Hecla Mining Co (HL)

[Soco54]

“A major reason why Hecla shares tumbled after recent earnings releases was a large quarterly net loss of $25.5 million versus a profit of $8.2 million in the year-ago period, despite 9% growth in sales. Hecla's Nevada operations are to blame, and it's a serious concern, as a deeper dive into the company's financials reveals.

Hecla bought Klondex Mines in July 2018 for $413.9 million, gaining ownership of three high-grade gold mines in Nevada: Fire Creek, Midas, and Hollister. The idea was to diversify into gold, similar to recent attempts made by other silver companies, a prime example being Wheaton Precious Metals. Wheaton's increased focus on gold is unmistakable -- the company dropped "silver" from its name in 2017 and recent deals means gold could make up nearly half of Wheaton's production by 2022.

Acquiring Klondex, therefore, was supposed to be a game-changer for Hecla, except that it's already failing to be that.

At the time of acquisition, Baker claimed the assets "will immediately add production and cash flow" and that "there is significant opportunity for improvement in the mines' productivity and consistency." Here's where things stand now: Hecla incurred an operating loss of $13.8 million in Nevada after operational problems at Fire Creek sent costs spiraling, forcing management to suspend operations....

Investors might as well expect another shocker (read: a big one-time impairment charge) from Hecla in the second quarter when it allocates its purchase price of Klondex in its accounting. This comes at a time when the company is already burning cash and its key development projects may have also run into hurdles.”

https://finance.yahoo.com/news/hecla-mining-buy-131600903.html