I suggest getting your peepers out to Hecla Mining Company (HL, Financial). A significant catalyst for 2018 came out from the last Hecla Mining’s news release on San Sebastian mine.Â
In the third quarter of this year, at Miguel Auza plant, Hecla Mining is going to process a 4,400-ton bulk sample of sulphide ore, which will be taken from its San Sebastian mine. Miguel Auza is a flotation mill facility that Excellon Resources Inc EXN) runs in the Mexican state of Zacatecas. The trucks will have to cover a 42 km distance from San Sebastian to transport the material to Miguel Auza, which will provide Hecla Mining with a daily milling capacity of approximately 440 tons of ore.
If the test outcome is positive, according to a five-year toll milling agreement inked with Excellon, Hecla Mining will start to mine the sulphide ore from the polymetallic Hugh Zone of its San Sebastian mine in 2019 and therefore extend the life of the Mexican mine for at least five years. Thanks to mineral discoveries made by the exploration team at San Sebastian and to the plan of the companies to equip Miguel Auza with a copper flotation circuit, the growing potential of San Sebastian may considerably increase.
The contract offers Hecla Mining the option to prolong the agreement for another two years.
Phillips S. Baker, Jr., President and Chief Executive Officer of Hecla Mining, commented: “This is a significant step towards […] in keeping with our strategy of maximizing the cash flow and minimizing capital investment by using third-party facilities.”
Hecla Mining Company jumped 3.1% jump following the news. The stock was at $3.85 per share after regular trading hours.
For the 52-weeks through Feb. 26 Hecla Mining lost 31% and underperformed the VanEck Vectors Gold Miners ETF (GDX, Financial) by 28%.
Source: Yahoo Finance
The stock is still trading cheaply since its market value is underneath the 200, 100 and 50-SMA lines and only 47 cents beyond the 52-week low of $3.38 per share price. The 52-week high price is $6.17 per share. The price-book (P/B) ratio is 1.03 times versus an industry median of 2.05 times. At 11.73 times the EV-to-Ebitda (ttm) ratio is higher than the industry median of 10.18 times. However, Hecla Mining has an Ebitda margin (ttm) of 27.10% that, compared to the industry median of 23.7%, indicates Hecla Mining tends to outperform the industry when the year is particularly positive for the precious metals. And 2018 has all the characteristics not to disappoint precious metals investors.
The recommendation rating is 2.5 out of a total of 5 and the average target price is $5.08 per share (+32% from the current market valuation).
The Relative Strength Indicator (RSI) is 49.50 of a 20 to 80 range.
(Disclosure: I have no positions in any security mentioned in this article.)
