Hecla Mining Company · NYSE:HL

Hecla Mining — BMO 25th Annual Global Metals & Mining Conference 2016

46 slides from Hecla Mining's conference presentation, Mar 1, 2016

  1. Slide 1: Strong Performance

    Strong Performance BMO Global Metals & Mining Conference March 1, 2016

  2. 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

  3. Slide 3: A Leading Silver, Gold, Base Metals Producer

    A Leading Silver, Gold, Base Metals Producer  Four producing mines in North America Quality mining assets  Strong margins in both silver and gold  Diversified, long-life revenue streams  Record silver reserves of 175 million Record Silver Reserves ounces, 10th year in a row, at $14.50/oz  San S

  4. Slide 4: Our Mission and Strategy

    Our Mission To create long-term value for shareholders from mining silver, gold and associated base metals Our Strategy Consistent, long-lived production that increases and improves over time Long life assets Operating to profit from Strong geologic knowledge to higher metal understanding to reduce

  5. Slide 5: The Strategy Has Worked

    The Strategy Has Worked Record (P+P) Ag Reserves for Past 10 Yrs Strong Production Growth 175 Moz 37.5 Moz AgEq1 +162% +243% 14.3 Moz AgEq1 51 Moz 2006 2015 2012 2015 Consistently Strong Liquidity Healthy Margins $16.00 Silver $291M $255M $14.26 $100M $100M 71% $11.42 61% $8.71 $191M $155M $4.58 $5.

  6. Slide 6: Solid Performance Against 2015 Estimates

    Solid Performance Against 2015 Estimates Estimates Actual Silver Production 10.5-11 11.6 BEAT Gold Production 185,000 189,327 BEAT Cash Cost, after by-product $6.00 $5.85 BEAT credits, per silver ounce1 Cash Cost, after by-product $825 $772 BEAT credits, per gold ounce1 Capital $150 M $141 M BEAT Pr

  7. Slide 7: Gold & Silver 2016 Reserve Prices

    Gold & Silver 2016 Reserve Prices $19.00 $17.50 $17.00 $17.00 $16.00 $16.00 $14.50 Hecla Agnico Eagle Endeavour Pan American Kinross Coeur - LT* Newmont $1,200 $1,200 $1,200 $1,180 $1,150 $1,100 $1,100 Hecla Agnico Eagle Endeavour Pan American Coeur - LT* Kinross Newmont *Coeur’s short term reserve

  8. Slide 8: Impact of Lower Silver Reserve Price

    Impact of Lower Silver Reserve Price Hecla: Reserves 1.5% Pan American: Reserves -6.6% 300.0 Moz 175.4 Moz 172.9 Moz 280.1 Moz $18.50 $17.25 $17.00 $14.50 2014 2015 2014 2015 Newmont: Reserves -21.1% Coeur*: Reserves -48.7% 143.6 Moz 303.9 Moz 113.3 Moz $20.00 $19.00 $19.00 155.9 Moz $17.50 * 2014 2

  9. Slide 9: Impact of Lower Gold Reserve Price

    Impact of Lower Gold Reserve Price Hecla: Reserves 0.2% Agnico Eagle: Reserves -4.5% 2.1 Moz 2.1 Moz 20.0 Moz 19.1 Moz $1,225 $1,100 $1,100 $1,100 2014 2015 2014 2015 Newmont: Reserves -9.7% Kinross: Reserves -1.3% 81.6 Moz 34.4 Moz 34.0 Moz $1,300 73.7 Moz $1,200 $1,200 $1,200 2014 2015 2014 2015 –

  10. Slide 10: Higher Reserves With Lower Price Assumptions

    Higher Reserves With Lower Price Assumptions 180 $30.00 $26.50 175.4 Moz 175 172.9 Moz $25.00 169.8 Moz 170 165 $20.00 $20.00 160 $17.25 $15.00 155 $14.50 150.0 Moz 150 $10.00 145 $5.00 140 135 $- 2012 2013 2014 2015 Silver Reserves (Moz) Silver Reserve Price 1. See Proven and Probable reserves data

  11. Slide 11: North American Focused Asset Portfolio

    North American Focused Asset Portfolio Operations in Greens Creek Admiralty Island, AK Low-Risk + Mining-Friendly Jurisdictions Corporate Offices Opinaca / Wildcat Operating mines James Bay, QC Casa Berardi Vancouver, BC Pre-development Val d’Or, QC Fayolle Val d’Or, QC Coeur d’Alene, ID Rock Creek

  12. Slide 12: Higher Grade Mines Than Peers

    Higher Grade Mines Than Peers BMO Silver Coverage, Silver Equiv. Reserves vs. Grade Higher Grade HL Source: BMO Capital Markets (02/05/2016) –12–

  13. Slide 13: Greens Creek: Consistent Low-Cost Production

    Greens Creek: Consistent Low- Cost Production Silver Gold Cash cost, after by- Production Production product credits, per Ag oz1 2014, 2015 7.8Moz 8.5Moz 59koz 61koz $2.89/oz $3.91/oz 2016E 7.5 Moz 52koz $6.00/oz 2016E Capital $48M 2P Reserves 88.7 Moz silver @ 12.3 oz/t Ag M+I Resources 13.0 Moz si

  14. Slide 14: Greens Creek: Long-Term Outperformance

    Greens Creek: Long-Term Outperformance Past 26 Years1 Consistently Revenue $4.6 billion Generates Net Income $1.2 billion Positive Free Cash Flow Free Cash Flow2 $983 million 21% Free Cash Flow Conversion Historical Production Past 26 Years Silver Production: 199.9 Moz Zinc Production: 1.4 M tons Go

  15. Slide 15: Greens Creek – Resources and Trends

    Greens Creek – Resources and Trends Indicated: 484,400 silver ounces and 7,000 gold ounces East Ore Resource Main Ramps Inferred: 11.4 million silver Mined Stopes ounces and 105,900 gold ounces Reserve Plan Measured Resource Indicated Resource Inferred Resource Mineralization trends Indicated: 4.1 m

  16. Slide 16: Strong Near Term Growth Pipeline

    Strong Near Term Growth Pipeline New San Sebastian mine operating, new EMCP surface pit begun at Casa Berardi, #4 Shaft project completes in 2016 –16–

  17. Slide 17: San Sebastian: Hecla's Newest Mine

    San Sebastian: Hecla’s Newest Mine Silver Gold Cash cost, after by- Production Production product credits, per Ag oz1 2015 81,677 oz 870 oz $6.71/oz 2016E 3.0 Moz 20k oz $2.00/oz 2016E Capital $2M 2P Reserves 8.0 Moz silver @ 27.7 oz/t Ag M+I Resources 9.3 Moz silver @ 5.9 oz/t Ag 1. Cash cost, afte

  18. Slide 18: San Sebastian

    San Sebastian Opening Ceremony Blasting, East Francine pit Amethystine quartz vein from the Middle Vein pit –18–

  19. Slide 19: San Sebastian PEA: Robust Cash Flow and IRR

    San Sebastian PEA: Robust Cash Flow and IRR Production From Shallow, High-Grade Open Pits Has Begun Silver equivalent production (18 months) 8,138,740 ounces Capital (rented mill) $5.8 million Cash cost, after by-product credits, per silver ounce $5.49 Total after tax cash flow (5% discount) $43 mil

  20. Slide 20: PEA Targets Only 10% of a Growing Resource

    PEA Targets Only 10% of a Growing Resource 2014 Resource (AgEq) Indicated 2.4 Mtons @15.6 oz/ton= 37.7 Moz Potential 100 Moz Inferred 3.7 Mtons AgEq @9.38 oz/ton=34.9 Moz Resource Current mine plan (PEA) based on 273 Ktons at a grade of 29.8 AgEq oz/t, or 8.1 Moz AgEq –20–

  21. Slide 21: Upside Potential Beyond PEA

    Upside Potential Beyond PEA  2015 exploration drilling identified vein extensions  2015 in-fill drilling increased some vein widths and grade  Potential to secure additional third-party mill capacity  Expect to increase resource at year end; potential to extend mine life  Strong confidence that

  22. Slide 22: San Sebastian: Exploration Drill Programs

    San Sebastian: Exploration Drill Programs –22– –22–

  23. Slide 23: San Sebastian: Growing Resources

    San Sebastian: Growing Resources AMC PIT SHELL NEW RESOURCE (2015) INFILL & GEOTECHNICAL DRILLING (2015) Drawings to Scale –23–

  24. Slide 24: Casa Berardi: Increasing Gold Exposure

    Casa Berardi: Increasing Gold Exposure Cash cost, after by-product Gold Production credits, per gold oz1 2014, 2015 Actual 128k oz 128koz $826/oz $772/oz 2016E 135,000 oz $700/oz 2016E Capital $61M 2P Reserves 1.3 Moz gold @ 0.13 oz/t gold M+I Resources 1.3 Moz gold @ 0.12 oz/t gold 1. Cash cost, af

  25. Slide 25: EMCP Pit Internal Study Summary

    EMCP Pit Internal Study Summary* Operation Estimates:  Throughput expected to increase from ~2,300 tpd (2015A) to ~3,100 tpd (2017E)  Pit expected to produce 5,000 Au oz in 2016, 30,000 gold oz 2017 Financial Estimates:  5.5 year project with an NPV (12%) of C$37.5M and an IRR of 90%  2016 Capit

  26. Slide 26: Lucky Friday: Solid Performance

    Lucky Friday: Solid Performance Cash cost, after by-product Silver Production credits, per silver oz1 2014, 2015 3.2 Moz 3.0 Moz $9.44/oz $11.23/oz 2016E 3.0 Moz $9.00/oz 2016E Capital $37M 2P Reserves 78.7 Moz silver @ 15.5 oz/t Ag M+I Resources 128.1 Moz silver @ 6.2 oz/t Ag 1. Cash cost, after by

  27. Slide 27: #4 Shaft: Increasing Grade with Depth

    #4 Shaft: Increasing Grade with Depth  Operational shaft expected in Q4/16 at a total cost of $225 million  As of Q4/15:  Over 90% complete, $20 million left to be spent  Production growth expected from higher-grade ore at depth –27–

  28. Slide 28: Lucky Friday: Increasing NSR x Thickness

    Lucky Friday: Increasing NSR x Thickness  16 Stope at 6300 level Starting to see high grade  Green oval highlights higher NSR* x thickness (richest part of ore body)  Up to 500 feet in length 16 Stope *NSR – net smelter return –28–

  29. Slide 29: Rock Creek: Long-Term Growth Opportunity

    Rock Creek: Long-Term Growth Opportunity Rock Creek could become a 20-30 year mine Acquired Revett for ~$19 million of Hecla stock on June 15, 2015 Rock Creek: Total inferred resource 229 million oz Ag, 2.0 billion lbs Cu¹ Rock Creek permitting ongoing: SEIS received from the Forest Service in Febru

  30. Slide 30: Strong Margins

    Strong Margins Silver Margins Casa Berardi Margins $17.18 $16.32 $16.00 $1,195 $1,222 $1,194 $14.54 $14.26 $1,121 $1,089 $248 20% $362 30% $328 29% 71% $560 47% 46% 71% $12.25 $10.71 66% $7.02 48% $498 61% $11.42 $8.71 $974 $591 $832 $793 $5.61 $635 $4.93 $7.52 $5.55 $4.58 Q4 2014 Q1 2015 Q2 2015 Q3

  31. Slide 31: Consistently Strong Liquidity

    Consistently Strong Liquidity (US$ millions) $312 $310 $291 $255 $212 $210 $191 $155 2012 2013 2014 2015 –31–

  32. Slide 32: Debt is Long Term with Good Metrics

    Debt is Long Term with Good Metrics  Senior notes due in 2021 is the Capitalization only substantial indebtedness Actual 2015  Limited covenants Cash and cash equivalents $155  No off balance sheet arrangements Capital lease liability 18  Credit Metrics Borrowing 503 Total debt $521  Total Net

  33. Slide 33: Stability From Diversified Revenue Streams

    Stability From Diversified Revenue Streams Lead and zinc positions supplement core exposure in silver and gold Consolidated Revenue by Metal 2015  #3 US lead and zinc producer 17% 11% 31%  Periodically hedge up to 60% of payable lead and zinc production out to 3 years 41%  Benefit: More stable re

  34. Slide 34: 2016 Expectations

    2016 Expectations Cash Cost, 2016E1 Silver 2016E1 Gold Mine after by-product credits, Production (Moz) Production (oz) per silver/gold ounce2 Greens Creek 7.5 52,000 $6.00 per silver oz Lucky Friday 3.0 $9.00 per silver oz San Sebastian 3.0 20,000 $2.00 per silver oz Casa Berardi 135,000 $700 per go

  35. Slide 35: Thank you

    Thank you Hecla Celebrates 50 Years on the NYSE – March 25, 2015 –35–

  36. Slide 36: Appendix

    Precious metal companies… Appendix –36–

  37. Slide 37: Increasing Share of Modern Demand

    Increasing Share of Modern Demand  Modern demand increased from 260 M oz in 1992 to 537 M oz in 2013, an increase of 106%, and an annualized increase of 4.0% 1% 5% 36% 22% 49% 30% Modern Modern 23% 29% 5% 1992 2013 Modern Investment Jewelry & Photography Coins & Medals Silverware Source - GFMS -37-

  38. Slide 38: Proven & Probable Reserves

    Proven & Probable Reserves (on Dec. 31, 2015 unless otherwise noted) Reserves and Resources - 12/31/2015 Proven Reserves Silver Gold Lead Zinc Silver Gold Lead Zinc Copper Asset Tons (000) (oz/ton) (oz/ton) % % (000 oz) (000 oz) Tons Tons Tons Greens Creek (a) 10 20.8 0.12 3.7 9.0 210 1 370 910 — Lu

  39. Slide 39: Reserves & Resources Update

    Reserves & Resources Update (on Dec. 31, 2015 unless otherwise noted) Measured Resources Silver Gold Lead Zinc Silver Gold Lead Zinc Copper Asset Tons (000) (oz/ton) (oz/ton) % % (000 oz) (000 oz) (Tons) (Tons) Tons Greens Creek (b) — — — — — — — — — Lucky Friday (2)(b) 13,762 6.1 — 4.1 2.3 83,711 —

  40. Slide 40: Reserves & Resources Update

    Reserves & Resources Update (on Dec. 31, 2015 unless otherwise noted) Inferred Resources Silver Gold Lead Zinc Silver Gold Lead Zinc Copper Asset Tons (000) (oz/ton) (oz/ton) % % (000 oz) (000 oz) (Tons) (Tons) Tons Greens Creek (b) 3,255 12.8 0.09 2.8 6.7 41,730 300 89,630 219,540 — Lucky Friday (8

  41. Slide 41: 2006 – 2014 Reserve Table

    2006 – 2014 Reserve Table Silver Silver Gold Silver Gold Proven Reserves Tons (oz/ton) Gold (oz/ton) (ounces) (ounces) 2011 Proven Reserves Tons (oz/ton) Gold (oz/ton) Silver (ounces) (ounces) 2006 Proven Reserves Greens Creek - - - - - Greens Creek (29.73%) - - - - - Lucky Friday 628,976 13.10 - 8,

  42. Slide 42: Cash Cost GAAP Reconciliation

    Cash Cost GAAP Reconciliation Reconciliation of cash cost, after by-product credits, per silver ounce to cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparable GAAP measurements, for Greens Creek, Lucky Friday and San Sebastian* (dollars and

  43. Slide 43: Cash Cost GAAP Reconciliation

    Cash Cost GAAP Reconciliation Greens Creek (In thousands (except ounce and per ounce amounts) Lucky Friday Q4/2015 Q4/2014 Q4/2015 Q4/2014 Cash costs, before by-product credits (1) $ 50,760 $ 51,828 Cash costs, before by-product credits (1) $ 19,632 $ 18,361 By-product credits (40,018) (45,088) By-p

  44. Slide 44: Hecla Adjusted EBITDA Reconciliation to GAAP

    Hecla Adjusted EBITDA Reconciliation to GAAP Reconciliation of Adjusted EBITDA to Generally Accepted Accounting Principles (GAAP) Dollars are in thousands Twelve Months Ended 31-Dec-15 Net income $ (86,968) Plus: Interest expense 25,389 Plus: Income taxes 56,310 Plus: Depreciation, depletion and amo

  45. Slide 45: Hecla Adjusted EBITDA Reconciliation to GAAP

    Hecla Adjusted EBITDA Reconciliation to GAAP Reconciliation of Adjusted EBITDA to Generally Accepted Accounting Principles (GAAP) Dollars are in thousands Twelve Months Ended 31-Dec-15 Net income $ (86,968) Plus: Interest expense 25,389 Plus: Income taxes 56,310 Plus: Depreciation, depletion and amo

  46. Slide 46: Greens Creek Free Cash Flow Reconciliation

    Greens Creek Free Cash Flow Reconciliation 1987-2015 Performance Revenue $4,640,526 Treatment Charges (911,508) Net Revenues 3,729,019 Freight & Selling Expense (188,234) Net Smelter Return 3,540,785 Cost of Goods Sold (1,648,047) NonCash Costs (567,499) Exploration Expense (78,894) Gain/(Loss) of S

Hecla Mining Company — BMO 25th Annual Global Metals & Mining Conference 2016 on 6ix