Hecla Mining Company · NYSE:HL
Hecla Mining — European Gold Forum 2016
36 slides from Hecla Mining's conference presentation, Apr 20, 2016
Slide 1: European Gold Forum
European Gold Forum Strong Performance April 20, 2016
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: A Leading Silver, Gold, Base Metals Producer
A Leading Silver, Gold, Base Metals Producer Four producing mines in North America Quality mining assets Strong margins in both silver and gold Diversified, long-life revenue streams Record silver production of 11.6M oz Record Setting Record silver reserves of 175 million Performance ounce
Slide 4: The Mining Industry Has Made Bad Decisions – But There Are Exceptions
The Mining Industry Has Made Bad Decisions – But There Are Exceptions Silver Reserves Gold Reserves Total Project Write-downs +3% 0% 2013 - 2015 -60% -18% $0 PM Group1 Hecla Peer Group1 Hecla $34.3B Silver Production Gold Production PM Group Hecla +30% +58% 0% +5% 2013 to 2015 Comparison PM Group1 H
Slide 5: Our Mission and Strategy
Our Mission To create long-term value for shareholders from mining silver, gold and associated base metals Our Strategy Consistent, long-lived production that increases and improves over time Long life assets Operating to profit from Strong geologic knowledge to higher metal understanding to reduce
Slide 6: The Strategy Has Worked
The Strategy Has Worked Record (P+P) Ag Reserves for Past 10 Yrs Strong Production Growth 175 Moz 37.5 Moz AgEq1 +162% +243% 14.3 Moz AgEq1 51 Moz 2006 2015 2012 2015 Consistently Strong Liquidity Healthy Margins $16.00 Silver $291M $255M $14.26 $100M $100M 71% $11.42 61% $8.71 $191M $155M $4.58 $5.
Slide 7: Solid Performance Against 2015 Estimates
Solid Performance Against 2015 Estimates Estimates Actual Silver Production (RECORD) 10.5-11 M 11.6 M BEAT Gold Production 185,000 189,327 BEAT Cash Cost, after by-product $6.00 $5.85 BEAT credits, per silver ounce1 Cash Cost, after by-product $825 $772 BEAT credits, per gold ounce1 Capital $150 M $
Slide 8: Higher Reserves With Lower Price Assumptions
Higher Reserves With Lower Price Assumptions 180 $30.00 $26.50 175.4 Moz 175 172.9 Moz $25.00 169.8 Moz 170 165 $20.00 $20.00 160 $17.25 $15.00 155 $14.50 150.0 Moz 150 $10.00 145 $5.00 140 135 $- 2012 2013 2014 2015 Silver Reserves (Moz) Silver Reserve Price 1. See Proven and Probable reserves data
Slide 9: Higher Grade Mines Than Peers
Higher Grade Mines Than Peers BMO Silver Coverage, Silver Equiv. Reserves vs. Grade Higher Grade HL Source: BMO Capital Markets (02/05/2016) –9–
Slide 10: North American Focused Asset Portfolio
North American Focused Asset Portfolio Operations in Greens Creek Admiralty Island, AK Low-Risk + Mining-Friendly Jurisdictions Corporate Offices Opinaca / Wildcat Operating mines Casa Berardi James Bay, QC Vancouver, BC Val d’Or, QC Pre-development Fayolle Val d’Or, QC Coeur d’Alene, ID Rock Creek
Slide 11: Greens Creek: Consistent Low-Cost Production
Greens Creek: Consistent Low- Cost Production Silver Gold Cash cost, after by- Production Production product credits, per Ag oz1 2015, Q1 2016 8.5Moz 2.5Moz 61koz 16koz $3.91/oz TBD 2016E 7.5Moz 52koz $6.00/oz 2016E Capital $48M (Includes $14M for tailings expansion) 2P Reserves 88.7 Moz silver @ 12
Slide 12: Greens Creek: Strong Cash Generation
Greens Creek: Strong Cash Generation Past 26 Years1 Consistently Revenue $4.6 billion Generates Net Income $1.2 billion Positive Free Cash Flow Free Cash Flow2 $983 million 21% Free Cash Flow Conversion Historical Production Past 26 Years Silver Production: 200 Moz Zinc Production: 1.4 M tons Gold P
Slide 13: Our Strategy Has Resulted in A Strong Growth Pipeline
Our Strategy Has Resulted in A Strong Growth Pipeline Rock Creek Potential large silver and Lucky Friday copper mine #4 Shaft Higher grade In permitting Higher cash flow Casa Berardi 20 years+ mine EMCP pit life 2025+ More cash flow Shaft completion San Sebastian IRR 90% 2016 New cash flow 2017+ Min
Slide 14: San Sebastian: Hecla's Newest Mine
San Sebastian: Hecla’s Newest Mine Silver Gold Cash cost, after by-product Production Production credits, per Ag oz1 2015, Q1 2016 81.7koz 1.2Moz 870 oz 9.3koz $6.71/oz TBD 2016E 3.0Moz 20koz $2.00/oz 2016E Capital $2M 2P Reserves 8.0 Moz silver @ 27.7 oz/t Ag M+I Resources 9.3 Moz silver @ 5.9 oz/t
Slide 15: Rapid Progress To Mining
Rapid Progress To Mining Opening Ceremony (December) 1,797 oz/ton Silver 1,808 oz/ton Silver 11.6 oz/ton Gold 7.2 oz/ton Gold 801 oz/ton Silver Blasting, East Francine pit 1.2 oz/ton Gold High Grade Mineralization at East Francine –15–
Slide 16: Improving On A Robust PEA
Improving On A Robust PEA PEA Expectations Current Expectations Silver equivalent production (18 months) 8.1 Moz 13.5 Moz1 Capital (rented mill) $5.8 M $2 M2 Cash cost, after by-product credits, per silver ounce4 $5.49 $2.002 Total after tax cash flow $43 M Expected to be higher (5% discount) IRR 40
Slide 17: Mining Only 20% Of Reserve + Resource
Mining Only 20% Of Reserve + Resource 2015 Resource (AgEq)* Indicated 1.6 Mtons @14.7 oz/ton= 22.9 Moz Potential 100 Moz Inferred 2.7 Mtons AgEq @11.6 oz/ton=31.2 Moz District Mine plan based on 289 Kton Reserve at 46.6 AgEq oz/t, or * Resource is exclusive of Reserve 13.5 Moz AgEq –17–
Slide 18: Casa Berardi: Increasing Gold Exposure
Casa Berardi: Increasing Gold Exposure Cash cost, after by-product Gold Production credits, per gold oz1 2015, Q1 2016 128koz 30.4koz $772/oz TBD 2016E 135koz $700/oz 2016E Capital $61M (Includes $19M for EMCP pit) 2P Reserves 1.3 Moz gold @ 0.13 oz/t gold M+I Resources 1.3 Moz gold @ 0.12 oz/t gold
Slide 19: EMCP Pit: Robust Economics
EMCP Pit: Robust Economics* Increase Production: ~2,300 tpd (2015A) to ~3,100 tpd (2017E), 5,000 Au oz (2016E) to 30,000 Au oz (2017E) Extend Mine Life: 5.5 year project, Principal Pit to follow Lower Cost Per Ounce: expected to decrease cost structure Strong Returns: NPV (12%) of C$37.5M an
Slide 20: Lucky Friday: Solid Performance
Lucky Friday: Solid Performance Cash cost, after by-product Silver Production credits, per silver oz1 2015, Q1 2016 3.0 Moz 977koz $11.23/oz TBD 2016E 3.0Moz $9.00/oz 2016E Capital $37M (Including $20M for #4 Shaft) 2P Reserves 78.7 Moz silver @ 15.5 oz/t Ag M+I Resources 128.1 Moz silver @ 6.2 oz/t
Slide 21: #4 Shaft: Increasing Grade with Depth
#4 Shaft: Increasing Grade with Depth Operational shaft expected in Q4/16 at a total cost of $225 million. $20 million remaining to be spent this year. Production growth expected from higher-grade ore at depth. –21–
Slide 22: Entering High Grade Stope
Entering High Grade 16 Stope Entering high grade 16 Stope at 6300 level Galena est. Mine Face 97.2 opt Silver 47.5% Lead 6500 L Blue oval highlights higher NSR* x thickness (richest part of ore body) 7500 L High grade increases from #4 Shaft 50 feet to ~500 feet in length *NSR – net smelter re
Slide 23: Rock Creek: Long-Term Growth Opportunity
Rock Creek: Long-Term Growth Opportunity Rock Creek could become a 20-30 year mine Acquired Revett for ~$19 million of Hecla stock on June 15, 2015 Rock Creek: Total inferred resource 229 million oz Ag, 2.0 billion lbs Cu¹ Rock Creek permitting ongoing: SEIS received from the Forest Service in Febru
Slide 24: Debt is Long Term with Good Metrics
Debt is Long Term with Good Metrics Senior notes (6.875%) due in Capitalization 2021 is the only substantial Actual indebtedness 2015 Limited covenants Cash and cash equivalents $155 No off balance sheet arrangements Capital lease liability 18 Borrowing 503 Credit Metrics Total debt $521 T
Slide 25: 2016 Expectations
2016 Expectations Cash Cost, 2016E1 Silver 2016E1 Gold Mine after by-product credits, Production (Moz) Production (oz) per silver/gold ounce2 Greens Creek 7.5 52,000 $6.00 per silver oz Lucky Friday 3.0 $9.00 per silver oz San Sebastian 3.0 20,000 $2.00 per silver oz Casa Berardi 135,000 $700 per go
Slide 26: Thank you
Thank you Battery Powered LHD – Now in service at the Lucky Friday -26-
Slide 27: Appendix
Precious metal companies… Appendix –27–
Slide 28: Increasing Share of Modern Demand
Increasing Share of Modern Demand Modern demand increased from 260 M oz in 1992 to 544 M oz in 2014, an increase of 109%, and an annualized increase of 4.0% 1% 5% 18% 36% 51% 30% Modern Modern 26% 29% 4% 1992 2014 Modern Investment Jewelry & Photography Coins & Medals Silverware Source - GFMS -28-
Slide 29: Proven & Probable Reserves
Proven & Probable Reserves (on Dec. 31, 2015 unless otherwise noted) Reserves and Resources - 12/31/2015 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) 10 20.8 0.12 3.7 9.0 210 1 370 910 — Lu
Slide 30: Reserves & Resources Update
Reserves & Resources Update (on Dec. 31, 2015 unless otherwise noted) 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) 13,762 6.1 — 4.1 2.3 83,711 —
Slide 31: Reserves & Resources Update
Reserves & Resources Update (on Dec. 31, 2015 unless otherwise noted) Inferred 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) 3,255 12.8 0.09 2.8 6.7 41,730 300 89,630 219,540 — Lucky Friday (8
Slide 32: 2006 – 2014 Reserve Table
2006 – 2014 Reserve Table 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 628,976 13.10 - 8,
Slide 33: Cash Cost GAAP Reconciliation
Cash Cost GAAP Reconciliation Reconciliation of cash cost, after by-product credits, per silver ounce to cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparable GAAP measurements, for Greens Creek, Lucky Friday and San Sebastian* (dollars and
Slide 34: Cash Cost GAAP Reconciliation
Cash Cost GAAP Reconciliation Greens Creek (In thousands (except ounce and per ounce amounts) Lucky Friday Q4/2015 Q4/2014 Q4/2015 Q4/2014 Cash costs, before by-product credits (1) $ 50,760 $ 51,828 Cash costs, before by-product credits (1) $ 19,632 $ 18,361 By-product credits (40,018) (45,088) By-p
Slide 35: Hecla Adjusted EBITDA Reconciliation to GAAP
Hecla Adjusted EBITDA Reconciliation to GAAP Reconciliation of Adjusted EBITDA to Generally Accepted Accounting Principles (GAAP) Dollars are in thousands Twelve Months Ended 31-Dec-15 Net income $ (86,968) Plus: Interest expense 25,389 Plus: Income taxes 56,310 Plus: Depreciation, depletion and amo
Slide 36: Greens Creek Free Cash Flow Reconciliation
Greens Creek Free Cash Flow Reconciliation 1987-2015 Performance Revenue $4,640,526 Treatment Charges (911,508) Net Revenues 3,729,019 Freight & Selling Expense (188,234) Net Smelter Return 3,540,785 Cost of Goods Sold (1,648,047) NonCash Costs (567,499) Exploration Expense (78,894) Gain/(Loss) of S