Hecla Mining Reports 2nd Quarter
- By Alberto Abaterusso
Hecla Mining Co. (HL) closed the second quarter of fiscal 2017 with a loss of $15.5 million, or four cents per share, missing analysts' expectations by five cents.
In addition, EPS declined from sevents cents in the comparable quarter of 2016. Analysts forecasted an average net profit of one cent, ranging between negative two cents and five cents.
Warning! GuruFocus has detected 1 Warning Sign with HL. Click here to check it out.
The intrinsic value of HL
Source: Yahoo Finance
Revenue for the quarter came in at $134.28 million, down 21.6% year over year and missed expectations by $5.82 million. Analysts forecasted revenue of $140.1 million.
Source: yahoo Finance
The year-over-year decline in revenue was even worse than expected due to a sharp drop in volume of metal sold. During the quarter, 2,688,721 ounces of silver and 53,170 ounces of gold were sold, down significantly from 4,141,427 ounces of silver and 62,965 ounces of gold in the comparable quarter of 2016. The average quarterly price of one ounce of silver ($17.14) and gold ($1,260) sold was about flat compared to a year ago.
The significantly lower sales volumes are a result of a decline in gold and silver production due to lower grades of mineral processed at Casa Berardi in Quebec, Greens Creek Mine in Alaska, San Sebastian in Mexico. In addition, the ongoing strike at the Lucky Friday Mine in Idaho drove gross profit, operating income and cash flow down.
In the second quarter, the after-byproduct credits silver cash costs and all-in sustaining costs (AISC) were 26 cents and $10 per ounce, down 93% and 22% year over year.
Hecla's President and CEO Phillips S. Baker Jr. said that despite the year-over-year decline in sales, income and operating cash flow, the company maintained a strong financial position due to a 43% decrease in capital expenditures.
Baker added Hecla Mining's production and cost per unit during the second half of the year should be significantly impacted by higher ore grades and lower waste tons of mineral the company processes at the Casa Berardi mine.
The company closed the quarter with $164.113 million in cash and securities, a decline of only 3.3% from Dec. 30, 2016. Hecla Mining also has a revolving credit facility of $100 million, which has been extended to July 2020. The total long-term debt amounts to $501.6 million with a long-term debt-equity ratio of 33.4% versus the industry average of 41.41.
GuruFocus gives Hecla Mining a financial strength rating of 6 out of 10 and a profitability and growth rating of 7 out of 10.
Hecla Mining is currently trading around $5.09 per share with a market capitalization of $2.02 billion, a price-book (P/B) ratio of 1.33, a price-earnings (P/E) ratio of 20.36 and a price-sales (P/S) ratio of 3.04.
According to the most recent data available, Hecla Mining distributes an annual dividend of 1.2 cents per share through quarterly payments of 0.003 cents for a dividend yield of 0.19%.
Currently, Hecla Mining's average target price is $6.28 per share, which ranges between a low of $5 and a high $8.50 per share. This represents an 18.7% upside to the stock's current market value.
Disclosure: I have no positions in Hecla Mining Co.
This article first appeared on GuruFocus.
Warning! GuruFocus has detected 1 Warning Sign with HL. Click here to check it out.
The intrinsic value of HL
