Hecla Mining Company · NYSE:HL
Hecla Mining — European Gold Forum 2017
42 slides from Hecla Mining's conference presentation, April 2017
Slide 1: European Gold Forum: Our Strategy Works For Shareholders
April 2017 NYSE:HL European Gold Forum 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: 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 4: 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 5: Gold & Silver 2016 Reserve Prices
Gold & Silver 2016 Reserve Prices Hecla’s price assumption assures high margin ounces NYSE:HL $20.00 HL Reserve Year $18.00 $18.00 $18.50 Prices $17.50 $16.29 $16.50 $15.00 2012 $26.50 $14.50 2013 $20.00 2014 $17.25 2015 $14.50 2016 $14.50 Hecla Fresnillo Endeavour Agnico Coeur Silver Goldcorp Pan T
Slide 6: 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. –6–
Slide 7: 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% 11.6 Moz +48% 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 8: 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 +$148 M $117 M ($87) M 2015 2016 2015 2016 2016 Mine Cash Flow Generation Increasing Liquidity & Decreasing Debt Metrics $316.8 51% M Conversion to $299 M Free Cash F
Slide 9: 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% Hecla 250% Peer Group 200% +174% 150% 100% +98% 50% 0% -50% Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17
Slide 10: Continuing To Execute The Strategy
Continuing To Execute The Strategy 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 Retur
Slide 11: North American Focused Asset Portfolio
North American Focused Asset Portfolio Operations in low-risk & mining-friendly jurisdictions NYSE:HL –11–
Slide 12: Greens Creek
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
Slide 13: Three Trends In Three Fault Blocks
Three Trends In Three Fault Blocks Targets up and down plunge and in the 3rd fault block NYSE:HL -13-
Slide 14: Lucky Friday
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
Slide 15: #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 16: Casa Berardi
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 credits, per gold oz4 All In Sustaining Cash Costs $1,247/oz $1,244/oz $1,150/oz (AISC), after by-product
Slide 17: Twelve Drills For Surface and Underground Targets
Twelve Drills For Surface and Underground Targets $5 million of exploration planned in 2017 NYSE:HL -17-
Slide 18: San Sebastian
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
Slide 19: 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 -19-
Slide 20: 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 21: 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 22: 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 and Cost Outlook Silver Gold Production 14.0 -15.5 Moz 230 -250 Koz Silver/Gold Equivalent7 46.5 – 49.4 Moz 655 – 696 Koz Cost of Sales $358 M $170 M Cash cost, after by-product
Slide 23: Thank You: Innovation at work in Hecla mines
Thank You Innovation at work in Hecla mines NYSE:HL Tele-remote LHD at Greens Creek Battery powered LHD at Lucky Friday –23–
Slide 24: Appendix
MINING COMPANY NYSE:HL Appendix -24-
Slide 25: 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 26: 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 27: 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 28: 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 29: 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 30: 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 31: 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 32: 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 33: Cash Cost Reconciliation to GAAP: Greens Creek
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 34: AISC Reconciliation to GAAP: Greens Creek
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 35: Cash Cost Reconciliation to GAAP: Lucky Friday
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 36: AISC Reconciliation to GAAP: Lucky Friday
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 37: Cash Cost Reconciliation to GAAP: San Sebastian
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 38: AISC Reconciliation to GAAP: San Sebastian
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 39: Cash Cost Reconciliation to GAAP: Casa Berardi
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 40: AISC Reconciliation to GAAP: Casa Berardi
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 41: 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 42: 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