Hecla Mining Company · NYSE:HL
Hecla Mining — Investor Presentation (February 2012)
48 slides from Hecla Mining's investor presentation, Feb 28, 2012
Slide 1: Cautionary Statements
Sra "> HECLA MINING COMPANY Cautionary Statements Cautionary Statements Statements made which are not historical facts, such as anticipated payments, litigation outcome, production, sales of assets, exploration results and plans, prospects and opportunities including reserves, resources, and mineral
Slide 2: Largest silver producer in the U.S.
Largest silver producer in the U.S. with 2012 silver production expected to be 7 million ounces 6" consecutive year of reserves and resources growth = 50% silver production growth anticipated over the next 5 years New common stock dividend Mining for more than 120 years Operations |locatedin a stabl
Slide 3: Dividend and hedging highlights
$3.6 mm ($0.0125 per common share) 35-50% hedged >$1/lb over next 24 months
Slide 4: Full Year 2011 results
HECLA MINING COMPANY Full Year 2011 SILVER PRODUCTION (mm oz) 25 BT. 95 TOTAL CASH COST ($/oz)'2 2.28 (0.14) 115 REVENUES ($ mm) 102.9 134.5 477.6 EARNINGS Basic Earnings per Share ($) 0.07 (0.05) 0.54 CASH FLOW from Operating Activities ($ mm) (118.0)? 825 69.9 Full Year 2010 106 (1.46) 418.8 0.14
Slide 5: Reserve and Resource Growth
Reserve and Resource Growth Silver Ounces 160 40 100 igh conve! Silver Ounces - Hecla Reserve History Sawa PERER SERRE ER ‘eded 2010 2011 180 160 140 0 100 80 60 40 20 00 Silver Grade (opt) in rate from resources to reset fap eae HECLA MINING COMPANY silver Ounces Silver Ounces - Hecla Resource Hist
Slide 6: Hecla Properties
2 ee ny | —— Aer ie HECLA MINING COMPANY Hecla Properties = Two strong and long-lived mines in the U.S. = Greens Creek Mine, Alaska, operating since 1989 = Lucky Friday Mine, Idaho, operating anes Sr0te tv since 1942 operating property = Pre-development and exploration projects eerie in U.S. & Mexic
Slide 7: Greens Creek (Alaska)
Mine production startup - 1989 One of the world’s largest high-grade and low-cost silver mines More than 200 mm ounces of silver produced to date Very large and under-explored 27- square-mile land position 30-mile strike length identified and projected mine contact on surface = 7 mm ounces of annual
Slide 8: Greens Creek (Alaska)
f= reek (Alaska) ad 4 ©) HECLA MINING COMPANY Gallagher 200 South Resource extensions Looking NE
Slide 9: Greens Creek 2012 capital expenditures
Sap ee 1 pa ~. => i= MINING COMPANY = Expected 2012 capital expen include: 90 mm - the most significant projects = ~$18 mm 200 South development = ~$14 mm Mining fleet additions and replacement = ~$10 mm Stage 3 tailings facility = ~$6 mm East Ore access and ventilation rehabilitation = ~$5 mm Defin
Slide 10: Lucky Friday & Silver Valley (Idaho)
Seine ees Lucky Friday & Silver Valley (Idaho) = Mine production startup - 1942 = More than 145 mm ounces of silver ‘Lucky Friday Mine produced to date ae: = Largest reserve and resource in history of mine - exploration has doubled silver reserves since 2007 to 49.3 mm ounces = 25-square-mile land p
Slide 11: Lucky Friday & Silver Valley (Idaho)
Lucky Friday & Silver Valley (Idaho) " ) HECLA MINING COMPANY Driving a new drift to maintain pumps - accessible from the #2 Shaft Remove loose cementitious material and unused utilities from the Silver Shaft Construct a water ring to prevent ice from forming in the winter Install a metal brattice w
Slide 12: Cash cost per ounce and cash margin
$35 $30 $25 $20 N g * $15 $10 $5 $0 0.24 $1.91 $1.15 Si $4.20 ($1.46) ($5) ($2.81) 2006 2007 2008 2009 2010 2011 mmCash Margin -Realized Silver Price* $35.30 1 Cash Cost Per Ounce Total cash cost per ounce of sver represents non-U.S. Generaly Accepted Accounting Principles (GAAP) measurement. A reca
Slide 13: Cash Provided by Operating Activities
HECLA MINING COMPANY Cash Provided by Operating Activities (millions) $237.91 $197.8 $119.2 $65.0 $11.0 2007 2008 2009 2010 2011 mActual — Pro-forma 1. Operatng cash fow for2011 was $599 millon afterenvronmental setement payment ofS 169 milion inthe fourth quarter. rey
Slide 14: Strength to Fund 2012 Capital Program
HECLA MINING COMPANY | Strength to Fund 2012 Capital Program: $414" $377 $322 $284 ‘| | Q4/10 Quit Q2/11 Q3/11 4/11 Cash & Cash Equivalents (millions) 1. _Afferenvironmentalsettement payment of $168 milfon in the fourth quarter 2011 4
Slide 15: Silver-linked dividend policy
Seep rf ") HECLA MINING COMPANY Fourth quarter onic of $0.0125 per share Silver-linked dividend policy in Q3/11 Minimum annual dividend of $0.01 per share paid quarterly & $0.30 2 = $0.25 a a $0.20 3 2 3B $0.15 = 3 $0.10 § 2 = $0.05 $0.00 Notes 18 $31.61 in Q4i14 $0.01 dividend per share $30.00 $35.
Slide 16: Properties/Activities milestones 2011-2015
HECLA MINING COMPANY Properties/Activities 2011 | 2012 | 2013 | 2014 | 2015 | (- LUCKY FRIDAY #4 SHAFT (MULLAN, ID) @ Board Approval ait @ Pre-sink & Set up aan © Shaft Sinking aains STAR (SILVER VALLEY, ID) @ Star 2000 Rehabilitation att & Initiate Underground Driling aint = = @ Additional Noonday
Slide 17: Organic Growth - Star Pre-development
(& 4 ae 7 sl , los me 5 . cy A N = _ HECLA MINING COMPANY Organic Growth - Star Pre-development = Hecla has re-opened the Star for definition & exploration drilling = Portal rehabilitation and ventilation adit have been successfully completed = A Preliminary Economic Assessment (PEA) of the “Upper C
Slide 18: Star resource boundary
SSR Cabestated Using Prices. Az $20.00 (oxhen), Po $0.85 (0B), Zn $0.85 0) (J) 2010 Resource Boundary 8
Slide 19: San Juan Silver and Bulldog mine
HECLA MINING COMPANY Historic Bulldog mine produced 25 mm ounces of silver before closing in 1985 Acquired 100% interest in defined mineralization of San Juan Silver property Silver resources of 37.1 mm ounces 2011 Activities: = Completed conceptual study & water management ponds = Equity ramp rehab
Slide 20: Equity Development Ramp with Current and Planned Drilling
HECLA MINING COMPANY Equity Development Ramp with Current and Planned Drilling net stope Recent drilling has defined high-grade, gold/silver-bearing veins View looking Northeast Equity vein may represent a mineralized structure with more than 1,400 feet of vertical continuity and considerable strike
Slide 21: Don Sergio drill pierce points
SEPT 2010 JUNE 2011 FEB 2012 HECLA MINING COMPANY NW 35° SE Looking NE Don Sergio Mine Workings (Projected to Section) es DRILL PIERCE POINTS Programmed In Progress or Assays Pending ° Completed No Vein, Faulted Out a
Slide 22: Properties/Activities milestones 2011-2015
HECLA MINING COMPANY Properties/Activities 2011 | 2012 | 2013 | 2014 | 2015 | (- LUCKY FRIDAY #4 SHAFT (MULLAN, ID) @ Board Approval ait @ Pre-sink & Set up aan © Shaft Sinking aains STAR (SILVER VALLEY, ID) @ Star 2000 Rehabilitation att & Initiate Underground Driling aint = = @ Additional Noonday
Slide 23: Silver production history and forecast
er-mm oz Historical Change in production due to lower grade in mine plan sequence HECLA MINING COMPANY Forecasted i 2009 2010 2011 2008 2007 2012E' 2013E = 2014E- 2015E | 2016E = 2017E 4._ No production atLucky Friday in2012— Silver Shaft clean-up and mine upgrades (see slide 11)
Slide 24: 2012 outlook
HECLA MINING COMPANY = Silver production estimate approximately 7 mm ounces = Lucky Friday mine expects to resume production in early 2013 = Total cash cost net of by-products are expected to be approximately between $1.00 to $2.00 per ounce at current metal prices = $140 mm in capital expenditures
Slide 25: Growth consistent with peers
HECLA MINING COMPANY Growth consistent with peers = “GO TO” SILVER PRODUCER
Slide 26: Appendix
Trae ECLA pRoPenTies EY MILESTONES Appendix MINING COMPANY
Slide 27: Strategy to build a solid asset base
past10+ years Hecla’s strategy to builda solid asset base by acq ‘ed land packages has now set the stage for a prosperous futu ‘4 1984 - Merger with Day Mines consolidating the Silver Valley 4 2000 - San Sebastian 4 2008 - 100% interest in Greens Creek silver mine 4 2008 - Independence Lead Mines a
Slide 28: Price/Net Asset Value
Price/Net Asset Value 2.0x 1.8x 1.6x. 14x 1.2x 1.0x 0.8x 0.6x 0.4x 0.2x 0.0x & Source — Average Analyst Valuations as of February 22, 2012 * Stock prices as of February 17, 2012
Slide 29: Price / Cash Flow
HECLA MINING COMPANY @ Months 2011 - Price / Cash Flow $350 @ Coeur $300 e Pan American ae 8 & 8 “Hecla Valuation at Nine months 2011 Cash Flow - US$ MM $150 ‘Average PICF H1/2011A Mutiple* $100 @ First Majestic $50 $0 += $0.0 $05 $1.0 $15 $2.0 $25 $3.0 Market Cap - US$ Billions 29 * Weighted Averag
Slide 30: Silver demand by use
Jewelry & Silverware Photography Industrial Demand S Sh ne} S\ FFI FF FFAS HECLA MINING COMPANY 1990 - 2010 Increase 2 N > Ry FEF SS SS Ss 30 Source-GFMS
Slide 31: Increasing Share of Industrial Demand
HECLA MINING COMPANY Increasing Share of Industrial Demand = Industrial demand increased from 274 mm oz in 1990 to 487 mm oz in 2010, an increase of 78%, and an annualized increase of 3.5% Industrial 1990 2010 (@§ Industrial § Investment Jewelry’ & @ Photography {| Coins & Medals Silverware Source-G
Slide 32: Silver Demand
rete " HECLA MINING COMPANY Silver Demand Uses of Silver in 20 Solar Panels: 40 mm oz of silver consumed in 2010; demand is expected to double by 2015 Cell Phones: ~1.6 bn units a (250 mg/handset) consumed 13 oo | mm oz of silver Bale/4 PC’s & Laptops: ~ 690 mm units (1g/unit) used 22 mm oz of silve
Slide 33: 189% Increase of Silver Reserves from 2006-2011
HECLA MINING COMPANY 189% Increase of Silver Reserves from 2006-; | «(189% Increase of Silver Reserves from 2006-20111 2010 2011 = Resources (mm oz) = Reserves (mm oz) New underground drilling capacity will create more resource growth opportunities 1, Reserves & Resources as of December 31, 2011 33
Slide 34: 2012 Exploration Activities
2012 Activities Targets Strategic Focus Budget Greens Creek, AK Surface & U/G drilling, geochem, geophysics -200 South -5250 South -Gallagher -NWW -West Bruin -Cub #4 -NE Contact -R&R definition -Identifying new ore zonesitargets $7mm Lucky Friday/ Silver Valley, ID Surface & UG drilling, geochem -N
Slide 35: Greens Creek (Alaska) - 2011 Overview
Slide 36: 1. Tota cath costger ounce of iver regresents anon-U.S. General Accepted Aosounting Pinos (GAAP)
1. Tota cath costger ounce of iver regresents anon-U.S. General Accepted Aosounting Pinos (GAAP) measurement, Araconctaton of total cash cots toostot ales and other dest production costs and eprecation, depletion and amorization (GAAP) can be foundin tne Append
Slide 37: Lucky Friday - #4 Shaft
od ee y fi. T HECLA MINING COMPANY #: Lucky Friday - #4 Shaft = Upon restart of #4 Shaft construction, work is expected to focus on shaft sinking & station development activities Total project is 45% complete and 80% of major procurements have been ordered or installed = Capital expenditures for 201
Slide 38: Interesting targets
interesting targets: + Noonday + Star + You Like — 30 Vein + >320M oz Ag produced
Slide 39: Silver Fault Zone drill intersections
HECLA miNinG Company tersected 30 Vein and Inter iate Veins in a Block of the Silver Fault © DDH Pierce Point [i Mined out Area “ g 0 250 500" € 2010 Resource Boundary = 4050 Lv. . z 3 — 4900. e Drill intersections in <i Silver Fault Zone . — seioLv. Definition Programs 8000 Lv.
Slide 40: San Juan drill section
ee ee are HECLA MINING COMPANY Gan hia oan JUua [i Rat Creek Tuff 12,000 — Drill Site WD Campbell Mtn. Tuff WE-1031 [il Bachelor Age Sediments [@ Bristol Head Andesite 11,000 — [Undifferentiated intrusive 10,000 — 9000 — 000 — 7000 —
Slide 41: San Sebastian (Mexico) - Exploration
HECLA MINING COMPANY . San Sebastian (Mexico) - Exploration Long Section NW SE \ HUGH ZONE RESOURCE - 1.3mm tonnes -9.3mm 0zAg - 14 thousand oz Au -71mm lbs Pb - 53mm Ibs Cu -109 mm Ibs Zn - 21mm 0zAgEq *Commodity Prices Used *Gold - $573 per oz, Silver - $10.73 per oz, Copper- $2.13 per Lb, Lead -
Slide 42: Coeur d'Alene River Basin consent decree
HECLA MINING COMPANY = Court approved consent decree for the Coeur d’Alene River Basin environmental litigation on September 8, 2011 = Settled Hecla Limited's historic environmental liability in the Basin and the remaining obligations in the Box = Hecla expects to pay $159 mm, net of expected relate
Slide 43: Company history and milestones
Hecla Mining Company is incorporated & mining commences at the Star Becomes the largest shareholder in the Lucky Friday Siver-Lead Mines Company Merger between Hecla and Lucky Friday Silver-Lead Mines is completed Hecla is listed on the New York Stock Exchange Best performer on the New York Stock Ex
Slide 44: Realized metal prices, Full Year 2011
Silver «Gold mLead «Zinc Based on Realized Prices Full Year 2011 Silver $ 35.30/0z Gold $ 1,592/0z Zinc $ 1.05/Ib Lead $ 1.00/Ib
Slide 45: Proven and Probable Reserves
HECLA MINING COMPANY ne Tons fo2nen) como) cc) sounessy stone, rons) Proven and Probable Reserves uaa Fray Unt Us aes ne ee eee sesso : sso raxeo ‘ttt Proven Reseee 23650 as 73s Base 5 7s Tax ‘ueny Pry Unt USA 13420 “7 - so 19706200 - arn 250 Greens cree, USA ra00 ms ows ssa sesso od ord re ‘ttle ro
Slide 46: Reconciliation of Cash Costs per Ounce to GAAP
HECLA MINING COMPANY Reconciliation of Cash Costs per Ounce to Generally Accepted Accounting Principles (GAAP) (dollars and ounces in thousands, except per ounce- unaudited) Total cash costs” Divided by siver ounces produced Total cash cost per ounce produced Reconciliation to GAAP: Total cash costs
Slide 47: Reconciliation of Cash Costs per Ounce to GAAP
Reconciliation of Cash Costs per Ounce to Generally Accepted Accounting Principles (GAAP) (dollars and ounces in thousands, except per ounce - unaudited) 441 aaiio Full Year 2011 Total cash costs" $ 5677 $ (377) $ 10,934 Divided by silver ounces produced 2,490 2741 9.483 Total cash cost per ounce pr
Slide 48: Reconciliation of Cash Costs per Ounce to GAAP
HECLA MINING COMPANY Reconciliation of Cash Costs per Ounce to Generally Accepted Accounting Principles (GAAP) (dollars and ounces in thousands, except per ounce - unaudited) Greens Creek Lucky Friday Year ended December 31 zon gor Total cash costs") $ (8.387) $ 19,321 Divided by silver ounces produ