Hecla Mining Company · NYSE:HL
Hecla Mining — Tumazos Metals and Natural Resources Conference 2019
58 slides from Hecla Mining's conference presentation, June 2019
Slide 1: Tumazos Conference: Creating Value Through Innovative Mining
TUMAZOS CONFERENCE CREATING VALUE THROUGH INNOVATIVE MINING June 2019 Placeholder image 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: Hecla Mining Overview
HECLA MINING OVERVIEW Positioned for Continued Strong Performance Asset Overview • Largest primary silver producer in the US, third largest producer of lead and zinc • Good mining jurisdictions: Alaska, Idaho, Nevada, Quebec, and Durango (Mexico) • Focus is long-lived, low cost mines that can be ext
Slide 4: Diverse Asset Portfolio in Mining Friendly Jurisdictions
DIVERSE ASSET PORTFOLIO IN MINING FRIENDLY JURISDICTIONS Primary Operations Growth / Transformation Greens Creek Casa Berardi San Sebastian Nevada Lucky Friday Location/ Risk Score1 Alaska, USA (76.9) Quebec, Canada (87.5) Durango, Mexico (65.1) Nevada, USA (90.5) Idaho, USA (84.5) Primary Product S
Slide 5: Portfolio of Quality Assets: Growing Presence in Nevada
PORTFOLIO OF QUALITY ASSETS GROWING PRESCENCE IN NEVADA Reno, Nevada NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 5 Source: Company disclosures.
Slide 6: Leading Precious Metal, Lead and Zinc Producer with Diverse Assets
LEADING PRECIOUS METAL, LEAD AND ZINC PRODUCER WITH DIVERSE ASSETS AND COMMODITY MIX #1 SILVER AND #3 LEAD AND ZINC PRODUCER IN THE U.S. Silver Production: 2.9 Moz Cost of Sales2: $68.6 M Cash Costs, after by-product credits3: $2.26/oz 15% Realized Price: $15.70/oz 29% 6% Gold Production: 60 Koz Q1
Slide 7: Our Best Mines Keep Getting Better
OUR BEST MINES KEEP GETTING BETTER NEW TECHNICAL REPORTS SHOW INCREASED MINE LIVES; HIGHER CASH FLOW Greens Creek Casa Berardi 107.1 million oz P+P silver reserves. 1 1.91 million oz P+P gold reserves. 1 Life of Mine Plan (LOM) extends to 2030. LOM extends to 2034. 97.4 million oz M&I silv
Slide 8: Record of Growing Reserves
RECORD OF GROWING RESERVES SIGNIFICANT INCREASES AT MUCH LOWER PRICES Silver Reserves Growth Gold Reserves Growth 120.0 1.5 2.8 191.0 2.0 (76.7) (millions of ounces) (millions of ounces) 147.7 133%*** (1.3) 0.7 685%*** 2013 Beginning Reserves Reserves Added, Silver Produced, Reserves, Replaced and 2
Slide 9: The Most Conservative Silver Price Assumption in the Industry
THE MOST CONSERVATIVE SILVER PRICE ASSUMPTION IN THE INDUSTRY RESERVES ARE THE BASIS FOR VALUE CREATION Price Assumption is at the discretion of management HL Reserve $19.00 Year Prices $18.50 $18.00 $18.00 2012 $26.50 $17.50 $17.00 2013 $20.00 $16.00 $16.61 $16.00 $15.50 2014 $17.25 Silver $15.00 $
Slide 10: Hecla's Track Record of Adding Value
HECLA’S TRACK RECORD OF ADDING VALUE AN EXTENSIVE HISTORY OF OPTIMIZING ASSETS Casa Berardi Greens Creek San Sebastian Increased recoveries/ low cost Prudent, high impact capital Operational enhancements and mill production differentiated mining model optimization • Throughput has increased by 91% s
Slide 11: Culture of Innovation Drives Productivity Improvements
CULTURE OF INNOVATION DRIVES PRODUCTIVITY IMPROVEMENTS TECHNOLOGY AND BEST PRACTICES TO BE LEVERAGED ACROSS KLONDEX’ ASSETS Autonomous Haulage in Jumbo/Stope Drill Operation at Casa Berardi Automation: Drilling During • 2- 24 hour trucks operation Shift Change drives cost savings • Adds 15 meters/da
Slide 12: Culture of Innovation Drives Productivity Improvements
CULTURE OF INNOVATION DRIVES PRODUCTIVITY IMPROVEMENTS INNOVATING ACROSS THE PORTFOLIO Projects 2014 2015 2016 2017 2018 2019 2020 2021 Automated Stope Drilling Installed In Operation Casa Berardi Automated Drill Jumbo Utilized 2 Add/Deploy 3rd drill In Operation Casa Berardi (Greens Creek H2/18) Dr
Slide 13: Experienced Management Team
EXPERIENCED MANAGEMENT TEAM WITH EXCELLENT TRACK RECORD OF DEVELOPING AND OPERATING ORGANIC PROJECTS • Currently serving as Hecla’s Director since 2001, CEO since May 2003 and President since November 2001 Phillips S. Baker, Jr. President and CEO • Served as a Director of QEP Resources, Inc. since M
Slide 14: 2019 Outlook
2019 OUTLOOK LOWERING CASH COST AND AISC, AFTER BY-PRODUCT CREDITS, PER SILVER OUNCE Production Outlook Silver Production Gold Production Silver Equivalent Gold Equivalent (Moz) (Koz) (Moz) (Koz) Original Original Original Original Current Current Current Current (if revised) (if revised) (if revise
Slide 15: Gold Silver Ratio Had Led to Strong Increases
GOLD SILVER RATIO ABOVE 80 HAD LED TO STRONG INCREASES US MINT SOLD OUT OF SILVER EAGLE COINS IN JANUARY WITH ALMOST NO SALES IN FEBRUARY & MARCH Gold | Silver Gold / Silver Ratio Silver ($/oz) Gold ($/oz) Ratio 20 Year Avg Ratio: 63.3 Gold / Silver Ratio Gold Silver 20 Year Avg Ratio NYSE: HL RESPO
Slide 16: Operations Overview
Operations Overview NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 16
Slide 17: Greens Creek
GREENS CREEK CONSISTENT LOW-COST PRODUCTION IN A WILDERNESS AREA / NATIONAL MONUMENT 2018 Q1 2018 Q1 2019 2019E5 Silver Production (Moz) 8.0 1.9 2.2 7.7 Gold Production (Koz) 51.5 13.1 14.3 50.0 Cost of Sales2 $190.1 M $41.9 M $54.1 M $202 M Cash cost, after by-product credits, per silver oz3 $(1.13
Slide 18: Greens Creek Has Generated Over $1B of Net Cash Flow
GREENS CREEK HAS GENERATED OVER $1B OF NET CASH FLOW CONSUMED CASH EARLY IN ITS LIFE $ in millions Cumulative Net Cash Flow* $1,400 $1,200 $1,000 $800 $600 Hecla Purchase $400 $200 $- $(200) $(400) * Net Cash Flow includes all capex, working capital changes, and lease financing expenses NYSE: HL RES
Slide 19: Casa Berardi
CASA BERARDI MAKING A GOOD MINE GREAT 2018 Q1 2018 Q1 2019 2019E5 Gold Production (Koz) 162.7 40.2 31.8 150.0 Cost of Sales2 $199.4 M $49.2 M $49.1 M $210 M Cash cost, after by-product credits, per gold oz3 $800/oz $827/oz $1,113/oz $850/oz AISC, after by-product credits, per gold oz4 $1,080/oz $1,0
Slide 20: 985 Drift Autonomous Haulage in Operation
985 DRIFT AUTONOMOUS HAULAGE IN OPERATION TWO TRUCKS RUN 24 HOURS A DAY; COST SAVINGS EXPECTED Loading 40-tonne autonomous Sandvik truck NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 20
Slide 21: Nevada Operations
NEVADA OPERATIONS MINES AND MILL TO OPERATE AS A COHESIVE UNIT, EMPHASIS ON CASH FLOW 2018* Q1 2019 2019E6 Gold Production (Koz) 32.9 10.4 60 Silver Production (Koz) 172.3 67.4 0.2 Cost of Sales2 $47.0 M $31.4 M $105 M Cash cost, after by-product credits, per gold oz3 $1,221/oz $1,782/oz $1,200/oz A
Slide 22: Why We Invested in Nevada
WHY WE INVESTED IN NEVADA 1. The 110-square mile land position with three, one-ounce headgrade mines. 2. Hatter Graben, part of Hollister, that has 1.4 oz headgrades, the potential for a million ounce orebody and will be drill-ready by year end. 3. Improve Fire Creek operations to lower the cut-off
Slide 23: Nevada Operations: Taking Action to Reduce Cost Structure
NEVADA OPERATIONS TAKING ACTION TO REDUCE COST STRUCTURE • Development contractor (AMT) demobilized at Fire Midas Mill Creek. • Mining of available faces expected to continue at Fire Creek until mid-2020 and until YE 2019 at Midas. • Hollister mining and Hatter Graben development suspended. • 25% re
Slide 24: San Sebastian
SAN SEBASTIAN JUST-IN-TIME MINING; LOOKING TO MAKE IT A LONG-LIFE MINE 2018 Q1 2018 Q1 2019 2019E5 Silver Production (Moz) 2.0 0.512 0.441 2.0 Gold Production (Koz) 15.0 4.5 3.5 14.0 Cost of Sales2 $41.8 M $5.8 M $12.4 M $41.0 M Cash cost, after by-product credits, per silver oz3 $9.69/oz $2.81/oz $
Slide 25: Lucky Friday
LUCKY FRIDAY POSITIONING FOR GROWTH AND LONGEVITY 2018 Q1 2018 Q1 2019 Silver Production (Koz) 169 100 173 Cost of Sales2 $9.8 M $4.1 M $2.2 M Cash cost, after by-product credits, per silver oz3 N/A N/A N/A AISC, after by-product credits, per silver oz4 N/A N/A N/A Union workers currently on strike.
Slide 26: Lucky Friday: Continuous Mechanical Cutting Is Coming
LUCKY FRIDAY: CONTINUOUS MECHANICAL CUTTING IS COMING DELIVERY 2020: COULD REPLACE DRILL AND BLAST Remote Vein Miner Fabrication Underway in Sweden Cutter Head and Machine NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 26
Slide 27: Other Supporting Information
Other Supporting Information NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 27
Slide 28: 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 29: 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 30: 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 31: 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 32: 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 33: 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 34: Our Commitment: Safety
OUR COMMITMENT: SAFETY SAFETY IS NON-NEGOTIABLE AT HECLA • Practice continuous improvement where we adapt/change to minimize risks of SAFETY IS EMBEDDED IN OUR CULTURE injury or an accident • Goal is always 0 injuries/fatalities • First hardrock mining company to achieve NMA’s CoreSafety certificati
Slide 35: Our Commitment: Safety
OUR COMMITMENT: SAFETY ALL INJURY FREQUENCY RATE IS 15% BELOW THE U.S. AVERAGE 2018: 15% below U.S. average 2.00 Injury frequency rates 2019 goal is a have been on a steady 10% reduction from decline since 2014 the 2018 target rate NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 35
Slide 36: Our Commitment: Communities and Education
OUR COMMITMENT: COMMUNITIES AND EDUCATION INVESTING IN FUTURE GENERATIONS AND COMMUNITIES Charitable Donations and Volunteerism • More than $2.9 million in Hecla Charitable Foundation contributions since 2009 • Foundation is focused on four areas: education, community programs, youth activities, and
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 THE 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, cont
Slide 39: Our Commitment: Governance
OUR COMMITMENT: GOVERNANCE YOU SPOKE, WE LISTENED 2014 2015 2016 2017 2018 2019 Eliminated tax gross-ups Amended guidelines for succession of CEO/Chairman Increased Diversity– added female director to the Board Shortened Board tenure Added Director Resignation Policy Increased disclosure on ESG Incr
Slide 40: Adjusted EBITDA Reconciliation to GAAP
ADUSTED EBITDA RECONCILLIATION TO GAAP Reconciliation of Net (Loss) Income (GAAP) to Adjusted EBITDA (non-GAAP) Dollars in thousands (USD) Twelve Months Ended 31-Dec-13 31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18 Net (loss) income $ (25,130) $ 17,824 $ (94,738) $ 61,569 $ (28,520) $ (26,563) P
Slide 41: Cash Cost and AISC Reconciliation to GAAP: 2019 Silver Estimates
CASH COST AND AISC RECONCILIATION TO GAAP 2019 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 42: Cash Cost and AISC Reconciliation to GAAP: 2019 Gold Estimates
CASH COST AND AISC RECONCILIATION TO GAAP 2019 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 43: 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 44: 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 45: 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 46: Cash Cost and AISC Reconciliation to GAAP: Casa Berardi
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 47: Cash Cost and AISC Reconciliation to GAAP: Nevada Operations
CASH COST AND AISC RECONCILIATION TO GAAP NEVADA 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 48: Cash Cost and AISC Reconciliation to GAAP: San Sebastian
CASH COST AND AISC RECONCILIATION TO GAAP SAN SEBASTIAN 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 49: Cash Cost and AISC Reconciliation to GAAP: Lucky Friday
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 50: Greens Creek Free Cash Flow Reconciliation
GREENS CREEK FREE CASH FLOW RECONCILIATION Greens Creek Free Cash Flow Reconciliation (in thousands) 1 2018 1987-2018 Gross profit $ 75,288 $ 1,408,990 Non-cash elements in gross profit: Depreciation, depletion and amortization 49,908 718,288 Other (1) 1,339 Working capital changes (57) (17,573) Net
Slide 51: Operations Free Cash Flow Reconciliation
OPERATIONS FREE CASH FLOW RECONCILIATION Casa Berardi Free Cash Flow Reconciliation Greens Creek Free Cash Flow Reconciliation (in thousands) (in thousands) 1 2018 2018 1987-2018 Gross Profit $ 10,938 Gross profit $ 75,288 $ 1,408,990 Non cash elements in gross profit: Non-cash elements in gross pro
Slide 52: Proven & Probable Mineral Reserves
PROVEN & PROBABLE MINERAL RESERVES (ON DECEMBER 31, 2018 UNLESS OTHERWISE NOTED) NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 52
Slide 53: Proven & Probable Mineral Reserves
PROVEN & PROBABLE MINERAL RESERVES (ON DECEMBER 31, 2018 UNLESS OTHERWISE NOTED) (1) The term “reserve” means that part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination. The term “economically,” as used in the definition of rese
Slide 54: Measured and Indicated Mineral Resources
MEASURED AND INDICATED MINERAL RESOURCES (ON DECEMBER 31, 2018 UNLESS OTHERWISE NOTED) Measured and Indicated Resources – 12/31/18 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 (
Slide 55: Inferred Mineral Resources
INFERRED MINERAL RESOURCES (ON DECEMBER 31, 2018 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 (6) 2,470 14.6 0.09 3.0 7.3 - 35,982 219 74,410 181,400 - L
Slide 56: Inferred Mineral Resources
INFERRED MINERAL RESOURCES (ON DECEMBER 31, 2018 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. (6) Mineral resources are based on $1350 gold, $21 silver, $
Slide 57: 2008 – 2018 Reserve Table
2008 – 2018 RESERVE TABLE Silver Gold Gold Silver Gold Gold 2008 Proven Reserves Tons (oz/ton) (oz/ton) Silver (ounces) (ounces) 2014 Proven Reserves Tons (oz/ton) (oz/ton) Silver (ounces) (ounces) Greens Creek - - - - - Greens Creek 4,700 15.70 0.100 74,000 5,000 Lucky Friday 1,270,000 12.40 - 15,8
Slide 58: 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
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