Hecla Mining (HL, Financial) is continuously and strategically focused on investing significant capital in its mines due to the lower metal prices which has made the key investment affordable for the company and gain significantly at lower costs. The Lucky Friday's #4 shaft is the company’s major growth project in its entire history and at the center of its growth strategy for the next several years. The project is executing well on schedule and within the stipulated budget with the excavation forecast to get over by this year ending and the shaft estimated to get fully operational by the third quarter of subsequent year.
Strong asset profile
The robust execution at the Lucky Friday mine located at San Sebastian along with significant growth in silver production highlights the effectiveness of the company operations.
The gold reserves of Hecla remained constant, leveraging $1,225 per ounce for the overall value calculation. The grade at Greens Creek enhanced due to the 200 South however, Casa's grade declined owing to extra open pit reserves. Going forward, Hecla expects to significantly expand its productions at Greens Creek and Lucky Friday.
The overall gold production of the company is forecast to be nearly 185,000 ounces comprising of 130,000 ounces of gold produced at cash cost of approximately $825 per ounce at the key Casa Berardi mine.
Casa Berardi delivered 39,385 ounces of gold during the fourth quarter at a cash cost, after by-product credits of $635 per gold ounce. The enhanced fourth quarter production was primarily due to superior grades stopes being mined in December and improved recoveries owing to reduced gold encapsulation than expected. The conclusion of the West mine shaft deepening project partially resulted in 36% growth in production over the third quarter and offering reduced after by-product credits per ounce and cash cost.
This key conclusion should enhance the mine operations by allowing extra access to the 118, 123 and 124 zones for moving waste and ore from underground and also supporting the exploration. Moving ahead, Hecla has significant drilling plans to actively drill approximately six underground wells and further two on surface at Casa Berardi mine, while continuing to develop on the mine’s robust reserve base.
The superior company productions at the Casa Berardi mine at significantly lower costs signifies the robust drilling technologies leveraged by Hecla and is estimated to greatly improve the company’s top line and bottom line, thus significantly benefiting the investors.
Conclusion
Overall, the investors are advised to hold their position in the stock looking at the impressive long-term growth investments as planned by the company. The trailing P/E of 60.00 indicates the high cost of the stock compared to the better industry’s average of 30.92. The PEG ratio of -144.50 depicts no growth but decline. The profit margin of 3.56% is also weak. Looking at the earnings trend, Hecla seems to be profitable in a long run. However, the company needs to optimize its debt-laden balance sheet with total debt of huge $521.62 million against total cash of $209.66 million only to successfully finance its long-term growth investments.
