Hecla Mining Company · NYSE:HL
Hecla Mining — H.C. Wainwright Mining Conference 2020
57 slides from Hecla Mining's conference presentation, Nov 30, 2020
Slide 1: A Tipping Point: The Third Quarter Reflects A Changed Hecla
A TIPPING POINT The Third Quarter Reflects A Changed Hecla November 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: What Differentiates Hecla?
What Differentiates Hecla? NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 4
Slide 5: What You Might Not Have Known About Hecla
WHAT YOU MIGHT NOT HAVE KNOWN ABOUT HECLA Six characteristics that are unique Largest silver miner in the United States Two of the largest silver mines in the world World’s highest-grade large silver mines Growing silver production Pay dividends Results from continuously improving ESG US
Slide 6: Hecla Mines a Third of All Silver Produced in the USA
HECLA MINES A THIRD OF ALL SILVER PRODUCED IN THE USA Half of the world’s production is from Mexico, Peru and China; U.S. production is scarce 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
Slide 7: Large High-Grade Silver Mines Are Scarce
LARGE HIGH-GRADE SILVER MINES ARE SCARCE Hecla has 2 of the 5 largest mines and the 2 highest grade mines Silver Equivalent Silver Ounces* Equivalent (Moz) 350 40 Grade (opt) 300 35 30 250 25 200 20 150 15 100 10 50 5 0 0 Greens Fresnillo Saucito Rochester Lucky La San Julian Dolores Palmarejo San J
Slide 8: Hecla Is Increasing Silver Production
HECLA IS INCREASING SILVER PRODUCTION Lucky Friday doubling over last year, doubling again next year and 60% more within 4 years 20 Years 30 Vein - *AgEq Grade (opt) Past Mining < 10 10 - 20 Almost 1000 20 - 30 6500 Level feet @ +35 30 - 35 > 35 AgEq Oct. 12, 2020 *Ag Equivalent Values Based on 7500
Slide 9: What Does Hecla Do With Its Cash Flow?
WHAT DOES HECLA DO WITH ITS CASH FLOW? Among the highest dividend yields provides a return on the silver produced Dividend Policy •Base dividend increased 50% 1.01% 1.01% •Silver-linked dividend is now triggered at $25 0.67% 0.67% •On a per ounce produced basis at $25, the aggregate dividend 0.33% r
Slide 10: Our Commitment to Continuous Improvement on ESG
OUR COMMITMENT TO CONTINUOUS IMPROVEMENT ON ESG A snapshot of our ESG accomplishments Environment • Completed reclamation of 97% of the Troy Tailings Facility returning lands to productive uses such as wildlife habitat • State and Federal agencies in process to release nearly $8M in financial assura
Slide 11: Final 2020 Guidance: Increases Production and Exploration
FINAL 2020 GUIDANCE: INCREASES PRODUCTION AND EXPLORATION Silver production up from pre-pandemic estimates Production Outlook Silver Production (Moz) Gold Production (Koz) Silver Equivalent (Moz)1 Gold Equivalent (Koz)1 Original Current Original Current Original Current Original Current Total Silver
Slide 12: Silver Market
Silver Market NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 12
Slide 13: Silver Supply Comes From Mine Production & Recycling
SILVER SUPPLY COMES FROM MINE PRODUCTION & RECYCLING Significant disruptions expected in mine supply in 2020 Mine production accounts for 80-85% of total silver supply • 2019 saw lower mine production due to grade declines and temporary mine suspensions due to community action • Greater challenges e
Slide 14: Silver Demand Has Three Main Components
SILVER DEMAND HAS THREE MAIN COMPONENTS Green energy demand is new and growing Silver Demand Consumer Products/Industrial Other 64.3 Moz 13% Investment 267.8 Moz 25% Photovoltaics 98.7 Moz Consumer Products/ 19% Electronics Industrial* 297.6 Moz 544.6 Moz 58% Jewelry & 51% Silverware 261.1 Moz Brazi
Slide 15: Replaying the Past
0 100 200 300 400 500 600 12/1/2001 NYSE: HL 3/1/2002 6/1/2002 9/1/2002 12/1/2002 3/1/2003 6/1/2003 Source: Bloomberg 9/1/2003 12/1/2003 3/1/2004 6/1/2004 9/1/2004 12/1/2004 3/1/2005 REPLAYING THE PAST 6/1/2005 9/1/2005 12/1/2005 • 1/1/2000 to 3/31/2004 – 50% appreciation 3/1/2006 6/1/2006 9/1/2006
Slide 16: Financial
Financial NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 16
Slide 17: Diverse Portfolio with Margin Generation
DIVERSE PORTFOLIO WITH MARGIN GENERATION #1 silver and #3 lead and zinc producer in the U.S. Silver Production: 3.5 Moz Cost of Sales: $78.5 M Cash Costs, after by-product credits(1): $4.43/oz 12% AISC, after by-product credits(1): $11.53/oz Realized Price: $25.32/oz 6% 37% Gold Production: 41.2 Koz
Slide 18: Strong Free Cash Flow Generation
STRONG FREE CASH FLOW GENERATION Positive free cash flow generation from all mines except Lucky Friday which remains on track to achieve historical production in Q4 Greens Creek San Sebastian Lucky Friday ($ millions) 67.1 61.5 (5.6) Silver Assets 6.8 6.6 Total Q3/2020 Free Cash Flow*: $63.7 M (0.2)
Slide 19: Solid Balance Sheet
SOLID BALANCE SHEET Fueled by free cash flow generation and solid margins • Strong balance sheet with $98.7 million in cash, repaid credit facility in full • Substantial increase in cash flow from operating activities: with Q3 at $73.4 million, Q2 at $38.2 million and Q1 at $4.3 million • Solid free
Slide 20: Very Liquid – Very Long Dated Debt
VERY LIQUID – VERY LONG DATED DEBT Liquidity, tenor and coverage have improved Liquidity Position Long Dated Debt Net Debt/Adjusted EBITDA* At 09/30/20 1 Revolver IQ Notes 7.25%Senior Notes Revolver $250 Cash $98.7 Revolver ~$348.7mm $200 $475 $250 $37 2021 2022 2023 2024 2025 2026 2027 2028 *Net De
Slide 21: Operations
Operations NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 21
Slide 22: Safety: Steady Focus, Excellent Safety Record
SAFETY: STEADY FOCUS, EXCELLENT SAFETY RECORD Improvements despite pandemic distractions Hecla All Injury Frequency Rate (AIFR) 5 4.57 5 78% Reduction since 2015 4 4 3.42 Frequency Rate 3 2.76 3 2.00 2 1.61 2 1.02 1 1 0 2015 2016 2017 2018 2019 YTD 2020 NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 22
Slide 23: Operational Review
OPERATIONAL REVIEW Continued performance despite COVID-19 challenges NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 23
Slide 24: Greens Creek: Free Cash Flow Engine
GREENS CREEK: FREE CASH FLOW ENGINE Focus on expediting testing to reduce quarantine period, improve cost further • Hecla has brought a lab to Juneau to provide real-time COVID-19 testing • Shrinking the 7-day quarantine period • Improving the cost structure • Cost of Sales reduced since first quart
Slide 25: Greens Creek - District and Near Mine Growth Potential
GREENS CREEK - DISTRICT AND NEAR MINE GROWTH POTENTIAL In-mine mineralization open for expansion and district potential for new deposits Continuation of resource expansion along mineralized trends • Ore tons have doubled in the past 15 years • Pace is driven by development access • 5250 exploration
Slide 26: Lucky Friday: Positioned for Growth and Grades
LUCKY FRIDAY: POSITIONED FOR GROWTH AND GRADES More than doubled last year’s production - on track for tripling • Ramp-up ahead of schedule with >85% of workforce in place • Expect positive free cash flow generation in Q4/2020 • Grade increases at depth, pursuing initiatives to increase productivity
Slide 27: Casa Berardi: Investing Today for the Future
CASA BERARDI: INVESTING TODAY FOR THE FUTURE Work to improve mill reliability is progressing • Lower gold production and higher costs in Q3 due to At 12/31/19 At 12/31/17 • Planned maintenance activities which led to lower mill throughput 2P Reserves 1.49 Moz @ 0.11 oz/t gold • Timing and availabili
Slide 28: ESG
ESG NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 28
Slide 29: 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 30: ESG Commitment: Communities and Education
ESG COMMITMENT: COMMUNITIES AND EDUCATION Investing in future generations and communities, COVID-19 relief Charitable Donations and Volunteerism • More than $3.4 million in Hecla Charitable Foundation contributions since 2009 • Foundation is focused on four areas: education, community programs, yout
Slide 31: 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 32: 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 33: 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 34: 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 35: 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 36: 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 37: 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 38: 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
Slide 39: Appendix
Appendix NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 39
Slide 40: Endnotes
ENDNOTES 1. Silver and gold equivalent is calculated using the average market prices for the time period noted. 2. Cost of sales and other direct production costs and depreciation, depletion and amortization. 3. Cash cost, after by-product credits, per silver and gold ounce represents a non-GAAP mea
Slide 41: Free Cash Flow (Non-GAAP) Reconciliation
FREE CASH FLOW (NON-GAAP) RECONCILIATON Reconciliation of Cash provided by operating activities (GAAP) to Free Cash Flow (non-GAAP) (In Thousands of USD ) Q3/2020 Q2/2020 Q1/2020 Cash provided by operating activities $73,439 $38,156 $4,297 Less: Additions to properties, equipment and mineral interes
Slide 42: Adjusted EBITDA Reconciliation to GAAP
ADJUSTED EBITDA RECONCILIATION TO GAAP Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (non-GAAP) in thousands (except per ounce amounts) Twelve Months Ended 31-Mar-20 30-Jun-20 30-Sep-20 Net income (loss) $ (91,209) $ (58,705) $ (25,561) Plus: Interest expense 54,093 54,587 53,589 Plu
Slide 43: Cash Cost and AISC Reconciliation to GAAP: 2020 Silver Estimates
CASH COST AND AISC RECONCILIATION TO GAAP 2020 Silver 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
Slide 44: Cash Cost and AISC Reconciliation to GAAP: 2020 Gold Estimates
CASH COST AND AISC RECONCILIATION TO GAAP 2020 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 Sustaining Costs,
Slide 45: 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 46: 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 47: Cash Cost and AISC Reconciliation to GAAP: Greens Creek
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 48: Greens Creek Free Cash Flow (Non-GAAP) Reconciliation
GREENS CREEK FREE CASH FLOW (NON-GAAP) RECONCILIATON *1987-2018 amounts reflect results of the Greens Creek mine on a 100% joint-venture basis (Hecla owned 29.7% until April 2008). NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 48
Slide 49: Proven & Probable Mineral Reserves
PROVEN & PROBABLE MINERAL RESERVES(1) (On December 31, 2019 unless otherwise noted) Proven Reserves 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 (2) 7 14.8 0.08 2.6 5.4 - 106 1 180 390 - Lucky F
Slide 50: Measured and Indicated Mineral Resources
MEASURED AND INDICATED MINERAL RESOURCES (On Dec. 31, 2019 unless otherwise noted) Measured 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 (5) 76 12.5 0.09 2.6 9.4 - 949 7 2,000 7,140 -
Slide 51: Inferred Mineral Resources
INFERRED MINERAL RESOURCES (On Dec. 31, 2019 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 (5) 1,848 13.7 0.09 3.1 7.4 - 25,393 159 56,670 135,880 - Luc
Slide 52: Mineral Resources (Notes)
MINERAL RESOURCES (NOTES) (On December 31, 2019 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. (5) Mineral resources are based on $1500 gold, $21 silver, $1
Slide 53: 2009 – 2018 Reserve Table
2009 – 2018 RESERVE TABLE Silver Gold Silver Gold Silver Gold Silver Gold 2014 Proven Reserves Tons (oz/ton) (oz/ton) (ounces) (ounces) 2009 Proven Reserves Tons (oz/ton) (oz/ton) (ounces) (ounces) Greens Creek 4,700 15.70 0.100 74,000 5,000 Greens Creek - - - - - Lucky Friday 3,840,000 13.70 - 52,5
Slide 54: Proven & Probable Mineral Reserves (2013)
PROVEN & PROBABLE MINERAL RESERVES (On December 31, 2013 unless otherwise noted) Proven Reserves Tons Silver Gold Lead Zinc Silver Gold Lead Zinc Asset Location Ownership (000) (oz/ton) (oz/ton) % % (000 oz) (000 oz) Tons Tons Greens Creek (a) United 100.0% 14 12.9 0.13 3.0 8.1 182 2 430 1,15 States
Slide 55: Measured and Indicated Mineral Resources (2013)
MEASURED AND INDICATED MINERAL RESOURCES (On Dec. 31, 2013 unless otherwise noted) Measured Resources Tons Silver Gold Lea Zinc Silver Gold Lead Zinc d Asset Location Ownership (000) (oz/ton) (oz/ton) % % (000 oz) (000 oz) (Tons) (Tons) Greens Creek (2)(a) United 100.0% 7 17.6 0.08 4.4 10.5 118 1 29
Slide 56: Inferred Mineral Resources (2013)
INFERRED MINERAL RESOURCES (On Dec. 31, 2013 unless otherwise noted) Inferred Resources Tons Silver Gold Lead Zinc Silver Gold Lead Zinc Asset Location Ownership (000) (oz/ton) (oz/ton) % % (000 (000 oz) (Tons) (Tons) oz) Greens Creek (9)(a) United States 100.0% 2,385 13.3 0.09 2.7 6.5 31,752 216 63
Slide 57: Proven & Probable Mineral Reserves; Measured, Indicated and Inferred Resources
PROVEN & PROBABLE MINERAL RESERVES; MEASURED AND INDICATED, AND INFERRED RESOURCES (On December 31, 2013 unless otherwise noted) Note: All estimates are in-situ except for the proven reserve at Greens Creek which is in a surface stockpile. Resources are exclusive of reserves. Totals may not represen
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