Hecla Mining Company · NYSE:HL

Hecla Mining — Bank of America Merrill Lynch Leveraged Finance Conference 2013

61 slides from Hecla Mining's conference presentation, Dec 4, 2013

  1. Slide 1: Bank of America Merrill Lynch Leveraged Finance Conference

    NEW HECLA HECLA PROPERTIES 2013 GUIDANCE STRONG INVESTMENT FUNDAMENTALS Bank of America Merrill Lynch Leveraged Finance Conference December 4, 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, production, exploration results and plans, costs, and prices or sales performance are "forward- looking statements" within the me

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

    HECLA MINING COMPANY A New Hecla: Financial Strength & Value Creation Financial Strength Value Creation  Net Debt ~$200 million  Gold and silver miner for 122 years  Net Debt/EBITDA < 3.5x  2 major acquisitions in past 6  Settled legacy liabilities and years rehabilitated major mine  Three lon

  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: Quality Silver and Gold Production in Low-Risk Jurisdictions

    HECLA MINING COMPANY Quality Silver and Gold Production in Low-Risk Jurisdictions % Silver Production in % Gold Production in U.S. for 2011 U.S. & Canada Hecla 100% 100% 100% 26% 80% 60% 53% 44% 43% 40% By-Product Silver 20% 15% 60% Other Primary Silver Mines* 0% 14% Total Silver Production in U.S.

  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  Diversified revenue stream (silver, gold, lead and zinc) from Consolidated Revenue by Metal 3 mines Q3 2013  Policy allows hedging of 60% of the next 3 years of lead and zinc production 16% 38% 11%  Currently have ~$300 millio

  8. Slide 8: Strong Cash Position

    HECLA MINING COMPANY Strong Cash Position $600 $544 Cash & Cash Equivalents as of Q3/2013 (millions) $500 Hecla has $338M of liquidity1 $421 $400 $300 $238 $211 $200 $100 $68 $42 $25 $- Silver Standard Pan American Hecla Coeur First Majestic Fortuna Endeavour Silver Cash and Cash Equivalents Q3/2013

  9. Slide 9: Q3 2013 - Continued Strong Margins

    HECLA MINING COMPANY Q3 2013 - Continued Strong Margins $40 $35.30 $35 $32.11 Strong Cash Margins $28.86 $30 $25 $22.70 $22.22 97% 92% $20 106% $21.84 76% $16.27 $/oz $34.15 $29.41 67% $15.63 $14.40 $15 $14.82 $24.16 66% $10 88% $10.71 $10.20 71% $13.72 $5 $7.02 $7.40 $4.20 $5.56 $1.91 $2.70 $0 ($1.

  10. Slide 10: Strong Financial Position

    HECLA MINING COMPANY Strong Financial Position  Senior notes are the only Capitalization substantial indebtedness Actual  No off balance sheet Q3/2013 arrangements Cash and Cash Equivalents $238  Capital Structure Capital lease liability 20 Borrowing, term loan and leases 490  Total Net Debt/EBI

  11. Slide 11: Q3 2013 Cash Flow Flexibility

    HECLA MINING COMPANY Q3 2013 Cash Flow Flexibility Cash Bridge Q3 2013 $500 Largely $450 Discretionary $61.7M Other Items $400 1 $17.5M $350 $30.4 $296.4 $300 US$ Millions $237.8 $250 $52.5 $9.2 $12.9 2 $4.6 $9.7 $200 $150 $100 $50 $- Q3/2013 Adjusted Capex Exploration + Changes in Net Cash Losses o

  12. Slide 12: 2010 - Q3 2013 Cash Flow Flexibility

    HECLA MINING COMPANY 2010 - Q3 2013 Cash Flow Flexibility Cash Bridge 2010 – Q3 2013 (US$M) $1,200 Largely Discretionary $551M $1,000 1 $789.2 $800 $600 One-time Expenses $380.9 $219M $400 Other $133.9 Items $36.2 $63M $237.8 $177.6 $200 $104.6 $193.0 $26.4 $12.9 $50.3 $- 2010 Beginning Adjusted Cap

  13. Slide 13: 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 26% to $163 million  Exploration exp

  14. Slide 14: Hecla: Zero Debt Obligations Until 2021

    HECLA MINING COMPANY Hecla: Zero Debt Obligations Until 2021 Peer Comparison Date Gross Current 1 Issuer Issued Coupon Maturity Proceeds 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 B3/BB- Eldorado Gold 10-Dec-12 6.125% Sr. Notes 20-Dec-20

  15. Slide 15: Strong Portfolio of Producing Assets

    HECLA MINING COMPANY Strong Portfolio of Producing Assets 15

  16. Slide 16: Lucky Friday Ramping Up Production

    HECLA MINING COMPANY Lucky Friday Ramping Up Production 0.90 $40.00  Silver production of 479,188 $36.55/oz ounces in Q3, up 121% over Q2 Cash cost, after by-product credits, per silver ounce 0.80 0.77E Moz $35.00  Cash cost, after by-product 0.70 $32.19/oz credits, per silver ounce of $30.00 Silv

  17. Slide 17: Lucky Friday Ramp-up

    HECLA MINING COMPANY Lucky Friday Ramp-up Daily Milled Tons 1,200 900 Tons Per Day 600 October Average: 996 tons per day 300 0 Historical full production rate 17

  18. Slide 18: Lucky Friday - Unlocking Value at Depth

    HECLA MINING COMPANY Lucky Friday - Unlocking Value at Depth Silver Shaft 30 Vein #4 Shaft 4050 level Current mining from 4900 level 5900 level access 5900 level 6500 level 7500 level Looking NW 18 *Assuming prices of $20.00/oz silver, $0.90/lb lead, and $0.80/lb zinc

  19. Slide 19: Greens Creek - Consistent Performer

    HECLA MINING COMPANY Greens Creek - Consistent Performer  Q3 silver production of 1.8 $6.00/oz 2.1 million ounces 2.00 Moz Cash cost, after by-product credits, per silver ounce $5.02/oz $5.00/oz 2.0  Q3 cash cost, after by- $5.00/oz 1.9 product credits, per silver 1.80 Moz 1.80 Moz Silver Producti

  20. Slide 20: Greens Creek: World-Class Silver Mine

    HECLA MINING COMPANY Greens Creek: World-Class Silver Mine 30 Vein Spectacular Performance over a Variety of Silver Prices $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

  21. Slide 21: Large and High Quality Silver Assets

    HECLA MINING COMPANY Large and High Quality Silver Assets Silver Reserves and Grades of the Largest Primary Silver Mines Silver Grade Reserves 100 477 406 308 109 5 11 500 Silver Reserves – Moz1 90 450 80 400 Silver Grade - g/t 70 350 60 300 50 250 40 200 30 150 20 100 10 50 0 0 San Bartolome (CDE)*

  22. Slide 22: Casa Berardi - Higher Q3 Production, Lower Costs

    HECLA MINING COMPANY Casa Berardi - Higher Q3 Production, Lower Costs  Development of new, higher-grade $1,400 35 32 koz E stopes Cash cost, after by-product credits, per gold ounce $1,152/oz 30  Expected to increase ounces $1,200 $1,066/oz produced to estimated 55,000 25 ounces in second half of

  23. Slide 23: Casa Berardi - Good Exploration Potential

    HECLA MINING COMPANY Casa Berardi - Good Exploration Potential 23

  24. Slide 24: 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) 24 Source: Public

  25. Slide 25: 2013 Guidance

    HECLA MINING COMPANY 2013 Guidance 25

  26. Slide 26: 2013 Expectations

    HECLA MINING COMPANY 2013 Expectations  Silver production to be at the high end of previously communicated guidance of 8 to 9 million ounces  Greens Creek at approximately 7 million ounces  Lucky Friday at approximately 1.6 million ounces  Total Cash cost, after by-product credits, per silver ou

  27. Slide 27: Precious Metals Fundamentals Remain Strong

    HECLA MINING COMPANY Precious Metals Fundamentals Remain Strong 27

  28. Slide 28: 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

  29. Slide 29: 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

  30. Slide 30: Strong Investment Fundamentals

    HECLA MINING COMPANY Strong Investment Fundamentals Portfolio of Three High Quality, Operating in Long-Life Cash Flow Low Political Operations Flexibility Risk Jurisdictions Low Risk, Stable Operations 1 7 2 Financial Strength High Secure Multiple Cash Revenue Margins 6 Strong Investment 3 Streams F

  31. Slide 31: Appendix

    NEW HECLA HECLA PROPERTIES 2013 GUIDANCE STRONG INVESTMENT FUNDAMENTALS Appendix

  32. Slide 32: Appendix Table of Contents

    HECLA MINING COMPANY Appendix Table of Contents Appendices Page 1. Management and Financial Information 33 2. Silver and Gold Landscape 44 3. Exploration 49 4. Silver Overview 57 5. Zinc Overview 60 32

  33. Slide 33: 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

  34. Slide 34: Total Cash Cost GAAP Reconciliation

    HECLA MINING COMPANY Appendix 1 Total Cash Cost GAAP Reconciliation Reconciliation of cash cost, after 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) Q3/2013 Q2/20

  35. Slide 35: Total Cash Cost GAAP Reconciliation

    HECLA MINING COMPANY Appendix 1 Total Cash Cost GAAP Reconciliation Reconciliation of cash cost, after 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 Months

  36. Slide 36: Cash Cost Reconciliation to GAAP - Casa Berardi

    HECLA MINING COMPANY Appendix 1 Cash Cost Reconciliation to GAAP - Casa Berardi Reconciliation of Cash Costs per Ounce to Generally Accepted Accounting Principles (GAAP) (dollars and ounces in thousands, except per ounce - unaudited) Q1/2013 2012 2011 2010 2009 2008 2007 2006 (1) Cash Operating Cost

  37. Slide 37: Total Cash Cost GAAP Reconciliation

    HECLA MINING COMPANY Appendix 1 Total Cash Cost GAAP Reconciliation Reconciliation of cash cost, after by-product credits, per gold ounce to Generally Accepted Accounting Principles (GAAP) for Casa Berardi (dollars and ounces in thousands, except per ounce - unaudited) Q3/2013 June 2013 (1) Cash cos

  38. Slide 38: Hecla Adjusted EBITDA Reconciliation

    HECLA MINING COMPANY Appendix 1 Hecla Adjusted EBITDA Reconciliation Reconciliation of Adjusted EBITDA (non-GAAP) to Net Income (GAAP) Three Months Ended September 30, 2013 2012 Net Income $ (8,458) $ (885) Plus: Interest expense, net of amount capitalized 7,348 591 Plus/(Less): Income taxes (2,542)

  39. Slide 39: 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 Q3/2013 Net Income $ 48,983 $ 151,164 $ 14,954 $ 11,094 $ (24,858) $ (8,458) Plus: Interest expense 2,211 2,875 2,4

  40. Slide 40: EBITDA Reconciliation

    HECLA MINING COMPANY Appendix 1 EBITDA Reconciliation Quarterly EBITDA: Hecla Aurizon Q3/12 Q4/12 Q1/13 Q2/13 Q3/12 Q4/12 Q1/13 Q2/13 Net Income $ (9,617) $ (7,989) $ 2,362 $ (24,996) $ 5,342 $ 9,117 $ (2,832) $ (2,384) Plus: DDA 11,601 12,381 14,007 20,212 9,120 9,347 8,629 9,414 Plus: income tax e

  41. Slide 41: Reserves & Resources Update

    HECLA MINING COMPANY Appendix 1 Reserves & Resources Update (on Dec. 31, 2012 unless otherwise noted) Proven Reserves Tons Silver Gold Lead Zinc Silver Gold Lead Zinc Asset Location Ownership (000) (oz/ton) (oz/ton) % % (000 oz) (000 oz) Tons Tons Greens Creek (a) United States 100.0% 12 9.3 0.10 2.

  42. Slide 42: Reserves & Resources Update

    HECLA MINING COMPANY Appendix 1 Reserves & Resources Update (on Dec. 31, 2012 unless otherwise noted) Measured Resources Tons Silver Gold Lead Zinc Silver Gold Lead Zinc Asset Location Ownership (000) (oz/ton) (oz/ton) % % (000 oz) (000 oz) (Tons) (Tons) Greens Creek (2)(a) United States 100.0% -- -

  43. Slide 43: Reserves & Resources Update

    HECLA MINING COMPANY Appendix 1 Reserves & Resources Update (on Dec. 31, 2012 unless otherwise noted) Inferred Resources Tons Silver Gold Lead Zinc Silver Gold Lead Zinc Asset Location Ownership (000) (oz/ton) (oz/ton) % % (000 oz) (000 oz) (Tons) (Tons) Greens Creek (9)(a) United States 100.0% 3,78

  44. Slide 44: Cash Margins at Casa Berardi

    HECLA MINING COMPANY Appendix 1 Cash Margins at Casa Berardi $1,800 $1,658 $1,621 $1,578 $1,600 $1,400 $1,335 $1,145 $1,200 $809 20% $962 $269 50% 58% $915 $1,041 $1,000 66% $/oz $847 $696 $604 $800 $625 53% $514 $600 $448 53% 56% $365 52% $317 51% $400 $1,066 $541 $812 $331 $696 $200 $537 $308 $401

  45. Slide 45: Silver Space

    HECLA MINING COMPANY Appendix 2 Silver Space 45 Source: MEG, BMO Capital Markets (11/18/13)

  46. Slide 46: Higher Silver Reserve Grade Among Peers

    HECLA MINING COMPANY Appendix 2 Higher Silver Reserve Grade Among Peers 46 Source: Company Filings, BMO Capital Markets (11/18/13)

  47. Slide 47: High Grade Long-Life Mines

    HECLA MINING COMPANY Appendix 2 High Grade Long-Life Mines 47 Source: Company Filings, BMO Capital Markets (11/18/13)

  48. Slide 48: 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

  49. Slide 49: 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

  50. Slide 50: 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 50

  51. Slide 51: Greens Creek - Surface Exploration (Killer Creek)

    HECLA MINING COMPANY Appendix 3 Greens Creek - Surface Exploration (Killer Creek) 51

  52. Slide 52: Lucky Friday & Silver Valley - Exploration

    HECLA MINING COMPANY Appendix 3 Lucky Friday & Silver Valley - Exploration 52

  53. Slide 53: 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 53

  54. Slide 54: 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 50% complete  Total project capital is expected to be approximately $200 million Hoist Room Shaft Sheave Deck 54

  55. Slide 55: 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 55

  56. Slide 56: 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

  57. Slide 57: 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

  58. Slide 58: 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

  59. Slide 59: 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

  60. Slide 60: 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

  61. Slide 61: Zinc Supply - US Production

    HECLA MINING COMPANY Appendix 5 Zinc Supply - US Production  Greens Creek is the 3rd largest zinc producer in the US % of USA Zinc Production 2012 Comparison of 2012 Zinc Production 140 Doe Run 4.00% 122 Gordonsville 120 Zinc Production (thousands tonnes) 6.62% Greens 100 Creek 80 8.04% 80 58 60 Ea

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