Value Microcaps Junior Miners

[Bobwins]

HL +.21 to 3.29 Hecla posted a good Q4. They lost 8 million but had positive cashflow of $57million. For 2019 they lost 100 million with 120.9 cashflow.

Hecla had record gold production of 272K oz, 12.6 million oz of silver and record revs of 673million. They used the cashflow to pay down debt by 136million or 23% of peak net debt.

Hecla, like most miners is enjoying rising metal prices while controlling costs. Debt is an issue with the stock and that is why Hecla has been trying to paydown debt. They paid off their revolver in full and are trying to refinance term debt in the first half of 2020. They were at high junk bond rates of over 12% but now expect to refinance in the 8% range, lowering interest costs substantially and removing the refinance deadline.

I like Hecla because they have substantial silver production so could benefit from a big run in silver but also have hefty gold production that is currently the most profitable. Besides the refinancing catalyst coming up, they are restarting the Lucky Friday mine after the strike was recently settled. They should be back to a 3 million oz/yr run rate by late 2020 vs the 650K production of 2019 when they were running the mine with a skeleton crew of salaried workers and hourly staff.

Also coming in late 2020 is a specialized machine that has been in the works for a couple of years. This is a specialized mining machine that will hopefully eliminate blasting. Should be safer and more efficient. This is important because the Lucky Friday is entering the prime high grade zone of the mining material for the next 20 years of mine life. This was part of the reason for the strike. The company didn't want to go into this profitable ore with restrictive work rules. The old union rules allowed senior miners to pick where they wanted to work in the mine and who they wanted to work with. The company fought for control of their workers and finally won after a 2+ year strike. They expect about 2/3 of the initial striking miners to come back and will hire additional workers to get staffed up by year end.

By year end, Lucky Friday should become a profit center again after negative financial results for the last 2 yrs.

I have some call options on Hecla. I expect the operational and financial performance to improve in 2020 and beyond.

https://finance.yahoo.com/news/heclas-fourth-quarter-continues-strong-083000847.html