HL Hecla (May 28, 2019 @ $1.39) Been following this forever, of course. Currently in a tight spot, losing money, missed their estimates, and now has the lawyers pounding on the doors with shareholder lawsuits... a period between March of 2018 and May of 2019. The news summarized here.
About the Lawsuit: Hecla Mining and certain of its executives are charged with failing to disclose material information during the Class Period, violating federal securities laws. On May 9, 2019, the Company disclosed that it was undertaking a “comprehensive review” of its Nevada operations that were cash flow negative, including the possibility of taking an impairment charge. On this news, the price of Hecla Mining’s shares plummeted by 23.5% over two trading days, from a closing price of $2.04 per share on May 8, 2019, to close at $1.56 per share on May 10, 2019. The case is Batter v. Hecla Mining Company et al, 19cv4883. Also as here.
The news has it trading down well below the lows of 2008 and 2015.
The operational difficulties will take some time to sort, it seems... Exploration highlights show interest, but in Nevada it might take more time than they're suggesting to develop solid mining plans, much less developing a solid history of cores with higher values to convert into proven resources. The difficulties in Nevada appear tied to the prior owners having mined out what they could reach without spending on expanding the resource... leaving far to much risk in the potential for grade variation, pinch out and run out... which is what's happened. Hecla knows what they're doing, though, and I think they should have a competent plan by mid June, and by the end of 2019 should be able to see the track to get back on it.
Long term... good value here. They overpaid for the Nevada assets by a wide margin... 2 to 4 times... more given the known problems at Hollister that others struggled with... and all the properties having been mismanaged in underfunded exploration and lack of development supporting near future plans. That makes them money pits... and Hecla is pouring the money into them...
All of that sucks for shareholders who've watched the decline over the last three years, the Lucky Friday collapse, and the labor problems. But, with silver at recent lows under $15 again now... and with the solid upside the Nevada mines offer when the work is done, and there are better plans in place along with a better picture of the resources ? HL could turn around within a year... and, with luck in the timing, if metals prices head higher... it will be well positioned to benefit when the short term risks are wrung out.
HL does seem to be able to find trouble on its own... and then acquire more . I don't think that's "bad luck"... so management choices and acquisition and deal risks have to be seen as an open ended risk.
But Green's Creek in Alaska is working out great... if only they can plug the hole in the bucket in Nevada... and get a break in the metals pricing.
HL now incorporates Mines Management and Revett Mining (RVM) with properties in Montana... Rock Creek might be developed in future, sadly, the Troy mine will be shut down... still has values, but the rocks keep moving. The Montanore probably a project for after the Rock Creek
The "Nevada properties" are recent acquisitions comprising the assets of Klondex... The Midas mine, Fire Creek, and the infamous Hollister mine. Hollister was Great Basin Gold, which imploded spectacularly, the smoking hole bought from the court by Waterton... who failed in putting it back in operation. They sold it to Klondex, who were acquired by Hecla. |
