Hecla Mining Company · NYSE:HL
Hecla Mining — Tumazos Metals and Natural Resource Conference (August 2020)
57 slides from Hecla Mining's conference presentation, Aug 13, 2020
Slide 1: America's Only U.S. Silver Equity
AMERICA’S ONLY U.S. SILVER EQUITY Most Production, Reserves and Longest Mine Life in Company History August 2020 RESPONSIBLE. SAFE. INNOVATIVE. NYSE: HL
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: Cautionary Statements (cont'd)
CAUTIONARY STATEMENTS (cont’d) Cautionary Statement Regarding Forward Looking Statements (Cont’d) In addition, material risks that could cause actual results to differ from forward-looking statements include, but are not limited to: (i) gold, silver and other metals price volatility; (ii) operating
Slide 4: Hecla Early Reaction to COVID-19 Lead to Strong Quarter
HECLA EARLY REACTION TO COVID-19 LEAD TO STRONG QUARTER Positioned to more than survive the pandemic Protected the workforce Government action had minimal impact on • Implemented pandemic plans on March 10th production with U.S. operations essentially • Started significant monitoring and social dist
Slide 5: Strong Quarter Led to Free Cash Flow Generation
STRONG QUARTER LED TO FREE CASH FLOW GENERATION Further upside in free cash flow generation in 2021 expected with Lucky Friday ramp-up Q2/2020 (in $ millions) Cash Flow from Capital Free Cash Flow** Lucky Friday Operations – Expenditures Cash Ramp- Before Lucky Friday Ramp-up Costs* up Costs 40.4 (2
Slide 6: Hecla Is a Unique and Scarce Investment Option
HECLA IS A UNIQUE AND SCARCE INVESTMENT OPTION Produces a third of U.S. silver production, largest reserve and resource 2019 U.S. Silver Production (31.5 Moz) Hecla’s Share of U.S. Production (Moz) 10.7 34.0% 66.0% 7.1 Hecla Other . 3 Countries Produce 50% of World Production 3.8 U.S. Produces 4% 2.
Slide 7: Balance Sheet Is Also Unique
BALANCE SHEET IS ALSO UNIQUE Very liquid – very long dated Liquidity Position Long Dated Debt Proforma 08/01/20 As at 06/30/20 1 Revolver Previous Revolver Extended Revolver 6.875% Senior Notes 7.25%Senior Notes IQ Notes $200 Cash $507 $76 $475 Revolver ~$276mm $200 $250 $150-250 $37 2021 2022 2023
Slide 8: Hecla Has Low Cost, Long Mine Lives
HECLA HAS LOW COST, LONG MINE LIVES Mining in the best jurisdictions Characteristics are Unique Asset Overview • Largest silver producer in the U.S., 3rd largest zinc and lead producer, 5th largest Quebec gold producer • Best mining jurisdictions: Alaska, Quebec, Idaho, Nevada, and Durango (Mexico)
Slide 9: Silver Contribution Growing with Production and Prices
SILVER CONTRIBUTION GROWING WITH PRODUCTION AND PRICES Lucky Friday expected to double production in 2020 over 2019 and again in 2021 Silver Production: 3.4 Moz Cost of Sales: $73.1 M Cash Costs, after by-product credits(1): $4.97/oz 12% AISC, after by-product credits(1): $9.33/oz Realized Price: $1
Slide 10: Reserves Continue to Grow
RESERVES CONTINUE TO GROW 129-year record for silver is largest in the U.S. Silver Reserves Growth (millions of ounces) Gold Reserves Growth (millions of ounces) 2.1 (1.6) 1.5 2.7 153.8 (76.7) 212.2 265%3 147.7 629%3 0.7 2013 Beginning Reserves added Gold produced Additions Reserves, 2013 Beginning
Slide 11: Not All Reserves Are the Same
NOT ALL RESERVES ARE THE SAME Hecla’s silver reserve price assumption are the lowest Price assumption is at the discretion of management HL Reserve Year Prices $18.00 $17.00 $17.00 $17.00 $17.00 $17.00 $17.00 $17.30 2012 $26.50 $16.00 $16.00 $14.50 2013 $20.00 2014 $17.25 Silver 2015 $14.50 2016 $14
Slide 12: Strong Silver and Gold Margins
STRONG SILVER AND GOLD MARGINS Lower AISC costs improve margins Silver Margins Gold Margins 17% 44% 51% 35% 49% 19% 20% 26% 14% (29)% Cost of Sales (000s)2 AISC, After By-Product Credits, per Ag-Au/Oz3 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Silver $61,744 $57
Slide 13: Strong Safety Performance in 2020
STRONG SAFETY PERFORMANCE IN 2020 Commitment to safety and adoption of CORESafety is driving results Injury frequency rates have been on a steady decline since 2014 • Lucky Friday receives 2018 Sentinels of Safety for excellent safety record NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 13
Slide 14: Greens Creek: Strong Production, Cash Flow
GREENS CREEK: STRONG PRODUCTION, CASH FLOW 7-day isolation protecting mine operations from COVID-19 Q2 2019 2019 Q2 2020 Silver Production (Moz) 2.2 9.9 2.8 Gold Production (Koz) 14.3 56.6 13.1 Cost of Sales2 $45.7 M $211.7 M $57.7 M Cash cost, after by-product credits, per silver oz3 $2.38/oz $1.97
Slide 15: Hecla's Strongest Mine - Greens Creek Is Growing
HECLA’S STRONGEST MINE - GREENS CREEK IS GROWING 22% increase in silver reserves in 2019; 10mm oz silver production, $107 mm in cash flow Cumulative Net Cash Flow Greens Creek Throughput has Grown 15% Since Purchase in 2008 Greens Creek Production and Reserves 900 16 $1,353 14 $1,246 $1,162 12 $1,06
Slide 16: Lucky Friday
LUCKY FRIDAY Positioning for growth and longevity, strike ended Q1, ramp up to full production expected by year end Q2 2019 2019 Q2 2020 Silver Production (Koz) 173.6 633.0 469.5 Cost of Sales2 $5.0 M $16.6 M $11.5 M Cash cost, after by-product credits, per silver oz3 N/A N/A N/A AISC, after by-prod
Slide 17: Lucky Friday Ramp-Up Continues
LUCKY FRIDAY RAMP-UP CONTINUES Full production rate expected by year end • Mining deemed essential in Idaho • Minimal effect on workforce • Over 96% of the expected workforce in-place • #2 hoist project completed on budget during quarter • Ongoing production ramp-up; expected full production rate by
Slide 18: Lucky Friday Full Production by Year End
LUCKY FRIDAY FULL PRODUCTION BY YEAR END Expect 60% more annual silver production compared to historic production as go deeper NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 18
Slide 19: Casa Berardi
CASA BERARDI Large reserves and resources position for strong cash flow Q2 2019 2019 Q2 2020 Gold Production (Koz) 31.8 134.4 30.8 Cost of Sales2 $55.2 M $217.7 M $45.6 M Cash cost, after by-product credits, per gold oz3 $1,101/oz $1,050/oz $919/oz AISC, after by-product credits, per gold oz4 $1,437
Slide 20: Casa Berardi Mill Operation Improvements Are Expected
CASA BERARDI MILL OPERATION IMPROVEMENTS ARE EXPECTED Increased mill availability will improve throughput, production, and cashflow – reviewing other opportunities • Improvements in availability seen in December continuing • Feed from underground and open pit provides flexibility to reach full capac
Slide 21: Growing Open Pits and New High Grade Underground
GROWING OPEN PITS AND NEW HIGH GRADE UNDERGROUND West Mine Crown Pillar (WMCP) latest addition to the pits; 148 Zone underground improving the dynamic Casa Berardi • Now 5 proposed open pits that are growing in size • High grade discovered in 148 Zone (East mine) added earlier in mine plan • Excelle
Slide 22: San Sebastian – Just in Time Mine
SAN SEBASTIAN – JUST IN TIME MINE Resulted in a five-year mine life; exploration and processing success needed Q2 2019 2019 Q2 2020 Silver Production (Moz) 0.441 1.9 0.159 Gold Production (Koz) 3.5 15.7 1.3 Cost of Sales2 $11.1 M $50.5 M $4.0 M Cash cost, after by-product credits, per silver oz3 $9.
Slide 23: Nevada Is Hecla's Newest Asset
NEVADA IS HECLA’S NEWEST ASSET Why we invested in Nevada • 110-square mile land position with three, one- ounce head grade mines • Hatter Graben, part of Hollister, that has 1.4 oz head grades, the potential for a million-ounce orebody • Opportunity to improve Fire Creek operations to lower the cut-
Slide 24: Advances in Nevada
ADVANCES IN NEVADA Bulk sample program underway; favorable hydrology study • Complete mining of oxide resource • Processing agreement with third party for bulk sample of Type 2 ore • Have collected 16,000 of the targeted 30,000 tons of Type 2 ore • Ground conditions, water inflow, productivity, and
Slide 25: Roadmap for Further Growth and Value Creation
ROADMAP FOR FURTHER GROWTH AND VALUE CREATION Largest inventory of growth projects in Hecla’s 129-year history Longer Term Development Robust Near-Term Growth Fire Creek Mine Plan Fire Creek • Potential for significant upside and • Studying how to improve mining method. increased production through
Slide 26: ESG Commitment: Communities and Education
ESG COMMITMENT: COMMUNITIES AND EDUCATION Investing in future generations and communities, COVID-19 relief Charitable Donations and Volunteerism • More than $3.4 million in Hecla Charitable Foundation contributions since 2009 • Foundation is focused on four areas: education, community programs, yout
Slide 27: 2020 Estimates Have Margin and Low Capital and Low Exploration
2020 ESTIMATES HAVE MARGIN AND LOW CAPITAL AND LOW EXPLORATION Silver Production (Moz) Gold Production (Koz) Silver Equivalent (Moz)1 Gold Equivalent (Koz)1 Production Outlook Greens Creek 8.9-9.3 46-48 21.5-22.1 240 – 246 Lucky Friday 1.4-1.8 n/a 3.2-3.6 35 – 40 San Sebastian 0.6-0.8 6-7 1.1-1.4 12
Slide 28: Appendix
Appendix NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 28
Slide 29: Adjusted EBITDA Reconciliation to GAAP
ADJUSTED EBITDA RECONCILIATION TO GAAP Reconciliation of Net (Loss) Income (GAAP) to Adjusted EBITDA (non-GAAP) Dollars in thousands (USD) Twelve Months Ended 31-Mar-19 30-Jun-19 30-Sep-19 31-Dec-19 Net (loss) income $ (60,336) $ (118,942) $ (115,274) $ (99,557) Plus: Interest expense, net of amount
Slide 30: Cash Cost and AISC Reconciliation to GAAP: 2020 Silver Estimates
CASH COST AND AISC RECONCILIATION TO GAAP 2020 Silver Estimates 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
Slide 31: Cash Cost and AISC Reconciliation to GAAP: 2020 Gold Estimates
CASH COST AND AISC RECONCILIATION TO GAAP 2020 Gold Estimates 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,
Slide 32: 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 33: 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 34: Free Cash Flow (Non-GAAP) Reconciliation
FREE CASH FLOW (NON-GAAP) RECONCILIATON Reconciliation of Cash Flow from Operations (GAAP) to Free Cash Flow (Non GAAP) Q2 2020 In 000 USD Q2/2020 Cash Flow from Operations 37,526 Add: Lucky Friday cash ramp-up costs 2,900 Cash Flow from Operations before Lucky Friday Cash Ramp-up 40,426 Less: Capit
Slide 35: 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 36: 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 37: Cash Cost and AISC Reconciliation to GAAP: San Sebastian
CASH COST AND AISC RECONCILIATION TO GAAP San Sebastian 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 38: Cash Cost and AISC Reconciliation to GAAP: Lucky Friday
CASH COST AND AISC RECONCILIATION TO GAAP Lucky Friday 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 39: Proven & Probable Mineral Reserves
PROVEN & PROBABLE MINERAL RESERVES(1) (On December 31, 2019 unless otherwise noted) 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) 7 14.8 0.08 2.6 5.4 - 106 1 180 390 - Lucky F
Slide 40: Measured and Indicated Mineral Resources
MEASURED AND INDICATED MINERAL RESOURCES (On Dec. 31, 2019 unless otherwise noted) Measured 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 (5) 76 12.5 0.09 2.6 9.4 - 949 7 2,000 7,140 -
Slide 41: Inferred Mineral Resources
INFERRED MINERAL RESOURCES (On Dec. 31, 2019 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 (5) 1,848 13.7 0.09 3.1 7.4 - 25,393 159 56,670 135,880 - Luc
Slide 42: Mineral Resources (Notes)
MINERAL RESOURCES (NOTES) (On December 31, 2019 unless otherwise noted) Note: All estimates are in-situ except for the proven reserves at Greens Creek and San Sebastian which are in surface stockpiles. Resources are exclusive of reserves. (5) Mineral resources are based on $1500 gold, $21 silver, $1
Slide 43: 2009 – 2018 Reserve Table
2009 – 2018 RESERVE TABLE Silver Gold Silver Gold Silver Gold Silver Gold 2014 Proven Reserves Tons (oz/ton) (oz/ton) (ounces) (ounces) 2009 Proven Reserves Tons (oz/ton) (oz/ton) (ounces) (ounces) Greens Creek 4,700 15.70 0.100 74,000 5,000 Greens Creek - - - - - Lucky Friday 3,840,000 13.70 - 52,5
Slide 44: Proven & Probable Mineral Reserves (2013)
PROVEN & PROBABLE MINERAL RESERVES (On December 31, 2013 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 100.0% 14 12.9 0.13 3.0 8.1 182 2 430 1,15 States
Slide 45: Measured and Indicated Mineral Resources (2013)
MEASURED AND INDICATED MINERAL RESOURCES (On Dec. 31, 2013 unless otherwise noted) Measured Resources Tons Silver Gold Lea Zinc Silver Gold Lead Zinc d Asset Location Ownership (000) (oz/ton) (oz/ton) % % (000 oz) (000 oz) (Tons) (Tons) Greens Creek (2)(a) United 100.0% 7 17.6 0.08 4.4 10.5 118 1 29
Slide 46: Inferred Mineral Resources (2013)
INFERRED MINERAL RESOURCES (On Dec. 31, 2013 unless otherwise noted) Inferred Resources Tons Silver Gold Lead Zinc Silver Gold Lead Zinc Asset Location Ownership (000) (oz/ton) (oz/ton) % % (000 (000 oz) (Tons) (Tons) oz) Greens Creek (9)(a) United States 100.0% 2,385 13.3 0.09 2.7 6.5 31,752 216 63
Slide 47: Proven & Probable Mineral Reserves; Measured, Indicated and Inferred Resources
PROVEN & PROBABLE MINERAL RESERVES; MEASURED AND INDICATED, AND INFERRED RESOURCES (On December 31, 2013 unless otherwise noted) Note: All estimates are in-situ except for the proven reserve at Greens Creek which is in a surface stockpile. Resources are exclusive of reserves. Totals may not represen
Slide 48: Endnotes
ENDNOTES 1. Silver and gold equivalent is calculated using the average market prices for the time period noted. 2. Cost of sales and other direct production costs and depreciation, depletion and amortization. 3. Cash cost, after by-product credits, per silver and gold ounce represents a non-GAAP mea
Slide 49: Responsible. Safe. Innovative.
RESPONSIBLE. SAFE. INNOVATIVE. Believe in earning and maintaining our social license to operate • We must be responsible operators in the communities where we live and work • We provide career jobs for our 1,800 employees • Create a culture where safety is non-negotiable • Protect and partner with t
Slide 50: Our Priority: ESG
OUR PRIORITY: ESG Implement SASB Standards on ESG • Our core values of being responsible, safe and innovative are reflected in our commitment to operating as a responsible, ethical and sustainable business • Utilize the industry-specific SASB standards to report on the ESG aspects of our company • C
Slide 51: Our Commitment: Environment
OUR COMMITMENT: ENVIRONMENT Reducing greenhouse gas emissions and conserving energy • 60% less diesel fuel consumption at Greens Creek through the use of interruptible hydropower • The biomass heating project installed at the Casa Berardi Mine is expected to reduce 2,732 tonnes of greenhouse gas emi
Slide 52: Our Commitment: Tailings Management
OUR COMMITMENT: TAILINGS MANAGEMENT Emphasis on safety and stability • Design, construct, operate, decommission and close our tailings facilities to ensure stability • Approximately half of the tailings produced is used as backfill at Greens Creek, Lucky Friday, and Casa Berardi • Early adopter of t
Slide 53: Our Commitment: Reclamation
OUR COMMITMENT: RECLAMATION Every mine begins with a reclamation plan • Begin each mine with a reclamation plan to restore the land to its natural state for productive uses • More than $175 million committed to ensuring mined lands are successfully reclaimed following operations • Completed reclamat
Slide 54: Our Commitment: Water Management
OUR COMMITMENT: WATER MANAGEMENT Robust program of sampling, quality analysis and audits • All water output must meet applicable federal and state (or provincial) water quality permit conditions • More than 95 percent of the process plant water needs at our Casa Berardi Mine are met by recycling wat
Slide 55: Our Commitment: Safety
OUR COMMITMENT: SAFETY Safety is non-negotiable at Hecla • Practice continuous improvement where we adapt/change to minimize risks of injury or an accident SAFETY IS EMBEDDED IN OUR CULTURE • Goal is always 0 injuries/fatalities • First hardrock mining company to achieve NMA’s CORESafety certificati
Slide 56: Our Commitment: Communities and Education
OUR COMMITMENT: COMMUNITIES AND EDUCATION Investing in future generations and communities Education and Training • $900,000 toward sustainable career development programs at Greens Creek Mine since 2011 • More than $1 million in donations toward student scholarships by the Hecla UQAT Foundation in Q
Slide 57: Our Commitment: Indigenous Peoples
OUR COMMITMENT: INDIGENOUS PEOPLES We partner with First Nations in local communities • Hecla Quebec and the Gitanyow Band in upper British Columbia have entered into an exploration agreement that addresses mutual benefits from future exploration activity in the area – including employment, contract
Hecla Mining Company — Tumazos Metals and Natural Resource Conference (August 2020) on 6ix