Commodities & Metals

Silver Miner Hecla Posts Surprise Profit

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Hecla Mining Co. (NYSE: HL) reported fourth-quarter and full-year 2014 results before markets opened Wednesday. For the quarter, the precious metal miner posted diluted earnings per share (EPS) of $0.05 on revenues of $121.99 million. In the same period a year ago, the company reported a break-even quarter on revenues of $114.18 million. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for a break-even quarter and $126.37 million in revenues.

For the full year, Hecla posted adjusted EPS of $0.05 on revenues of $500.78 million, compared with a net loss per share of $0.08 on revenues of $382.59 million in 2013. Analysts were looking for a loss per share of $0.01 on revenue of $509.65 million.

Hecla’s silver equivalent production totaled 34.5 million ounces in 2014, a company record, and gold production rose 56% to 128,244 ounces. Hecla also increased its proven and probable reserves of silver by 1.9% to a total of 179 million ounces, while proven and probable reserves of gold declined by 1.5%, compared with end of December 2013 totals.

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The mining company is forecasting 2015 silver production of 10.5 million ounces and gold production of 185,000 ounces. Including base metals, Hecla forecasts silver equivalent production of 35 million ounces in 2015. Cash costs (including by-product credits) for silver are estimated at $6.00 per ounce and cash costs for gold are forecast at $825 per ounce.

The average realized price for silver in the fourth quarter was $16 an ounce, and for the whole year the average was $18.46. Hecla’s average fourth-quarter realized price for gold was $1,195 an ounce and the full-year average was $1,262 per ounce.

Hecla declared a quarterly dividend of $0.0025 per share of common stock and the regular quarterly dividend of $0.875 per share of Series B Cumulative Convertible Preferred Stock. The company’s dividend policy on common stock is drive by the price of silver, and the $16 price did not “satisfy the criteria for a larger dividend.”

The company’s CEO said:

While spending less on exploration than in 2013, we still maintained reserves, despite using lower price assumptions, after record production, and continued to grow our resource base. In 2015 we expect to once again have our capital and exploration expenditures fully funded by adjusted EBITDA even as we continue the capital expenditures designed to drive returns, growth and mine life.

Hecla’s shares traded up about 1.3% in Wednesday’s premarket at $3.24, in the stock’s 52-week range of $2.00 to $3.76. The consensus target price for the shares was around $2.70 before the report.

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