Hecla Mining Company · NYSE:HL

Hecla Mining — Bank of America Merrill Lynch 19th Annual Canada Mining Conference 2013

58 slides from Hecla Mining's conference presentation, Sep 12, 2013

  1. Slide 1: Bank of America Merrill Lynch 19th Annual Canada Mining Conference

    STRONG SILVER NEW HECLA FINANCIAL STRENGTH HECLA PROPERTIES FUNDAMENTALS Bank of America Merrill Lynch 19th Annual Canada Mining Conference September 12, 2013

  2. Slide 2: Cautionary Statements

    HECLA MINING COMPANY Cautionary Statements Cautionary Note Regarding Forward Looking Statements Statements made which are not historical facts, such as strategies, plans, anticipated payments, litigation outcome (including settlement negotiations), production, sales of assets, exploration results an

  3. Slide 3: A New Hecla: Financial Strength & Value Creation

    HECLA MINING COMPANY A New Hecla: Financial Strength & Value Creation Financial Strength Value Creation  $296 million cash (06/30/13)  Gold and silver miner for 122 years  Settled legacy liabilities and rehabilitated major mine  Three long life (10yrs+), low-cost mines  Prudently reducing capit

  4. Slide 4: North American Focused Asset Portfolio

    HECLA MINING COMPANY North American Focused Asset Portfolio All operations in lower-risk, mining-friendly jurisdictions 4

  5. Slide 5: Strong, Disciplined Production Growth Anticipated

    HECLA MINING COMPANY Strong, Disciplined Production Growth Anticipated Silver ounces (millions) Gold ounces (thousands) 15 200 Anticipated Production Range 134% 257% 175 6.4 56 2012 1 2017E 2012 2014E 2 1. Hecla’s Lucky Friday mine was closed during 2012. 5 2. Consists of Casa Berardi expected long-

  6. Slide 6: Reserve Growth 2003 - 2012

    HECLA MINING COMPANY 1 Reserve Growth 2003 - 2012 Silver ounces (millions) Gold ounces (millions)2 2.2 150 233% 175% 45 0.8 2003 2012 2003 2012 1. See Proven and Probable reserves data in the Appendix. 6 2. Includes Casa Berardi’s reserves for 2012.

  7. Slide 7: Diversified Revenue: Silver, Gold, Lead and Zinc

    HECLA MINING COMPANY Diversified Revenue: Silver, Gold, Lead and Zinc Consolidated Revenue by Metal Third Quarter Estimated  Diversified revenue stream (silver, gold, lead and zinc) from 17% 11% 36% 3 mines  Recently base metals prices tend 36% to be less volatile than precious metals prices Gold

  8. Slide 8: Strong Cash Position

    HECLA MINING COMPANY Strong Cash Position $500 $450 $436 Cash & Cash Equivalents as of Q2/13 (millions) $400 Hecla has $396M of liquidity1 $350 $296 $300 $265 $250 $239 $238 $200 $150 $100 $92 $79 $44 $50 $22 $0 Silver Hecla Coeur Hochschild Pan American Silvercorp First Majestic Fortuna Endeavour S

  9. Slide 9: Q2 2013 - Continued Strong Margins

    HECLA MINING COMPANY Q2 2013 - Continued Strong Margins $40 $35.30 $35 Strong Cash Margins $32.11 $28.86 $30 $25 $22.70 97% 92% $20 $16.27 $/oz $34.15 $29.41 $21.84 76% $15.63 106% $14.40 $15 88% $24.16 $10.71 66% $10 $10.20 71% $13.72 $5 $5.56 $4.20 $1.91 $2.70 $7.02 $0 ($1.46) $1.15 ($5) 2008 2009

  10. Slide 10: Q2 Cash Flow Flexibility

    HECLA MINING COMPANY Q2 Cash Flow Flexibility Cash Bridge Q2 2013 (US$M) $350 $300 $177 $178 $296 Largely Discretionary $62M $250 1 One-time $200 $32 Expenses $20M $169 $150 $35 $11 $3 $13 $20 $100 $50 $- Q2/2013 Adjusted EBITDA Capex Exploration + Pre- Purchase of Other Aurizon Cash from Aurizon Q2

  11. Slide 11: 2010 - Q2 2013 Cash Flow Flexibility

    HECLA MINING COMPANY 2010 - Q2 2013 Cash Flow Flexibility Cash Bridge 2010 - Q2 2013 (US$M) Largely Discretionary $1,000 $526M $900 $7591 $800 $700 $600 One-time Expenses $500 $328 $219 $400 $125 $178 $296 $38 $35 $300 $200 $105 $100 $193 $26 $- 2010 Beginning Adjusted Capex Exploration + Other Divi

  12. Slide 12: Response to Metals Price Weakness

    HECLA MINING COMPANY Response to Metals Price Weakness  Decline in precious metals prices led to review of 2013 expenses  Maintained programs with long logistical requirements or short implementation windows  Revised guidance  Capital expenditures reduced by 13% to $178 million  Exploration exp

  13. Slide 13: Hecla: Zero Debt Obligations Until 2021

    HECLA MINING COMPANY Hecla: Zero Debt Obligations Until 2021 Peer Comparison Date Gross Current Issuer Issued Coupon Maturity Proceeds1 Rating 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+ Eldorardo Gold 10-Dec-12 6.125% Sr. Notes 15-Dec-20

  14. Slide 14: Lucky Friday - Ramping Up Production

    HECLA MINING COMPANY Lucky Friday - Ramping Up Production  0.34 Moz production in H1/13 Expected cost reductions and production increases  Average Total Cash Cost, Net of By- Product Credits, per Silver Ounce of $40.00 1.4 Production 1.30E Moz  $33.75¹ in H1/13 Total Cash Cost, Net of By-product

  15. Slide 15: Lucky Friday - Unlocking Value at Depth

    HECLA MINING COMPANY Lucky Friday - Unlocking Value at Depth Silver Shaft 30 Vein #4 Shaft 4050 level 4900 level Current mining from 5900 level access 5900 level 6500 level 7500 level Looking NW 15 *Assuming prices of $20.00/oz silver, $0.85/lb lead, and $0.85/lb zinc

  16. Slide 16: Greens Creek - Exceeding Expectations

    HECLA MINING COMPANY Greens Creek - Exceeding Expectations  Silver production of 2 million Q2 vs. Q1 Production and Cost Improvements ounces  2nd highest quarterly $6.00 2.1 Production tonnage in mine’s history Total Cash Cost, Net of By-product Credits, per 2.00 Moz $5.02/oz ↑11% 2.0  Up 48% fro

  17. Slide 17: Greens Creek: World-Class Silver Mine

    HECLA MINING COMPANY Greens Creek: World-Class Silver Mine Spectacular Performance over a Variety of Silver Prices 30 Vein $60 #4 Shaft $50 4050 level Past 26 Years1 Next 10 Years $40 Revenue: $3.0 billion 4900 level Continued strong $/oz Net Income: $1.0 billion performance expected $30 Free Cash F

  18. Slide 18: Greens Creek - Future Growth

    HECLA MINING COMPANY Greens Creek - Future Growth Southwest Bench Lower Southwest Deep Southwest Location View Looking North 200 South Model 500 Feet View Looking North/Northwest 18

  19. Slide 19: Casa Berardi - Increasing Gold Production

    HECLA MINING COMPANY Casa Berardi - Increasing Gold Production  Acquisition completed 6/1/13 Cost reductions expected with growing gold production  One month production to Hecla of 6,740 ounces of gold at Total Cash Cost, Net of By- $1,400 0.6 Total Cash Cost, Net of By-product Credits, per Produc

  20. Slide 20: Casa Berardi - Good Exploration Potential

    HECLA MINING COMPANY Casa Berardi - Good Exploration Potential 20

  21. Slide 21: Large and High Quality Silver Assets

    Silver Reserves - Moz 0 10 20 30 40 50 60 70 80 90 100 Pitarilla (SSRI)* San Cristobal (SMM)* San Bartolome (CDE)* Greens Creek (HL) Pirquitas (SSRI)* Ying (SVM) Dolores (PAA)* La Colorada (PAA) Huaron (PAA) Lucky Friday (HL) Palmarejo (CDE) Rochester (CDE)* Reserves 21 Source: Public filings, *Open

  22. Slide 22: Solid Gold Grade and Reserves

    HECLA MINING COMPANY Solid Gold Grade and Reserves Gold Reserves and Grades of Several Canadian Gold Mines 4.50 18.00 4.00 16.00 3.50 14.00 Gold Reserves - Moz 3.00 12.00 Gold Grade - g/t 2.50 10.00 2.00 8.00 1.50 6.00 1.00 4.00 0.50 2.00 - 0.00 Gold Reserves (Moz) Gold Grade (g/t) 22 Source: Public

  23. Slide 23: Quality Silver Production in Low-Risk Jurisdictions

    HECLA MINING COMPANY Quality Silver Production in Low-Risk Jurisdictions % Silver Production in % Gold Production in U.S. & Canada U.S. & Canada 100% 100% 100% 100% 100% 80% 80% 60% 60% 53% 44% 43% 40% 40% 20% 15% 20% 16% 0% 0% Hecla Coeur Company % Company % Pan American 0 Alacer 0 Silver Standard

  24. Slide 24: 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

  25. Slide 25: Silver Consumption per Capita Increases

    HECLA MINING COMPANY Silver Consumption per Capita Increases 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 G

  26. Slide 26: Financial Strength and Value Creation

    HECLA MINING COMPANY Financial Strength and Value Creation Portfolio of Three High Quality, Operating in Long-Life Low Political Free Cash Flow Operations Risk Jurisdictions Financial Strength Value Creation High Secure Multiple Cash Revenue Margins Strong Investment Streams Fundamentals Established

  27. Slide 27: Appendix

    STRONG SILVER NEW HECLA FINANCIAL STRENGTH HECLA PROPERTIES FUNDAMENTALS Appendix

  28. Slide 28: Appendix Table of Contents

    HECLA MINING COMPANY Appendix Table of Contents Appendices Page 1. Management and Financial Information 29 2. Silver Landscape 37 3. Exploration 41 4. Silver Overview 51 5. Zinc Overview 58 28

  29. Slide 29: Seasoned Management Team with Significant Experience

    HECLA MINING COMPANY Appendix 1 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 Explora

  30. Slide 30: 2013 Guidance

    HECLA MINING COMPANY Appendix 1 2013 Guidance  Silver production of between 8 and 9 million ounces  Total Cash Cost, Net of By-Product Credits, per Silver Ounce of $5.00  Gold production from Casa Berardi of approximately 60,000 ounces in 2H 2013 at a Total Cash Cost, Net of By-Product Credits, p

  31. Slide 31: Total Cash Cost GAAP Reconciliation

    HECLA MINING COMPANY Appendix 1 Total Cash Cost GAAP Reconciliation Reconciliation of Total Cash Cost, Net of By-Product Credits, per Silver Ounce to Generally Accepted Accounting Principles (GAAP) for Greens Creek & Lucky Friday (dollars and ounces in thousands, except per ounce - unaudited) Q2/201

  32. Slide 32: Total Cash Cost GAAP Reconciliation

    HECLA MINING COMPANY Appendix 1 Total Cash Cost GAAP Reconciliation Reconciliation of Total Cash Cost, Net of By-Product Credits, per Silver Ounce to Generally Accepted Accounting Principles (GAAP) for Greens Creek & Lucky Friday (dollars and ounces in thousands, except per ounce - unaudited) Three

  33. Slide 33: Total Cash Cost GAAP Reconciliation

    HECLA MINING COMPANY Appendix 1 Total Cash Cost GAAP Reconciliation Reconciliation of Cash Costs per Ounce to Generally Accepted Accounting Principles (GAAP) for Casa Berardi (dollars and ounces in thousands, except per ounce - unaudited) June 30, 2013 2012 (1) Cash operating costs $ 7,804 $ - By-pr

  34. Slide 34: Hecla Adjusted EBITDA Reconciliation

    HECLA MINING COMPANY Appendix 1 Hecla Adjusted EBITDA Reconciliation Reconciliation of Adjusted EBITDA to Generally Accepted Accounting Principles (GAAP) 2010 2011 2012 Q1/2013 Q2/2013 Net Income $ 48,983 $ 151,164 $ 14,954 $ 11,094 $ (24,858) Plus: Interest expense 2,211 2,875 2,427 704 6,454 Plus:

  35. Slide 35: Adjusted Earnings Reconciliation

    HECLA MINING COMPANY Appendix 1 Adjusted Earnings Reconciliation Reconciliation of Net Income Applicable to Common Shareholders (GAAP) to Earnings Before Adjustments (dollars and ounces in thousands, except per ounce - unaudited) Three Months Ended June 30 2013 2012 Net income applicable to common s

  36. Slide 36: Hecla Adjusted EBITDA Reconciliation

    HECLA MINING COMPANY Appendix 1 Hecla Adjusted EBITDA Reconciliation Reconciliation of Adjusted EBITDA to Generally Accepted Accounting Principles (GAAP) Three Months Ended June 30, 2013 2012 Net Income $ (24,858) $ 2,524 Plus: Interest expense, net of amount capitalized 6,454 505 Plus/(Less): Incom

  37. Slide 37: Greens Creek - Among the Highest Grade Silver Deposits

    HECLA MINING COMPANY Appendix 2 Greens Creek - Among the Highest Grade Silver Deposits 37 Source: MEG, BMO Capital Markets (09/09/13)

  38. Slide 38: Higher Silver Reserve Grade Among Peers

    HECLA MINING COMPANY Appendix 2 Higher Silver Reserve Grade Among Peers 38 Source: Company Filings, BMO Capital Markets (09/09/13)

  39. Slide 39: High Grade Long-Life Mines

    HECLA MINING COMPANY Appendix 2 High Grade Long-Life Mines 39 Source: Company Filings, BMO Capital Markets (09/09/13)

  40. Slide 40: Top Largest Silver Deposits

    HECLA MINING COMPANY Appendix 2 Top 25 Largest Silver Deposits Most deposits face political risk / large capital requirements 25 Largest Silver Deposits 1,400 Developed deposits (6 bn oz) 1,200 Undeveloped deposits (10 bn oz) Silver Ounces (mm) 1,000 800 600 400 200 0 Source: Intierra and public fil

  41. Slide 41: New Quebec Gold Assets

    HECLA MINING COMPANY Appendix 3 New Quebec Gold Assets  Gold producer and exploration portfolio in western Quebec  Heva and Hosco West extension  Large in-pit gold resource at Hosco  Additional gold resources at Heva and Hosco West Extension  Attractive exploration potential  Growth potential

  42. Slide 42: Organic Growth - Greens Creek (Alaska)

    HECLA MINING COMPANY Appendix 3 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 No

  43. Slide 43: Exploration - Greens Creek (Alaska)

    HECLA MINING COMPANY Appendix 3 Exploration - Greens Creek (Alaska) Underground Exploration Targets Looking NE East Ore extension SW Bench 5250 South Resource Extension Gallagher 200 South Resource extensions 43

  44. Slide 44: Lucky Friday & Silver Valley - Exploration

    HECLA MINING COMPANY Appendix 3 Lucky Friday & Silver Valley - Exploration 44

  45. Slide 45: Organic Growth - Star Pre-Development (Idaho)

    HECLA MINING COMPANY Appendix 3 Organic Growth - Star Pre-Development (Idaho) Longitudinal Section Looking North Water level - Water level #4 Shaft behind Lucky Friday expansion area 45

  46. Slide 46: Lucky Friday - #4 Shaft

    HECLA MINING COMPANY Appendix 3 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 approximat

  47. Slide 47: Organic Growth - San Sebastian (Mexico)

    HECLA MINING COMPANY Appendix 3 Organic Growth - San Sebastian (Mexico)  185-square-mile land package  Potential extensions to both Middle Vein and Hugh Zone structures  Andrea Vein remains open along strike and at depth 47

  48. Slide 48: San Sebastian (Mexico) - Middle Vein

    HECLA MINING COMPANY Appendix 3 San Sebastian (Mexico) - Middle Vein Pre-2011 October 2012 July 2013 48

  49. Slide 49: Organic Growth - San Juan Silver (Colorado)

    HECLA MINING COMPANY Appendix 3 Organic Growth - San Juan Silver (Colorado)  Includes historic Bulldog mine: produced 25 million ounces of silver before closing in 1985  7.6 million ounces of silver Indicated Resources  33.1 million ounces of silver Inferred Resources  2013 Activities: 21 Square

  50. Slide 50: Delivering Growth - San Juan Silver (Colorado)

    HECLA MINING COMPANY Appendix 3 Delivering Growth - San Juan Silver (Colorado) Advance of the Bulldog Decline Shotcrete Application • Bulldog underground infrastructure now advanced over 2,000 feet • Completion expected in Q4 2013 50

  51. Slide 51: Properties of Silver

    HECLA MINING COMPANY Appendix 4 Properties of Silver 51 Source – Clear Science 2010

  52. Slide 52: Mine Production is Key to Silver Supply

    HECLA MINING COMPANY Appendix 4 Mine Production is Key to Silver Supply 1200 Producer Hedging 1992 – 2012 Silver Production (mm oz) Implied Net Disinvestment Increase 1000 Net Government Sales 70% 800 Old Silver Scrap 600 400 60% Mine Production 200 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 200

  53. Slide 53: Top Producing Countries (10 years)

    HECLA MINING COMPANY Appendix 4 Top 5 Producing Countries (10 years)  Mining produced a total of 597.2 mm oz of silver globally in 2003 and nearly 787.0 mm oz in 2012.  Mexico became the largest single country producer in 2010 and produced 162.2 mm oz in 2012. 5% 7% 14% 21% 38% 43% 16% 14% 10% 7%

  54. Slide 54: Top Mines Produced 2012 Silver Production

    HECLA MINING COMPANY Appendix 4 Top 15 Mines Produced 152 mm oz 35 2012 Silver Production 30 Silver Production (mm oz) 25 20 15 10 5 0 54 Source: The Silver Institute: World Silver Survey 2012, GFMS, Hecla

  55. Slide 55: Increasing Share of Modern Demand

    HECLA MINING COMPANY Appendix 4 Increasing Share of Modern Demand  Modern demand increased from 260 mm oz in 1992 to 465 mm oz in 2012, an increase of 80%, and an annualized increase of 3.0% 5% 16% 36% 46% 30% 9% Modern Modern 23% 29% 6% 1992 2012 Modern Investment Jewelry & Photography Coins & Med

  56. Slide 56: Silver is a Lifestyle Metal

    HECLA MINING COMPANY Appendix 4 Silver is a Lifestyle Metal Shanghai, China 1990 2010  Silver is not an infrastructure material such as cement, steel, copper; its use is further downstream and is partly tied to discretionary spending  We expect Chinese modern demand to increase to approximately 12

  57. Slide 57: Modern Silver Demand Increases with Increasing Income

    HECLA MINING COMPANY Appendix 4 Modern Silver Demand Increases with Increasing Income 30% 2010 Silver Consumption per Capita 1.4 India World Average Income 25% per Capita Distribution of Population 1.2 China 20% 1.0 0.8 (oz) 15% 0.6 10% Brazil, United Russia States 0.4 5% 0.2 0% 0.0 $50000+ $0 $2,00

  58. Slide 58: Zinc Supply - Mining

    HECLA MINING COMPANY Appendix 5 Zinc Supply - Mining  Forecasted mine production vs. forecasted market demand  Demand is expected to exceed mine production around 2018 Major Mine Shutdowns Annual Mine Capacity (MT) Perseverance 115K Brunswick 240K Century 510K Lisheen 175K Source: Wood Mackenzie J

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