 Investor Presentation September 2008 |
 1 Cautionary Statements Cautionary Statements Cautionary Note Regarding Forward Looking Statements Statements made which are not historical facts, such as anticipated payments, litigation outcome,
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, exploration risks and results, political risks, project
development risks, labor issues and ability to raise financing. Refer to the company’s Form 10-Q and 10-K 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. Hecla has filed a shelf registration statement (including
a prospectus) and a preliminary prospectus supplement with the SEC for the offering to
which this communication relates. Before you invest, you should read the preliminary prospectus supplement and the prospectus in that registration statement and other documents Hecla has filed with the SEC for more complete information about Hecla and the
offering. You may get these documents for free by visiting EDGAR on the SEC web
site at www.sec.gov. Alternatively, Hecla, any underwriter or any dealer
participating in the offering will arrange to send you a copy of the preliminary
prospectus supplement and prospectus in the registration statement if you request it by calling Merrill Lynch, Pierce, Fenner & Smith Incorporated at 212-449-1000 or Scotia Capital (USA) Inc. at 212-225- 6853. Reconciliation of Enterprise Value (EV) and cash cost per ounce can be found in the Appendix.
Issuer Free Writing Prospectus, dated September 3, 2008 Filed pursuant to Rule 433 Registration Statement No.: 333-145919 |
 2 Offering Summary Offering Summary Issuer Hecla Mining Company Offer Size 30 million shares Over-Allotment 15% greenshoe Offer Type Fully registered offer in the U.S. Private placement in Canada and Europe Exchange / Ticker NYSE / HL Use of Proceeds Repayment of bridge facility General corporate purposes Joint Bookrunners Merrill Lynch and Scotia Capital Key Milestones Roadshow – September 2 to September 8 Anticipated pricing – September 8 |
 3 Why Hecla? Why Hecla? Attractive production profile – mining a great product Consistently one of the lowest cost silver producers in North America Geo-politically stable locations Largest silver producer in the U.S. 100% of silver reserves in the U.S. Additional exploration opportunities in the U.S. and Mexico Strength operationally, financially, organizationally Established history with over 100 years of operational experience Lucky Friday in operation since 1942 Greens Creek in operation since 1989 Accretive acquisition not yet fully appreciated by the market Experienced management team |
 4 6%/annum increase in industrial/consumer demand over last five years (54% of total demand) • New/expanded sophisticated consumer uses (cell phones, laptops) • Developing countries are urbanizing Physical properties – versatile & difficult to substitute Jewelry/Silverware steady (26%) Photography use becoming irrelevant (15%) Also an investment vehicle – store of value like gold • Supply shortage of physical metal Why Silver? Why Silver? A High Growth Metal A High Growth Metal |
 5 On April 16, 2008, Hecla completed the acquisition of 70.3% of the Greens Creek joint venture, increasing our ownership interest to 100% Funded with $700 million in cash and approximately $50 million in common stock Gives Hecla control of 100% of the fifth largest silver mine in the world Nearly doubles Hecla’s annual silver production to approximately 11 million ounces Significantly increases cash flow from operations Maintains Hecla’s already-low average cash costs per ounce of silver relative to peers On July 8, 2008, Hecla completed the sale of its Venezuelan properties to Rusoro Mining for $25 million Consideration consisted of $20 million in cash and approximately 4.3 million shares of Rusoro Mining common stock Transforming Transforming Transactions Transactions |
 6 Silver Silver Production Growth Production Growth Note: 2008 production estimates include 3.5 months of 29.7% of Greens Creek and 8.5 months of 100.0%
of Greens Creek 11 million ounces 5.6 million ounces |
 7 Greens Creek is the largest silver mine owned by any N. American-listed silver company (2007 Production) Largest Silver Producer Largest Silver Producer * SLW purchases silver metal under contract from mine owners Source: Public filings |
 ($6) ($4) ($2) $0 $2 $4 $6 $8 $10 ($6) ($4) ($2) $0 $2 $4 $6 $8 $10 Low Cost Producer Low Cost Producer 2007 Cash Costs 2007 Cash Costs 8 Source: GFMS World Silver Survey Greens Creek is the lowest cost mine owned by any North American listed silver company |
 9 Low Costs = High Margins Low Costs = High Margins |
 10 194% increase * Pro forma 100% Greens Creek Silver Reserve Growth Silver Reserve Growth |
 11 Coeur Silver Wheaton Silver Standard Apex Silver Locations of Peer Group Locations of Peer Group Silver Reserves Silver Reserves Australia 22% Bolivia 71% Chile 3% Argentina 4% Argentina 100% Pan American Silver Bolivia 13% Argentina 17% Peru 44% Mexico 26% Sweden 10% Greece 3% Peru 4% Mexico 83% USA 100% Source: Public filings |
 12 Relative Valuation - Relative Valuation - Cash Flow Cash Flow Note: Enterprise values as of August 19, 2008 except for Hecla 30% Greens Creek, which is as of
February 11, 2008 1 Enterprise Value = Market Capitalization + Debt + Preferred Stock + Minority Interests – Cash and Equivalents Hecla generates significantly higher cash flow at a much lower EV 1 |
 13 Diversified Portfolio in Diversified Portfolio in Stable Geographies Stable Geographies *San Sebastian, Mexico *San Juan Silver, Colorado Greens Creek, Alaska Lucky Friday Unit, Idaho Coeur d’Alene, Idaho Vancouver, BC Silver Properties Corporate Offices Exploration Projects * |
 14 Hecla’s ownership interest: 100% Underground silver-zinc-gold-lead mine World’s fifth largest silver mine 1 Low cash cost producer due to significant byproduct credits In operation since 1989 with good history of reserve replacement Hecla’s attributable 2008 production estimate 2 : 6 million oz. of silver 50,000 oz. of gold 45,000 tons of zinc 16,000 tons of lead Greens Creek Mine Greens Creek Mine 1 Source: The Silver Institute 2 Includes 29.7% of Greens Creek for 3.5 months and 100.0% of Greens Creek for 8.5 months. Admiralty Island, Alaska |
 Greens Creek
Greens Creek Property Boundary Property Boundary Projected Mine Contact Projected Mine Contact 1 mile 1 mile Greens Creek Greens Creek Long-Term Potential Long-Term Potential 15 |
 16 Mullan, Idaho Lucky Friday Mine Lucky Friday Mine Hecla’s ownership interest: 100% Underground silver-lead-zinc mine Low cash cost producer due to byproduct credits In operation since 1942 with good history of reserve replacement Excellent exploration potential 2008 production estimate: • 3 million oz. of silver • 18,000 tons of lead • 5,500 tons of zinc |
 17 Lucky Friday: Lucky Friday: Excellent Excellent Exploration Potential Exploration Potential Mined Out Area Identified Reserve and Other Exploration Opportunities Potential Discovery Areas |
 18 A World Class District A World Class District The Silver Valley, North Idaho 1.2 billion oz of historical silver production 300 million oz silver from Hecla’s land position Very significant vertical continuity in the district Large 25-square-mile claims area Under-explored with modern exploration techniques Hecla Land Position |
   19 Mexican Silver Belt Mexican Silver Belt Santa Eulalia Batopilas Parral San Dimas Fresnillo Zacatecas Real de Angeles Pachuca Guanajuato Taxco Real de Catorce Concepcion del Oro MEXICAN SILVER BELT 10.2 Billion Ounces of Historical Silver Production SAN SEBASTIAN Penasquito |
 San Sebastian San Sebastian Exploration Targets Exploration Targets 20 |
 21 San Juan Silver JV San Juan Silver JV Hecla’s earn-in interest: 70% 1 Excellent exploration potential District has historically used narrow-vein mining 84 million ounces of historic silver production 100 million+ oz potential – mostly on patented ground Land package consolidated 1 In February 2008, Hecla acquired the right to earn into a 70% joint venture interest in a roughly
25-square-mile consolidated land package in one of Colorado’s most prolific silver-producing districts. |
 22 Equity OH Amethyst Bulldog Alpha Corsair 1 mile Homestake San Juan patented San Juan unpatented 25 sq. miles 30 miles of prospective veins An immediate drilling program $23 million of work and stock for 70% of JV San Juan Silver - San Juan Silver - Major Veins Major Veins |
 23 Silver Valley 3D compilation 25-square-mile target area Lucky Friday ‘Gap’ area and deep underground drilling 5250 Zone West Gallagher Zone Surface drilling for new deposit Idaho Alaska 511-square-mile target area -- multiple targets Hugh Zone evaluation Rio Grande Mexico San Juan Silver Mining J.V. Colorado Project Pipeline Project Pipeline |
 24 Why Hecla? Why Hecla? Attractive production profile – mining a great product Consistently one of the lowest cost silver producers in North America Geo-politically stable locations Largest silver producer in the U.S. 100% of silver reserves in the U.S. Additional exploration opportunities in the U.S. and Mexico Strength operationally, financially, organizationally Established history with over 100 years of operational experience Lucky Friday in operation since 1942 Greens Creek in operation since 1989 Accretive acquisition not yet fully appreciated by the market Experienced management team |
 25 APPENDIX |
 26 Silver – Silver – A High Growth Metal A High Growth Metal • Global aluminum consumption and industrial demand of silver have followed a similar trend in the past. Both have high end consumer uses. • Silver’s long-term industrial demand growth could be expected to parallel aluminum’s future estimated growth rate of 6 – 7%. Sources: Brook Hunt , Silver Institute, Hecla analysis |
 27 Industrial Demand Grows Industrial Demand Grows as GDP Grows as GDP Grows Source: GFMS, China GDP – World Bank Industrial uses of silver in China have increased with the growth of GDP per capita |
 28 Silver – Silver – The Rest of the Story The Rest of the Story Investment Silver is an investment vehicle Silver’s investment demand is driven by same factors as gold’s (i.e. weak US dollar, negative real interest rates in US, ongoing credit market crisis, inflation fears) Jewelry and Silverware Steady demand (30%) Photographic Becoming irrelevant and is not a substantial part of the total fabrication demand (15%) Overall, silver’s total fabrication demand is poised for growth |
 Silver: Not Easily Silver: Not Easily Substitutable Substitutable Silver has unique properties that make it versatile and difficult to substitute Natural bactericide/biocide – water purification, wound dressings Photosensitive – photography, x-rays Highly reflective – mirrors, glass coatings Chemically useful – catalyst for plastics and petrochemical industry; used in batteries Strength and fluidity – used in solders, brazing alloys 29 |
 30 Silver Industrial Demand Silver Industrial Demand is Price Inelastic is Price Inelastic |
 31 Strong Silver Industry Strong Silver Industry Fundamentals Fundamentals Positive trends in end markets Growth of the middle class in China and India Growing use of mobile phones/other
consumer products
Computerization in the third world Continued demand for industrial applications Demand is relatively inelastic to the price of
silver (low proportion of
cost) Scarcity of supply Inventories leveling off over the past year Silver demand from ETFs expected to result in a continued tightening of the silver market |
 32 Silver Supply & Demand Silver Supply & Demand 0 100 200 300 400 500 600 700 800 900 1,000 1,100 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Mined Silver production Industrial Applications Photography Jewelry Silverware Coins & Medals Source: World Silver Survey 2008 |
 Silver and Gold Prices Silver and Gold Prices (2003 – (2003 – 2008 YTD) 2008 YTD) |
 34 Grade Contained Metal Ore Silver Gold Lead Zinc Silver Gold Lead Zinc (tons) (oz/ton) (oz/ton) (%) (%) (000 oz.) (000 oz.) (MM lbs.) (MM lbs.) Proven reserves Lucky Friday 760,700 12.3 — 7.2 2.5 9,325 — 109 38 9,325 — 109 38 Probable reserves Lucky Friday 680,000 11.9 — 7.5 2.5 8,065 — 102 33 Greens Creek 8,454,000 13.7 0.110 3.8 10.2 116,025 908 642 1,722 Total 124,090 908 744 1,755 Total Reserves 133,415 908 853 1,793 Source: Hecla's Q1 2008 Earnings Release Proforma with 100% Greens Creek, Jan. 1, 2008 Reserves Reserves |
 35 Exploration and Exploration and Capital Expenditures Capital Expenditures (US$ in millions) Source: Hecla Mining $47 mil Lucky Friday Silver Valley $5.5 Mexico $5 San Juan Silver $5 Greens Creek $4 Lucky Friday $3 Other $2.5 $47 mil $42.2 mil $75
mil |
 36 Maintain low cash cost position among precious metal producers Exploit and develop existing asset base Grow through new and existing exploration opportunities Build on the Greens Creek transaction through new acquisitions Key Strategies Key Strategies |
 37 Snapshot Snapshot Market cap: US$899 million 1 Basic shares outstanding: 126.3 million Fully diluted shares: 126.4 million Listings: NYSE: “HL” 2008 share liquidity: 3.5 million/day Cash: US$45.8 million 2 1 Based on share price at August 19, 2008 and diluted shares outstanding calculated using the treasury
stock method 2 Cash and cash equivalents as of June 30, 2008 less cash used to acquire the Greens Creek joint
venture plus cash from sale of Venezuelan gold assets |
 38 Experienced Management Experienced Management Phillips S. Baker, Jr. President and Chief Executive Officer (21 years in mining) James A. Sabala Senior Vice President and Chief Financial Officer (27 years in mining) Ronald W. Clayton Senior Vice President – Operations (28 years in mining) Dr. Dean W. McDonald Vice President – Exploration (28 years in mining) Don Poirier Vice President – Corporate Development (25 years in mining) Michael H. Callahan Vice President (18 years in mining) Vicki Veltkamp Vice President – Investor and Public Relations (20 years in mining) Philip C. Wolf Senior Vice President – General Counsel (36 years in mining) |
 39 Enterprise Value Enterprise Value Reconciliation Reconciliation Market Capitalization 1 Plus: Total Debt Plus: Preferred Stock 2 Less: Cash and Cash Equivalents 3 Enterprise Value $898.9 360.0 156.7 (45.8) $1,369.8 1 Based on share price at August 19, 2008 and diluted shares outstanding calculated using the treasury
stock method 2 Based on market value of preferred stock outstanding as of August 19, 2008 3 Cash and cash equivalents (including short-term investments) as of June 30, 2008 less cash used
to acquire the Greens Creek joint venture plus cash from sale of Venezuelan gold
assets Note: US$ in millions |
 40 Cash Cost per Ounce Cash Cost per Ounce Reconciliation Reconciliation 1 Includes all direct and indirect operating cash costs related directly to the physical activities of
producing metals, including mining, processing and other plant costs, third-party
refining and marketing expense, on-site general and administrative costs, royalties and mining production taxes, net of by-product revenues earned from all metals other than the primary metal produced at each unit. Three Months Ended June 30, Six Months Ended June 30, 2008 2007 2008 2007 Total cash costs 1 $8,269 ($2,950) $6,484 ($4,699) Divided by ounces produced 2,409 1,493 3,664 3,050 Total cash cost per ounce produced $3.43 ($1.98) $1.77 ($1.54) Reconciliation to GAAP: Total cash costs $8,269 ($2,950) $6,484 ($4,699) Depreciation, depletion and amortization 9,855 3,078 12,768 6,145 Treatment and freight costs (23,922) (7,647) (34,776) (16,108) By-product credits 49,147 26,694 78,729 51,526 Change in product inventory 18,452 1,241 16,523 589 Reclamation and other costs 569 50 617 95 Cost of sales and other direct production costs and depreciation, depletion and amortization $62,370 $20,466 $80,345 $37,548 |