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Jbay76 (< 20)

Hecla's Dazzling Ahead



August 09, 2011 – Comments (4) | RELATED TICKERS: HL , SIL


HL released their 2nd quarter report and it does two things: 1) validates the productivity and prosperirty of America's oldest mining company and; 2) Validates Sinch's analysis, as if he needed more validation :)

 Quick highlights are as follows:

* Sales of $117.9 million, a 33% increase over the same period in 2010

* Net income of $33.3 million, or $0.12 per basic share

* Operating cash flow of $66.3 million, a 16% increase over the same period in 2010

* Silver production of 2.3 million ounces at a total cash cost of $0.52 per ounce, net of by-products1

* Cash and cash equivalents of $377 million at June 30, 2011 (emphasis mine)

The last highlight is emphasized because it helps shed light on HL's ability to weather the storms, so to speak.  You may recall they have had a rough year with the collapse of a section of their Lucky Friday mine, the loss of a miner as a result of that collapse, and the litigation settlement with the local indian tribe and federal regulators.  They are expected to have litigation finalized by the third quarter and thus commence payments totaling 263.4 million over a 3 yr. period, with an additional 1.1 million in interest.  Doing the math, HL could pay that all off using their cash reserves they reported in their quarterly report.  Thus, this company will fulfill its obligations and continue to generate a lot of revenue.  Given how our government kids are acting, there does not seem to be an end to the increase in silver's run, which will only generate more income for HL.  Additionally, HL is expected to increase production by 50-60% over the next 5 years due to project expansion. So, this company will continue to be a viable investment for a long time!

The report is a good read for anyone thinking of getting shares of HL, which I am!



4 Comments – Post Your Own

#1) On August 09, 2011 at 9:19 AM, outoffocus (24.06) wrote:

But its current price (yesterday's closing price) is evil...EVILLLLL!!!!

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#2) On August 09, 2011 at 9:31 AM, silverminer (29.70) wrote:

Nice analysis, JBay! It's the current market valuation for the company's immense silver reserves that seals the deal for me.

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#3) On August 09, 2011 at 9:41 AM, Jbay76 (< 20) wrote:

Thanks silverminer!  At one point I was looking to sell my stake in HL, it was ugly for a while. I'm glad I kept my emotions in check, or rather was lazy about it.  Given that anaylsts expected a $0.14 increase/share instead of the $0.11/share being reported, now seems like a good time to double down, or atleast prepare for that.  Kind of funny how at the beginning of this year I was thinking of dumping them but now am planning on doubling down......such is life

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#4) On August 10, 2011 at 9:36 AM, Jbay76 (< 20) wrote:

To add to this, here is the transcript from HL's conference call.  One of the glaringly beuatiful things to take heed of is that their cash cost will be ~$1 for dollar while silver is currently >$40....awesome!

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