The Purest Silver Bet Has Fallen 59%. Is That Enough?
Debt-free, with half a billion dollars in cash and operating profit growing 61% a year. Yet Hecla Mining shares lost nearly a quarter of their value in a month. Anyone who understands why knows what the next move in silver will do to them.
Key points
The largest U.S. silver producer is in its best shape in 135 years, and its stock is still falling.
The company’s operating profit is growing four times faster than revenue, driven by one rarely discussed mechanism.
The cash cost per ounce of silver mined came to minus 8,10 dollars in the second quarter.
The Bulios fair value model and the consensus of 26 analysts differ by 150% on this stock.
Results on November 5 could show the first year-over-year decline in profit after a long run of record quarters.
The strongest balance sheet in 135 years—and a stock that keeps falling
Hecla Mining $HL is the largest silver producer in the United States. It mines at three sites—Greens Creek in Alaska, Lucky Friday in Idaho, and Keno Hill in Canada’s Yukon—and has been around since 1891. For the average investor, though, it is a second-tier company: no product you’d recognize in a store, no CEO on the front pages, just rock, a mill, and concentrate shipped by sea.
And yet right now, it is in the best shape in its history. It has no long-term debt, holds 483 million dollars in cash, and its operating profit is growing at a rate of 60,9% a year, according to Bulios data—four times faster than revenue (15,5% a year).
And yet the stock closed at 13,98 USD on October 26. It lost 23,1% in a month, 27,1% year to date, and is down 59% from its January high of 34,17 USD. The company is stronger than ever, while its share price is returning to where it stood a year ago, before the silver rush began. The explanation for this disconnect is also the answer to what will happen to your money next.