Hecla Mining Company · NYSE:HL
Hecla Mining — BMO Global Metals & Mining Conference 2017
55 slides from Hecla Mining's conference presentation, February 2017
Slide 1: BMO Global Metals & Mining Conference
February 2017 NYSE:HL BMO Global Metals & Mining Conference Our Strategy Works For Shareholders
Slide 2: Cautionary Statements
Cautionary Statements NYSE:HL 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
Slide 3: Why Invest in Hecla?
Why Invest in Hecla? Consistent strategy creates value NYSE:HL 1. N.A. Silver & Gold Exposure 2. Strong 2016; Better margins in 2017 Silver reserves 172.3 Moz Record $646 M Revenue Gold reserves 2 Moz Record 46.1 Moz AgEq1 Production Significant zinc and lead exposure All 4 mines perform
Slide 4: Strategy Created Per Share Value In 2016
Strategy Created Per Share Value In 2016 Execution was very strong and took advantage of rising prices NYSE:HL Growth Captive Extend Price Cycles Mine Life Production Reserves & Cash-Flow Resources Long-Lived Capture Price Cycles Low-Cost Mines Improve High Productivity High Return Investm
Slide 5: Added Moz of Reserves Over Past Years
Added 299 Moz of Reserves Over Past 10 Years Unchanged reserve despite replacing record production and lowest exploration NYSE:HL budget since 2009 250 200 Reserve Additions 172 Moz 150 100 299 Million Ounces Silver Ounces (millions) 50 - (50) (100) Cumulative Production 127 M oz (150) (200) 2007 20
Slide 6: Gold & Silver 2016 Reserve Prices
Gold & Silver 2016 Reserve Prices Hecla’s price assumption assures high margin ounces NYSE:HL $18.50 $18.00 $18.00 HL Reserve $17.50 Year Prices $16.29 $16.50 2012 $26.50 $15.00 $14.50 2013 $20.00 2014 $17.25 2015 $14.50 2016 $14.50 Hecla Fresnillo Endeavour Agnico Eagle Coeur Silver Goldcorp Pan St
Slide 7: Significant Resource Growth
Significant Resource Growth 28% growth in inferred silver ounces positions Hecla for strong future reserve growth NYSE:HL Silver Gold Million Oz Million Oz 463.9 4.9 4.7 362 161.3 171.6 1.7 1.8 M&I Inferred M&I Inferred 2015 2016 2015 2016 Zinc Lead Copper 1,044 739 1,008 1,433 667 538 572 1,029 580
Slide 8: Two Of The Ten Highest Grade Mines In The World
Two Of The Ten Highest Grade Mines In The World Lucky Friday not far behind NYSE:HL 6. 10. –8–
Slide 9: Higher Grade Mines Than Peers
Higher Grade Mines Than Peers BMO silver coverage, silver equiv. reserves vs. grade NYSE:HL 1,600 800 Higher Grades Silver Eq. Reserves (Moz) 1,200 600 Reserve Grade (g/t) 800 400 400 200 0 0 FRES THO BCM PAAS* HL* CDE* SSRI* FVI HOC FR EDR* MAG Silver Other Metals Silver Eq Grade *Reserve and resou
Slide 10: Record Production is Organic
Record Production is Organic Every mine contributes; high return investments NYSE:HL Silver Production Growth Gold Production Growth 17.2 Moz 233.9 Koz 189.3 Koz +24% +48% 11.6 Moz 2015 2016 2015 2016 AgEq Production Growth1 AgEq Production Growth1 46.1 Moz +26% 46.1 Moz CAGR 37.5 Moz +23% 23.0 Moz
Slide 11: Improving Financial Metrics
Improving Financial Metrics Debt metrics improved organically NYSE:HL Net Income Adjusted EBITDA2: A Record Year $69 M $265 M +$157 M +127% $117 M ($87) M 2015 2016 2015 2016 Increasing Liquidity & 2016 Mine Cash Flow Generation Decreasing Debt Metrics $316.8 51% M Conversion to $299 M Free Cash Flo
Slide 12: Strategy Has Grown Per Share Metrics
Strategy Has Grown Per Share Metrics Strong operations combined with disciplined share issuance NYSE:HL Silver Equivalent Production Per Share Operating Cash Flow Per Share 2012-2016 CAGR 2012-2016 CAGR Hecla Hecla Peer Group Peer Group Average Average 0% +21% +33% -6% -12-
Slide 13: Share Price Reflects Successful Execution of the Strategy
Share Price Reflects Successful Execution of the Strategy Our strategy remains consistent: And it works! NYSE:HL 2016 - 2017 Performance 300% 250% Hecla +238% 200% Peer Group 150% +127% 100% 50% 0% -50% Jan-16 Mar-16 Jun-16 Aug-16 Nov-16 Feb-17 200% Performance Since Aurizon Acquisition 150% +119% 1
Slide 14: Even More Value In 2017
Even More Value In 2017 2016 accomplishments continue and improved productivity NYSE:HL Growth Captive Extend Price Cycles Mine Life Production Reserves & Cash-Flow Resources Long-Lived Capture Price Cycles Low-Cost Mines Improve High Productivity High Return Investments Return Investmen
Slide 15: North American Focused Asset Portfolio
North American Focused Asset Portfolio Operations in low-risk & mining-friendly jurisdictions NYSE:HL –15–
Slide 16: Greens Creek
Greens Creek Consistent low-cost production in a Wilderness Area / National Monument NYSE:HL Q4 2016 2016 Silver Production 2.2 Moz 9.3 Moz Gold Production 14 koz 54 koz Cost of Sales $44.3 M $191.3 M Cash cost, after by-product credits, $1.19/oz $3.84/oz per silver oz4 All in Sustaining Cash Costs
Slide 17: Innovation To Increase Productivity
Innovation To Increase Productivity $200k investment in the teleremote LHD for 2% more tons NYSE:HL –17–
Slide 18: Lucky Friday
Lucky Friday Positioned for growth and longevity NYSE:HL Q4 2016 2016 Silver Production 874 koz 3.6 Moz Cost of Sales $19.5 M $76.2 M Cash cost, after by-product $7.50/oz $8.89/oz credits, per silver oz4 All In Sustaining Cash Costs $18.51/oz $20.66/oz (AISC), after by-product credits5 2017E Sustain
Slide 19: #4 Shaft Gives Access to the High Grade Zone
#4 Shaft Gives Access to the High Grade Zone Reserve grade 4 ounces higher than 2013, production grade increasing 0.5oz/yr NYSE:HL 20 Years Past Mining ORE GRADE VALUES *AgEq Grade (opt) Mine Face (Galena) > 24 97.2 opt Silver 18 - 24 6500 Level 47.5% Lead 12 - 18 6 - 12 <6 7500 Level 900’@ +24 opt
Slide 20: #4 Shaft Is Fully Operational
#4 Shaft Is Fully Operational Waste being moved off 6500, ore later this year NYSE:HL –20–
Slide 21: Continuing Testing Battery Powered LHD
Continuing Testing Battery Powered LHD Technology could reduce ventilation needs vs diesel NYSE:HL -21-
Slide 22: Casa Berardi
Casa Berardi Making a good mine great NYSE:HL Q4 2016 2016 Gold Production 42 koz 146 koz Cost of Sales $49.1 M $155.7 M Cash cost, after by-product $800/oz $764/oz credits, per gold oz4 All In Sustaining Cash Costs $1,247/oz $1,244/oz (AISC), after by-product credits5 Underground Open Pit Tons Mill
Slide 23: Mill Throughput Increased Almost 100%
Mill Throughput Increased Almost 100% Steady increase from the underground, step function increase from the pit continuing NYSE:HL Trendline -23-
Slide 24: Twelve Drills For Surface and Underground Targets
Twelve Drills For Surface and Underground Targets $5 million of exploration planned in 2017 NYSE:HL -24-
Slide 25: 985 Automation Will Happen in 2017
985 Automation Will Happen in 2017 Two 40 tonne Sandvik trucks should save $5M, lessons for other operations NYSE:HL 123 & 118 Lower 985 Exploration Drift West Extension -25-
Slide 26: San Sebastian
San Sebastian Just-in-time mining; looking to make it a long-term mine NYSE:HL Q4 2016 2016 Silver Production 860 koz 4.3 Moz Gold Production 7 koz 34 koz Cost of Sales $7.8 M $31.2 M Cash cost, after by-product $(3.13)/oz $(3.35)/oz credits, per silver oz4 All In Sustaining Cash Costs $(0.66)/oz $(
Slide 27: Mining Underground By The End Of 2017
Mining Underground By The End Of 2017 Access development is underway NYSE:HL North Portal CURRENT MIDDLE VEIN RESOURCE WEST MIDDLE VEIN EXPLORATION EAST MIDDLE VEIN DRILLING EXPLORATION DRILLNG North Portal Existing Workings -27-
Slide 28: Middle Vein Now 1.5 Miles of Continuous Mineralization
Middle Vein Now 1.5 Miles of Continuous Mineralization Underground growing, deeper mineralization similar to Hugh Zone NYSE:HL -28-
Slide 29: Rock Creek & Montanore
Rock Creek & Montanore Final stages of permitting, expecting to advance in 2018 NYSE:HL Rock Creek Montanore Potential Mine Life 20-30 years each Hecla stock acquisition cost $19 M $54 M 148.1 Moz Ag / 183.4 Moz Ag / Big potential 1.3 Blbs Cu 1.5 Blbs Cu Advanced permitting SEIS Final EIS, RODs** We
Slide 30: Interior Secretary Has Unique Experience
Interior Secretary Has Unique Experience Former Montana Congressman, geologist, knows the project NYSE:HL Ryan Zinke US Representative for Montana since 2015 (former state Senator) Geologist from Whitefish, Montana Has visited our sites Strong supporter of economic development in NW Montana
Slide 31: Similar Development Project Timelines
Similar Development Project Timelines Production in mid 2020’s NYSE:HL Montanore Rock Creek Donlin Creek 2016 Permitting Permitting 2017 Permitting Evaluation- 2018 Feasibility 2019 Evaluation – Feasibility 2020 Construction 2021 Construction 2022 Construction 2023 2024 Production Production Product
Slide 32: Resources Are As Much As Hecla's Reserves
Resources Are As Much As Hecla’s Reserves Together are 40% the metal of Donlin Creek – significant unrealized value NYSE:HL Donlin Creek Rock Creek Montanore Average Analyst Value Average Analyst Value Nominal = $1.0 B3 1. Silver equivalent calculated using average prices for 2016 2. Resources inclu
Slide 33: Focused On Improving The Financial Position
Focused On Improving The Financial Position Brings lots of flexibility for the 2021 debt maturity NYSE:HL Improving financial flexibility $299 M Liquidity $299 M of liquidity at end of 2016 $225M in 2016 operating cash flow $199M $44M in 2016 free cash flow8 Cash & Cash Equivalents $100M Capit
Slide 34: 2017 AgEq Outlook In-Line With 2016
2017 AgEq Outlook In-Line With 2016 Lower cost per silver ounce and capital expenditure, better margins NYSE:HL Production Outlook Silver Production (Moz) Gold Production (Koz) Silver Equivalent (Moz)7 Gold Equivalent (koz)7 Greens Creek 7.4 – 8.0 54 - 60 22.8 – 23.9 322 - 336 Lucky Friday 3.6 – 4.1
Slide 35: Continuing To Execute The Strategy
Continuing To Execute The Strategy Expect good per share results NYSE:HL Growth Captive Extend Price Cycles Mine Life Production Reserves & Cash-Flow Resources Long-Lived Capture Price Cycles Low-Cost Mines Improve High Productivity High Return Investments Return Investments LONG TERM GO
Slide 36: Thank you
Thank you #4 Shaft Now Operational NYSE:HL –36–
Slide 37: Appendix
MINING COMPANY NYSE:HL Appendix -37-
Slide 38: Endnotes
Endnotes NYSE:HL 1. Silver equivalent is calculated using the average market prices for the time period noted. 2. This release refers to a non-GAAP measure of adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), which is a measure of our operating performance.
Slide 39: Proven & Probable Mineral Reserves
Proven & Probable Mineral Reserves (on Dec. 31, 2016 unless otherwise noted) NYSE:HL 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) 9 15.5 0.09 2.5 6.6 140 1 230 600 - Lucky Friday (a) 3,308
Slide 40: Measured and Indicated Mineral Resources
Measured and Indicated Mineral Resources (on Dec. 31, 2016 unless otherwise noted) NYSE:HL 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) 14,698 6
Slide 41: Inferred Mineral Resources
Inferred Mineral Resources (on Dec. 31, 2016 unless otherwise noted) NYSE:HL Inferred Resources Silver Gold Lead Zinc Copper Silver Gold Lead Zinc Copper Asset Tons (000) (oz/ton) (oz/ton) % % % (000 oz) (000 oz) (Tons) (Tons) Tons Greens Creek (b) 3,397 11.9 0.08 2.9 7.2 - 40,253 285 98,380 243,220
Slide 42: 2006 – 2015 Reserve Table
2006 – 2015 Reserve Table NYSE:HL 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 2,345,500
Slide 43: AISC Reconciliation
AISC Reconciliation Expecting lower AISC in 2017 NYSE:HL Total Silver Properties and Corporate Year Ended In thousands (except per ounce amounts) December 31, Estimate for 2016 2017 Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 298,740 $ 357,40
Slide 44: Cash Cost GAAP Reconciliation
Cash Cost GAAP Reconciliation NYSE:HL Reconciliation of cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparable GAAP measurement, to cash cost, after by-product credits, per silver ounce, for Greens Creek, Lucky Friday & San Sebastian (dollar
Slide 45: Cash Cost GAAP Reconciliation
Cash Cost GAAP Reconciliation NYSE:HL Numbers in thousands (USD) Casa Berardi Q4 2016 Q3/2016 Q2/2016 Q1/2016 Q4/2015 Cost of sales and other direct production costs and depreciation, $ 49,074 $ 36,295 $ 41,183 $ 29,159 $ 39,161 depletion and amortization (GAAP) Depreciation, depletion and amortizat
Slide 46: Cash Cost Reconciliation to GAAP
Cash Cost Reconciliation to GAAP Greens Creek NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Oun
Slide 47: AISC Reconciliation to GAAP
AISC Reconciliation to GAAP Greens Creek NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ounce (n
Slide 48: Cash Cost Reconciliation to GAAP
Cash Cost Reconciliation to GAAP Lucky Friday NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Oun
Slide 49: AISC Reconciliation to GAAP
AISC Reconciliation to GAAP Lucky Friday NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ounce (n
Slide 50: Cash Cost Reconciliation to GAAP
Cash Cost Reconciliation to GAAP San Sebastian NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ou
Slide 51: AISC Reconciliation to GAAP
AISC Reconciliation to GAAP San Sebastian NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ounce (
Slide 52: Cash Cost Reconciliation to GAAP
Cash Cost Reconciliation to GAAP Casa Berardi NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Oun
Slide 53: AISC Reconciliation to GAAP
AISC Reconciliation to GAAP Casa Berardi NYSE:HL Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to All- In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ounce (n
Slide 54: Adjusted EBITDA Reconciliation and Net Debt Reconciliation to GAAP
Adjusted EBITDA Reconciliation and Net Debt Reconciliation to GAAP NYSE:HL Numbers in thousands (USD) Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (non-GAAP) As of and for the Twelve Months Ended 31-Dec-16 30-Sep-16 30-Jun-16 31-Mar-16 31-Dec-15 Net Income (Loss) $ 69,574 $ (13,676)
Slide 55: Greens Creek Free Cash Flow Reconciliation
Greens Creek Free Cash Flow Reconciliation NYSE:HL 1987-2016 Dollars are in thousands Performance Gross Revenues $4,961,131 Treatment Charges (958,927) Net Revenues 4,002,204 Freight & Selling Expense (195,474) Net Smelter Return 3,806,730 Cost of Goods Sold (1,775,194) NonCash Costs (612,052) Explo
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