Hecla Mining Company · NYSE:HL
Hecla Mining — Q1 2022 Earnings Presentation
28 slides from Hecla Mining's earnings presentation, May 10, 2022
Slide 1: First Quarter 2022 Earnings Conference Call
FIRST QUARTER 2022 Earnings Conference Call May 10, 2022 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 Note Regarding Reserves and Resources This presentation uses the terms “mineral resources,” “measured mineral resources,” “indicated mineral resources” and “inferred mineral resources.” Mineral resources that are not mineral reserves do not have demonstrated
Slide 4: 130 Years of Time-Tested Success
130 YEARS OF TIME-TESTED SUCCESS High-grade, low-cost silver mines: Foundations of a solid present and a strong future Low Risk • Mining in the best countries, states, and provinces* Operating • Prior capital investments allow for low future capital needs Portfolio • Lucky Friday’s new mining method
Slide 5: Financial Review
Financial Review NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 5
Slide 6: Financial Strength and Flexibility
FINANCIAL STRENGTH AND FLEXIBILITY Solid operational performance delivers free cash flows and strong balance sheet • Revenues of $186.5 million, +1% over prior quarter • Consistent capital spend, averaging $114 million from 2019 to 2022** • Cash flow from operations $37.9 million, free cash flow of
Slide 7: Robust Free Cash Flow Generation
ROBUST FREE CASH FLOW GENERATION Low-cost silver mines generate margins even at low silver prices • High-grade, low-cost silver mines drive margins and free cash flow generation even at low silver prices • 8th consecutive quarter of free cash flow generation, 2.8x increase in cash since Q2/2020 Silv
Slide 8: Cost Inflation Tied to Labor and Materials
COST INFLATION TIED TO LABOR AND MATERIALS Higher lead and zinc by-product credits offset inflationary pressure • Key inputs like diesel, steel, and reagents have increased by ~35% in prices over Q1/2021 • Labor is the largest component of total costs and remains a key inflationary factor • By-produ
Slide 9: Operations Review
Operations Review NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 9
Slide 10: Greens Creek: Strong Operational Performance
GREENS CREEK: STRONG OPERATIONAL PERFORMANCE Stable operating and capital costs, along with high grades drive free cash flow generation • Production performance due to higher grades; strong cost performance on a per silver ounce basis due to production beat as costs remain low and stable • Productio
Slide 11: Lucky Friday: On Track to Be 5 Moz/Yr Producer
LUCKY FRIDAY: ON TRACK TO BE 5 Moz/YR PRODUCER Production expected to exceed 1 million ounces for the next three quarters • Lower production in the quarter due to equipment delays that affected mine sequencing and resulted in fewer tons milled and lower grades • Higher costs due to increased contrac
Slide 12: Casa Berardi: Production Per Plan, Costs in Focus
CASA BERARDI: PRODUCTION PER PLAN, COSTS IN FOCUS Strong mill performance, focus on mitigating inflationary cost pressures • Decrease in production over prior quarter due to lower grades milled as more material sourced from the 160 pit • Higher costs due to increased contractor costs due to lack of
Slide 13: Silver – Widening Gap Between Supply & Demand
SILVER – WIDENING GAP BETWEEN SUPPLY & DEMAND Hecla is poised as a leader on U.S. mineral production • Pandemic and Ukraine war have highlighted our Silver Supply and Demand* supply chain vulnerability (Million Ounces) • US Senate leaders see mineral production as 1,102 The Opportunity fundamental t
Slide 14: Appendix
Appendix NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 14
Slide 15: 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 16: Adjusted EBITDA Reconciliation to GAAP
ADJUSTED EBITDA RECONCILIATION TO GAAP Reconciliation of Net Income (GAAP) to Adjusted EBITDA (non-GAAP) Dollars in thousands (USD) Twelve Months Ended Q1 2022 Q1 2021 Net income $ 17,797 $ 19,366 Plus: Interest expense 41,607 44,002 Plus/(Less): Income and mining tax provision (benefit) (28,681) 5,
Slide 17: 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 18: Free Cash Flow (Non-GAAP) Reconciliation
FREE CASH FLOW (NON-GAAP) RECONCILIATON Consolidated Reconciliation of Cash provided by operating activities (GAAP) to Free Cash Flow (non-GAAP) in millions Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Cash provided by operating activities $ 37.5 $ 73.4 $ 64.9 $ 37.9 $ 86.3 $ 42.7
Slide 19: 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) Three Months Ended in thousands Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Greens Creek Cash provided (used) by operating acti
Slide 20: 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 21: 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 22: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP Casa Berardi 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 23: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP 2022 silver and gold estimates Reconciliation of 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 Co
Slide 24: 2022 Guidance: Production and Costs
2022 GUIDANCE: PRODUCTION AND COSTS 2022 Production Outlook Silver Production Gold Production Silver Equivalent Gold Equivalent (Koz)6 (Moz) (Koz) (Moz)6 Greens Creek* 8.6 – 8.9 40 – 43 20.7 – 21.2 268 – 275 Lucky Friday* 4.3 – 4.6 N/A 8.9 – 9.3 116 – 120 Casa Berardi N/A 125 - 132 9.7 – 10.2 125 -
Slide 25: Proven & Probable Mineral Reserves
PROVEN & PROBABLE MINERAL RESERVES(1) (On December 31, 2021 unless otherwise noted) Investors are cautioned that Reserves and Resources are as of December 31, 2021, and are dynamic during the year due to mining depletion, changing metal prices, changing costs or project NYSE: HL economics, and new d
Slide 26: Measured and Indicated Mineral Resources
MEASURED AND INDICATED MINERAL RESOURCES (On December 31, 2021 unless otherwise noted) Measured Resources (8) 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 (11,12) United States
Slide 27: Inferred Mineral Resources
INFERRED MINERAL RESOURCES (On December 31, 2021 unless otherwise noted) Inferred Resources (10) 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 (11,12) United States 100.0% 2,152
Slide 28: Mineral Resources Footnotes
MINERAL RESOURCES FOOTNOTES NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 28