable Mineral Reserves
PROVEN & PROBABLE MINERAL RESERVES(1) (On December 31, 2022 unless otherwise noted) Proven Reserves (1) 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 (2,3) United States 100.0% 7 16.1 0.07 2.3 5.4 108 0.
Slide 55: Measured and Indicated Mineral Resources (1/2)
MEASURED AND INDICATED MINERAL RESOURCES (1/2) (On December 31, 2022 unless otherwise noted) Measured Resources (9) 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 (12,13) United
Slide 56: Measured and Indicated Mineral Resources (2/2)
MEASURED AND INDICATED MINERAL RESOURCES (2/2) (On December 31, 2022 unless otherwise noted) Measured & Indicated Resources 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 (12,13
Slide 57: Inferred Mineral Resources
INFERRED MINERAL RESOURCES (On December 31, 2022 unless otherwise noted) Inferred Resources (11) 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) (12,13) Greens Creek United States 100.0% 2,38
Slide 58: Mineral Resources Footnotes
MINERAL RESOURCES FOOTNOTES Note: All estimates are in-situ except for the proven reserves at Greens Creek which are in surface stockpiles. Mineral resources are exclusive of reserves. 8. The term "mineral resources" means a concentration or occurrence of material of economic interest in or on the E
Slide 59: Mineral Resources Footnotes
MINERAL RESOURCES FOOTNOTES 15. The average resource cut-off grades at Casa Berardi are 0.11 oz/ton gold for underground and 0.034 oz/ton gold for open pit; metallurgical recovery (actual 2022): 87% for gold; US$/CAN$ exchange rate: 1:1.3. 16. The resource NSR cut-off value at Keno Hill is $129.10/t
Slide 60: Mineral Resources Footnotes
MINERAL RESOURCES FOOTNOTES 24. Inferred open-pit resources for Fire Creek calculated November 30, 2017 using gold and silver recoveries of 65% and 30% for oxide material and 60% and 25% for mixed oxide-sulfide material. Indicated Resources reclassified as Inferred in 2019. Open pit resources are ca
Hecla Mining Company — RBC Capital Markets Global Mining & Materials Conference 2023 on 6ix