Hecla Mining Company · NYSE:HL

Hecla Mining — Dahlman Rose & Co. 4th Annual Precious Metals Conference (January 2013)

63 slides from Hecla Mining's conference presentation, Jan 9, 2013

  1. Slide 1: Dahlman Rose & Co. 4th Annual Precious Metals Conference

    C R E ATI N G V AL U E HECLA PROPERTIES O R G AN I C G R O W TH KEY MILESTONES Dahlman Rose & Co. 4th Annual Precious Metals Conference January 9, 2013

  2. Slide 2: Cautionary Statements

    HECLA MINING COMPANY Cautionary Statements Cautionary Statements Statements made which are not historical facts, such as anticipated payments, litigation outcome, production, sales of assets, exploration results and plans, prospects and opportunities including reserves, resources, and mineralization

  3. Slide 3: Growth and Value in Silver – NYSE:HL

    HECLA MINING COMPANY Growth and Value in Silver – NYSE:HL Largest U.S. Primary Silver Producer Expected 2013 production growth with re-opening of Lucky Friday mine Among lowest operating cost per ounce of major producers Lower risk North American focus Strong cash position – no significant debt; rev

  4. Slide 4: Delivering Growth & Value in a Strong Silver Market

    HECLA MINING COMPANY Delivering Growth & Value in a Strong Silver Market NYSE:HL Record Production Exploration and Cash Flow and Pre- Growth Development Strong Silver Market Low Political Low Cost Risk Producer Strong Balance Sheet 4

  5. Slide 5: North American Focus

    HECLA MINING COMPANY North American Focus  Two long-lived silver mines – 148 mm ounces of high-grade silver reserves  Largest U.S. silver producer  2nd largest zinc  3rd largest lead  Lucky Friday mine expected to resume production in Q1 2013  2 mm ounces annual silver production expected, inc

  6. Slide 6: Planned Re-opening of Lucky Friday

    HECLA MINING COMPANY Planned Re-opening of Lucky Friday  Mine operations/production expected to resume in Q1/2013  Production planned to ramp up to over 2 mm ounces of silver in 2013  Entire Silver Shaft restoration expected to be complete by January 2013  Work to resume on #4 Shaft – access to

  7. Slide 7: 19% Higher Silver Production at Greens Creek in Q3

    HECLA MINING COMPANY 19% Higher Silver Production at Greens Creek in Q3  One of the world’s largest and lowest cost primary silver mines  1st nine months 2012 average cash costs of $2.34 per ounce of silver (non-GAAP)  Full-year production expected at over 6 mm ounces  Record 2012 CapEx projects

  8. Slide 8: Greens Creek Silver Production

    HECLA MINING COMPANY Over 6 Million Ounces of Silver Expected in 2012 Greens Creek Silver Production 23% 1.6 1.4 1.3 Million oz. Q1/2012 Q2/2012 Q3/2012 8

  9. Slide 9: Very Low Cash Costs – Q3 Margin of $31.48 Per Ounce

    HECLA MINING COMPANY Very Low Cash Costs – Q3 Margin of $31.48 Per Ounce $40 $36.59 $35.30 $35.00 Strong Cash Margins $35 $30 $27.05 94% 90% $25 $22.70 97% 96% $20 106% $34.35 $31.48 $/oz $15.63 $34.15 $13.78 $12.10 $14.40 $15 $26.02 $24.16 $10 120% 71% 88% 98% $10.20 $13.72 $16.59 $11.86 $5 $0 $0.2

  10. Slide 10: Strong Cash Flow

    HECLA MINING COMPANY Strong Cash Flow Cash Provided by Operating Activities (millions) $66.3 $60.7 $41.4 $35.2 $50.01 ($10.2) ($118.0) Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2013 Actual Pro-forma 1. Operating cash flow for 2011 was $69.9 million after environmental litigation settlement payment

  11. Slide 11: Solid Balance Sheet

    HECLA MINING COMPANY Solid Balance Sheet Cash and Cash Equivalents (millions) $414 $377 $2661 $279 $233 $232 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 1. After environmental litigation settlement payment of $168 million in the fourth quarter 2011. 11

  12. Slide 12: Record 2012 Exploration/Pre-Development Budget

    HECLA MINING COMPANY Record 2012 Exploration/Pre-Development Budget  Estimated $53 million of exploration and pre-development  Approximately $30 million exploration  Approximately $23 million pre-development  Greens Creek Greens Creek 98.4 mm oz Proven & Probable Silver Reserves  ~$7 million ex

  13. Slide 13: Organic Growth - Greens Creek (Alaska)

    HECLA MINING COMPANY Organic Growth - Greens Creek (Alaska) 200 South - Reserves and Resources 200 South 3-Dimensional 200 South Cross section +650 200 South Reserve 200 South Reserve 200 South Resource 200 South 200 South Resource Resource 13

  14. Slide 14: Organic Growth - Greens Creek (Alaska)

    HECLA MINING COMPANY Organic Growth - Greens Creek (Alaska) NWW, Southwest & Southwest Bench – Exploration Drilling Maki Fault NWW Southwest Southwest Bench 5250 200 South 14

  15. Slide 15: Organic Growth - San Juan Silver

    HECLA MINING COMPANY Organic Growth - San Juan Silver  Historic Bulldog mine produced 25 mm ounces of silver before closing in 1985  Acquired 100% interest in defined mineralization of San Juan Silver property  Silver resources of 37.1 mm ounces 21 Square Mile Land Package  2012 Activities:  Bu

  16. Slide 16: Organic Growth - San Sebastian (Mexico)

    HECLA MINING COMPANY Organic Growth - San Sebastian (Mexico) San Sebastian – Middle Vein Longitudinal 16

  17. Slide 17: Delivering Value: Reserve and Resource Growth

    HECLA MINING COMPANY Delivering Value: Reserve and Resource Growth 115% Increase of Silver Reserves from 2000-2011 281 248 192 148 142 132 118 92 92 69 51 46 44 33 2000 2002 2004 2006 2008 2010 2011 Resources (mm oz) Reserves (mm oz) 17

  18. Slide 18: Development Driving Production Growth

    HECLA MINING COMPANY Development Driving Production Growth Silver Production 15 Historical Forecasted 14 Change in production due to lower 13 grade in mine plan sequence 12 11 10 Silver - mm oz 9 8 7 6 5 4 3 2 1 - 2007 2008 2009 2010 2011 2012E 1 2013E 2014E 2015E 2016E 2017E 1. No production at Luc

  19. Slide 19: New Innovation has Changed Silver Demand

    HECLA MINING COMPANY New Innovation has Changed Silver Demand  February 1900  Long-running popular series of simple and inexpensive cameras  Introduced the concept of the “snapshot”  Transformed the demand of silver  Today new innovation has changed demand again 19

  20. Slide 20: Silver - The Metal of This Age

    HECLA MINING COMPANY Silver - The Metal of This Age  Has the highest electrical conductivity of all the metals  80% more conductive than aluminum  50% more conductive than gold, 6% more conductive than copper  Critically important in the miniaturization of circuits as electronic items become inc

  21. Slide 21: Growing Silver Demand

    HECLA MINING COMPANY Growing Silver Demand Uses of Silver Medicine: silver is added to Solar Panels: 90% of crystalline bandages and wound-dressings, silicon photovoltaic cells use silver catheters and other medical paste; over 100 mm ounces of silver instruments and is a key part of are estimated f

  22. Slide 22: Silver Consumption per Capita

    HECLA MINING COMPANY Silver Consumption per Capita 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 Sou

  23. Slide 23: Silver Price Past Decade

    HECLA MINING COMPANY Silver Price Past Decade Silver Price 2002-2012 $50.00 $45.00 $40.00 $35.00 Silver Price - $/oz $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $- 2002 2004 2006 2008 2010 2012 Source: Bloomberg 23

  24. Slide 24: Growth and Value in Silver

    HECLA MINING COMPANY Growth and Value in Silver – NYSE:HL Projected full-year 2012 silver production of more than 6 million ounces Among lowest operating cost per ounce of major producers Production growth as Lucky Friday plans to resume operations in Q1: silver output expected to ramp up to over 2

  25. Slide 25: Appendix

    C R E ATI N G V AL U E HECLA PROPERTIES O R G AN I C G R O W TH KEY MILESTONES Appendix

  26. Slide 26: Capital Structure & Financial Position

    HECLA MINING COMPANY Capital Structure & Financial Position Share Price $6.111 Market Capitalization $1.7 B Shares Outstanding 285 mm1 Analyst Coverage 9 3-month Weighted Average Daily Volume 3.90 mm1 Cash & Cash Equivalents $232 mm2 Revolving Credit Agreement (Undrawn) $150 mm Debt None Total Liqui

  27. Slide 27: Dividend Policy

    HECLA MINING COMPANY Dividend Policy  Silver-linked dividend policy commenced in Q3/11  Minimum annual dividend of $0.01 per share paid quarterly Annual Dividend Per Share ($) $0.30 $0.25 $0.20 $0.15 $0.10 $0.05 $0.00 $30.00 $35.00 $40.00 $45.00 $50.00 $55.00 $60.00 Average Realized Silver Price N

  28. Slide 28: Silver Space

    HECLA MINING COMPANY Silver Space 28 Source: MEG, BMO Capital Markets (12/17/12)

  29. Slide 29: Silver Space

    HECLA MINING COMPANY Silver Space 29 Source: Company Filings, BMO Capital Markets (12/17/12)

  30. Slide 30: Silver Space

    HECLA MINING COMPANY Silver Space 30 Source: Company Filings, BMO Capital Markets (12/17/12)

  31. Slide 31: Greens Creek (Alaska) - 2011 Overview

    HECLA MINING COMPANY Greens Creek (Alaska) - 2011 Overview 2011 Probable Reserves (mm oz) 98.4 Silver Resources (mm oz) 55.2 Cash Costs (net of by-products) $ (1.29)/oz1 Silver Grade (oz/t) 11.5 Tons Milled 772,069 Ag Produced (oz) 6,498,337 Au Produced (oz) 56,818 Lead Produced (t) 21,055 Zinc Prod

  32. Slide 32: Lucky Friday & Silver Valley (Idaho)

    HECLA MINING COMPANY Lucky Friday & Silver Valley (Idaho) 2012 Work Plan  Remove loose cementitious material and unused utilities from the Silver Shaft  Install a metal brattice which should improve safety & functionality of Silver Shaft  5900 haulage way bypass construction  Other surface and u

  33. Slide 33: Excellent Progress at Lucky Friday (Idaho)

    HECLA MINING COMPANY Excellent Progress at Lucky Friday (Idaho) 33

  34. Slide 34: Excellent Progress at Lucky Friday (Idaho)

    HECLA MINING COMPANY Excellent Progress at Lucky Friday (Idaho) 34

  35. Slide 35: Bypass Construction at Lucky Friday (Idaho)

    HECLA MINING COMPANY Bypass Construction at Lucky Friday (Idaho) 35

  36. Slide 36: Lucky Friday - #4 Shaft

    HECLA MINING COMPANY Lucky Friday - #4 Shaft  Upon restart of #4 Shaft construction, work is expected to focus on shaft sinking & station development activities  Total project is 45% complete and 80% of major procurements have been ordered or installed  Capital expenditures for 2011 were $42 mm f

  37. Slide 37: Q3 2012 - Exploration Programs

    HECLA MINING COMPANY Q3 2012 - Exploration Programs Highlights of Q3/2012 exploration program consist of:  Underground definition and exploration drilling upgrade and expand resources at 200 South, Gallagher, South West Bench, 5250 and 9a Zones at Greens Creek  Intersections of mineralization at K

  38. Slide 38: Q3 2012 - Pre-Development Programs

    HECLA MINING COMPANY Q3 2012 - Pre-Development Programs Highlights of Q3/2012 pre-development program consist of:  The development contractor has completed the initial structural steel support for the portal section of the Bulldog decline and advanced the drift to 110 feet as of October 26th  The

  39. Slide 39: Lucky Friday (Idaho) - 2011 Overview

    HECLA MINING COMPANY Lucky Friday (Idaho) - 2011 Overview 2011 Proven Reserves (mm oz) 29.6 Probable Reserves (mm oz) 19.7 Silver Resources (mm oz) 161.3 Cash Costs (net of by-products) $ 6.47/oz1 Silver Grade (oz/t) 10.7 Tons Milled 298,672 Ag Produced (oz) 2,985,339 Lead Produced (t) 18,095 Zinc P

  40. Slide 40: Organic Growth - Greens Creek (Alaska)

    HECLA MINING COMPANY Organic Growth - Greens Creek (Alaska)  Very large and under-explored 27- square-mile land position  Over 30 miles of unexplored mine contact (red-trace) with multiple targets  Surface exploration only resumed East Ridge in 1999 due to establishment of Lil’ Sore North Land Ex

  41. Slide 41: Greens Creek - Exploration

    HECLA MINING COMPANY Greens Creek - Exploration Underground Exploration Targets Looking NE East Ore extension SW Bench 5250 South Resource Extension Gallagher 200 South Resource extensions 41

  42. Slide 42: Lucky Friday & Silver Valley - Exploration

    HECLA MINING COMPANY Lucky Friday & Silver Valley - Exploration 42

  43. Slide 43: Organic Growth - Lucky Friday (Idaho)

    HECLA MINING COMPANY Organic Growth - Lucky Friday (Idaho) Lucky Friday Expansion Area - Increased Grade and Thickness at Depth *As of 2010 43

  44. Slide 44: Organic Growth - Star Pre-development

    HECLA MINING COMPANY Organic Growth - Star Pre-development  Hecla has re-opened the Star for definition & exploration drilling  Portal rehabilitation and ventilation adit have been successfully completed  A Preliminary Economic Assessment (PEA) of the “Upper Country” Star mine complex is under re

  45. Slide 45: Organic Growth - Star Pre-development

    HECLA MINING COMPANY Organic Growth - Star Pre-development Silver Valley (Star) – Moffitt & Noonday Vein Resource 2011 Noonday NSR Block Model Potential Resource Additions Moffitt Star Noonday Stopes Morning Diamond Drill Hole Diamond Drill Hole Potential Resource Additions Noonday Star 2000 Level 5

  46. Slide 46: San Sebastian (Mexico)

    HECLA MINING COMPANY San Sebastian (Mexico) 300+ Square Mile Land Package 46

  47. Slide 47: Organic Growth - San Sebastian (Mexico)

    HECLA MINING COMPANY Organic Growth - San Sebastian (Mexico) Andrea Vein - Potential New Silver and Gold-Rich Resource in 2012 NW 35º SE Looking NE SEPT 2010 Don Sergio Mine Workings (Projected to Section ) DRILL PIERCE POINTS Programmed JUNE 2011 In Progress or Assays Pending Completed No Vein, Fau

  48. Slide 48: Organic Growth - San Juan Silver (Colorado)

    HECLA MINING COMPANY Organic Growth - San Juan Silver (Colorado) Bulldog Development Vent Fan & Line Portal Sets & Face 48

  49. Slide 49: Organic Growth - San Juan Silver (Colorado)

    HECLA MINING COMPANY Organic Growth - San Juan Silver (Colorado) Bulldog Development Rock Bolting Flash Coating 49

  50. Slide 50: Organic Growth - San Juan Silver (Colorado)

    HECLA MINING COMPANY Organic Growth - San Juan Silver (Colorado) Bulldog Infrastructure Batch Plant, Shop & Admin Buildings 50

  51. Slide 51: Organic Growth - Exploration Upside

    HECLA MINING COMPANY Organic Growth - Exploration Upside Increasing Exploration Expenditures Greens Creek, AK Lucky Friday/ Rio Grand Silver, San Sebastian, MX Silver Valley, ID CO 2012 Activities Surface & U/G Surface & U/G Surface & U/G Surface drilling & drilling, geochem, drilling, geochem drill

  52. Slide 52: Coeur d'Alene Basin Litigation

    HECLA MINING COMPANY Coeur d’Alene Basin Litigation  Court approved consent decree for the Coeur d’Alene River Basin environmental litigation on September 8, 2011  Settled Hecla Limited’s historic environmental liability in the Basin and the remaining obligations in the Box  Hecla expects to pay

  53. Slide 53: Historical Milestones

    HECLA MINING COMPANY Historical Milestones Over a Century of Silver Mining Experience 1891  Hecla Mining Company is incorporated & mining commences at the Star 1958  Becomes the largest shareholder in the Lucky Friday Silver-Lead Mines Company 1964  Merger between Hecla and Lucky Friday Silver-Le

  54. Slide 54: Reserves & Resources Update (on Dec. 31, 2011)

    HECLA MINING COMPANY Reserves & Resources Update (on Dec. 31, 2011) Silver Gold Lead Zinc Silver Gold Lead Zinc Mine Tons (Oz/ton) (Oz/ton) (%) (%) (Ounces) (Ounces) (Tons) (Tons) Proven and Probable Reserves Proven Ore Reserves Lucky Friday Unit, USA 2,345,500 12.6 - 7.8 3.0 29,573,900 - 183,100 70

  55. Slide 55: Total Cash Cost GAAP Reconciliation

    HECLA MINING COMPANY Total Cash Cost GAAP Reconciliation Reconciliation of Cash Costs per Ounce to Generally Accepted Accounting Principles (GAAP) (dollars and ounces in thousands, except per ounce - unaudited) Q3/12 Q2/12 Q1/12 2011 2010 2009 2008 2007 2006 (1) Total cash costs $ 5,701 $ 1,410 $ 2,

  56. Slide 56: Total Cash Cost GAAP Reconciliation

    HECLA MINING COMPANY Total Cash Cost GAAP Reconciliation Reconciliation of Cash Costs per Ounce to Generally Accepted Accounting Principles (GAAP) (dollars and ounces in thousands, except per ounce - unaudited) YTD YTD Q3/12 Q3/11 September 30, 2012 September 30, 2011 1 Total cash costs $ 5,701 $ 1,

  57. Slide 57: Adjusted Earnings GAAP Reconciliation

    HECLA MINING COMPANY Adjusted Earnings GAAP Reconciliation Reconciliation of Net Income Applicable to Common Shareholders (GAAP) to Earnings Before Adjustments (dollars and ounces in thousands, except per ounce - unaudited) Three Months Ended Nine Months Ended September 30 September 30 2012 2011 201

  58. Slide 58: Strong Silver Market Fundamentals

    HECLA MINING COMPANY Strong Silver Market Fundamentals Silver Demand*  Mine production rise of 40% over past 20 years to 700 mm ounces 1,900 Technology  Modern/technology-driven demand up 1,700 Photography Jewelry & Silverware 78% in same period to nearly 500 mm Coins & Medals ounces – nearly half

  59. Slide 59: Supply & Demand Conclusions

    HECLA MINING COMPANY Supply & Demand Conclusions Silver Supply and Demand  Present silver supply is approximately 950 mm oz and Total Silver Supply Silver Demand (Excl. Investment) should increase by 90 mm oz to 1,400 Investment Demand 1.05 bn oz by 2015 1,200  Silver demand of 1.06 bn oz today is

  60. Slide 60: Silver Demand

    HECLA MINING COMPANY Silver Demand Silver Demand 900 1990 – 2011 Increase 800 Coins & Medals 248% 700 Jewelry & Silverware 9% 600 500 MM oz -70% 400 Photography 78% 300 200 Industrial Demand 100 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201

  61. Slide 61: Silver Demand

    HECLA MINING COMPANY Silver Demand Increasing Share of Industrial Demand  Industrial demand increased from 274 mm oz in 1990 to 487 mm oz in 2011, an increase of 78%, and an annualized increase of 3.5% 5% 16% 26% 38% 47% 11% Industrial Industrial 20% 31% 6% 1990 2011 Industrial Investment Jewelry &

  62. Slide 62: Properties of Silver

    HECLA MINING COMPANY Properties of Silver A Precious Metal…A Currency…A Lifestyle Metal Source – Clear Science 2010 62

  63. Slide 63: ETFs Demonstrate Strong Investment Demand

    HECLA MINING COMPANY ETFs Demonstrate Strong Investment Demand Silver ETF Holdings 700 Other** Central Fund of Canada 600 ETF Securities* ZKB 500 iShare Silver Ounces (mm) 400 300 200 100 0 2006 2007 2008 2009 2010 2011 2012 *Includes ETFs London, Australia, NYSE, Glitter and WITE ** Includes Julius

Hecla Mining Company — Dahlman Rose & Co. 4th Annual Precious Metals Conference (January 2013) on 6ix