Hecla Mining Company · NYSE:HL
Hecla Mining — Gold Forum Europe 2019
33 slides from Hecla Mining's conference presentation, April 2019
Slide 1: Gold Forum Europe: Key Value Drivers
GOLD FORUM EUROPE KEY VALUE DRIVERS April 2019 RESPONSIBLE. SAFE. INNOVATIVE. Hecla Mining Company NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 1
Slide 2: Cautionary Statements
CAUTIONARY STATEMENTS 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 intended
Slide 3: Hecla Mining Overview
HECLA MINING OVERVIEW Positioned for Continued Strong Performance Asset Overview • Largest primary silver producer in the US, third largest producer of lead and zinc • Good mining jurisdictions: Alaska, Idaho, Nevada, Quebec, and Durango (Mexico) • Focus is long-lived, low cost mines that can be ext
Slide 4: Diverse Asset Portfolio in Mining Friendly Jurisdictions
DIVERSE ASSET PORTFOLIO IN MINING FRIENDLY JURISDICTIONS Core Operations Growth / Transformation Greens Creek Casa Berardi San Sebastian Nevada Lucky Friday Location/ Risk Score1 Alaska, USA (76.9) Quebec, Canada (87.5) Durango, Mexico (65.1) Nevada, USA (90.5) Idaho, USA (84.5) Primary Product Silv
Slide 5: Leading Precious Metal and Zinc Producer with Diverse Assets and Commodity Mix
LEADING PRECIOUS METAL AND ZINC PRODUCER WITH DIVERSE ASSETS AND COMMODITY MIX #1 SILVER AND #3 LEAD AND ZINC PRODUCER IN THE U.S. Silver Production: 10.4 Moz Cost of Sales: $241.6 M 17% Cash Costs, after by-product credits: $1.08/oz 24% Realized Price: $15.63/oz 6% Gold Production: 262 Koz 2018 Mar
Slide 6: Our Best Mines Keep Getting Better
OUR BEST MINES KEEP GETTING BETTER NEW TECHNICAL REPORTS SHOW INCREASED MINE LIVES; HIGHER CASH FLOW Greens Creek Casa Berardi 107.1 million oz P+P silver reserves. 1 1.91 million oz P+P gold reserves. 1 Life of Mine Plan (LOM) extends to 2030. LOM extends to 2034. 97.4 million oz M&I silv
Slide 7: Record of Growing Reserves
RECORD OF GROWING RESERVES SIGNIFICANT INCREASES AT MUCH LOWER PRICES Silver Reserves Growth Gold Reserves Growth 120.0 1.5 2.8 191.0 2.0 (76.7) (millions of ounces) (millions of ounces) 147.7 133%*** (1.3) 0.7 685%*** 2013 Beginning Reserves Reserves Added, Silver Produced, Reserves, Replaced and 2
Slide 8: The Most Conservative Silver Price Assumption in the Industry
THE MOST CONSERVATIVE SILVER PRICE ASSUMPTION IN THE INDUSTRY RESERVES ARE THE BASIS FOR VALUE CREATION Price Assumption is at the discretion of management HL Reserve $19.00 Year Prices $18.50 $18.00 $18.00 2012 $26.50 $17.50 $17.00 2013 $20.00 $16.00 $16.61 $16.00 $15.50 2014 $17.25 Silver $15.00 $
Slide 9: Culture of Innovation Drives Productivity Improvements
CULTURE OF INNOVATION DRIVES PRODUCTIVITY IMPROVEMENTS PROBLEM SOLVING DRIVES THE INNOVATION Projects 2014 2015 2016 2017 2018 2019 2020 2021 Automated Stope Drilling Installed In Operation Casa Berardi Automated Drill Jumbo Utilized 2 Drills Add/Deploy 3rd drill In Operation Casa Berardi (Greens Cr
Slide 10: 2019 Outlook
2019 OUTLOOK LOWERING CASH COST AND AISC, AFTER BY-PRODUCT CREDITS, PER SILVER OUNCE Production Outlook Silver Production (Moz) Gold Production (Koz) Silver Equivalent (Moz)3 Gold Equivalent (Koz)3 Greens Creek 7.7 50 24.0 305 Lucky Friday 0.2 n/a 0.2 n/a San Sebastian 2.0 14 3.0 40 Casa Berardi n/a
Slide 11: Greens Creek
GREENS CREEK CONSISTENT LOW-COST PRODUCTION IN A WILDERNESS AREA / NATIONAL MONUMENT Q4 2017 Q4 2018 2017 2018 Silver Production (Moz) 2.1 2.2 8.4 8.0 Gold Production (Koz) 11.6 13.1 50.8 51.5 Cost of Sales2 $61.6 M $48.3 M $201.8 M $190.1 M Cash cost, after by-product credits, per silver oz3 $0.66/
Slide 12: Greens Creek Has Generated Over $1B of Net Cash Flow
GREENS CREEK HAS GENERATED OVER $1B OF NET CASH FLOW SIGNIFICANT IMPROVEMENT IN PERFORMANCE SINCE HECLA BECAME OPERATOR Cumulative Net Cash Flow Greens Creek Throughput has Grown 15% Since Purchase in 2008 850 Greens Creek Production and Reserves 16 $1,246 $1,162 14 $1,061 $983 12 $941 Ore Reserves
Slide 13: Greens Creek – Three Exploration Trends
GREENS CREEK – THREE EXPLORATION TRENDS SYSTEMATICALLY EVALUATED WITH DRILLING FROM UNDERGROUND AND THE SURFACE Drilling from UG Drilling from Surface NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 13
Slide 14: Casa Berardi
CASA BERARDI MAKING A GOOD MINE GREAT Q4 2017 Q4 2018 2017 2018 Gold Production (Koz) 43.4 35.9 156.7 162.7 Cost of Sales1 $46.4 M $47.3 M $184.7 M $199.4 M Cash cost, after by-product credits, per gold oz2 $719/oz $940/oz $820/oz $800/oz AISC, after by-product credits, per gold oz4 $1,039/oz $1,348
Slide 15: 985 Drift Autonomous Haulage in Operation
985 DRIFT AUTONOMOUS HAULAGE IN OPERATION TWO TRUCKS RUN 24 HOURS A DAY; COST SAVINGS REALIZED Loading 40-tonne autonomous Sandvik truck NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 15
Slide 16: Series of Open Pits at Casa Berardi
SERIES OF OPEN PITS AT CASA BERARDI WEST MINE CROWN PILLAR (WMCP) LATEST ADDITION TO THE PITS • 28% increase in gold reserves • WMCP pit is the 2nd largest and 2nd highest grade • Infilling on the WMCP and data to steepen the pit walls • Advancing underground exploration on the East portion of the m
Slide 17: Proposed West Mine Crown Pillar Pit
PROPOSED WEST MINE CROWN PILLAR PIT CONVERGENCE OF LOWER INTER AND 105 ZONES NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 17
Slide 18: Gold Silver Ratio Above 80 Has Led to Strong Increases
GOLD SILVER RATIO ABOVE 80 HAS LED TO STRONG INCREASES US MINT SOLD OUT OF SILVER EAGLE COINS IN JANUARY WITH ALMOST NO SALES IN FEBRUARY & MARCH Gold | Silver Gold / Silver Ratio Gold ($/oz) Silver ($/oz) Ratio $2,000 $60 100 $1,800 90 $50 $1,600 80 $1,400 70 $40 $1,200 60 20 Year Avg Ratio: 62.9 $
Slide 19: Other Supporting Information
Other Supporting Information NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 19
Slide 20: Adjusted EBITDA Reconciliation to GAAP
ADUSTED EBITDA RECONCILLIATION TO GAAP Reconciliation of Net (Loss) Income (GAAP) to Adjusted EBITDA (non-GAAP) Dollars in thousands (USD) Twelve Months Ended 31-Dec-13 31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18 Net (loss) income $ (25,130) $ 17,824 $ (94,738) $ 61,569 $ (28,520) $ (26,563) P
Slide 21: Cash Cost and AISC Reconciliation to GAAP – 2019 Estimates Silver
CASH COST AND AISC RECONCILIATION TO GAAP 2019 ESTIMATES – SILVER OPERATIONS Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sus
Slide 22: Cash Cost and AISC Reconciliation to GAAP – 2019 Estimates Gold
CASH COST AND AISC RECONCILIATION TO GAAP 2019 ESTIMATES – GOLD OPERATIONS Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Susta
Slide 23: Cash Cost and AISC Reconciliation to GAAP – Silver Operations
CASH COST AND AISC RECONCILIATION TO GAAP SILVER OPERATIONS Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Be
Slide 24: Cash Cost and AISC Reconciliation to GAAP – Gold Operations
CASH COST AND AISC RECONCILIATION TO GAAP GOLD OPERATIONS Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Befo
Slide 25: Cash Cost and AISC Reconciliation to GAAP – Greens Creek
CASH COST AND AISC RECONCILIATION TO GAAP GREENS CREEK Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before
Slide 26: Cash Cost and AISC Reconciliation to GAAP – Casa Berardi
CASH COST AND AISC RECONCILIATION TO GAAP CASA BERARDI Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before
Slide 27: Reconciliation to Adjusted EBITDA and Net Debt
RECONCILIATION TO ADJUSTED EBITDA AND NET DEBT Reconciliation of Net Loss (GAAP) and Debt (GAAP) to Adjusted EBITDA (non-GAAP) and Net Debt (non-GAAP) In thousands Twelve Months Ended December 31, December 31, 2018 2017 Net loss ($26,563) ($28,520) Plus: Interest expense, net of amount capitalized 4
Slide 28: Greens Creek Free Cash Flow Reconciliation
GREENS CREEK FREE CASH FLOW RECONCILIATION Greens Creek Free Cash Flow Reconciliation (in thousands) 1 2018 1987-2018 Gross profit $ 75,288 $ 1,408,990 Non-cash elements in gross profit: Depreciation, depletion and amortization 49,908 718,288 Other (1) 1,339 Working capital changes (57) (17,573) Net
Slide 29: Proven & Probable Mineral Reserves
PROVEN & PROBABLE MINERAL RESERVES (ON DEC. 31, 2018 UNLESS OTHERWISE NOTED) Proven and Probable Reserves – 12/31/18(1) Proven Reserves Tons Silver Gold Lead Zinc Copper Silver Gold Lead Zinc Copper Asset (000) (oz/ton) (oz/ton) % % % (000 oz) (000 oz) Tons Tons Tons Greens Creek (2) 6 13.8 0.10 2.8
Slide 30: Measured and Indicated Mineral Resources
MEASURED AND INDICATED MINERAL RESOURCES (ON DEC. 31, 2018 UNLESS OTHERWISE NOTED) NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 30
Slide 31: Inferred Mineral Resources
INFERRED MINERAL RESOURCES (ON DEC. 31, 2018 UNLESS OTHERWISE NOTED) Inferred Resources Tons Silver Gold Lead Zinc Copper Silver Gold Lead Zinc Copper Asset (000) (oz/ton) (oz/ton) % % % (000 oz) (000 oz) (Tons) (Tons) Tons Greens Creek (6) 2,470 14.6 0.09 3.0 7.3 - 35,982 219 74,410 181,400 - Lucky
Slide 32: 2008 – 2018 Reserve Table
2008 – 2018 RESERVE TABLE Silver Gold Gold Silver Gold Gold 2008 Proven Reserves Tons (oz/ton) (oz/ton) Silver (ounces) (ounces) 2014 Proven Reserves Tons (oz/ton) (oz/ton) Silver (ounces) (ounces) Greens Creek - - - - - Greens Creek 4,700 15.70 0.100 74,000 5,000 Lucky Friday 1,270,000 12.40 - 15,8
Slide 33: Endnotes
ENDNOTES 1. Cost of sales and other direct production costs and depreciation, depletion and amortization. 2. Cash cost, after by-product credits, per silver and gold ounce represents a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation