Hecla Mining Company · NYSE:HL
Hecla Mining — Shareholder Meeting (May 2019)
55 slides from Hecla Mining's shareholder meeting presentation, May 23, 2019
Slide 1: Annual Meeting of Shareholders
ANNUAL MEETING OF SHAREHOLDERS CREATING VALUE … May 23, 2019 Placeholder image 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: Best in Class Mining Jurisdictions
BEST IN CLASS MINING JURISDICTIONS NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 3
Slide 4: Safety First
SAFETY FIRST FIRST HARDROCK MINING COMPANY TO COMPLETE NMA CORESAFETY PROGRAM Hecla All Injury Frequency Rate (AIFR) 6 5.41 63% 5 4.57 4 3.42 Frequency Rate 3 2.76 2.00 2 1 0 2014 2015 2016 2017 2018 NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 4
Slide 5: Diverse Asset Portfolio in Mining Friendly Jurisdictions
DIVERSE ASSET PORTFOLIO IN MINING FRIENDLY JURISDICTIONS Core Operations Growth / Transformation Greens Creek Casa Berardi San Sebastian Nevada Lucky Friday Location/ Risk Score1 Alaska, USA (76.9) Quebec, Canada (87.5) Durango, Mexico (65.1) Nevada, USA (90.5) Idaho, USA (84.5) Primary Product Silv
Slide 6: Greens Creek
GREENS CREEK CONSISTENT LOW-COST PRODUCTION IN A WILDERNESS AREA / NATIONAL MONUMENT 2018 Q1 2018 Q1 2019 2019E4 Silver Production (Moz) 8.0 1.9 2.2 7.7 Gold Production (Koz) 51.5 13.1 14.3 50.0 Cost of Sales1 $190.1 M $41.9 M $54.1 M $202 M Cash cost, after by-product credits, per silver oz2 $(1.13
Slide 7: Greens Creek Was a Challenging Mine
GREENS CREEK WAS A CHALLENGING MINE • Acquired at the time of the financial crisis. • Greens Creek had a history of using cashflow instead of generating it. • Weak metal prices and low recoveries offset much higher grade. • Complicated metallurgy made recoveries challenging. • Operating in a Nationa
Slide 8: Greens Creek Has Generated Over $1B of Net Cash Flow
GREENS CREEK HAS GENERATED OVER $1B OF NET CASH FLOW CONSUMED CASH EARLY IN ITS LIFE $ in millions Cumulative Net Cash Flow* $1,400 $1,200 $1,000 $800 $600 Hecla Purchase $400 $200 $- $(200) $(400) * Net Cash Flow includes all capex, working capital changes, and lease financing expenses NYSE: HL RES
Slide 9: Greens Creek Improved Production and Reserves
GREENS CREEK IMPROVED PRODUCTION AND RESERVES SIGNIFICANT IMPROVEMENT IN PERFORMANCE SINCE HECLA BECAME OPERATOR Greens Creek Throughput has Grown 15% Since Purchase in 2008 850 Greens Creek Production and Reserves 16 14 12 Ore Reserves (Mtons) 800 10 Ore Production (ktons) 8 Hecla became operator 6
Slide 10: Greens Creek Silver Recovery
GREENS CREEK SILVER RECOVERY NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 10
Slide 11: Greens Creek: Our Best Mine Is Getting Better
GREENS CREEK: OUR BEST MINE IS GETTING BETTER LONGER LIFE, MOVING REVENUE FORWARD, REDUCED DEVELOPMENT EXPECTED • 15 to 20% increase in silver, gold, lead and zinc reserves from drilling and more data • Improved plan has 8% higher grades over the next four years, almost $80 million more revenue Defi
Slide 12: Greens Creek – Three Exploration Trends
GREENS CREEK – THREE EXPLORATION TRENDS SYSTEMATICALLY EVALUATED WITH DRILLING FROM UNDERGROUND AND THE SURFACE Drilling from UG Drilling from Surface NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 12
Slide 13: Casa Berardi
CASA BERARDI MAKING A GOOD MINE GREAT 2018 Q1 2018 Q1 2019 2019E4 Gold Production (Koz) 162.7 40.2 31.8 150.0 Cost of Sales1 $199.4 M $49.2 M $49.1 M $210 M Cash cost, after by-product credits, per gold oz2 $800/oz $827/oz $1,113/oz $850/oz AISC, after by-product credits, per gold oz3 $1,080/oz $1,0
Slide 14: Feedback on Casa Berardi Deal (2013)
FEEDBACK ON CASA BERARDI DEAL (2013) THE MINE HAD CHALLENGES • Casa Berardi was a troubled asset, disappointed market. • TVX/Inco had ground subsidence issues. • We acquired Casa at a time of falling gold prices. • Market was looking for reasons for HL to get out of the deal before it closed. • Inco
Slide 15: Casa Berardi Today: Much Better
CASA BERARDI TODAY: MUCH BETTER TURNAROUND HAS BEEN IMPRESSIVE • 4000 tpd throughput • Mine life = 15 years • More consistent operations • Stable ground conditions • Open pit and underground mine • Has become a core mines and generated $35 million of free cash flow in 2018 RESPONSIBLE. SAFE. INNOVAT
Slide 16: Casa Berardi Growing Reserves
CASA BERARDI GROWING RESERVES RESPONSIBLE. SAFE. INNOVATIVE. l 16 NYSE: HL
Slide 17: Growing Production and Reserves
GROWING PRODUCTION AND RESERVES AGGRESSIVE EXPLORATION ADDS TO RESERVE AND RESOURCE BASE Casa Berardi throughput and reserves have grown 111% and 163% Casa Berardi Longitudinal Section since purchase in 2013 Hecla became operator • Successfully stabilized, then increased throughput rates since becom
Slide 18: Improved Ground Stability
IMPROVED GROUND STABILITY ARCHED PROFILES MADE A BIG DIFFERENCE General improvement in ground conditions since November 2013 with no major groundfalls - even though we have taken some quite challenging stopes in that time. Top Cut - 180N, Z113, 350 Level looking into open stope showing good profile
Slide 19: Underground Opportunities Below Open Pits
UNDERGROUND OPPORTUNITIES BELOW OPEN PITS HIGH-GRADE LENSES EXTEND TO DEPTH FOR UNDERGROUND MINING NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 19
Slide 20: 985 Drift Autonomous Haulage in Operation
985 DRIFT AUTONOMOUS HAULAGE IN OPERATION TWO TRUCKS RUN 24 HOURS A DAY; COST SAVINGS EXPECTED Loading 40-tonne autonomous Sandvik truck NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 20
Slide 21: Casa Berardi Control Room
CASA BERARDI CONTROL ROOM ADDING TELEMETRY AND HYDRAULIC ROCKBREAKER Autonomous truck Telemetry data monitoring station Truck manual operation station collection NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 21
Slide 22: Sentiment on Casa Has Turned 180 Degrees
SENTIMENT ON CASA HAS TURNED 180 DEGREES “Hecla paid too much” Has become… “Hecla’s efforts to improve safety, efficiency and productivity at the Casa Berardi gold mine are paying off” NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 22
Slide 23: Record of Growing Reserves
RECORD OF GROWING RESERVES SIGNIFICANT INCREASES AT MUCH LOWER PRICES; VERY LOW COSTS Silver Reserves Growth Gold Reserves Growth 120.0 1.5 2.8 191.0 2.0 (76.7) (millions of ounces) (millions of ounces) 147.7 133%*** (1.3) 0.7 685%*** 2013 Beginning Reserves Reserves Added, Silver Produced, Reserves
Slide 24: The Most Conservative Silver Price Assumption in the Industry
THE MOST CONSERVATIVE SILVER PRICE ASSUMPTION IN THE INDUSTRY RESERVES ARE THE BASIS FOR VALUE CREATION Price Assumption is at the discretion of management $19.00 HL Reserve $18.50 Year Prices $18.00 2012 $26.50 $17.00 $17.00 $16.61 2013 $20.00 $16.00 $16.00 2014 $17.25 $15.50 $15.00 2015 $14.50 $14
Slide 25: World Class Assets
WORLD CLASS ASSETS NO ASSET IMPAIRMENTS TAKEN; GOOD STEWARDS OF ALLOCATING CAPITAL Asset Impairments from 2013-2018* - $ millions 4,839 3,896 2,854 2,581 2,018 1,614 1,333 1,276 507 352 273 27 17 - Kinross Yamana Eldorado Coeur New Gold IAMGOLD Agnico Pan First Endeavour SSR Fortuna Fresnillo Hecla
Slide 26: Appendix
Appendix NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 26
Slide 27: Endnotes
ENDNOTES 1. Cost of sales and other direct production costs and depreciation, depletion and amortization. 2. Cash cost, after by-product credits, per silver and gold ounce represents a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation
Slide 28: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP 2019 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, Befor
Slide 29: 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 30: 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 31: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP NEVADA 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 32: 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 33: 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 34: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP SAN SEBASTIAN 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 35: Greens Creek Free Cash Flow Reconciliation
GREENS CREEK FREE CASH FLOW RECONCILIATION Greens Creek Free Cash Flow Reconciliation (in thousands) 1 2018 1987-2018 Gross profit $ 75,288 $ 1,408,990 Non-cash elements in gross profit: Depreciation, depletion and amortization 49,908 718,288 Other (1) 1,339 Working capital changes (57) (17,573) Net
Slide 36: Operations Free Cash Flow Reconciliation
OPERATIONS FREE CASH FLOW RECONCILIATION Casa Berardi Free Cash Flow Reconciliation Greens Creek Free Cash Flow Reconciliation (in thousands) (in thousands) 1 2018 2018 1987-2018 Gross Profit $ 10,938 Gross profit $ 75,288 $ 1,408,990 Non cash elements in gross profit: Non-cash elements in gross pro
Slide 37: Proven & Probable Mineral Reserves
PROVEN & PROBABLE MINERAL RESERVES (ON DECEMBER 31, 2018 UNLESS OTHERWISE NOTED) NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 37
Slide 38: Proven & Probable Mineral Reserves
PROVEN & PROBABLE MINERAL RESERVES (ON DECEMBER 31, 2018 UNLESS OTHERWISE NOTED) (1)The term “reserve” means that part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination. The term “economically,” as used in the definition of reser
Slide 39: Measured and Indicated Mineral Resources
MEASURED AND INDICATED MINERAL RESOURCES (ON DECEMBER 31, 2018 UNLESS OTHERWISE NOTED) NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 39
Slide 40: Inferred Mineral Resources
INFERRED MINERAL RESOURCES (ON DECEMBER 31, 2018 UNLESS OTHERWISE NOTED) Inferred 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 (6) 2,470 14.6 0.09 3.0 7.3 - 35,982 219 74,410 181,400 - L
Slide 41: Inferred Mineral Resources
INFERRED MINERAL RESOURCES (ON DECEMBER 31, 2018 UNLESS OTHERWISE NOTED) Note: All estimates are in-situ except for the proven reserves at Greens Creek and San Sebastian which are in surface stockpiles. Resources are exclusive of reserves. (6) Mineral resources are based on $1350 gold, $21 silver, $
Slide 42: 2008 – 2018 Reserve Table
2008 – 2018 RESERVE TABLE Silver Gold Gold Silver Gold Gold 2008 Proven Reserves Tons (oz/ton) (oz/ton) Silver (ounces) (ounces) 2014 Proven Reserves Tons (oz/ton) (oz/ton) Silver (ounces) (ounces) Greens Creek - - - - - Greens Creek 4,700 15.70 0.100 74,000 5,000 Lucky Friday 1,270,000 12.40 - 15,8
Slide 43: Other Supporting Information
Other Supporting Information NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 43
Slide 44: Responsible. Safe. Innovative.
RESPONSIBLE. SAFE. INNOVATIVE. BELIEVE IN EARNING AND MAINTAINING OUR SOCIAL LICENSE TO OPERATE • We must be responsible operators in the communities where we live and work • We provide career jobs for our 1,800 employees • Create a culture where safety is non-negotiable • Protect and partner with t
Slide 45: Our Priority: ESG
OUR PRIORITY: ESG IMPLEMENT SASB STANDARDS ON ESG • Our core values of being responsible, safe and innovative are reflected in our commitment to operating as a responsible, ethical and sustainable business • Utilize the industry-specific SASB standards to report on the ESG aspects of our company • C
Slide 46: Our Commitment: Environment
OUR COMMITMENT: ENVIRONMENT REDUCING GREENHOUSE GAS EMISSIONS AND CONSERVING ENERGY • 60% less diesel fuel consumption at Greens Creek through the use of interruptible hydropower • The biomass heating project installed at the Casa Berardi Mine is expected to reduce 2,732 tonnes of greenhouse gas emi
Slide 47: Our Commitment: Tailings Management
OUR COMMITMENT: TAILINGS MANAGEMENT EMPHASIS ON SAFETY AND STABILITY • Design, construct, operate, decommission and close our tailings facilities to ensure stability • Approximately half of the tailings produced is used as backfill at Greens Creek, Lucky Friday, and Casa Berardi • Early adopter of t
Slide 48: Our Commitment: Reclamation
OUR COMMITMENT: RECLAMATION EVERY MINE BEGINS WITH A RECLAMATION PLAN • Begin each mine with a reclamation plan to restore the land to its natural state for productive uses • More than $175 million committed to ensuring mined lands are successfully reclaimed following operations • Completed reclamat
Slide 49: Our Commitment: Water Management
OUR COMMITMENT: WATER MANAGEMENT ROBUST PROGRAM OF SAMPLING, QUALITY ANALYSIS AND AUDITS • All water output must meet applicable federal and state (or provincial) water quality permit conditions • More than 95 percent of the process plant water needs at our Casa Berardi Mine are met by recycling wat
Slide 50: Our Commitment: Safety
OUR COMMITMENT: SAFETY SAFETY IS NON-NEGOTIABLE AT HECLA • Practice continuous improvement where we adapt/change to minimize risks of SAFETY IS EMBEDDED IN OUR CULTURE injury or an accident • Goal is always 0 injuries/fatalities • First hardrock mining company to achieve NMA’s CoreSafety certificati
Slide 51: Our Commitment: Safety
OUR COMMITMENT: SAFETY ALL INJURY FREQUENCY RATE IS 15% BELOW THE U.S. AVERAGE 2018: 15% below U.S. average 2.00 Injury frequency rates 2019 goal is a have been on a steady 10% reduction from decline since 2014 the 2018 target rate NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 51
Slide 52: Our Commitment: Communities and Education
OUR COMMITMENT: COMMUNITIES AND EDUCATION INVESTING IN FUTURE GENERATIONS AND COMMUNITIES Charitable Donations and Volunteerism • More than $2.9 million in Hecla Charitable Foundation contributions since 2009 • Foundation is focused on four areas: education, community programs, youth activities, and
Slide 53: Our Commitment: Communities and Education
OUR COMMITMENT: COMMUNITIES AND EDUCATION INVESTING IN FUTURE GENERATIONS AND COMMUNITIES Education and Training • $900,000 toward sustainable career development programs at Greens Creek Mine since 2011 • More than $1 million in donations toward student scholarships by the Hecla UQAT Foundation in Q
Slide 54: Our Commitment: Indigenous Peoples
OUR COMMITMENT: INDIGENOUS PEOPLES WE PARTNER WITH FIRST NATIONS IN THE LOCAL COMMUNITIES • Hecla Quebec and the Gitanyow Band in upper British Columbia have entered into an exploration agreement that addresses mutual benefits from future exploration activity in the area – including employment, cont
Slide 55: Our Commitment: Governance
OUR COMMITMENT: GOVERNANCE YOU SPOKE, WE LISTENED 2014 2015 2016 2017 2018 2019 Eliminated tax gross-ups Amended guidelines for succession of CEO/Chairman Increased Diversity– added female director to the Board Shortened Board tenure Added Director Resignation Policy Increased disclosure on ESG Incr
Hecla Mining Company — Shareholder Meeting (May 2019) on 6ix