Hecla Mining Company · NYSE:HL

Hecla Mining — Deutsche Bank 2017 Basic Materials 1x1 Day

47 slides from Hecla Mining's conference presentation, March 2017

  1. Slide 1: Deutsche Bank Basic Materials 1x1 Day

    March 2017 NYSE:HL Deutsche Bank Basic Materials 1x1 Day Our Strategy Has Worked 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 amende

  2. Slide 2: 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

  3. Slide 3: Added 299 Moz of Reserves Over Past 10 Years

    Added 299 Moz of Reserves Over Past 10 Years Unchanged reserve despite replacing record production and lowest exploration budget NYSE:HL since 2009 250 200 Reserve Additions 172 Moz 150 100 Silver Ounces (millions) 299 Million Ounces 50 - (50) (100) Cumulative Production 127 M oz (150) (200) 2007 20

  4. Slide 4: 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. –7– 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

  5. Slide 5: 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

  6. Slide 6: Captured Higher Prices with Growing Production

    Captured Higher Prices with Growing Production Base metals in 2nd half of 2016 and possibly 2017 NYSE:HL Silver Price Gold Price $22.00 $1,400 $20.00 $1,300 $18.00 $1,200 $16.00 $1,100 $14.00 $12.00 $1,000 Zinc Price Lead Price $1.40 $1.20 $1.30 $1.10 $1.20 $1.00 $1.10 $1.00 $0.90 $0.90 $0.80 $0.80

  7. Slide 7: Improving Financial Metrics

    Diversified Revenue Stream 2016 Mitigates risk and enhances economics NYSE:HL #1 Silver and #3 Lead and Zinc Producer in the U.S. 26% Greens Creek 40% of 46% Total Revenue 9% Silver Production: 17.2 Moz Zinc Production: 68.5 Ktons Cash Costs, after by-product 19% Realized Price: $0.95/oz credits: $3

  8. Slide 8: Diversified Revenue Stream 2016

    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

  9. Slide 9: Focused On Improving The Financial Position

    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

  10. Slide 10: Continuing To Execute The Strategy

    North American Focused Asset Portfolio Operations in low-risk & mining-friendly jurisdictions NYSE:HL –19– A Roadmap for Further Value and Growth Creation NYSE:HL A Strong Immediate Securing The Foundation Growth Long-Term Future Greens Creek Productivity Existing Mines Greens Creek Lucky Friday #4

  11. Slide 11: North American Focused Asset Portfolio

    Greens Creek Consistent low-cost production in a wilderness area / National Monument NYSE:HL Q4 2016 2016 2017E Silver Production (Moz) 2.2 9.3 7.4 - 8.0 Gold Production (koz) 14 54 54 – 60 Cost of Sales $44.3 M $191.3 M $228 M Cash cost, after by-product $1.19/oz $3.84/oz $2.50/oz credits, per silv

  12. Slide 12: Greens Creek

    Continuing To Increase Recoveries & Productivity NYSE:HL Average Recoveries Have Increased 7% Improving Mining Based On Data Adding $100 M Value, Multiple Projects In Process CCO2 80% SCALP Silver Recovery % 75% CO2 pH 70% Control 65% 2014 2015 Ventilation on Demand Will Be Focus On Productivity Of

  13. Slide 13: Continuing To Increase Recoveries & Productivity

    Three Trends In Three Fault Blocks Targets up and down plunge and in the 3rd fault block NYSE:HL -25- Still Finding New Target Areas Mine syncline has potential for a large area from Northwest to 200 South NYSE:HL -26-

  14. Slide 14: Three Trends In Three Fault Blocks

    Lucky Friday Positioned for growth and longevity NYSE:HL Q4 2016 2016 2017E Silver Production (Moz) 874 koz 3.6 3.6 - 4.1 Cost of Sales $19.5 M $76.2 M $94 M Cash cost, after by-product $7.50/oz $8.89/oz $6.00/oz credits, per silver oz4 All In Sustaining Cash Costs $18.51/oz $20.66/oz $12.50/oz (AIS

  15. Slide 15: Lucky Friday

    #4 Shaft Increasing grade with depth NYSE:HL  Shaft is now operational  Production growth expected from higher-grade ore at depth Silver Shaft 4050 Level #4 Shaft ORE GRADE VALUES *AgEq Grade (opt) 4900 Level Mining Activity > 24 5900 Level 18 - 24 12 - 18 5900 Level 6 - 12 6500 Level <6 Dec. 31,

  16. Slide 16: #4 Shaft

    #4 Shaft Now operational NYSE:HL –31– Lucky Friday - New Mining Technique Increase cash flows, lower development NYSE:HL Standard LFUL:  Current approach  5 cuts per ramp Optimized LFUL:  New approach  10 cuts per ramp  Lower development expenditure  Stopes turn around faster –32–

  17. Slide 17: #4 Shaft

    Lucky Friday: Testing Battery Powered LHD Technology could reduce ventilation needs vs diesel NYSE:HL -33- Casa Berardi Making a good mine great NYSE:HL Q4 2016 2016 2017E Gold Production (koz) 42 146 150 – 165 Cost of Sales $49.1 M $155.7 M $170 M Cash cost, after by-product $800/oz $764/oz $800/oz

  18. Slide 18: Lucky Friday: Testing Battery Powered LHD

    Casa Berardi Increased throughput NYSE:HL Trendline -35- EMCP Pit is Transforming Casa Berardi Creating value NYSE:HL  Optimizing the mill: ~2,300 tpd (2015A) to ~3,400 tpd (2017E), adds 5,000 Au oz (2016E) and 30,000 Au oz (2017E)  Increasing operating flexibility: More consistent operations  St

  19. Slide 19: Casa Berardi

    Multiple Stage Pits Move Cash Flow Forward New permit increases throughput NYSE:HL Previous Permit:  1,100,000 tonnes per year (1,213,000 tons) New Permit:  1,250,000 tonnes per year (1,378,000 tons) –37– Investing in Productivity Improvements NYSE:HL Automated Shaft and Jumbo/Stope Drill Rock Bre

  20. Slide 20: Casa Berardi EMCP Pit is Transforming Casa Berardi

    Twelve Drills For Surface and Underground Targets $5 Million of exploration planned in 2017 NYSE:HL -39- Casa Berardi An example of the long-term potential of Casa NYSE:HL -40-

  21. Slide 21: Multiple Stage Pits Move Cash Flow Forward

    Casa Berardi Drilling the west extensions of the Casa Berardi fault and splays NYSE:HL -41- 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 -42-

  22. Slide 22: Casa Berardi

    San Sebastian Just-in-time mining; looking to make it a long-term mine NYSE:HL Q4 2016 2016 2017E Silver Production (Moz) 860 koz 4.3 3.0 – 3.4 Gold Production (koz) 7 34 21 – 25 Cost of Sales $7.8 M $31.2 M $36 M Cash cost, after by-product $(3.13)/oz $(3.35)/oz $0.00/oz credits, per silver oz4 All

  23. Slide 23: Casa Berardi

    2018 Underground Design and Exploration Location of mineral resource and exploration areas NYSE:HL North Portal CURRENT MIDDLE VEIN RESOURCE WEST MIDDLE VEIN EXPLORATION EAST MIDDLE VEIN DRILLING EXPLORATION DRILLNG North Portal Existing Workings -45- San Sebastian Middle vein - new reserve and expl

  24. Slide 24: San Sebastian

    San Sebastian New discovery at east extension of Francine vein NYSE:HL -47- How Else Does San Sebastian Become Sustainable? Ore sorting is a potential way of upgrading the ore NYSE:HL Ag Grade vs Recovery  Initial results indicate a reduction of 100% Average Grade (ppm) Cumulative Recovery 6600 mas

  25. Slide 25: 2018 Underground Design and Exploration

    Rock Creek & Montanore Securing Hecla’s long-term future 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* Well located: 50 miles fro

  26. Slide 26: San Sebastian

    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

  27. Slide 27: Rock Creek & Montanore

    Greens Creek Experience Great Asset for Montana Project Development NYSE:HL Hecla Brings Responsible Development Experience to Montana Greens Creek Troy Mine –53– Environmentally Sensitive Mining Version 1.0 - Greens Creek NYSE:HL Brown Bear Salmon Water- Windfall Harbour –54–

  28. Slide 28: Interior Secretary Has Unique Experience

    Environmentally Sensitive Mining Version 2.0 Rock Creek & Montanore NYSE:HL Grizzly Water-Granite Lake Bull Trout –55– 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

  29. Slide 29: Greens Creek Experience Great Asset for Montana Project Development

    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

  30. Slide 30: Similar Development Project Timelines

    Improving Debt Metrics 2016 net income increased to $70M NYSE:HL LTM* Adjusted EBITDA2 Net Debt/LTM Adjusted EBITDA3 $265 M 3.0x $234 M $177 M 2.0x $128 M 1.4x 1.2x LTM Q1 2016 LTM Q2 2016 LTM Q3 2016 LTM Q4 2016 LTM Q1 2016 LTM Q2 2016 LTM Q3 2016 LTM Q4 2016  Total liquidity ~$300 m  $506 M high

  31. Slide 31: 2017 AgEq Outlook In-Line With 2016

    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

  32. Slide 32: Improving Debt Metrics

    NYSE:HL Appendix –63– 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

  33. Slide 33: Continuing to Execute the Strategy

    Items of Note NYSE:HL  Expect to begin depreciating the #4 Shaft in Q2 ▸ Total depreciation for 2017 estimated to be $143 million  G&A increased in 2016 due to accrual for the Annual Incentive Plan and Long Term Incentive Plan based on strong performance against long-term goals and against peers 

  34. Slide 34: Appendix

    Strong Financial Performance in 2016 It all starts with record production NYSE:HL Silver Production Gold Production 17.2 Moz 233.9 Koz 189.3 Koz +24% 11.6 Moz +48% 2015 2016 2015 2016 2016 2015 Revenue $646.0 M $443.6 M Cash provided by operating activities $225.3 M $106.4 M Cost of sales and other

  35. Slide 35: Items of Note

    A History of Beating Forecasts NYSE:HL 2013 2014 2015 2016 MET BEAT BEAT BEAT Silver Production (M oz) 8-9E 8.9A 9-10E 11.1A 10-11E 11.6A 15.75E 17.2A BEAT BEAT BEAT BEAT Gold Production (K oz) 60E1 62.5A1 180E 187A 185E 189A 233E 234A Cash cost, after by- MISS BEAT BEAT BEAT product credits, per si

  36. Slide 36: Strong Financial Performance in 2016

    Safety First First hardrock mining company to complete NMA CORESafety program NYSE:HL Hecla All Injury Frequency Rate (AIFR) 7 6.06 6 5.35 5.41 5 4.57 Incident Rate 4 3.42 3 2 1 0 2012 2013 2014 2015 2016 -71- Increasing Share of Modern Demand NYSE:HL Modern demand increased from 260 Moz in 1992 to

  37. Slide 37: A History of Beating Forecasts

    Silver Consumption per Capita Increases NYSE:HL 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 South

  38. Slide 38: Safety First

    Heva-Hosco on the Famous Cadillac Break Exploring for the deeper trend mineralization NYSE:HL Lapa Mine Projected 1.08M oz Au -75- Opinaca/Wildcat In the shadow of Eleonore NYSE:HL -76-

  39. Slide 39: Silver Consumption per Capita Increases

    Focusing on Potential High-Grade Underground Zones NYSE:HL –77– 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

  40. Slide 40: Heva-Hosco on the Famous Cadillac Break

    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

  41. Slide 41: Proven & Probable Mineral Reserves

    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

  42. Slide 42: Measured and Indicated Mineral Resources

    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

  43. Slide 43: 2006 – 2015 Reserve Table

    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

  44. Slide 44: Cash Cost GAAP Reconciliation

    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

  45. Slide 45: Cash Cost Reconciliation to GAAP: Greens Creek

    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

  46. Slide 46: Cash Cost Reconciliation to GAAP: Lucky Friday

    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

  47. Slide 47: 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)

Hecla Mining Company — Deutsche Bank 2017 Basic Materials 1x1 Day on 6ix