Hecla Mining (HL, Financial) is making significant progress under an unimpressive silver and gold prices environment. Hecla has increased the overall production aggressively, while lowering its costs radically.
Growth drivers
Its Lucky Friday mill remains pretty promising ahead. This mine is back with a bang with production silver production of 3.2 Moz, an increase of 122% over 2013. The company has reduced cash costs to $9.44 per ounces of silver, an improvement of more than 50% from $19.21 per silver ounces in 2013. Looking ahead, the company is executing various initiatives at this mine that will lead to enhance production and reduced costs at the mine.
Furthermore, it is developing #4 Shaft at Lucky Friday that is expected to enhance its production more than 60% upon completion. The company has completed more than 75% of the work at this expansion. Moreover, the company is seeing 10% enhancement in the grades or 1.4 ounces per tons at its Lucky Friday mill. This should generate additional revenue of $25 per tons. This is great assets for the company that keeps generating profits for shareholders.
Hecla Mining is doing right things. It is increasing its production with the rise in the overall demand across the world. The company is strategically investing in the new mines. The company is blessed with three new high grades silver and gold mines like Greens Creek, Lucky Friday and Casa Berardi that solely produces gold. The company has over 240 million ounces of reserves as of 2014. It is growing its P+P reserves continuously 9 years in a row with lower reserve prices. The company has reserve prices of $17.25/Oz versus $22.61/Oz industry peers.
These assets remain very promising in the future. The company will be investing approximately $145 million in the exploration and development of these mines in fiscal 2015. This is slightly above from its 2014 capital expenditure.
Conclusion
Hecla Mining is an attractive stock with great returns. The company has a solid balance sheet, enough to fund its assets without taking on extra debt. Moreover, its liquidity position remains strong with total cash and cash equivalents of approximately $210 million and an undrown credit facility of $310 million. The company has total debt of $521.62 million. It has operating cash flow of $83.12 million. Hecla has a long history of generating profits. It has profit and operating profit margins of 3.56% and 8.15% respectively for the last 12 months. The analysts expect its earnings to grow 133.30% this year.
