Hecla Mining Company · NYSE:HL
Hecla Mining — BMO Global Metals & Mining Conference 2022
60 slides from Hecla Mining's conference presentation, Mar 1, 2022
Slide 1: BMO Global Metals & Mining Conference
BMO GLOBAL METALS & MINING CONFERENCE United States’ Leading Silver Producer March 1, 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: 2021: Record Revenues, 2nd Highest Silver Reserves
2021: RECORD REVENUES, 2nd HIGHEST SILVER RESERVES Silver – Metal for Largest U.S. Silver ESG Focus Record Year Green Future Producer • Silver is key to clean • Hecla produces >40% • Strong safety • Developed and green energy of U.S. silver performance, All- Underhand Closed transition • Largest sil
Slide 5: Reserves: 2021 vs. 2020
RESERVES: 2021 vs. 2020 2nd highest silver and gold reserves, mining depletion replaced by increased reserves • Greens Creek silver reserves up +12%, second highest since 2002 • Company wide measured & indicated resources declined due to conversion to reserves • Inferred resources increased 8% for s
Slide 6: Why Invest in Hecla?
WHY INVEST IN HECLA? The largest U.S. silver producer with the largest U.S. reserve base Primary U.S. • Right jurisdiction for risk and ESG Based Operations • Net neutral in scope 1 & 2 emissions Highest • Long lived mines with decades ahead of us grade silver • Produce >40% silver mined in the U.S.
Slide 7: Hecla Is the Leader in Metal Produced per Tonne of GHG
HECLA IS THE LEADER IN METAL PRODUCED PER TONNE OF GHG High-grade, low tonnage silver mines generate more benefit with smaller footprint Silver Equivalent Ounce per Tonne of GHG Emissions Gold Equivalent Ounce per Tonne of GHG Emissions 473 5.5 177 166 158 139 2.1 1.9 1.9 1.6 Hecla Coeur Pan America
Slide 8: Comparison to Peers – Reserves and Ore Grades
COMPARISON TO PEERS – RESERVES AND ORE GRADES Hecla has highest reserve grade and third largest reserve base Reserves & Reserve Grade AgEq Reserves (mmoz) AgEq Reserve Grade (g/t) 1,297 587 1,138 441 430 376 369 354 516 511 147 130 291 158 158 133 36 103 104 83 Fresnillo Pan American Hecla Coeur For
Slide 9: Low Political Risk
LOW POLITICAL RISK U.S. and Canada focus results in one of the safest operating jurisdictions Policy Perception Index: Measures (1) Geographic Risk Profile attractiveness of mining policies in a jurisdiction 2020 Fraser Institute Policy Perception Index | Operating Assets Only based on the opinions
Slide 10: Hecla Mines >40% of All Silver Produced in the USA
HECLA MINES >40% OF ALL SILVER PRODUCED IN THE USA Half of the world’s production is from Mexico, Peru and China; U.S. production is scarce 2020 U.S. Silver Production Hecla’s Share of U.S. Production (Moz) 13.5 43% 57% Hecla Other 6.5 3 Countries. Produce ~50% of World Production U.S. Produces 4% 3
Slide 11: Financial Strength and Flexibility
FINANCIAL STRENGTH AND FLEXIBILITY Solid operational performance delivers strong balance sheet • Record revenues of $807 million, +16% over 2020 • Record adjusted EBITDA of $279 million, +20% over 2020; net debt to adjusted EBITDA ratio of 1.1x, well below the 2.0x target(1) • Cash flow from operati
Slide 12: Capital and Production Costs Are Stable
CAPITAL AND PRODUCTION COSTS ARE STABLE Impact from inflation is relatively low due to low tonnage, high-grade mines • Increase in silver production not tied to any significant increase in capital • No significant increase in planned production costs in 2022 • Stable capital costs with no planned la
Slide 13: Strong Free Cash Flow Generation
STRONG FREE CASH FLOW GENERATION Positive free cash flow generation from all mines over last five quarters(2) Greens Creek Casa Berardi Lucky Friday* Generated $236 million in Free Cash Flow since Generated $43 million in Free Cash Flow since Generated $33 million in Free Cash Flow in 2021 Q4/2020 Q
Slide 14: Greens Creek: Another Solid Year
GREENS CREEK: ANOTHER SOLID YEAR Consistent performance, low costs drive free cash flow generation at all silver prices • Solid finish to 2021, production met guidance, costs beat guidance – 9.2 Moz silver produced • Cost of sales $216 million • Cash costs per silver oz, after by-product credits, ($
Slide 15: Lucky Friday on Track to Be 5 Moz/Yr Producer
LUCKY FRIDAY ON TRACK TO BE 5 Moz/YR PRODUCER Underhand Closed Bench (UCB) mining method expected to improve safety, tonnage and production • UCB method’s success with higher grades mined at depth position Lucky Friday to be a flagship asset for the next decade • 2022E production 1.2x 2021, 2.2x 202
Slide 16: UCB Mining Method
UCB MINING METHOD Isometric view showing two of the four UCB stopes that produce the 30 Vein • Large scale blasting proactively manages seismic risk – miners work inside the de-stressed zone. • Mining front advances down-dip, under engineered backfill. NYSE: HL This information is confidential; it i
Slide 17: UCB Mining Method
UCB MINING METHOD Same stopes, two weeks later • Dilution is controlled by bolting the ribs as mining advances along strike and down dip. • High degree of mechanization and reduced seismic delays improve productivity. NYSE: HL This information is confidential; it is not to be relied on by any 3rd pa
Slide 18: Lucky Friday on Track to Be 5 Moz per Year Producer
LUCKY FRIDAY ON TRACK TO BE 5 Moz PER YEAR PRODUCER Higher grades at depth are supported by success of UCB mining method 30 Vein - *AgEq Grade (opt) 20 Years Past Mining < 10 10 - 20 Almost 20 - 30 6500 Level 30 - 35 1000 feet > 35 @ +35 Oct. 12, 2020 AgEq *Ag Equivalent Values Based on 7500 Level m
Slide 19: Casa Berardi: Strong Production Performance in 2021
CASA BERARDI: STRONG PRODUCTION PERFORMANCE IN 2021 Production optimization focus delivered results, 16% increase in gold reserves • Mill achieved record throughput at 4,187 tpd; Mill recoveries +4% • 2021: 134.5 Koz gold produced • Cost of sales $230 million • Cash costs per gold oz, after by-produ
Slide 20: Lucky Friday Technical Report Highlights
LUCKY FRIDAY TECHNICAL REPORT HIGHLIGHTS Positioned for long-term value with strong free cash flow generation in the next decade Technical Report S-K 1300 Highlights Mine life, based on reserve plan years 17 Ore Tons Processed ktons 5,456 Silver Grade opt 13.7 Silver Recovery % 96.4 Total Silver Pro
Slide 21: Greens Creek Technical Report Highlights
GREENS CREEK TECHNICAL REPORT HIGHLIGHTS Tier 1 asset that will maintain solid production and robust free cash flow generation profile Technical Report S-K 1300 Highlights* Mine life, based on reserve plan years 14 Ore Tons Processed ktons 12,700 Silver Grade** opt 11.3 Silver Recovery** % 76.5 Tota
Slide 22: Casa Berardi S-K 1300 Technical Report Highlights
CASA BERARDI S-K 1300 TECHNICAL REPORT HIGHLIGHTS Solid asset with consistent free cash flow generation Technical Report S-K 1300 Highlights* Mine life, based on reserve plan years 14 Ore Milled Mtonnes 20.9 Gold Grade (mined) – Open pit** g/t 2.61 Gold Grade (mined) – Underground** g/t 5.27 Gold Gr
Slide 23: Hecla's 2021 Exploration
HECLA’S 2021 EXPLORATION 20 drill rigs company wide focused on expanding and discovery of resources Nevada • Drilling the new discovery at Midas • Defining targets at Aurora • Development of Hatter Graben drift for exploration drilling continues Greens Creek • Expanding and upgrading resources in th
Slide 24: Leading Dividend Policy Is Improved Further
LEADING DIVIDEND POLICY IS IMPROVED FURTHER More cash returned to shareholders as dividend yield increases synchronously with silver prices • Industry’s only silver-linked dividend policy that pays an annual normal dividend ($0.015 per share) plus a silver price linked dividend that commences at $20
Slide 25: A Very Short History on Silver Demand
A VERY SHORT HISTORY ON SILVER DEMAND Despite declining photography demand, silver industrial and investment demand has been in a secular bull market since 2000 and was stronger in 2021 and the future Five distinct periods of silver demand, three that are strengthening • Monetary by governments (200
Slide 26: Renewable Energy Gains Momentum – Solar Projected for the Largest Growth
RENEWABLE ENERGY GAINS MOMENTUM – SOLAR PROJECTED FOR THE LARGEST GROWTH Global policies are favoring renewable energy • In the U.S., renewable energy projected to double from 21% in 2020 to 42% by 2050 • Solar energy generation as a percentage of renewable energy forecast to increase 3x by 2050 fro
Slide 27: Silver – Widening Gap Between Supply & Demand
SILVER – WIDENING GAP BETWEEN SUPPLY & DEMAND Gap expected to increase with continued trend of industrial demand growth of 2.0% • 2019 saw a total supply of 1,023 Moz and total demand of 1,074 Moz • Silver’s total demand in 2030 is expected to reach ~1,147 Moz if demand stays on the last decade tren
Slide 28: Why Invest in Hecla?
WHY INVEST IN HECLA? The largest U.S. silver producer with the largest U.S. reserve base with high margin, best in class silver assets We mine: • Silver is the right metal for a renewable The Right energy future Metals • Produce 40% of silver mined in the U.S. • Have the largest U.S. silver reserve
Slide 29: Guidance
Guidance NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 29
Slide 30: Guidance: Growing Silver & Gold Production
GUIDANCE: GROWING SILVER & GOLD PRODUCTION High silver margins projected despite COVID-19 and inflation costs Silver Production Gold Production Silver Equivalent Consolidated Production Outlook* (Moz) (Koz) (Moz)8 Gold Equivalent (Koz)8 2022 Total 12.9 – 13.5 165 - 175 39.3 – 40.7 509 – 527 2023 Tot
Slide 31: Exploration – Pre-Development
Exploration – Pre-Development NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 31
Slide 32: Hecla's 2022 Exploration
HECLA’S 2022 EXPLORATION 18 drill rigs company wide focused on expanding and discovery of resources Nevada • Drilling ongoing at Midas • Development of Hatter Graben drift and exploration drilling continues • Drilling at Aurora later this year Greens Creek • Drilling to expand and upgrade multiple o
Slide 33: Casa Berardi Drilling Focused on Expanding Resources
CASA BERARDI DRILLING FOCUSED ON EXPANDING RESOURCES Positive drilling results in the West, Principal, and East Mine areas Positive Drilling Results 113 Zone • Confirming Mineralization with high- grade intersections Upper 123 Zone • Expanding mineralization to the east and west Lower 123 Zone • Exp
Slide 34: Midas Green Racer Sinter Discovery Location
MIDAS GREEN RACER SINTER DISCOVER LOCATION 2 core drills focused on expanding high-grade mineralization and drill testing additional targets NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 34
Slide 35: Midas - Green Racer Sinter Longitudinal Section
MIDAS - GREEN RACER SINTER LONGITUDINAL SECTION 2022 exploration drilling to test 1.7 miles of strike length on the Racer Structure 0.25 oz/t gold, 63.9 oz/t silver over 1.2 ft (0.9 feet est. true width) 0.02 oz/t gold, 12.6 oz/t silver over 2.1 ft (1.7 feet est. true width) NYSE: HL RESPONSIBLE. SA
Slide 36: Midas - Green Racer Sinter Longitudinal Section
MIDAS - GREEN RACER SINTER LONGITUDINAL SECTION 2022 exploration drilling to test 1.7 miles of strike length on the Racer Structure 0.84 oz/t gold, 0.6 oz/t silver over 2.2 ft (1.9 feet est. true width) NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 36
Slide 37: NV Exploration - Hollister Underground Exploration
NV EXPLORATION - HOLLISTER UNDERGROUND EXPLORATION Drift development and exploration drilling advancing N Drillholes Planned Completed 1000 Feet NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 37
Slide 38: Hollister – Hatter Graben Drillhole HUC-111 Significant Intercepts
HOLLISTER – HATTER GRABEN DRILLHOLE HUC-111 SIGNIFICANT INTERCEPTS A Cross Section Looking Northeast A’ 0.12 oz/ton gold and 12.7 1.27 oz/ton gold and oz/ton silver over 0.4 feet 1.1 oz/ton silver over 0.9 feet V805 V795 V790 V780 V770 V760 V750 V740 5,000 ft V700 0.30 oz/ton gold and 3.2 Rhyolite o
Slide 39: San Sebastian - Exploring for Larger Zones of Mineralization
SAN SEBASTIAN - EXPLORING FOR LARGER ZONES OF MINERALIZATION 2022 drilling in progress at La Roca and San Sebastian Mine Middle Vein NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 39
Slide 40: Aurora, Creede, and Republic - Advancing Historic Mining Districts
AURORA, CREEDE, AND REPUBLIC - ADVANCING HISTORIC MINING DISTRICTS 2022 exploration drilling marks first drilling activities in many years NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 40
Slide 41: Montana Assets
MONTANA ASSETS Working to advance underground data collection and permitting Permitting Strategy – Taking a reset Site Overview • Executing strategy to expedite authorization for underground evaluation and data collection via existing infrastructure. • Focus on permitting additional underground eval
Slide 42: Appendix
Appendix NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 42
Slide 43: 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 44: ESG: Small Footprint, Large Benefit
ESG: SMALL FOOTPRINT, LARGE BENEFIT Environment, Community and Safety are three pillars of our ESG program Small Environment Safety Large Community Benefit Footprint • Well-established safety culture • Net neutral on emissions in 2021* • Support >2,300 families • Casa Berardi awarded the John T. Rya
Slide 45: Adjusted EBITDA Reconciliation to GAAP
ADJUSTED EBITDA RECONCILIATION TO GAAP Reconciliation of Net Income (Loss) (GAAP) and Debt (GAAP) to Adjusted EBITDA (non-GAAP) Dollars in thousands (USD) FY 2020 FY 2021 Net (loss) income $ (9,457) $ 35,095 Plus: Interest expense 49,569 41,945 Plus/(Less): Income and mining taxes 8,199 (29,569) Plu
Slide 46: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP Silver 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 By-pr
Slide 47: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP Gold 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 By-prod
Slide 48: Free Cash Flow (Non-GAAP) Reconciliation
FREE CASH FLOW (NON-GAAP) RECONCILIATON Greens Creek, Casa Berardi and Lucky Friday Reconciliation of Cash provided by operating activities (GAAP) to Free Cash Flow (non-GAAP) Three Months Ended in thousands Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Greens Creek Cash provided (used) by operating activ
Slide 49: 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 thousands Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Cash provided by operating activities $ 64,901 $ 37,936 $ 86,304 $ 42,742 $ 53,355 Less: Capital expen
Slide 50: Free Cash Flow (Non-GAAP) Reconciliation
FREE CASH FLOW (NON-GAAP) RECONCILIATON Greens Creek and Casa Berardi Reconciliation of Cash provided by operating activities (GAAP) to Free Cash Flow (non-GAAP) 2021 2020 2019 Greens Creek Casa Berardi Greens Creek Casa Berardi Greens Creek Casa Berardi Cash provided by operating activities $ 204,1
Slide 51: 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 52: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP Lucky Friday 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 53: 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 54: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP 2022 silver and gold 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 Sustain
Slide 55: 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 56: 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 57: 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 (11,12) Greens Creek United States
Slide 58: 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 59: Mineral Resources Footnotes
MINERAL RESOURCES FOOTNOTES NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 59
Slide 60: BMO Global Metals & Mining Conference
BMO GLOBAL METALS & MINING CONFERENCE United States’ Leading Silver Producer March 1, 2022 RESPONSIBLE. SAFE. INNOVATIVE. NYSE: HL
Hecla Mining Company — BMO Global Metals & Mining Conference 2022 on 6ix