Hecla Mining Company · NYSE:HL
Hecla Mining — Q3 2020 Earnings Presentation
26 slides from Hecla Mining's earnings presentation, Nov 9, 2020
Slide 1: Third Quarter 2020 Earnings Conference Call
THIRD QUARTER 2020 Earnings Conference Call November 9, 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: Strong Quarter Despite the Pandemic
STRONG QUARTER DESPITE THE PANDEMIC Driven by robust prices, grades, margins and COVID protocols • Hecla’s high-grade, high-margin, low-cost, low-capital silver mines generated Quality Silver Assets solid silver margins • Low capital requirements both in the past and in the future. Average spend Low
Slide 5: Financial Review
Financial Review NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 5
Slide 6: 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 $4.3 million • Solid free
Slide 7: Strong Free Cash Flow Generation
STRONG FREE CASH FLOW GENERATION Positive free cash flow generation from all mines except Lucky Friday which remains on track to achieve historical production in Q4 Greens Creek San Sebastian Lucky Friday ($ 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 8: Operations Review
Operations Review NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 8
Slide 9: 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 9
Slide 10: 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 11: 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 12: 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 • Planned maintenance activities which led to lower mill throughput • Timing and availability of underground stopes • Delayed underground ounces expected
Slide 13: San Sebastian & Nevada: Focus on Future
SAN SEBASTIAN & NEVADA: FOCUS ON FUTURE San Sebastian Nevada • Low capital strategy at San Sebastian has generated • Mining of developed oxide resource substantially complete significant returns in the past, and is expected to again in • Processing agreement with third party for bulk sample of the f
Slide 14: Exploration and Estimates
Exploration and Estimates NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 14
Slide 15: 4th Quarter Increase in Exploration Spending
4th QUARTER INCREASE IN EXPLORATION SPENDING $5 million more allows continued exploration at San Sebastian and increases in Nevada at Midas San Sebastian Nevada NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 15
Slide 16: 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 17: Appendix
Appendix NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 17
Slide 18: Endnotes
ENDNOTES 1. Cost of sales and other direct production costs and depreciation, depletion and amortization. 2. Cash cost, after by-product credits, per silver and gold ounce represents a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation
Slide 19: 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 20: 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 21: 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 22: 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 23: Cash Cost and AISC Reconciliation: Current 2020 Silver Estimates
CASH COST AND AISC RECONCILIATION TO GAAP Current 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 Sustaini
Slide 24: Cash Cost and AISC Reconciliation: Original 2020 Silver Estimates
CASH COST AND AISC RECONCILIATION TO GAAP Original 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 Sustain
Slide 25: Cash Cost and AISC Reconciliation: Current 2020 Gold Estimates
CASH COST AND AISC RECONCILIATION TO GAAP Current 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
Slide 26: Cash Cost and AISC Reconciliation: Original 2020 Gold Estimates
CASH COST AND AISC RECONCILIATION TO GAAP Original 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 Sustainin