Second Quarter Earnings Conference Call by jennyyingdi

VIEWS: 3 PAGES: 30

									THE SILVER PRODUCER   F I N AN C I AL O V E R V I EW    S I L V ER M AR K E T   HECLA PROPERTIES




          Second Quarter 2011
        Earnings Conference Call
                                            August 9, 2011
                                                                                                  HECLA MINING COMPANY




Cautionary Statements
Cautionary Note Regarding Forward Looking Statements
Statements made which are not historical facts, such as anticipated payments, litigation outcome, (including outcomes of
settlement negotiations), production, sales of assets, exploration results and plans, costs, and prices or sales performance
are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and involve a
number of risks and uncertainties that could cause actual results to differ materially from those projected, anticipated,
expected or implied. These risks and uncertainties include, but are not limited to, metals price volatility, volatility of metals
production and costs, environmental and litigation risks, operating risks, project development risks, political risks, labor
issues, ability to raise financing and exploration risks, and results. Refer to the company's Form 10-K and 10-Q reports for a
more detailed discussion of factors that may impact expected future results. The company undertakes no obligation and has
no intention of updating forward-looking statements other than as may be required by law.

Cautionary Note Regarding Estimates of Measured, Indicated and Inferred Resources
The United States Securities and Exchange Commission permits mining companies, in their filings with the SEC, to disclose
only those mineral deposits that a company can economically and legally extract or produce. We use certain terms on this
release, such as “resource,” “other resources,” and “mineralized materials” that the SEC guidelines strictly prohibit us from
including in our filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K and Form
10-Q. You can review and obtain copies of these filings from the SEC’s website at www.sec.gov.

Cautionary Note Regarding Total Cash Cost Reconciliation
Total cash cost per ounce of silver represents a non-U.S. Generally Accepted Accounting Principles (GAAP) measurement.
A reconciliation of total cash cost to cost of sales and other direct production costs and depreciation, depletion and
amortization (GAAP) can be found in the Appendix.




2                                                Q2 2011 Conference Call
                                                   HECLA MINING COMPANY




Overview

     Second Quarter Overview
     Silver Market
     Hecla Properties
     Summary




3                        Q2 2011 Conference Call
                                                                                                                 HECLA MINING COMPANY




Second Quarter 2011 Highlights
                                                                            Q2                Q2             Six Months          Six Months
                                                                           2011              2010            Ended June          Ended June
                                                                                                              30, 2011            30, 2010

    SILVER PRODUCTION (mm oz)                                               2.3                2.6                4.7                 5.1
    TOTAL CASH COST ($/oz)1,2                                              0.52              (1.82)              0.79               (2.41)
    REVENUES ($ mm)                                                        117.9              88.6              254.2               168.5
    EARNINGS Basic Earnings per Share ($)                                  0.12               0.06               0.27                0.13
    CASH FLOW Operational Cash Flow ($ mm)                                 66.3               57.0              127.2                74.8


                  Second quarter revenues of                                                Lowest-cost silver
                   $117.9 mm                                                                  producer in North America
                  Second quarter cash flow from                                             Clean balance sheet with
                   operations of $66.3 mm                                                     $377.4 mm in cash and no
                  Gross profit $67.8 mm, and net                                             debt
                   income to common
                   shareholders $33.2 mm
    1. Total cash cost per ounce of silver represents a non-U.S. Generally Accepted Accounting Principles (GAAP) measurement. A reconciliation of total
       cash costs to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found in the Appendix.
    2. By-product prices – Q2/11: $1,504 Au, $1.16 Pb, $1.02 Zn; Q2/10: $1,196 Au, $0.88 Pb, $0.92 Zn; First Half 2011: $1,444 Au, $1.17 Pb, $1.06 Zn;
       First Half 2010: $1,152 Au, $0.95 Pb, $0.98 Zn

4                                                         Q2 2011 Conference Call
                                                                                  HECLA MINING COMPANY




    Second Quarter 2011 Realized Metal Prices

                      Silver                                                    Gold
                      ($/oz)                                                    ($/oz)
                                $35.80                                                    $1,550
                                                                       $1,246


            $18.96                                                               24%
                      89%




         Q2 2010            Q2 2011                                Q2 2010             Q2 2011


                      Zinc                                                      Lead
                      ($/lb)                                                    ($/lb)
                                 $1.02                                                     $1.15
              $0.89
                                                                     $0.93
                      15%
                                                                                 24%




          Q2 2010            Q2 2011                               Q2 2010             Q2 2011

5                                        Q2 2011 Conference Call
                                                                                                                           HECLA MINING COMPANY




Second Quarter 2011- Low Cash Costs
             $40                                                                                                          $36.49             $35.80
             $35

             $30

             $25                                                                                      $22.70

             $20
                                                                                                                          $35.46
      $/oz




                                           $13.78                                 $15.63                                                     $35.28
                                                               $14.40
             $15        $12.10
                                                                                                      $24.16
             $10                                               $10.20
                                           $16.59                                 $13.72
                        $11.86
             $5

             $0
                         $0.24                                  $4.20              $1.91                                  $1.03
                                                                                                     ($1.46)                                  $0.52
             ($5)                          ($2.81)
                         2006                2007               2008                2009               2010               Q1/11               Q2/11

                                    Cash Cost Per Ounce                    Cash Margin                 Realized Silver Price


*   Total cash cost per ounce of silver represents non-U.S. Generally Accepted Accounting Principles (GAAP) measurements. A reconciliation of total cash costs to
    cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) can be found in the Appendix.

6                                                             Q2 2011 Conference Call
                                                                                         HECLA MINING COMPANY




Second Quarter 2011 Net Income
    Income Applicable to Common Shareholders                                    Basic Earnings Per Share
                     (millions)                                                                    $0.12
                                            $33.2




                                                                            $0.06

             $13.7




       Q2 2010                    Q2 2011                             Q2 2010                Q2 2011




7                                           Q2 2011 Conference Call
                                                                    HECLA MINING COMPANY




Second Quarter 2011 Cash Flow
                          Cash Flow from Operations
                                       (millions)




                                           $85.8



                                                                          $66.3
                                                            $60.9
        $57.0


                     $41.9




    Q2 2010     Q3 2010             Q4 2010            Q1 2011       Q2 2011




8                            Q2 2011 Conference Call
                                                                   HECLA MINING COMPANY




Second Quarter 2011 - Strong Balance Sheet
                           Cash and Cash Equivalents
                                  (millions)

                                                                                $377


                                  91%                       $322
                                                $284


                       $217
            $197




    Q2/10          Q3/10                Q4/10           Q1/11           Q2/11



9                             Q2 2011 Conference Call
                                                                                             HECLA MINING COMPANY




Silver and Gold Price Performance
                   $1,720                                                                                 $42


                   $1,700
                                                                                                          $41
                   $1,680




                                                                                                                Silver - $/oz
     Gold - $/oz




                   $1,660                                                                                 $40


                   $1,640
                                                                                                          $39
                   $1,620


                   $1,600                                                                                 $38
                            1-Aug      2-Aug      3-Aug      4-Aug      5-Aug     6-Aug   7-Aug   8-Aug

                                                              Gold       Silver

10           Gold and Silver prices are Comex prices, Source – Metalprices.com
                                                                                HECLA MINING COMPANY




Organic Growth - Overview

     Construction      •       #4 Shaft Project Lucky Friday (completion expected in 2014)


                               Potential Mine Re-Opening                   Mine Development
                           •   Star, Silver Valley               •   Mine Optimization, Lucky Friday
     Scoping Studies                                             •   29 Ramp, Greens Creek
                           •   Bulldog, San Juan Silver
                           •   San Sebastian, MX



     Exploration       •       Expanding scope of exploration program – 2011 increased budget




11                                     Q2 2011 Conference Call
                                                                                       HECLA MINING COMPANY




Growth Opportunities - Ideally Positioned
                                             Increased Silver Production
                      16


                      14
                                                   + 172%
                      12


                      10
     Silver - mm oz




                       8


                       6


                       4


                       2


                       0
                           2006    2008            2010          2012E            2014E         2016E

                                  Lucky Friday   Greens Creek   Pre-Development Projects


12
                                                                                         HECLA MINING COMPANY




    Organic Growth - Lucky Friday #4 Shaft Project
        Anticipated 60% production increase                                         #4 Shaft
         from ≈ 3.0 to 5.0 mm oz silver/year              Silver Shaft                           30 Vein

         (expected ramp-up period 2014-2016)              4050 level                                   Current mining

             Increased ore grade from 10.4 opt           4900 level
                                                                                                     5900 level access


              to ≈ 14.0 opt
                                                          5900 level                                 6500 level
             Increased annual throughput from
                                                                                                     7500 level
              350k tons to 375k tons                               Silver Shaft                 30 Vein
             Mine optimization study underway                                                       8500 level

                                                                 4050 level                     Proposed #4 Shaft
        Expected life of mine extension
                                                                  Lucky Friday #4 Shaft                    Capital
         beyond 2030                                             4900 level
                                                                 Spent to Date (6/30/2011)            ≈ $70 mm
        Internal shaft descending from 4,900 to
                                                                       2011 (2nd Half)                    $25 mm
         8,800 feet below surface                                5900 level
                                                                              2012                      level
                                                                                                   6500 $40 mm
        Received Board approval for project                                  2013                        $40 mm
         completion
                                                                              2014                 7500 $25 mm
                                                                                                        level
        #4 Shaft completion expected in                         Total Capital Requirements           ≈ $200 mm
         H2/2014
    13                                 Q2 2011 Conference Call
                                                                HECLA MINING COMPANY




Organic Growth - Lucky Friday #4 Shaft Project
     Key Development         Work Completion
     Detailed Design                                                         100%

     Off Shaft Development                                                   83%
     Shaft Development                14%

     Major Procurements                                                78%
                                                          38%
     Total Project


       Shaft Collar                       Shaft                 Sheave Deck




14                              Q2 2011 Conference Call
                                                                                                                                  HECLA MINING COMPANY




Organic Growth – Lucky Friday #4 Shaft Project

                                                                     Key Production Data

                         Lucky Friday #4 Shaft                                                                          100% Ownership
                         Mine Life/Mine Rate1                                                                       >20 years/1000 tons
                                                                                                                                per day
                         Ore Grade (Average Life of Mine)
                               Silver ounce/ton                                                                                      14.3
                               Lead %/ton                                                                                             8.5
                               Zinc %/ton                                                                                             2.7
                         Annual Production (Life of Mine)                                                               4-5 million ounces


                         Average Cash Cost Per Ounce                                                                               <$3.00




 1.   The Mine Life/Mine Rate does not include additional production from the mine optimization study currently being completed

15                                                                   Q2 2011 Conference Call
                                                                           HECLA MINING COMPANY




Organic Growth - Silver Valley Silver, Idaho
                           Star: Pre-development Project
    Star-Morning mine operated from 1891-1982
    Hecla has initiated a re-opening study on the Star mine
    Infrastructure rehabilitation and re-establishing ventilation
    Five drill stations will be used to evaluate and expand historic resources
    Potential to connect to the existing Lucky Friday underground development

            Portal                      Star 2000 Drift                    Site Footprint




                                        Star Mine (Noonday Vein)
                                 Tons             Silver oz/Ton    Lead %            Zinc %
      Inferred Resources         517, 900               2.0          3.6              10.8
16                                  Q2 2011 Conference Call
                                                  HECLA MINING COMPANY




Exploration – Silver Valley, Idaho
            Star 2000 Level Exploration Targets




17                   Q2 2011 Conference Call
                                                                                                                HECLA MINING COMPANY




Organic Growth - San Juan JV, Colorado
     Equity Mine: Pre-development Project                                            Bulldog Mine: Pre-development Project
    Equity (North Amethyst) re-opening of portal                                       Historic Bulldog mine produced 25 million
     and ventilation adit                                                                ounces of silver before closing in 1985
    Decline access to past production and                                              Developing a program to allow construction of
     exploration development was found in excellent                                      surface infrastructure necessary to re-open
     condition                                                                           Bulldog mine
    Year-round underground drill programs are          Work on the portal is expected to commence in
     being designed and could start as early as            Q4
     Q4/11
         Amethyst Vein                   Equity Mine: Main Portal     Bulldog Mine: 1984 Infrastructure




                                                                        Bulldog Mine
                                                            Tons             Silver oz/Ton              Lead %            Zinc %
       Inferred Resources*                                  3,092,800             12.00                   1.7               1.3
      * Hecla controls 70% of the San Juan Silver project
18                                                             Q2 2011 Conference Call
                                                                         HECLA MINING COMPANY




Exploration - San Juan JV, Colorado
                          Equity Mine Plan View

            Drill trace
           of WE1031                             Trace of Equity Vein




            Equity Portal
                                                      Equity Mine Ramp




                                                Trace of Amethyst Vein



                                                                N



19                          Q2 2011 Conference Call
                                                                    HECLA MINING COMPANY




Exploration - San Juan JV, Colorado
        Equity Mine Cross Section View – Looking East
                      Equity Portal

        Drill trace
        of WE1031
                                                            Equity Mine Ramp




                              Trace of Equity Vein




                      0.31 opt Au, 31 opt Ag over 2.5 ft;
                      0.18 opt Au, 13 opt Ag over 7.0 ft




20                           Q2 2011 Conference Call
                                                                             HECLA MINING COMPANY




Organic Growth - San Sebastian, Mexico
               Hugh Zone & Andrea Vein: Pre-development & Exploration

      The Hugh Zone is a high-grade down dip extension of the past producing
       Francine Vein
      A scoping study has been initiated to re-evaluate the previous Hugh Zone
       scoping work and integrate it with a study on the nearby Andrea Vein
      Scoping study expected to be complete by year end
      Drilling in Q2/11 continued to extend the Andrea Vein to the southeast
      Step out drilling on the Andrea Vein could potentially define other higher
       grade pods revealing a periodicity in their location


                                            Hugh Zone Grade
                                Tons                Silver oz/Ton   Lead %            Zinc %
      Inferred Resources        1,142,500               8.00         2.9%             4.4%




21                                     Q2 2011 Conference Call
                                                 HECLA MINING COMPANY




Exploration - San Sebastian, Mexico
               1.7 KM Continuous Strike Length




22                Q2 2011 Conference Call
                                                     HECLA MINING COMPANY




 2011 Guidance

 9-10 mm oz of silver

 Cash costs are expected to be approximately $1.00 per ounce of
  silver, net of by-product credits, at recent metals prices

 $115 mm in capital expenditures

 $32 mm in exploration and pre-development




23                        Q2 2011 Conference Call
                                                             HECLA MINING COMPANY




Summary

      Hecla “Go To” Silver Producer

      Largest silver producer in the U.S. with long-life, low-cost mines
       and district-sized land packages

      Generating very strong financial and operating results

      $377 mm in cash and no debt

      Ideally positioned to grow internally and through M&A




24                              Q2 2011 Conference Call
THE SILVER PRODUCER   F I N AN C I AL O V E R V I EW   S I L V ER M AR K E T   HECLA PROPERTIES




                                   Appendix
                                                                                                                                                                      HECLA MINING COMPANY




Reserves & Resources Update (on Dec. 31, 2010)
                                                                                      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                                       1,642,000                  12.4              -           7.8         2.8        20,387,600               -      128,000           46,000

     Subtotal Proven Reserves                                                                                                                       20,387,600               -      128,000           46,000

     Probable Reserves

       Lucky Friday Unit, USA                                       1,545,100                  14.2              -           8.9         3.0        21,955,000               -      136,900           46,500

       Greens Creek, USA                                            8,243,100                  12.1         0.092            3.5         9.3        99,730,000       757,000        291,300      766,500

     Subtotal Probable                                                                                                                             121,685,000       757,000        428,200      813,000

     Total Proven & Probable                                                                                                                       142,072,600       757,000        556,200      859,000

     Mineralized Material

       Lucky Friday Unit, USA (1)                                  14,987,200                   6.7              -           4.3         2.0       100,835,500               -      650,100      303,600

       Greens Creek, USA (2)                                          789,800                   4.1         0.063            2.0         4.6          3,262,300       49,400         16,000           36,300


     Total Mineralized Material                                                                                                                    104,097,800        49,400        666,100      339,900


     Other Resources 2009

       Lucky Friday Unit, USA (3)                                   5,778,300                   9.8              -           6.2         2.1        56,677,000               -      359,700      120,300

       Greens Creek, USA (4)                                        4,343,300                  11.8         0.089            2.2         5.6        51,305,100       387,000         96,800      242,200

       San Sebastian Hugh (5)                                       1,142,500                   8.0         0.010            2.9         4.4          9,186,200       14,300         33,000           49,900

       San Juan JV -Creede (70%)       (6)                          2,165,000                  12.0              -           1.7         1.3        25,946,000               -       36,200           28,600

       Noonday Project      (7)                                       517,900                   2.0              -           3.6         9.8          1,061,500              -       18,600           51,000

     Total Other Resources                                                                                                                         144,175,700       401,200        544,300      492,000

     Totals may not match due to rounding for significant figures
     (1)   Measured and Indicated resources from Gold Hunter and Lucky Friday vein systems, diluted and factored for expected mining recovery.
     (2)   Indicated resources, Gallagher orebody, factored for dilution and mining recovery.
     (3)   Inferred resources from Gold Hunter and Lucky Friday vein systems, diluted and factored for expected mining recovery.
     (4)   Inferred resources, East, West, SW, Gallagher, NWW, '9A', and 200S orebodies, factored for dilution and mining recovery.
     (5)   Inferred resources, Hugh zone (Deep Francine) - diluted and factored to minimum mining width.
     (6)   Inferred resources diluted and factored to minimum mining width. San Juan JV (Creede, CO) reportable @ 70% to Hecla.
     (7)   Inferred resources diluted and factored to minimum mining width for conventional mining (Noonday veins).


26                                                                                  Q2 2011 Conference Call
                                                                                         HECLA MINING COMPANY




Organic Growth – Scoping Studies
                         Unlocking Value By Advancing Organic Growth Projects

                   Lucky Friday, ID    Silver Valley, ID     San Juan Silver,   San Sebastian,       29 Ramp
                                       Star                  CO, Bulldog        MX                   Greens Creek,
                                                                                                     AK
 2011 Focus        Mine optimization   Develop plans         Develop plans      Updating scoping     Develop plans
                   study               re-opening U/G        re-opening U/G     study Hugh Zone      rehabilitation

 Mine Type         Underground         Underground           Underground        Underground          Underground
 Metals            Ag, Pb, Zn          Ag, Pb, Zn            Ag, Pb             Ag, Pb, Zn, Cu       Ag, Au, Pb, Zn
 Infrastructure    Additional mill     Toll milling          New mill           New mill or toll     N/A
 Requirements      equipment                                                    mill
 Constraints       Hoisting,           Seeking additional    Rehabilitating     Seeking additional   Rehabilitating
                   ventilation, rock   resources             infrastructure,    resources            infrastructure
                   mechanics                                 permitting


 Opportunities     Increase            Convert               Potential for      Resume               Increase
                   production          resources into        additional         production in a      production
                   beyond 375k         reserves &            production         short period of
                   tons/yr             develop in                               time +/- 2 years
                                       conjunction w/
                                       Star-2000
 Estimated         Year-end 2011       Year-end 2011         Year-end 2011      Year-end 2011        2012
 Completion Date
27                                         Q2 2011 Conference Call
                                                                                           HECLA MINING COMPANY




 Organic Growth – Exploration Upside
                                       Increasing Exploration Expenditures

                  Greens Creek, AK          Lucky Friday/             San Juan Silver, CO      San Sebastian, MX
                                            Silver Valley, ID
2011 Activities   Surface & U/G             Surface & U/G             Surface drilling &       Surface drilling &
                  drilling, geochem,        drilling, geochem         geochem                  geochem
                  geophysics
Targets           -NE Contact               -30 Vein                  -Equity                  -Andrea vein
                  -200 South                -WeLike                   -Amethyst                -Pedernalillo
                  -5250 South               -Noonday                  -Bulldog                 -LaRoca
                  -Gallagher                -Star Morning             -Rat Creek               -LucyVein
                  -East Ore                 -Star 2000
                  -West Bruin               -Burke
                  -Lil’ Sore
Strategic Focus   -R&R definition           -R&R definition           -Resource definition     -Resource definition
                  -Identifying new ore      -Identifying new          -Identifying new         -Identifying new
                  zones/targets             targets                   targets                  targets
Budget            $10 mm                    $9 mm                     $8 mm                    $6 mm




 28                                         Q2 2011 Conference Call
                                                                                                                HECLA MINING COMPANY




Cash Cost Reconciliation

                                                                                                                                  YTD
                                                                                  Q2/11                  Q2/10                June 30, 2011


     Total cash costs1                                                    $               1,169   $             (4,784) $               3,699
     Divided by silver ounces produced                                                    2,250                  2,628                  4,705
     Total cash cost per ounce produced                                   $                0.52   $              (1.82) $                0.79

     Reconciliation to GAAP
     Total cash costs                                                     $             1,169 $                (4,784) $               3,699
     Depreciation, depletion and amortization                                          11,203                  15,020                 23,466
     Treatment and freight costs                                                      (25,947)                (21,619)               (50,183)
     By-product credits                                                                66,931                  64,066                131,442
     Change in product inventory                                                        (4,164)                 (2,401)                (2,631)
     Reclamation and other costs                                                           877                     283                  1,067
     Cost of sales and other direct production costs and
     depreciation, depletion and amortization                             $            50,069     $            50,565     $          106,860


1. Cash cost per ounce of silver represents a non-U.S. Generally Accepted Accounting Principles (GAAP) measurement that the Company believes
provides management and investors an indication of net cash flow. Management also uses this measurement for the comparative monitoring of
performance of mining operations period-to-period from a cash flow perspective. “Total cash cost per ounce” is a measure developed by gold
companies in an effort to provide a comparable standard; however, there can be no assurance that our reporting of this non-GAAP measure is similar to
that reported by other mining companies. Cost of sales and other direct production costs and depreciation, depletion and amortization, was the most
comparable financial measures calculated in accordance with GAAP to total cash costs.
29                                                      Q2 2011 Conference Call
                                                                                     HECLA MINING COMPANY




     Second Quarter 2011 Revenue by Metal
                                                  Consolidated


                                            20%


                                  14%                                    52%


                                         14%




                                         Silver    Gold   Lead    Zinc
             Greens Creek                                                               Lucky Friday


                                                                                         7%
           25%
                                                                               25%
                            45%     Based on Realized Prices Q2/2011:
     10%                            Silver     $ 35.80/oz
                                                                                                       68%
                                    Gold       $ 1,549.59/oz
                 20%                Zinc       $ 1.02/lb
                                    Lead       $ 1.15/lb




30                                      Q2 2011 Conference Call

								
To top