April 30th, 2009:
Hecla Mining Co (HL)
Current Price: $2.47
www.hecla-mining.com
Hecla Mining Co. (HL) engages in the discovery, acquisition, development, production, and marketing of silver, gold, lead, and zinc. HL is the oldest U.S.-based precious metals mining company in North America and the largest producer of silver in the U.S. HL currently produces silver from two silver mines, Greens Creek and Lucky Friday.
In April 2008, HL acquired 100% of the fifth largest silver mine in the world, the Greens Creek joint venture in Alaska. In 2008, the Greens Creek mine produced 5.8 million ounces of silver and has dramatically increased HL’s annual silver production, while maintaining a low cash cost per ounce of silver relative to its peers. HL’s Lucky Friday mine in northern Idaho produced 2.9 million ounces.
In 2008, HL was one of the lowest-cost primary silver producers in North America, producing 8.7 million ounces of silver, 54% more silver than in 2007, at an average total cash cost of $4.20 per ounce.
HL just reported first quarter 2009 net income of $3.9 million, or 2 cents per common share, on revenue of $54.7 million. HL produced a record 2.86 million ounces of silver in the first quarter, a 128% increase compared to the prior year period!
The increase in production is primarily due to HL consolidating 100% ownership in the Greens Creek mine with the purchase of the 70.3% interest that was previously owned by mining giant Rio Tinto and a very strong operational performance at both the Greens Creek and Lucky Friday mines.
HL has a strong balance sheet with $62.6 million in cash and is trading under book value. HL has 217.18 million shares outstanding with a market cap of $534.3 million.
The historical price ratio of gold to silver shows that about 16 ounces of silver would buy one ounce of gold, a 16:1 ratio. Today, the gold to silver ratio is about 75:1 (with silver at about $12/oz and gold at about $900/oz.) If the gold to silver ratio returns to historical levels, from 75:1 to 16:1, many companies like HL could flourish and make substantial gains from the current levels.
NIA believes HL will capitalize significantly on the upcoming gold and silver boom.
A co-founder of NIA has purchased 10,000 shares of HL and could sell them at any time.
|
|
