Hecla Mining Company · NYSE:HL

Hecla Mining — Vertical Research Partners Materials Conference 2017

50 slides from Hecla Mining's conference presentation, Jun 15, 2017

  1. Slide 1: Corporate Update

    June 2017 NYSE:HL Corporate Update Improving Productivity and Safety With Innovation

  2. Slide 2: Investor Inquiries

    NYSE:HL Investor Inquiries 6500 North Mineral Drive, Suite 200 Coeur d’Alene, ID 83815-9408 800-HECLA-91 (800-432-5291) hmc-info@hecla-mining.com

  3. Slide 3: Cautionary Statements

    June 2017 NYSE:HL Corporate Update Improving Productivity and Safety With Innovation Cautionary Statements NYSE:HL 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 am

  4. Slide 4: Why Invest in Hecla?

    Why Invest in Hecla? Consistent strategy creates value NYSE:HL 1. N.A. Silver & Gold Exposure 2. Strong 2016; Better margins in 2017  Silver reserves 172.3 Moz  Record $646 M Revenue  Gold reserves 2 Moz  Record 46.1 Moz AgEq1 Production  Significant zinc and lead exposure  All 4 mines perform

  5. Slide 5: Hecla Advancing Innovation Quickly

    Hecla Advancing Innovation Quickly Partial implementation has meaningful value creation for Hecla NYSE:HL ORE SORTING AT SURFACE INITIAL TEST IMPLEMENTATION ELECTRIC VEHICLES UNDERGROUND IN PROGRESS ORE SORTING CONTINUOUS MUCKING NOT STARTED ELECTRIC MINE SMART ELECTRIC U/G MINING FULLY MECHANICAL C

  6. Slide 6: Added Moz of Reserves Over Past Years

    Added 299 Moz of Reserves Over Past 10 Years Unchanged reserve despite replacing record production and lowest exploration budget NYSE:HL since 2009 250 200 Reserve Additions 172 Moz 150 100 Silver Ounces (millions) 299 Million Ounces 50 - (50) (100) Cumulative Production 127 M oz (150) (200) 2007 20

  7. Slide 7: Two Of The Ten Highest Grade Mines In The World

    Two Of The Ten Highest Grade Mines In The World Lucky Friday not far behind NYSE:HL 6. 10. –9– Higher Grade Mines Than Peers BMO silver coverage, silver equiv. reserves vs. grade NYSE:HL 1,600 800 Higher Grades Silver Eq. Reserves (Moz) 1,200 600 Reserve Grade (g/t) 800 400 400 200 0 0 FRES THO BCM

  8. Slide 8: Significant Resource Growth

    Significant Resource Growth 28% growth in inferred silver ounces positions Hecla for strong future reserve growth NYSE:HL Silver Gold Million Oz Million Oz 463.9 4.9 4.7 362 161.3 171.6 1.7 1.8 M&I Inferred M&I Inferred 2015 2016 2015 2016 Zinc Lead Copper 1,044 739 1,008 1,433 667 538 572 1,029 580

  9. Slide 9: Strong Financial Performance

    Strong Financial Performance NYSE:HL Net Income Adjusted EBITDA2 $27 M $54 M $47 M +$27 M +16% -$1 M Q1/2016 Q1/2017 Q1/2016 Q1/2017 Outperformed Peer Share Prices Increasing Liquidity & Decreasing Debt Metrics 300% Hecla $313 M 250% Peer Average 1.1x 200% +188% $100 M +59% (63%) 150% 100% +85% $213

  10. Slide 10: Strong Silver and Gold Margins

    Strong Silver and Gold Margins 95% silver cash margin is one of the industry’s highest NYSE:HL Silver Margins Gold Margins 52% 78% 81% 82% 95% 32% 27% 79% 34% 33% 4 4 -15- Q1 2017 Mine Cash Flow Generation San Sebastian and Greens Creek major contributors NYSE:HL Combined Hecla’s Four Operating Mine

  11. Slide 11: Improving Debt Metrics

    Improving Debt Metrics Q1 2017 NYSE:HL LTM* Adjusted EBITDA2 Net Debt/LTM Adjusted EBITDA3 $265 M $272 M $234 M 2.0x $177 M 1.4x 1.2x 1.1x LTM Q2 2016 LTM Q3 2016 LTM Q4 2016 LTM Q1 2017 LTM Q2 2016 LTM Q3 2016 LTM Q4 2016 LTM Q1 2017  Total liquidity ~$313 m  $506 M high yield notes due 2021  Ne

  12. Slide 12: North American Focused Asset Portfolio

    North American Focused Asset Portfolio Operations in low-risk & mining-friendly jurisdictions NYSE:HL –19– A Roadmap for Further Value and Growth Creation NYSE:HL A Strong Immediate Securing The Foundation Growth Long-Term Future Greens Creek Productivity Existing Mines Greens Creek Lucky Friday #4

  13. Slide 13: Greens Creek

    Greens Creek Consistent low-cost production in a wilderness area / National Monument NYSE:HL 2016 Q1 2016 Q1 2017 2017E Silver Production (Moz) 9.3 2.5 1.9 7.4 - 8.0 Gold Production (koz) 54 16 14 54 – 60 Cost of Sales $191.3 M $44.9 M $44.0 M $228 M Cash cost, after by-product $3.84/oz $3.96/oz $0.

  14. Slide 14: Creating Value During The Shift Change

    Creating Value During The Shift Change Automated LHD operates during shift change/blasting increasing productivity NYSE:HL Blasting & Blasting & Shift Change Shift Change Utilization Operating Operating Operating Hours in the Day -23- Automated LHD Already At Work Purchased the MINExpo demo unit NYS

  15. Slide 15: Hecla Has Significantly Improved Recoveries

    Hecla Has Significantly Improved Recoveries Expect further improvements from Woodgrove SFR flotation cells NYSE:HL  Increases payable silver and gold by having it report to bulk con instead of the zinc con  Cost approx. $1.3 million  Payback expected in 6-12 months  IRR in excess of 100%  Compl

  16. Slide 16: Three Trends In Three Fault Blocks

    Three Trends In Three Fault Blocks Targets up and down plunge and in the 3rd fault block NYSE:HL -27- Greens Creek Drilling Adding shallow reserves near mine portal NYSE:HL -28-

  17. Slide 17: Lucky Friday

    Lucky Friday Positioning for growth and longevity NYSE:HL 2016 Q1 2016 Q1 2017 2017E Silver Production (Moz) 3.6 .977 .681 TBD Cost of Sales $76.2 M $18.5 M $14.5 M TBD Cash cost, after by-product $8.89/oz $9.05/oz $5.93/oz TBD credits, per silver oz4 AISC, after by-product $20.66/oz $21.78/oz $12.0

  18. Slide 18: Lucky Friday Grade Improving With Depth

    Lucky Friday Grade Improving With Depth Trend expected to continue in the future NYSE:HL Trendline -31- #4 Shaft Increasing grade with depth NYSE:HL  Shaft is now operational  Production growth expected from higher-grade ore at depth Silver Shaft 4050 Level #4 Shaft ORE GRADE VALUES *AgEq Grade (o

  19. Slide 19: #4 Shaft Gives Access to the High Grade Zone

    #4 Shaft Gives Access to the High Grade Zone Reserve grade 4 ounces higher than 2013, production grade increasing 0.5oz/yr NYSE:HL 20 Years Past Mining ORE GRADE VALUES *AgEq Grade (opt) Mine Face (Galena) > 24 97.2 opt Silver 18 - 24 6500 Level 47.5% Lead 12 - 18 6 - 12 <6 7500 Level 900’@ +24 opt

  20. Slide 20: Lucky Friday - New Mining Technique

    Lucky Friday - New Mining Technique Increase cash flows, lower development NYSE:HL Standard LFUL:  Current approach  5 cuts per ramp Optimized LFUL:  New approach  10 cuts per ramp  Lower development expenditure  Stopes turn around faster –35– Continuing Testing Battery Powered LHD Technology

  21. Slide 21: Casa Berardi

    Continuous Mechanical Cutting To Eliminate Drill/Blast A 5-year investment that could revolutionize some mines NYSE:HL Could Improve Safety and Productivity Atlas Copco Test Mine 2016 -37- Casa Berardi Making a good mine great NYSE:HL 2016 Q1 2016 Q1 2017 2017E Gold Production (koz) 146 30.4 36 150

  22. Slide 22: EMCP Pit is Transforming Casa Berardi

    Casa Berardi Increased throughput more than 100% NYSE:HL Trendline -39- EMCP Pit is Transforming Casa Berardi Creating value NYSE:HL  Optimizing the mill: ~2,300 tpd (2015A) to ~3,400 tpd (2017E), adds 5,000 Au oz (2016E) and 30,000 Au oz (2017E)  Increasing operating flexibility: More consistent

  23. Slide 23: EMCP Continues to Expand

    EMCP Continues to Expand 2016 to today shows how the pit has expanded NYSE:HL April 2016 April 2017 -41- Investing in Productivity Improvements NYSE:HL Automated Shaft and Jumbo/Stope Drill Rock Breakers Automation: Drilling During Shift Change  $200K investment  Adds 15M/day  Internally sourced

  24. Slide 24: Automation in 2017

    985 Automation in 2017 Two 40 tonne Sandvik trucks should save $5M, lessons for other operations NYSE:HL  123 & 118 Lower 985 Automated Drift -43- First Automated Truck Arrives in 2017 Modeled after the Williams operation NYSE:HL Surface control center Optical scanner & camera Safety gated area -44

  25. Slide 25: Automated trucking level

    Automated trucking level: No surface operation required, fully autonomous NYSE:HL  985 Automated haulage level DUMP POINTS CHUTE 1 FIXED BARRIERS ACCESS BARRIER Zone 118 CHUTE 2 Autonomous Navigation System CHUTE 3 Zone 123 CHUTE 4 ACCESS BARRIER -45- Twelve Drills For Surface and Underground Targe

  26. Slide 26: Casa Berardi Plan View

    Casa Berardi Plan View Surface view showing potential series of open pits NYSE:HL -47- Casa Berardi Drilling the west extensions of the Casa Berardi fault and splays NYSE:HL -48-

  27. Slide 27: San Sebastian

    San Sebastian Just-in-time mining; looking to make it a long-term mine NYSE:HL 2016 Q1 2016 Q1 2017 2017E Silver Production (Moz) 4.3 1.2 751 koz 3.0 – 3.4 Gold Production (koz) 34 9.3 6.3 21 – 25 Cost of Sales $31.2 M $7.7 M $6.6 M $36 M Cash cost, after by-product $(3.35)/oz $(3.26)/oz $(3.27)/oz

  28. Slide 28: Mining Underground By The End of 2017

    Mining Underground By The End of 2017 Access development is underway NYSE:HL North Portal CURRENT MIDDLE VEIN RESOURCE WEST MIDDLE VEIN EXPLORATION EAST MIDDLE VEIN DRILLING EXPLORATION DRILLNG North Ramp Under Construction Existing Workings -51- San Sebastian Plan View: Current open pits, developme

  29. Slide 29: Middle Vein 1.5 Miles of Continuous Mineralization

    Middle Vein 1.5 Miles of Continuous Mineralization Underground growing, deeper mineralization similar to Hugh Zone NYSE:HL MIDDLE VEIN LONGITUDINAL SECTION Mineralization (Looking NE) trends TRACE OF NEW UG RAMP MIDDLE VEIN Underground (IN PROGRESS) OPEN PIT Reserve 0.35 oz/ton gold, 0.05 oz/ton gol

  30. Slide 30: How Else Does San Sebastian Become Sustainable?

    How Else Does San Sebastian Become Sustainable? Ore sorting is a potential way of upgrading the ore NYSE:HL Ag Grade vs Recovery  Initial results indicate a reduction of 100% Average Grade (ppm) Cumulative Recovery 6600 mass by 60% while maintaining 90% 80% 5600 of the silver and 93% of the gold 60

  31. Slide 31: Rock Creek & Montanore

    Rock Creek & Montanore Final stages of permitting, expecting to advance in 2018 NYSE:HL Rock Creek Montanore Potential Mine Life 20-30 years each Hecla stock acquisition cost $19 M $54 M 148.1 Moz Ag / 183.4 Moz Ag / Big potential 1.3 Blbs Cu 1.5 Blbs Cu Advanced permitting SEIS Final EIS, RODs** We

  32. Slide 32: Interior Secretary Has Unique Experience

    Interior Secretary Has Unique Experience Former Montana Congressman, geologist, knows the project NYSE:HL Ryan Zinke  US Representative for Montana since 2015 (former state Senator)  Geologist from Whitefish, Montana  Has visited our sites  Strong supporter of economic development in NW Montana

  33. Slide 33: 2017 Expectations

    Resources Are As Much As Hecla’s Reserves Together are 40% the metal of Donlin Creek – significant unrealized value NYSE:HL Donlin Creek Rock Creek Montanore Average Analyst Value Average Analyst Value Nominal = $1.0 B3 1. Silver equivalent calculated using average prices for 2016 2. Resources inclu

  34. Slide 34: Continuing to Execute the Strategy

    Continuing to Execute the Strategy Expect good per share results NYSE:HL Growth Captive  Extend  Price Cycles  Mine Life Production Reserves & Cash-Flow  Resources Long-Lived  Capture Price Cycles Low-Cost Mines Improve  High Productivity High Return Investments Return Investments LONG TERM GO

  35. Slide 35: Appendix

    Safety First First hardrock mining company to complete NMA CORESafety program NYSE:HL Hecla All Injury Frequency Rate (AIFR) 7 6.06 6 5.35 5.41 5 4.57 Incident Rate 4 3.42 3 2 1 0 2012 2013 2014 2015 2016 -65- Endnotes NYSE:HL 1. Silver equivalent is calculated using the average market prices for th

  36. Slide 36: Safety First

    Items of Note NYSE:HL  Expect to begin depreciating the #4 Shaft in Q2 ▸ Total depreciation for 2017 estimated to be $143 million  G&A increased in 2016 due to accrual for the Annual Incentive Plan and Long Term Incentive Plan based on strong performance against long-term goals and against peers 

  37. Slide 37: Items of Note

    RCT Truck Guidance NYSE:HL Guidance  Install Progress ▸ Fully installed on truck 4213 ▸ Commissioning of system complete ▸ Training of operators to start soon ▸ Able to run in mainline and ramps  Operator assist system ▸ Not Autonomous ▸ System controls throttle, brakes, and steering ▸ Utilizes fo

  38. Slide 38: RCT Truck Guidance

    Silver Consumption per Capita Increases NYSE:HL 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 States 0.20 Germany South

  39. Slide 39: Silver Consumption per Capita Increases

    Heva-Hosco on the Famous Cadillac Break Exploring for the deeper trend mineralization NYSE:HL Lapa Mine Projected 1.08M oz Au -73- Opinaca/Wildcat In the shadow of Eleonore NYSE:HL -74-

  40. Slide 40: Heva-Hosco on the Famous Cadillac Break

    Focusing on Potential High-Grade Underground Zones NYSE:HL –75– Proven & Probable Mineral Reserves (on Dec. 31, 2016 unless otherwise noted) NYSE:HL (a) Mineral reserves are based on $1200 gold, $14.50 silver, $0.90 lead, $1.05 zinc, unless otherwise stated. (1) Mineral reserves are based on $1200 g

  41. Slide 41: Proven & Probable Mineral Reserves

    Measured and Indicated Mineral Resources (on Dec. 31, 2016 unless otherwise noted) NYSE:HL -77- Inferred Mineral Resources (on Dec. 31, 2016 unless otherwise noted) NYSE:HL (b) Mineral resources are based on $1350 gold, $21 silver, $0.95 lead, $1.10 zinc and $3.00 copper, unless otherwise stated. (2

  42. Slide 42: Measured and Indicated Mineral Resources

    2006 – 2015 Reserve Table NYSE:HL Silver Silver Gold Silver Gold Proven Reserves Tons (oz/ton) Gold (oz/ton) (ounces) (ounces) 2011 Proven Reserves Tons (oz/ton) Gold (oz/ton) Silver (ounces) (ounces) 2006 Proven Reserves Greens Creek - - - - - Greens Creek (29.73%) - - - - - Lucky Friday 2,345,500

  43. Slide 43: 2006 – 2015 Reserve Table

    Cash Cost Reconciliation to GAAP Silver Operations NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization, the most comparable GAAP measurement, After By-product Credits, per Silver Ounce for Greens Creek, Lucky Friday and San Sebastian

  44. Slide 44: Cash Cost Reconciliation to GAAP

    Cash Cost Reconciliation to GAAP Greens Creek NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Oun

  45. Slide 45: Cash Cost Reconciliation to GAAP

    Cash Cost Reconciliation to GAAP Lucky Friday NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Oun

  46. Slide 46: Cash Cost Reconciliation to GAAP

    Cash Cost Reconciliation to GAAP San Sebastian NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ou

  47. Slide 47: Cash Cost Reconciliation to GAAP

    Cash Cost Reconciliation to GAAP Casa Berardi NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Oun

  48. Slide 48: Cash Cost GAAP Reconciliation

    Cash Cost GAAP Reconciliation Silver Operations NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization, the most comparable GAAP measurement to Cash Costs, After By-Product Credits, per Silver Ounce, for Greens Creek, Lucky Friday & San

  49. Slide 49: Adjusted EBITDA Reconciliation and Net Debt Reconciliation to GAAP

    Adjusted EBITDA Reconciliation and Net Debt Reconciliation to GAAP NYSE:HL Numbers in thousands (USD) Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (non-GAAP) For the Twelve Months Ended 31-Mar-17 31-Dec-16 30-Sep-16 30-Jun-16 31-Mar-16 Net Income (Loss) $ 96,999 $ 69,547 $ (13,676)

  50. Slide 50: Greens Creek Free Cash Flow Reconciliation

    Greens Creek Free Cash Flow Reconciliation NYSE:HL 1987-2016 Dollars are in thousands Performance Gross Revenues $4,961,131 Treatment Charges (958,927) Net Revenues 4,002,204 Freight & Selling Expense (195,474) Net Smelter Return 3,806,730 Cost of Goods Sold (1,775,194) NonCash Costs (612,052) Explo

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