Hecla Mining Company (NYSE:HL) Earnings Dragged Down By Declining Metal Prices
Hecla Mining Company (NYSE:HL) is one of the many stocks in the mining industry that has seen quite volatile sessions throughout 2015 and that it is the leading silver producer in the United States has done little to hedge its stock against this volatility. In fact, it has barely contributed anything thereto.
HL closed Tuesday’s trade at $1.96 per share, up 5% from the day before and exactly 45% away from the 52-week high registered in early-2015. Yesterday, the stock edged yet another 1.02% higher.
Considering that both gold and silver have lost value over the same time period, HL‘s current score is hardly surprising. While the company’s most recent quarterly reports do differ in terms of its financial health, Hecla’s condition still seems far from bad. Currently operating four primary mines for silver and gold, the Idaho-based producer is also carrying out a diversified exploration and development program to secure continual reserve base in the future. As of 2015, Hecla’s silver and gold reserves amounted to 173Moz and 2.1Moz, respectively. Were the company’s annual output of either precious metal to remain unchanged, these reserves would do for well above a decade.
As for production itself, Hecla Mining has managed to maintain relatively low production costs, which is why its asset side has more or less held steady against unfavorable price developments in the industry. Yet, it was not enough to avoid the $10 million Q3 loss, or $0.03 per share. On a YoY basis, this result marks a 367% slide downwards. That is why, the dividend of $0.0025 per share planned to be distributed among all current shareholders in early-December will do little to offset Hecla’s Q3 EPS.
To ensure sustainable performance in an environment of falling metal prices, HL will need to keep its output flexible enough if management wants to maintain optimal production cost. At the moment, Hecla is obviously not doing a fabulous job in terms of its chart performance. However, this could change rapidly should the silver and gold markets rebound soon.
