Recently insiders of Hecla Mining Co. (HL, Financial) disposed of some shares of their own company.
George R. Nethercutt Jr., Hecla Mining’s nonemployee director, sold – as shown in the chart below – 62,500 shares for $5.24 per share on Oct. 13.
Source of data: Hecla Mining’s website
Nethercutt holds 78,667 shares of Hecla Mining, of which – as you can see in the chart below – 14,369 shares, or about 18.27% of its total holding, is through direct ownership of the company while 64,298 shares, or about 81.73%, is through indirect ownership.
Source of data: Hecla Mining’s website
The picture above also shows the volume of Hecla Mining’s shares held by the company's other nonemployee directors through indirect ownership.
Under the company’s stock plan for nonemployee directors a total volume of 424,203 shares of Hecla Mining are allocated to its directors – of which 345,536 shares are held by the other nonemployee directors through indirect ownership.
Insiders’ ownership of Hecla Mining is disclosed by Hecla via the company's website.
Even though indirect insider trading is different from direct, it should not be overlooked since it usually implies the insider is purchasing shares of the company anyway, probably for one of his family members. According to the company’s filings, the previous transactions – dated July 5 – saw the nonemployee insiders increasing their indirect holdings through the company's allocation of own shares for $4.5919 per share, which is 9% lower than the current market valuation.
Nethercutt's transaction share price of $5.24 is nearly 3.8% higher than the market valuation of $5.05 per share according to which Hecla Mining is trading on the New York Stock Exchange.
The stock has been downtrending since Oct. 9 and has lost 3.63% year to date. The stock has a price-sales (P/S) ratio of 3.22 and a price-book (P/B) ratio of 1.34. The forward price-earnings (P/E) ratio is 21.69 while the EV/EBITDA ratio is 11.80.
For full fiscal 2017 analysts forecast an EPS of 5 cents and an EPS of 20 cents for full fiscal 2018. When the forward P/E ratio of 21.69 is multiplied by a weighted (quarters) average EPS of 16.25 cents for full fiscal years 2017 and 2018, it yields a value of $3.52 per share.
Hecla Mining's current enterprise value is $2.33 billion. The company has 172 million ounces of silver in its reserves and 2 million ounces of gold in its reserves. Considering a gold/silver ratio of 1:72.87 – as per the second quarter of fiscal 2017 – Hecla Mining has a total volume of approximately 317.74 million ounces of silver equivalent in its mineral reserves for an EVO – Hecla Mining’s enterprise value per ounce of mineral reserve (measured in ounces of silver equivalent) – of $7.33.
The gold/silver ratio of 1:72.87 is based on the average spot price of the two commodities over the quarter in question – $1,256.963 per ounce of gold and $17.25 per ounce of silver.
Analysts recommend holding shares of Hecla with an average rating of 2.9 out of 5. The average target price per share is $5.90, which represents a nearly 16.8% upside from the current share price, a 28.5% upside from the value at which shares were allocated to the directors at a price of $4.5919 per unit and a 12.6% upside from the share price at which Nethercutt disposed of 62,500 shares.
Hecla Mining is a U.S. mining company engaged in the production and sale of gold and silver. It is also committed to enhancing shareholders’ long-term value through acquisitions of mineral resources and other mining-related activities.
Hecla Mining has approximately 399.02 million shares outstanding, of which about 395.45 is float. The percentage of the company’s shares outstanding held by insiders is 1.41% and by institutions is 63.20%. Among the top institutional holders, Van Eck Associates Corp. stands out against the others with 38,105,358 shares of Hecla Mining held or about 9.55% of the company’s total shares outstanding as of June 29.
Disclosure: I have no position in Hecla Mining.
