Hecla Mining Releases Financial Results

The miner beat consensus on 4th quarter sales and earnings

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Hecla Mining Company (HL, Financial) closed the seventh week of the year at $3.98 per share, up 1.8% from the previous trading day on the heels of its release of financial results for full year 2017.

Hecla Mining closed the reporting period with a revenue of $577.8 million. Even though this was a 10.6% decline on a year over year basis, fiscal 2017 revenue was “the second highest in company history,” Hecla Mining said.

The fall in the company’s sales was attributed to some operational issues, including a labor dispute at Lucky Friday (Idaho) that squeezed 2017 silver production by 27% to 12,484,843 ounces and prompted lower grades of mineral processed at Greens Creek. The company is seeking to solve this labor dispute with unionized workers. In March, an update on the matter is expected.

From the top line of the company’s full fiscal 2017 income statement, Hecla Mining’s economics dropped a net profit,adjusted to one-time charges of 10 cents per ordinary share of Hecla or $38.8 million.

The quarterly measure of adjusted net profit per share was 4 cents, which was backed on quarterly revenue of $160.11 million (-2.5% year over year).

Helped by higher precious and base metal prices, Hecla Mining beat consensus on quarterly revenue by $4.76 million and on adjusted earnings by one cent per share.

The beat on fourth quarter of fiscal 2017 adjusted earnings per share produced a 33.30% positive surprise.

For full year fiscal 2018, excluding production at Lucky Friday, the grey metal is predicted to reach 9.5 million to 10.5 million ounces range (a decline of 24% to 16% on a year over year basis), while the yellow metal will reach approximately a volume of 218,000 to 232,000 ounces.

Phillips S. Baker, Jr., Hecla Mining’s president and chief executive officer, predicts improved productivity at the company’s mines in 2018:

"2018 should have further value creation at all our mines as we advance low-cost, high-return technologies that are focused on improving productivity. We are also taking a bulk sample of San Sebastian's polymetallic zone which could further extend its mine life. Exploration spending is increasing as we see further opportunities for both discoveries and resource growth."

Source: Hecla Mining’s Press Release

Hecla Mining has a market capitalization of $1.59 billion, a price-book (P/B) ratio of 1.07 versus an industry median of 2.05 and an EV-to-Ebitda ratio of 12.05 times. The industry has an EV-to-Ebitda ratio of 10.18 times.

The 52-week range is $3.38 to $6.72 per share. The recommendation rating is 2.5 out of a total of 5. The average target price of $5.21 per share is a mean of ten $3.98 to $8.50 ranging estimates.

(Disclosure: I have no positions in any stock mentioned in this article.)