Hecla Mining: Gauging the PositivesHL) might have struggled on account of weak gold and silver pricing, but the company’s operational efficiency has helped it perform strongly in difficult times. For instance, Hecla Mining is generating significant cash flows from its operations across the world. In fact, its cash flows have increased consistently in the last four quarters.
It has generated approximately $56 million in free cash flows from its core projects, apart from generating about $12 million in cash flows through a strong hedging position.
A strong project pipeline will be a tailwind
In addition, Hecla has strong pipeline of new projects that should enhance its cash flow performance in the future. In fact, it has recently renewed its exploration activity in Mexico and an acquisition in Montana to bring new short and long-term growth potential in order to boost its cash flow profile further.
Also, Hecla’s Lucky Friday and Rock Creek projects under its belt that should continue to deliver positive cash flows through 2025. Moreover, apart from a strong asset profile, Hecla will also benefit from a decent liquidity position.
The company has a strong liquidity position that will allow it to strengthen its projects in the long run. It has about $300 million in total liquidity and a $100 million of revolving credit facility. Moreover, its net debt to EBITDA is less than 2.08x. This indicates that it has a manageable debt schedule going forward, which will allow the company to gradually improve its finances and invest in its growth projects at the same time.
Hecla Mining looks on track to deliver strong returns in the long run, and this is not surprising considering the company’s strong asset profile. This is because Hecla has high quality assets that have helped it generate positive free cash flow from its operations even in a difficult environment. Also, the company is strategically looking to enhance its operating efficiencies that should boost its cash margins. Thus, Hecla Mining is a good investment from a long-term perspective and investors should remain invested in it.
Published on Oct 11, 2015By Vinay Singh