Hecla Mining Company · NYSE:HL
Hecla Mining — Q2 2020 Earnings Presentation
32 slides from Hecla Mining's earnings presentation, Aug 6, 2020
Slide 1: Second Quarter 2020 Earnings Conference Call
SECOND QUARTER 2020 Earnings Conference Call August 6, 2020 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) 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 Is a Unique and Scarce Investment Option
HECLA IS A UNIQUE AND SCARCE INVESTMENT OPTION Produces a third of U.S. silver production, largest reserve and resource 2019 U.S. Silver Production (31.5 Moz) Hecla’s Share of U.S. Production (Moz) 10.7 34.0% 66.0% 7.1 Hecla Other** . 3 Countries Produce 50% of World Production 3.8 U.S. Produces 4%
Slide 5: Financial Review
Financial Review NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 5
Slide 6: Leading Precious Metal, Lead and Zinc Producer with Diverse Assets and Commodity Mix
LEADING PRECIOUS METAL, LEAD AND ZINC PRODUCER WITH DIVERSE ASSETS AND COMMODITY MIX #1 silver and #3 lead and zinc producer in the U.S. Silver Production: 3.4 Moz Cost of Sales: $73.1 M Cash Costs, after by-product credits(1): $4.97/oz 12% AISC, after by-product credits(1): $9.33/oz Realized Price:
Slide 7: Focused on Free Cash Flow Generation
FOCUSED ON FREE CASH FLOW GENERATION Further upside in free cash flow generation in 2021 expected with Lucky Friday ramp-up Q2/2020 (in $ millions) Cash Flow from Capital Free Cash Flow* Lucky Friday Operations – Expenditures Cash Ramp- Before Lucky Friday Ramp-up Costs* up Costs 40.4 (2.9) 26.7 (10
Slide 8: Operations Review
Operations Review NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 8
Slide 9: Excellent Safety Record
EXCELLENT SAFETY RECORD Continue to lower AIFR Hecla All Injury Frequency Rate (AIFR) 5 4.57 74% 5 4 4 3.42 Frequency Rate 3 2.76 3 2.00 2 1.61 2 1.19 1 1 0 2015 2016 2017 2018 2019 YTD 2020 NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 9
Slide 10: Greens Creek Performing Strongly
GREENS CREEK PERFORMING STRONGLY New schedule helps protect the operation against the pandemic • Safely remained in operation, 470 days without a reportable injury (a record in 30 years of operations) • Changed schedule for workers • 7 days in quarantine • 21 days on island • 14 days off Quarantine
Slide 11: Casa Berardi Back to Full Operation
CASA BERARDI BACK TO FULL OPERATION Program to improve mill operations ongoing; goal is significant cost reductions Security – Employee screening includes questionnaire with • Quebec government mandated closure from March temperature check 24 to April 15, 2020 • Returned to full production quickly •
Slide 12: Lucky Friday Ramp-Up Continues
LUCKY FRIDAY RAMP-UP CONTINUES Full production rate expected by year end • Mining deemed essential in Idaho • Minimal effect on workforce • Over 96% of the expected workforce in-place • #2 hoist project completed on budget during quarter • Ongoing production ramp-up; expected full production rate by
Slide 13: Advances in Nevada
ADVANCES IN NEVADA Bulk sample program underway; favorable hydrology study • Complete mining of oxide resource • Processing agreement with third party for bulk sample of Type 2 ore • Have collected 16,000 of the targeted 30,000 tons of Type 2 ore • Ground conditions, water inflow, productivity, and
Slide 14: San Sebastian Long-Term Potential Remains
SAN SEBASTIAN LONG-TERM POTENTIAL REMAINS Flexible capital strategy pays off • Mining is expected to stop in the third quarter • Milling is expected to be complete in the fourth quarter • Continue to study potential opportunities to return to production in the future • Low capital strategy at San Se
Slide 15: Thank You for Staying Safe
THANK YOU FOR STAYING SAFE N95 Masks – Mandatory for tasks being performed within 2 meters without any physical barrier. N95 Masks – Required when social distancing is not possible N95 Masks – Required when social distancing is not possible NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 15
Slide 16: Appendix
Appendix NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 16
Slide 17: 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 18: Free Cash Flow (Non-GAAP) Reconciliation
FREE CASH FLOW (NON-GAAP) RECONCILIATON Reconciliation of Cash Flow from Operations (GAAP) to Free Cash Flow (Non GAAP) In 000 USD Q2/2020 Cash Flow from Operations 37,526 Add: Lucky Friday cash ramp-up costs 2,900 Cash Flow from Operations before Lucky Friday Cash Ramp-up 40,426 Less: Capital Expen
Slide 19: Cash Cost and AISC Reconciliation to GAAP - Silver Operations
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 20: Cash Cost and AISC Reconciliation to GAAP - Gold Operations
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 21: Other Supporting Information
Other Supporting Information NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 21
Slide 22: 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 23: 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 24: Our Commitment: Environment
OUR COMMITMENT: ENVIRONMENT Reducing greenhouse gas emissions and conserving energy • Typically 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 greenhou
Slide 25: 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 26: 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 Before • Completed r
Slide 27: 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 28: Our Commitment: Safety
OUR COMMITMENT: SAFETY Safety is non-negotiable at Hecla • Practice continuous improvement where we adapt/change to minimize risks of injury or an accident SAFETY IS EMBEDDED IN OUR CULTURE • Goal is always 0 injuries/fatalities • First hardrock mining company to achieve NMA’s CORESafety certificati
Slide 29: Our Commitment: Safety
OUR COMMITMENT: SAFETY Continue to lower All Injury Frequency Rate Injury frequency rates have been on a steady decline since 2014 NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 29
Slide 30: 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 31: 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 32: Our Commitment: Indigenous Peoples
OUR COMMITMENT: INDIGENOUS PEOPLES We partner with First Nations in 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, contract