Hecla Mining Company · NYSE:HL
Hecla Mining — Denver Gold Forum 2018
55 slides from Hecla Mining's conference presentation, Sep 25, 2018
Slide 1: Corporate Update
September 2018 NYSE:HL Corporate Update Near-Term Value Drivers
Slide 2: Cautionary Statements
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 amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are
Slide 3: Our Strategy Works In Every Price Environment
Our Strategy Works In Every Price Environment Three ways for shareholders to benefit NYSE:HL To invest in long-lived, low-cost (both operating and capital) assets where we see the potential to improve the operations, making them safer, lowering the cost or extending the life further ▸ Each mine is
Slide 4: Portfolio of Long-Lived Quality Assets
Portfolio of Long-Lived Quality Assets Growing presence in Nevada NYSE:HL Nevada “Heart of the Nevada Gold District” Midas N Hollister Fire Creek –4– Source: Company disclosures.
Slide 5: 20 Year Gold Silver Ratio
20 Year Gold Silver Ratio Highest we have seen in the past 20 years NYSE:HL 90 80 70 60 20 Year Avg: 62.5 50 40 30 Source: Bloomberg -5-
Slide 6: Diversified Revenue Stream Q2/2018
Diversified Revenue Stream Q2/2018 Mitigates risk and enhances economics NYSE:HL #1 Silver and #3 Lead and Zinc Producer in the U.S. Greens Creek 33% 35% Silver Production: 2.6 Moz 51% of Cost of Sales: $60.6 M1 Total Revenue Cash Costs, after by-product credits: 11% $(0.57)/oz2 21% Zinc Production:
Slide 7: 2018 Silver and Gold Mineral Reserve Prices
2018 Silver and Gold Mineral Reserve Prices Company Comparison - Hecla at low end of expected peer range NYSE:HL $18.50 $19.00 $17.50 $18.00 $18.00 $18.00 HL Reserve $17.00 $17.26 Year $16.00 $16.00 Prices $14.50 2012 $26.50 2013 $20.00 2014 $17.25 2015 $14.50 2016 $14.50 2017 $14.50 Hecla Agnico Ea
Slide 8: Silver All-in Sustaining Cash Costs
Silver All-in Sustaining Cash Costs Hecla has the lowest AISC among silver peers NYSE:HL 2017 Silver AISC* - $/oz (after by-product credits) $18.30 $15.95 $13.82 $10.79 $8.91 $7.86 HL TAHO ** PAAS FR CDE *** SSRM CDE – Coeur d’Alene Mines, HL – Hecla, PAAS – Pan American, SSRM – SSR Mining, FR – Fir
Slide 9: Major Value Drivers Over The Short Term
Major Value Drivers Over The Short Term NYSE:HL Solidify plans for Nevada operations ▸ Moving men and equipment from Midas to Fire Creek and Hollister ▸ Working to increase development and production at Fire Creek (largest cash flowing mine in Nevada portfolio) ▸ Focus on development at Hatter Gra
Slide 10: Nevada Operations
Nevada Operations Mines and mill to operate as a cohesive unit, emphasis on cash flow NYSE:HL 2018E* Gold Production (Koz) 40-50 Cost of Sales $68 M Cash cost, after by-product $800/oz credits, per gold oz2 AISC, after by-product Midas (high cost, short life) being credits, per gold oz3 $1,100/oz pu
Slide 11: Acquisition of the Nevada Assets: 2018 Plan
Acquisition of the Nevada Assets: 2018 Plan Focus on improving operations, investing in the mines NYSE:HL Integrated Nevada operations: Midas Mill All operations now report to a single VP and GM, Kevin Shiell Creating a unified mine plan for the mines feeding the Midas Mill Priority is ramping
Slide 12: Fire Creek
Fire Creek Premier asset in a top-tier jurisdiction NYSE:HL Producing, narrow vein mine located in Lander County, Nevada, ~63 miles west of Elko, Nevada Commenced production in 2014 and has undergone extensive geological testing since 1981 Processing conducted at Midas located ~109 miles from
Slide 13: Geotextile Fabric Improves Roadway
Geotextile Fabric Improves Roadway Important for increasing development/throughput at Fire Creek NYSE:HL Before (4 Haulage drift) After (Spiral 3) Self-wicking fabric removes water -13-
Slide 14: Fire Creek Vein Networks Offer Extensive Opportunities
Fire Creek Vein Networks Offer Extensive Opportunities Production centers and vein networks are open in all directions NYSE:HL Mineralized structures have predictive sigmoid pattern VTEM conductor Current reserves and resources provide mining trends inventory out to 2023 Identified veins are o
Slide 15: Hollister – Upside at Hatter Graben
Hollister – Upside at Hatter Graben Potential of one vein = 1.1 million gold ounces; Multiple veins identified NYSE:HL WEST PLAN VIEW EAST A Hollister Mine A’ Gloria 425k AuEq Oz Hatter Graben Hatter Graben Veins Tertiary Unconformity OPEN 600 ft. ~ Ordovician OPEN HATTER GRABEN INTERCEPTS OPEN Dril
Slide 16: Hatter Graben – Room to Grow
Hatter Graben – Room to Grow Intercepts to the East of the Principal Resource NYSE:HL H7-246 IH-174 1.12 oz/ton gold, 2.38 oz/ton gold, and 0.42 oz/ton and 1.37 oz/ton N silver over 3.4 feet silver over 1.0 foot IV90732 2.07 oz/ton gold and 2.35 oz/ton silver over 5.0 feet Proposed Workings IH-138 0
Slide 17: Culture of Innovation Drives Productivity Improvements
Culture of Innovation Drives Productivity Improvements Technology and best practices to be leveraged across Klondex’ assets NYSE:HL Autonomous Haulage in Jumbo/Stope Drill Operation at Casa Berardi Automation: Drilling 24-hour truck operation During Shift Change drives cost savings Adds 15 meter
Slide 18: Lucky Friday: Continuous Mechanical Cutting is Coming
Lucky Friday: Continuous Mechanical Cutting is Coming Delivery late 2019: Could revolutionize the mining by replacing drill and blast NYSE:HL Fabrication underway in Sweden Atlas Copco Test Mine 2016 3D Graphic of Remote Vein Miner -18-
Slide 19: San Sebastian
San Sebastian Just-in-time mining; looking to make it a long-term mine NYSE:HL 2017 Q2 2017 Q2 2018 2018E Silver Production 3.3 Moz .867 Moz .560 Moz 2.0-2.5 Moz Gold Production (Koz) 25.2 6.6 3.9 15-17 Cost of Sales $23.7 M $5.1 M $11.1 M $44 M Cash cost, after by-product $(3.36)/oz $(3.31)/oz $9.7
Slide 20: San Sebastian - Strong Exploration Potential
San Sebastian - Strong Exploration Potential Continued strong results near mine infrastructure NYSE:HL -20-
Slide 21: Francine Vein - Polymetallic and Oxide Potential
Francine Vein - Polymetallic and Oxide Potential Polymetallic vein traced over 8,000 feet of strike length NYSE:HL -21-
Slide 22: Potential Mine Life extension: Sulfides
Potential Mine Life extension: Sulfides 15,000 ton bulk sample in Q4 and Q1 to confirm 3rd party mill performance NYSE:HL Francine Vein Polymetallic (Hugh Zone) Initial Production Area Underground production expected late in 2019 -22-
Slide 23: Roadmap for Further Growth and Value Creation
Roadmap for Further Growth and Value Creation NYSE:HL Robust Near Term Growth Longer Term Development Fire Creek Ramp UP Fire Creek Mine Plan • Production to reach 550 tpd from 350 tpd in 2019 • Potential for significant upside and increased production through New Open Pits at Casa developing Fire C
Slide 24: 2018 Outlook
2018 Outlook Lowering cash cost and AISC, after by-product credits, per silver ounce NYSE:HL Production Outlook Silver Production Gold Production Silver Equivalent Gold Equivalent (Moz) (Koz) (Moz)5 (Koz)5 Original Original Original Original Current Current Current Current (if revised) (if revised)
Slide 25: Appendix
Appendix NYSE:HL Midas San Sebastian Lucky Friday Greens Creek Fire Creek Hollister Casa Berardi –25–
Slide 26: Culture of Innovation Drives Productivity Improvements
Culture of Innovation Drives Productivity Improvements Innovating across the portfolio NYSE:HL Projects 2014 2015 2016 2017 2018 2019 2020 2021 Automated Stope Drilling Installed In Operation CB Automated Drill Jumbo Utilized 2 Add/Deploy 3rd In Operation CB (GC H2/18) Drills drill Tele-Remote UG Mu
Slide 27: Hecla’s Track Record of Adding Value
Hecla’s Track Record of Adding Value An extensive history of optimizing assets NYSE:HL Casa Berardi Greens Creek San Sebastian Operational enhancements and Increased recoveries/ low cost Prudent, high impact capital mill optimization production differentiated mining model Throughput has increased
Slide 28: Lucky Friday
Lucky Friday Positioning for growth and longevity NYSE:HL 2017 Q1 2017 Q1 2018 Silver Production (koz) 838.7 681 100 Cost of Sales $15.1 M $14.5 M $4.1 M Cash cost, after by-product $5.81/oz $5.93/oz - credits, per silver oz2 AISC, after by-product credits, $12.48/oz $12.06/oz N/A per silver oz3 CF
Slide 29: #4 Shaft Gives Access to the High Grade Zone
#4 Shaft Gives Access to the High Grade Zone At least 30 more years of mine-life expected NYSE:HL 20 Years ORE GRADE VALUES Past Mining *AgEq Grade (opt) Mine Face (Galena) > 24 97.2 opt Silver 47.5% 18 - 24 Lead 12 - 18 6500 Level 6 - 12 <6 Dec. 31, 2015 7500 Level 900’@ +24 opt *Ag Equivalent Valu
Slide 30: Lucky Friday: Continuous Mechanical Cutting is Coming
Lucky Friday: Continuous Mechanical Cutting is Coming Delivery late 2019: Could revolutionize the mining by replacing drill and blast NYSE:HL Fabrication underway in Sweden Atlas Copco Test Mine 2016 3D Graphic of Remote Vein Miner -30-
Slide 31: Greens Creek
Greens Creek Consistent low-cost production in a wilderness area / National Monument NYSE:HL 2017 Q2 2017 Q2 2018 2018E Silver Production (Moz) 8.4 1.9 2.0 7.5-8.1 Gold Production (Koz) 50.8 12.7 13.7 50-55 Cost of Sales $201.8 M $54.3 M $47.7 M $198 M Cash cost, after by-product $0.71/oz $1.86/oz $
Slide 32: Greens Creek
Greens Creek Significant improvement in performance since Hecla became operator NYSE:HL Cumulative Net Cash Flow Greens Creek throughput has grown 14% since purchase in 2008 $1,162 $1,061 $983 $941 $875 $812 Hecla becomes operator $698 $504 Hecla became operator $324 $216 $122 $(11) $(118) Automat
Slide 33: Greens Creek - Adding to the Known Trends
Greens Creek - Adding to the Known Trends Drilling expected to continue to convert resources into reserves NYSE:HL -33-
Slide 34: Casa Berardi
Casa Berardi Making a good mine great NYSE:HL 2017 Q2 2017 Q2 2018 2018E Gold Production (Koz) 156.7 33.3 42.7 157-162 Cost of Sales $180.2 M $43.7 M $51.7 M $185 M Cash cost, after by- product credits, per gold $820/oz $972/oz $775/oz $800/oz oz2 AISC, after by-product $1,174/oz $1,373/oz $1,039/oz
Slide 35: Growing Production and Reserves
Growing Production and Reserves Aggressive exploration adds to reserve and resource base NYSE:HL Casa Berardi throughput and reserves have Casa Berardi Longitudinal Section grown 69% and 53% since purchase in 2013 Looking North WEST PILLAR PIT PRINCIPAL PIT 134 PIT EMCP PIT 160 PIT 1 146/148 Hecla b
Slide 36: 985 Drift Autonomous Haulage In Operation
985 Drift Autonomous Haulage In Operation Truck runs 24 hours a day; cost savings expected NYSE:HL Control room Loading 40-tonne autonomous Sandvik truck -36-
Slide 37: Casa Berardi – Expansion of Mineralized Trends
Casa Berardi – Expansion of Mineralized Trends High-grade mineralized trends extended with surface and underground drilling NYSE:HL -37-
Slide 38: Rock Creek & Montanore
Rock Creek & Montanore Final stages of permitting, expecting to advance in 2018 NYSE:HL Mine overview Rock Creek Site Overview Montanore, a silver-copper mine located in Libby, Montana, was acquired from Mines Management in 2016 Rock Creek, a silver-copper mine located in Noxon, Montana, was acq
Slide 39: A Further Transformation of Hecla
A Further Transformation of Hecla Consistent with strategy and expertise NYSE:HL Now with seven large land positions located in Alaska, Quebec, Nevada, Mexico and Idaho which are some of the safest and most prolific mining jurisdictions in the world Proven operational excellence to be leveraged
Slide 40: Endnotes
Endnotes NYSE:HL 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 depr
Slide 41: Cash Cost and AISC Reconciliation to GAAP
Cash Cost and AISC Reconciliation to GAAP Silver Operations NYSE:HL 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 C
Slide 42: Cash Cost and AISC Reconciliation to GAAP
Cash Cost and AISC Reconciliation to GAAP Greens Creek NYSE:HL 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,
Slide 43: Cash Cost and AISC Reconciliation to GAAP
Cash Cost and AISC Reconciliation to GAAP Casa Berardi NYSE:HL 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,
Slide 44: Cash Cost and AISC Reconciliation to GAAP
Cash Cost and AISC Reconciliation to GAAP San Sebastian NYSE:HL 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
Slide 45: Cash Cost and AISC Reconciliation to GAAP
Cash Cost and AISC Reconciliation to GAAP Lucky Friday NYSE:HL 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,
Slide 46: Greens Creek Free Cash Flow Reconciliation
Greens Creek Free Cash Flow Reconciliation NYSE:HL Greens Creek Free Cash Flow Reconciliation (in thousands) 2017 1987-2017* Gross profit $ 76,588 $ 1,333,702 Non-cash elements in gross profit: Depreciation, depletion and amortization 56,328 668,380 Other 2,360 1,340 Working capital changes 1,378 (1
Slide 47: Operations Free Cash Flow Reconciliation
Operations Free Cash Flow Reconciliation NYSE:HL Greens Creek Free Cash Flow Reconciliation Lucky Friday Free Cash Flow Reconciliation (in thousands) (in thousands) 2017 2017 Gross Profit $ 76,588 Gross Profit $ 6,448 Non cash elements in gross profit: Non cash elements in gross profit: Depreciation
Slide 48: Reconciliation for AISC - 2017
Reconciliation for AISC - 2017 NYSE:HL In thousands (except per ounce amounts) -48-
Slide 49: Fire Creek Cash Costs Reconciliation to GAAP
Fire Creek Cash Costs Reconciliation to GAAP NYSE:HL Reconciliation of Cash Costs per Gold Ounce for Fire Creek in thousands (except per ounce amounts) 2017 2016 2015 Cost of sales and other direct production costs and depreciation, depletion and amortization 74,288 57,858 45,218 Depreciation, deple
Slide 50: Adjusted EBITDA Reconciliation to GAAP
Adjusted EBITDA Reconciliation to GAAP NYSE:HL Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (non-GAAP) in thousands (except per ounce amounts) LTM Q2/2018 Net income (loss) $ (6,023) Plus: Interest expense, net of amount capitalized 38,820 Plus/(Less): Income taxes 34,050 Plus: Depr
Slide 51: Cash Cost and AISC Reconciliation to GAAP
Cash Cost and AISC Reconciliation to GAAP 2018 estimates - all operations NYSE:HL 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-I
Slide 52: Proven & Probable Mineral Reserves
Proven & Probable Mineral Reserves (on Dec. 31, 2017 unless otherwise noted) NYSE:HL -52-
Slide 53: Measured and Indicated Mineral Resources
Measured and Indicated Mineral Resources (on Dec. 31, 2017 unless otherwise noted) NYSE:HL -53-
Slide 54: Inferred Mineral Resources
Inferred Mineral Resources (on Dec. 31, 2017 unless otherwise noted) NYSE:HL -54-
Slide 55: 2008 – 2017 Reserve Table
2008 – 2017 Reserve Table NYSE:HL Silver Gold Gold 2013 Proven Reserves Tons (oz/ton) (oz/ton) Silver (ounces) (ounces) Greens Creek 14,000 12.90 0.130 182,000 2,000 Lucky Friday 3,708,000 12.10 - 44,892,000 - Casa Berardi 1,106,000 - 0.170 - 185,000.00 Probable Reserves Greens Creek 7,783,000 11.90