Hecla Mining Company · NYSE:HL
Hecla Mining — Investor Presentation (September 2023)
51 slides from Hecla Mining's investor presentation, September 2023
Slide 1: Hecla Mining Company September 2023 Update
HECLA MINING COMPANY United States’ Largest Silver Producer and Soon To Be Canada’s September 2023 Update 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) Notice Regarding Reserves and Resources Unless otherwise stated herein, the reserves stated in this release represent estimates at December 31, 2022, which could be economically and legally extracted or produced at the time of the reserve determination. Estimates of pr
Slide 4: Hecla is the Fastest Growing Established Silver Miner
HECLA IS THE FASTEST GROWING ESTABLISHED SILVER MINER Production growth in best jurisdictions, 20Moz by 2025 Largest U.S. Silver Producer • Produces 45% of U.S. Silver • On track to be Canada’s largest silver producer by 2024 • Largest and highest-grade silver reserve base in the U.S.; largest and h
Slide 5: Hecla Mines 45% of All Silver Produced in the USA
HECLA MINES 45% OF ALL SILVER PRODUCED IN THE USA Half of the world’s production is from Mexico, Peru and China; U.S./Canadian production is scarce 2022 U.S. Silver Production* (Moz) Hecla is the Largest U.S. Silver Producer** 14.2 Hecla, 44% Other, 56% 6.6 3 Countries Produce ~51% of World Producti
Slide 6: Largest U.S./Canada Reserve Base
LARGEST U.S./CANADA RESERVE BASE 4th largest silver reserve base, silver reserve grades are among the highest Silver Reserves and Reserve Grade** Silver Reserves (MM oz) Silver Grade (g/t) * Hatched area represents US and Canadian reserves 577 457 448 313 246 241 217 205 169 117 108 62 62 23 16 34 3
Slide 7: Low-Cost Profile Silver Mines
LOW-COST PROFILE SILVER MINES Hecla’s AISC is at the lower end of silver peers Silver AISC of Hecla and Silver Peers*: 12 Months ended December 31, 2022 US$/oz AISC Hecla Silver Peers* 16.5 20.0 13.1 15.6 19.7 16.3 11.3 11.5 - 20,000 40,000 60,000 80,000 100,000 Silver Production (Kt) Source: S&P Gl
Slide 8: Leading Dividend Policy with Silver Linked Dividend
LEADING DIVIDEND POLICY WITH SILVER LINKED DIVIDEND More cash returned to shareholders as dividend yield increases synchronously with silver prices Industry’s only silver-linked dividend policy pays an annual normal dividend (1.5 cents per share) plus a silver price-linked dividend that starts at $2
Slide 9: Operational Review
OPERATIONAL REVIEW NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 9
Slide 10: Greens Creek: Flagship Mine
GREENS CREEK: FLAGSHIP MINE 11th Largest silver mine in the world Since 1987, Greens Creek has: Location: Admiralty Island, Alaska Mined more than Generated more than • 20 million tons, containing • $2.8 billion in cash flow from Type: Underground • 345Moz Silver operations Ag, Au, Zn, Pb • 2.8Moz G
Slide 11: Greens Creek: Free Cash Flow Engine
GREENS CREEK: FREE CASH FLOW ENGINE Consistent performance, low costs drive robust free cash flow generation Low-cost structure, high grades generate significant free cash flow Greens Creek throughput has grown 15% since purchase in 2008 Since 1987: Cumulative Cash Flow from Greens Creek Production
Slide 12: Lucky Friday: Innovation Driven Production Growth
LUCKY FRIDAY: INNOVATION DRIVEN PRODUCTION GROWTH Recognized for innovation by Society for Mining, Metallurgy and Exploration (SME) • Record year 2022 in throughput, highest silver production in the past 20 years Reserve Life: Location: 17 Years Idaho • Ratified 6-year contract with the Union Type:
Slide 13: Lucky Friday: Positioned for Long-Term Value
LUCKY FRIDAY: POSITIONED FOR LONG-TERM VALUE Higher grades at depth are supported by success of UCB mining method Lucky Friday: Long Section 30 Vein – *AgEq Grade (opt) < 10 10 - 20 20 - 30 30 - 35 > 35 December 31, 2022 *Ag Equivalent Values Based on metal prices of $17/oz Ag, $0.90/lb Pb, and $1.1
Slide 14: Union Ratification of Labor Contract Solidifies Lucky Friday's Growth
UNION RATIFICATION OF LABOR CONTRACT SOLIDIFIES LUCKY FRIDAY’S GROWTH Six-year agreement reflects a strong working relationship Ratification in January 2023, No material changes, work rules largely unchanged Key Terms Term of Agreement - 6 years and 4 months • Longest contract in the history of the
Slide 15: Underhand Closed Bench (UCB) Mining Method
UNDERHAND CLOSED BENCH (UCB) MINING METHOD Large scale blasting proactively manages seismic risk and increases throughput UCB Method Uses advanced drilling and Is safer: miners work blasting techniques to below engineered fragment the mineralized backfill and above a ore zone de-stressed zone Allows
Slide 16: Lucky Friday: Best Decade in 80 Year History Is Ahead
LUCKY FRIDAY: BEST DECADE IN 80 YEAR HISTORY IS AHEAD UCB is contributing to productivity and safety improvements UCB method’s success and higher grades mined at depth position Lucky Friday to be a flagship asset for the next decade Lucky Friday: Silver Production by Decade* (Million oz) ~2x 50 30 2
Slide 17: Keno Hill: Largest Primary Silver Reserves in Canada
KENO HILL: LARGEST PRIMARY SILVER RESERVES IN CANADA 2023 Silver production to exceed 2.5Moz, Up to 4Moz in 2024 • 33% increase in silver 33% increase in reserves to nearly silver reserves 50Moz50Moz to nearly at 22.5atoz/ton 22.5 oz/ton Reserve Location: Life:Canada Yukon, 8+ Years • Restarted Full
Slide 18: Keno Hill: 440 Tons per Day by Year End 2023
KENO HILL: 440 TONS PER DAY BY YEAR END 2023 Larger deposit - Bermingham development on plan Initial Production Areas Development plan: Production shapes: Existing Development: Bear Zone Arctic Zone Looking southeast Bermingham Deep ~100m NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 18
Slide 19: Casa Berardi: Transitioning to Open Pit
CASA BERARDI: TRANSITIONING TO OPEN PIT Pivoting to long-term value, free cash flow generation over the next four years Location: La Sarre, Quebec • Strategic pivot to transition to full open pit operations by mid-2024 • Closing underground operations in a phased process, East Mine closed in July 20
Slide 20: Montana Assets: 3rd Largest Copper Deposit in U.S.
MONTANA ASSETS: 3rd LARGEST COPPER DEPOSIT IN U.S. Working to advance underground data collection and permitting Permitting Strategy – Taking a reset Site Overview • Executing strategy to expedite authorization for underground evaluation and data collection via existing infrastructure. • Focus on pe
Slide 21: Financial Review
FINANCIAL REVIEW NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 21
Slide 22: Committed to a Strong Balance Sheet
COMMITTED TO A STRONG BALANCE SHEET Financial flexibility and leverage ratio of < 2x is the top priority H1/2023: Free cash flow from Net debt to adjusted EBITDA of Cash and cash equivalents of silver operations* is $107 million(2) 2.1, due to investments in Keno $106.8 million, liquidity ~ of $219
Slide 23: Silver Margins Are Best in the Industry
SILVER MARGINS ARE BEST IN THE INDUSTRY Strong free cash flow generation deployed in production growth • From 2020 – H1/2023, Greens Creek and Lucky Friday have generated: • > $780 million in cash flow from operations, > $560 million in free cash flow2 Strong Silver Margins Free Cash Flow: Greens Cr
Slide 24: Revenue, Production and Cost Highlights: H1/2023
REVENUE, PRODUCTION AND COST HIGHLIGHTS: H1/2023 Silver Gold Lead Zinc Silver Production: 7.87Moz Total Cost of Sales(7): $197.6M Cash Costs, after by-product credits(5): $2.70/oz 15% AISC, after by-product credits(4): $10.21/oz Realized Price: $23.12/oz Gold Production: 74.8Koz 12% 40% Total Cost o
Slide 25: Silver Market
SILVER MARKET NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 25
Slide 26: The World's Growing Needs for Silver
THE WORLD’S GROWING NEEDS FOR SILVER Demand increased by almost 500Moz in two decades 23 YEAR CHANGE IN DEMAND PERIODS OF SILVER DEMAND Moz 1999 2022 % Increase Five distinct periods of silver demand, three are strengthening Industrial 343 576 68% Photography 246 28 -89% Monetary by governments 2000
Slide 27: Silver Supply Comes from Mine Production & Recycling
SILVER SUPPLY COMES FROM MINE PRODUCTION & RECYCLING Mine production accounts for more than 80% of supply 51% of mine production comes from Mexico, China and Peru Silver Supply (Millions oz) Mine Production Recycling Net Hedging Supply Net Official Sector Sales 1,012 1,000 999 1,004 1,005 1,025 958
Slide 28: Silver Mine Supply Dependent on Other Metals
SILVER MINE SUPPLY DEPENDENT ON OTHER METALS 70% of the supply is a by-product of gold, copper, lead, and zinc mines Primary Silver Gold Copper Lead/Zinc 29% 29% 30% 32% 33% 31% 31% 30% 21% 23% 23% 23% 23% 26% 25% 26% 17% 15% 15% 15% 16% 16% 15% 16% 32% 32% 31% 29% 28% 27% 28% 28% 2015 2016 2017 201
Slide 29: Silver Demand: Silver Is Critical in Green Energy
SILVER DEMAND: SILVER IS CRITICAL IN GREEN ENERGY Green energy demand is new and growing – bolstered by photovoltaics Silver Demand Consumer Products/Industrial 12% CAGR (Millions oz) (Millions oz) 2022: 1,117Moz 2022: 557Moz over 9 years Other 45 4% Other 136 24% Photovoltaics Jewelry & 140 Silverw
Slide 30: Solar Energy Is Expected to Grow
SOLAR ENERGY IS EXPECTED TO GROW 1 Gigawatt of solar capacity requires half a million ounces of silver Solar could account for 33% of total U.S. energy generation by 2050 U.S. Electricity Generation by Fuel: 2000 - 2050 gigawatt 2022 history projections Over the next 28 years need ~750 Moz 6,000 jus
Slide 31: Silver's Photovoltaic (PV) Demand Is Growing
SILVER’S PHOTOVOLTAIC (PV) DEMAND IS GROWING Compounded growth rate of 12% from 2013 to 2022 PV Installations (Gigawatts) and Silver Loadings*,** Silver used in PVs, 2013 - 2025F** PV Installations Ag Loading (Million oz) PV Installations Silver Loading 241 Gigawatts Index 2013 = 100 450 100 416 400
Slide 32: Silver Deficit Is Expected to Continue
SILVER DEFICIT IS EXPECTED TO CONTINUE Silver demand is buoyed by photovoltaics with newer silver technologies that use more silver • In 2022, silver deficit was 238 Moz, 2023 forecast deficit is 142 Moz* • Expect silver deficit to persist with increasing use of silver in PVs, • Newer PV technologie
Slide 33: Silver – Widening Gap Between Supply & Demand
SILVER – WIDENING GAP BETWEEN SUPPLY & DEMAND Gap expected to increase even if industrial demand growth is only 1.5% 2022 deficit of 238 Moz, 2023F deficit of Silver’s total demand in 2030 is expected to Supply needs to grow by >70Moz per year 142 Moz reach ~1,187Moz if demand stays on the by 2030 w
Slide 34: Exploration
EXPLORATION NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 34
Slide 35: Hecla's 2023 Exploration
HECLA’S 2023 EXPLORATION Company wide focus on expanding and discovery of resources Greens Creek Focused on resource expansion and conversion to expand and upgrade multiple ore zones Keno Hill Definition drilling at Bermingham Bear Zone and the Flame & Moth; Exploration drilling on underexplored Car
Slide 36: Keno Hill Silver District: Excellent Potential
KENO HILL SILVER DISTRICT: EXCELLENT POTENTIAL Historical Production of over 200Moz of silver at 40 oz Ag per ton: 2x Greens Creek Property contains excellent exploration potential to host deposits similar in size and grade to the Hector-Calumet, Bermingham, or Flame and Moth deposits Numerous untes
Slide 37: Keno Hill: 2022 Exploration Success at 3 Targets
KENO HILL: 2022 EXPLORATION SUCCESS AT 3 TARGETS Initial exploration drilling confirms significant exploration potential within large district Plan Map Showing the Location of 3 Exploration Targets Coral Wigwam Longitudinal Section Looking NW 101.5 oz/ton silver over 7.3 feet Including: 2,522.1 oz/t
Slide 38: Greens Creek: Underground Drilling Is Adding Resources
GREENS CREEK: UNDERGROUND DRILLING IS ADDING RESOURCES Underground Surface District Exploration Targets From 1989 to 2022, Greens Creek has mined 22 Mtons containing: • 345Moz of silver • 2.8Moz of gold • 4.0Blbs of zinc • 1.6Blbs of lead Upgrading Resources (200 South and East), Exploring (East, 52
Slide 39: ESG
ESG NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 39
Slide 40: Commitment to Responsible Mining
COMMITMENT TO RESPONSIBLE MINING Complementary ESG Vision and Track-Record Safety Small Environmental Footprint Large Community Benefit Net zero on emissions in 2021 Well-established safety culture Hecla Charitable Foundation and 2022* San Sebastian Mine received the Casa Berardi awarded the John 20
Slide 41: Sustainability Rating Agency Scores
SUSTAINABILITY RATING AGENCY SCORES Significant improvements since 2019 Agency Progression in ESG Scores • Overall Score increased from 53rd 38 percentile to 74th percentile • Governance Score increased from 24 60th percentile to 78th percentile 15 13 • Environmental Score increased from 52nd percen
Slide 42: Hecla Is Among the Safest Mining Companies
HECLA IS AMONG THE SAFEST MINING COMPANIES Implemented NMA’s CORESafety in 2012, became industry leader All – Injury Frequency Rate (AIFR) 7 80% 6 reduction 5 since SHMS* inception 4 3 2 1 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 30-Jun-23 ~45,000 hours of safety and health Reduced A
Slide 43: Hecla Changes Lives
HECLA CHANGES LIVES Significant private employer within the communities we operate, jobs and benefits that last a lifetime Total economic impact – 2022 Hecla Charitable Foundation $833M $4+ million to area non-profits Nevada Operations Hecla Corporate $38M $103M Grouse Creek Greens Creek $564K Local
Slide 44: Endnotes
ENDNOTES 1. Net debt to adjusted EBITDA is a non-GAAP measurement, a reconciliation of adjusted EBITDA and net debt to the closest GAAP measurements of net income (loss) and debt can be found in the appendix. It is an important measure for management to measure relative indebtedness and the ability
Slide 45: GAAP Reconciliations
GAAP RECONCILIATIONS NYSE: HL RESPONSIBLE. SAFE. INNOVATIVE. l 45
Slide 46: Adjusted EBITDA Reconciliation to GAAP
ADJUSTED EBITDA RECONCILIATION TO GAAP Reconciliation of Net Income (GAAP) to Adjusted EBITDA (non-GAAP) Trailing Twelve Months Dollars in thousands (USD) Q1 2023 Q2 2023 Net (loss) income $(44,674) $(46,843) Plus: Interest expense 42,552 42,358 Plus/(Less): Income and mining tax provision (benefit)
Slide 47: Cash Cost and AISC Reconciliation to GAAP
CASH COST AND AISC RECONCILIATION TO GAAP Silver Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ounce (n
Slide 48: Free Cash Flow (Non-GAAP) Reconciliation
FREE CASH FLOW (NON-GAAP) RECONCILIATON Greens Creek, Lucky Friday, and Casa Berardi Reconciliation of Cash provided by operating activities (GAAP) to Free Cash Flow (non-GAAP) in thousands FY 2020 FY 2021 FY 2022 Greens Creek Cash provided (used) by operating activities $176,975 $208,715 $150,621 A
Slide 49: Cash Cost and AISC Reconciliation to GAAP: Greens Creek
CASH COST AND AISC RECONCILIATION TO GAAP Greens Creek Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ou
Slide 50: Cash Cost and AISC Reconciliation to GAAP: Lucky Friday
CASH COST AND AISC RECONCILIATION TO GAAP Lucky Friday Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ou
Slide 51: Cash Cost and AISC Reconciliation to GAAP: Casa Berardi
CASH COST AND AISC RECONCILIATION TO GAAP Casa Berardi Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Costs, Before By-product Credits, per Ounce and All-In Sustaining Costs, After By-product Credits, per Ou
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