HECLA MINING COMPANY $4.12 (New York symbol HL; TSINetwork Rating: Extra Risk) (208-769- 4100; www.hecla-mining.com; Shares o/s: 380.8 million; Market cap: $1.8 billion; Dividend yield: 0.2%) explores for, mines and processes silver and gold in the U.S. and Mexico.
Most of the company’s silver output comes from three sites: the Greens Creek mine in Alaska; the Lucky Friday project in Idaho; and the San Sebastian mine in Mexico. Hecla’s Casa Berardi mine in Quebec, which it bought for $796 million in June 2013, supplies its gold.
In the three months ended March 31, 2016, Hecla’s gold output rose 36.7%, to 55,688 ounces from 40,650. It produced 4.6 million ounces of silver—up 61.3% from 2.9 million a year earlier. The rise came from higher ore grades at its mines, as well as output from its new San Sebastian mine in Mexico.
The company started up San Sebastian in December 2015. The facility is forecast to produce eight million ounces of silver equivalent in its first two years from easily mined surface deposits. The operation then has the potential to further expand its reserves.
Hecla’s cash flow rose 36.8% in the latest quarter, to $40.2 million, or $0.11 a share, from $29.4 million, or $0.08 a share, a year earlier. The higher production more than offset lower silver and gold prices.
Like most precious-metals firms, the company’s shares will be heavily influenced by silver and gold prices. Meanwhile, its positive cash flow and improving production outlook give it speculative appeal.
Hecla Mining is a buy.
