Hecla Mining Company · NYSE:HL
Hecla Mining — European Gold Forum 2013
51 slides from Hecla Mining's conference presentation, April 2013
Slide 1: European Gold Forum
C R E ATI N G V AL U E HECLA PROPERTIES O R G AN I C G R O W TH KEY MILESTONES European Gold Forum April 2013
Slide 2: Cautionary Statements
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 mineralization
Slide 3: Creation of a Leading Precious Metals Company
HECLA MINING COMPANY Creation of a Leading Precious Metals Company • Two silver and one gold mine • Long-lived assets with all mine lives of ten years or Growth from more Quality Assets • Strong organic growth potential • Goal of silver production growth to 15.0 million ounces by 2017 • Robust free
Slide 4: Aurizon Acquisition Highlights
HECLA MINING COMPANY Aurizon Acquisition Highlights Hecla made a “white knight” bid after a substantial search process was triggered by a hostile bid, which has since been dropped Casa Berardi, Aurizon’s principal operating mine, is a well-known asset to Hecla, having followed it closely since 2
Slide 5: Hecla at a Glance
HECLA MINING COMPANY Hecla at a Glance Pro forma three 100% owned long-lived, low Pro Forma Operational Statistics cost mines Reserves by Metal (1) 2012A Revenue by Metal 10 years or more of mine life at all operations All operations located in stable and mining- friendly jurisdictions – U.S.
Slide 6: North American Focused Asset Portfolio
HECLA MINING COMPANY North American Focused Asset Portfolio The New Hecla has assets in 3 of the top 6 mining-friendly jurisdictions 2012 Rankings of Countries for Mining Investment Rank Country 1 Australia 57 2 Canada 52 3 Chile 51 4 Brazil 45 5 Mexico 43 6 United States 41 7 Colombia 39 8 Botswana
Slide 7: Financial Strength
HECLA MINING COMPANY Financial Strength 7
Slide 8: Multiple Revenue Streams Base Metals Hedging
HECLA MINING COMPANY Multiple Revenue Streams Base Metals Hedging Hecla Standalone Pro Forma Proven and Probable Reserves(1) Policy is to hedge up to 60% of the next three years’ production of lead and zinc Locking in revenue to cover costs 2011 Revenue by Metals Currently, base metals hedgi
Slide 9: Strong Balance Sheet
HECLA MINING COMPANY Strong Balance Sheet Cash and Cash Equivalents (millions) $3321 $266 $233 $232 $191 Q1/12 Q2/12 Q3/12 Q4/12 Q4/12 Pro forma Note: All monetary amounts presented in millions of dollars. All metrics presented on an unadjusted basis. 1. Includes $500 million from senior notes less
Slide 10: Senior Notes Overview
HECLA MINING COMPANY Senior Notes Overview Peer Comparison Amount Current Issuer Date Issued Coupon Maturity Raised1 Ratings Hecla 12-Apr-13 6.875% Sr. Notes 1-May-21 $500 B2/B Coeur 24-Jan-13 7.875% Sr. Notes 1-Feb-21 $300 B2/B+ Eldorado Gold 10-Dec-12 6.125% Sr. Notes 15-Dec-20 $600 Ba3/BB IAMGOLD
Slide 11: Low Cash Costs - 2012 Margin of $29.41 Per Ounce
HECLA MINING COMPANY Low Cash Costs - 2012 Margin of $29.41 Per Ounce $40 Strong Cash Margins $35.30 $35 $32.11 $30 $34.15 $29.41 $22.70 $25 $20 $24.16 $13.78 $/oz $15.63 97% 92% $14.40 $15 $12.10 $13.72 106% $16.59 $10.20 $10 $11.86 120% 71% 88% $5 98% $0 $0.24 $4.20 $1.91 $1.15 $2.70 ($1.46) ($2.8
Slide 12: Strong Cash Margins at Casa Berardi
HECLA MINING COMPANY Strong Cash Margins at Casa Berardi $1,800 $1,658 $1,578 $1,600 $962 $1,041 $1,400 $1,145 $1,200 58% $604 66% $1,000 $915 $847 $/oz 53% $800 $696 $514 $625 $448 56% $600 53% $696 $365 $317 52% 51% $541 $537 $400 $399 $401 $308 $331 $200 $0 2006 2007 2008 2009 2010 2011 2012 Cash
Slide 13: Cash Flow Generation
HECLA MINING COMPANY Cash Flow Generation Adjusted EBITDAX(1) (US$mm) $300 $288 $287 $235 $171 $116 $200 $143 $100 $171 $0 2009A 2010A 2011A 2012A 2012 Pro forma 2009-2012 Cash Bridge(2) (US$mm) 1,000 $694 800 600 $268 400 $231 $193 40 $41 200 $103 $105 $45 191 $190 0 (3) 2009 Ending EBITDAX Capex B
Slide 14: Reserve Growth 2003 - 2012
HECLA MINING COMPANY Reserve Growth 2003 - 2012 Silver ounces (millions) Gold ounces (millions)(1) 3.8 150 233% 375% 45 0.8 2003 2012 2003 2012 1. Includes Aurizon’s reserves and resources for 2012. 14
Slide 15: Strong, Disciplined Production Growth
HECLA MINING COMPANY Strong, Disciplined Production Growth Silver ounces (millions) Gold ounces (thousands)(1) 15 195 2% 192 134% 6.4 2012 2017E 2012 2014E 1. Includes Aurizon’s production levels for 2012. 15
Slide 16: High Quality Silver and Gold Mines
HECLA MINING COMPANY High Quality Silver and Gold Mines 16
Slide 17: Portfolio of High Quality, Long-Life Assets
HECLA MINING COMPANY Portfolio of High Quality, Long-Life Assets Greens Creek Lucky Friday Casa Berardi Location Alaska Idaho Quebec Ownership 100% 100% 100% Primary Metal Ag Ag Au Primary Metal Grade (oz/t) 12.1 13.4 0.2 Proven and Probable Reserves (mm oz) Au Eq. 3.6 -- 1.5 Ag Eq. 213 92 87 Mine L
Slide 18: Greens Creek - Low Cost Silver Production
HECLA MINING COMPANY Greens Creek - Low Cost Silver Production One of the largest and lowest-cost primary silver mines in the world Has produced approximately 200 million ounces of silver and approximately 1.5 million ounces of gold since production commenced in 1989 Expected 2013 silver produ
Slide 19: Re-Opened Lucky Friday
HECLA MINING COMPANY Re-Opened Lucky Friday Operations and production resumed in Q1/13 Conservative and manageable ramp-up through 1st half of year 2 million ounces of silver production expected in 2013 and 3 million in 2014 Expected cash costs of $17.00 per ounce in first half of year, decl
Slide 20: High Quality Assets
Silver Reserves - Moz 100 120 0 20 60 80 40 San SanCristobal Cristobal(SMM)* (50%)* Pitarilla (SSRI)* San Bartolome (CDE)* Greens Creek (HL) Pirquitas (SSRI)* Ying (SVM) Huaron (PAA) Lucky Friday (HL) Palmarejo (CDE)* Rochester (CDE)* High Quality Assets 20 Source: Public filings, *Open pit mines -
Slide 21: Casa Berardi - Long-Life Gold Asset
HECLA MINING COMPANY Casa Berardi - Long-Life Gold Asset Produced 688,000 oz gold at 7.1 g/t from 1988 to 1997 Gold production of 937,100 oz at 7.8 g/t gold since the restart of operations in 2006 Potential to increase processing capacity to Highlights 2,400 tpd High conversion (~65%) of res
Slide 22: Casa Berardi - Long Section
HECLA MINING COMPANY Casa Berardi - Long Section 1 22
Slide 23: Exploration and Pre-development Projects
HECLA MINING COMPANY Exploration and Pre-development Projects 23
Slide 24: Organic Growth - San Sebastian (Mexico)
HECLA MINING COMPANY Organic Growth - San Sebastian (Mexico) 185-square-mile land package Middle Vein Hugh Zone Potential extensions to both Middle Vein and Hugh Zone structures Andrea Vein remains open 1 Km along strike and at depth Andrea Vein 24
Slide 25: Reserve and Resource Growth - Middle Vein (Mexico)
HECLA MINING COMPANY Reserve and Resource Growth - Middle Vein (Mexico) Longitudinal of Middle Vein Middle Vein at San Sebastian defined over 3,000 feet along strike, from surface to over 1,000 feet in depth New other resources of 8.8 million silver ounces and 45,000 ounces gold appears open alo
Slide 26: New Quebec Gold Exploration Projects
HECLA MINING COMPANY New Quebec Gold Exploration Projects Gold producer and exploration portfolio in western Quebec Heva and Hosco West extension and the Joanna Hosco Pit Large in-pit gold resource at Hosco Additional gold resources at Heva and Hosco West Extension Attractive exploration p
Slide 27: Organic Growth - San Juan Silver (Colorado)
HECLA MINING COMPANY Organic Growth - San Juan Silver (Colorado) Includes historic Bulldog mine: produced 25 million ounces of silver before closing in 1985 Nearby Equity property included $25 million of underground ramp development 7.6 million ounces of silver Mineralized Material 21-Square-M
Slide 28: Strong Precious Metals Fundamentals
HECLA MINING COMPANY Strong Precious Metals Fundamentals 28
Slide 29: Silver - The Metal of This Age
HECLA MINING COMPANY Silver - The Metal of This Age Has the highest electrical conductivity of all the metals 80% more conductive than aluminum 50% more conductive than gold, 6% more conductive than copper Critically important in the miniaturization of circuits as electronic items become inc
Slide 30: Silver Consumption per Capita
HECLA MINING COMPANY Silver Consumption per Capita Increasing Silver Consumption Per Person in China and India 0.80 0.80 Japan 0.70 0.70 South Korea 0.60 0.60 Silver Ounce Per Capita Silver Ounce Per Capita 0.50 0.50 United Japan 0.40 0.40 States Germany 0.30 0.30 United 0.20 States 0.20 Germany Sou
Slide 31: 100% Precious Metals Exposure
HECLA MINING COMPANY 100% Precious Metals Exposure… Silver Historical Silver Price $50.00 Mine production increased 40% over Silver Price Per Ounce the past 20 years to 700 million ounces $40.00 Modern/technology-driven demand up $30.00 78% in same period to nearly 500 $20.00 million ounces – ne
Slide 32: Strong Investment Fundamentals
HECLA MINING COMPANY Strong Investment Fundamentals Pro Forma Portfolio of Three High Quality, Operating in Long-Life Low Political Free Cash Flow Operations Risk Jurisdictions Strong Cash Flow Generation Low Risk, Stable Operations 1 7 2 High Secure Multiple Cash Revenue Margins 6 Growth and Strong
Slide 33: Appendix
C R E ATI N G V AL U E HECLA PROPERTIES O R G AN I C G R O W TH KEY MILESTONES Appendix
Slide 34: Seasoned Management Team with Significant Experience
HECLA MINING COMPANY Seasoned Management Team with Significant Experience Phillips S. Baker, Jr., has 15+ years of Dr. Dean W.A. McDonald, is a geologist with mining experience. He was previously over 30+ years experience. He was VP and CFO of Battle Mountain Gold previously VP of Exploration for Co
Slide 35: Notes to Unaudited Pro Forma Financial Statements
HECLA MINING COMPANY Notes to Unaudited Pro Forma Financial Statements The unaudited pro forma condensed combined financial statements and notes have been prepared based on historical financial statements of Hecla and Aurizon to assist shareholders in analyzing the potential financial results of the
Slide 36: Hecla Total Cash Cost GAAP Reconciliation
HECLA MINING COMPANY Hecla Total Cash Cost GAAP Reconciliation Reconciliation of Cash Costs per Ounce to Generally Accepted Accounting Principles (GAAP) (dollars and ounces in thousands, except per ounce - unaudited) 2012 2011 2010 2009 2008 2007 2006 (1) Total cash costs $ 17,262 $ 10,934 $ (15,435
Slide 37: Aurizon Total Cash Cost GAAP Reconciliation
HECLA MINING COMPANY Aurizon Total Cash Cost GAAP Reconciliation Reconciliation of Cash Costs per Ounce to Generally Accepted Accounting Principles (GAAP) (dollars and ounces in thousands, except per ounce - unaudited) 2012 2011 2010 2009 2008 2007 2006 Cash Operating Costs (1) US$000 $ 93,259 $ 88,
Slide 38: Portfolio of Three High Quality, Long-Life Operations
HECLA MINING COMPANY Portfolio of Three High Quality, Long-Life Operations Proven Reserves Tons Silver Gold Lead Zinc Silver Gold Lead Zinc Silver Eq. Gold Eq. Asset Location Ownership ('000's) (oz/ton) (oz/ton) % % (mm oz) (mm oz) (kt) (kt) (mm oz) (mm oz) Greens Creek United States 100.0% 12 9.3 0
Slide 39: Hecla EBITDAX Reconciliation
HECLA MINING COMPANY Hecla EBITDAX Reconciliation US$ millions 2008A 2009A 2010A 2011A 2012A PF 2012A Net Income from Continuing Operations ($37,173) $67,826 $48,983 $151,164 $14,954 $21,625 Plus: Depreciation 35,846 63,061 60,235 47,348 50,113 96,530 Plus: Income Taxes 3,807 (7,680) (123,532) 81,97
Slide 40: Aurizon EBITDAX Reconciliation
HECLA MINING COMPANY Aurizon EBITDAX Reconciliation C$ millions 2008A 2009A 2010A 2011A 2012A Net Income from Continuing Operations $4,921 $36,706 $17,240 $43,931 $31,807 Plus: Income Taxes 6,602 20,706 13,911 42,653 24,266 Plus: Interest Expense 2,692 485 750 1,112 856 Plus: Depreciation 35,582 36,
Slide 41: Lucky Friday - #4 Shaft
HECLA MINING COMPANY Lucky Friday - #4 Shaft #4 Shaft construction resumed in Q1/13 - focus on shaft sinking & station development activities Total project is 40% complete and 80% of major procurements have been ordered or installed Total project capital is expected to be approximately $200 mi
Slide 42: 2013 - Silver Exploration Programs
HECLA MINING COMPANY 2013 - Silver Exploration Programs Highlights of 2013 exploration programs consist of: At Greens Creek, underground drilling expects to convert resources to reserves and define extensions to the 200 South, Southwest Bench and NNW. Surface drilling at Killer Creek may define a
Slide 43: 2013 - Pre-Development Programs
HECLA MINING COMPANY 2013 - Pre-Development Programs Pre-development programs consist of: San Sebastian: Further scoping studies are in progress to determine the production viability, rate and sequencing of mining the three areas and are expected to be completed in the third quarter. A ramp is b
Slide 44: Organic Growth - Greens Creek (Alaska)
HECLA MINING COMPANY Organic Growth - Greens Creek (Alaska) Very large and under-explored 27- square-mile land position Over 30 miles of unexplored mine contact (red-trace) with multiple targets Surface exploration only resumed East Ridge in 1999 due to establishment of Lil’ Sore North Land Ex
Slide 45: Exploration - Greens Creek (Alaska)
HECLA MINING COMPANY Exploration - Greens Creek (Alaska) Underground Exploration Targets Looking NE East Ore extension SW Bench 5250 South Resource Extension Gallagher 200 South Resource extensions 45
Slide 46: Lucky Friday - Idaho
HECLA MINING COMPANY Lucky Friday - Idaho Silver Shaft 30 Vein #4 Shaft 4050 level 4900 level Current mining from 5900 level access 5900 level 6500 level 7500 level Looking NW 46
Slide 47: Organic Growth - Lucky Friday (Idaho)
HECLA MINING COMPANY Organic Growth - Lucky Friday (Idaho) Lucky Friday Expansion Area - Increased Grade and Thickness at Depth *As of 2010 47
Slide 48: Organic Growth - Star Pre-Development (Idaho)
HECLA MINING COMPANY Organic Growth - Star Pre-Development (Idaho) 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 Country” Star mine complex is
Slide 49: Delivering Growth - San Juan Silver (Colorado)
HECLA MINING COMPANY Delivering Growth - San Juan Silver (Colorado) Advance of the Bulldog Decline Shotcrete Application • Bulldog underground infrastructure now advanced over 800 feet • Completion expected in 4th Quarter 49
Slide 50: New Innovation has Changed Silver Demand
HECLA MINING COMPANY New Innovation has Changed Silver Demand February 1900 Long-running popular series of simple and inexpensive cameras Introduced the concept of the “snapshot” Transformed the demand of silver Today new innovation has changed demand again 50
Slide 51: Growing Silver Demand
HECLA MINING COMPANY Growing Silver Demand Uses of Silver Medicine: silver is added to Solar Panels: 90% of crystalline bandages and wound-dressings, silicon photovoltaic cells use silver catheters and other medical paste; over 100 mm ounces of silver instruments and is a key part of are estimated f