Hecla Needs This Lucky Friday
Feb 20th 2013 10:37PM
Updated Feb 21st 2013 7:35AM
It's been quite a long time since Hecla Mining shareholders have felt particularly lucky. We had one short-lived spike to nearly $7 per share last September, but back here beneath $5 per share, that feels like ancient history now.
But finally, the one key catalyst that was required to close a painful chapter in this storied miner's history has emerged with Hecla's announcement Tuesday that the Lucky Friday mine has resumed operations. The mine will require several months to ramp up to full production and is expected to add just 2 million ounces to total 2013 production. From 2014 output of 3 million ounces, however, Lucky Friday is expected to expand to 5 million ounces to provide one-third of consolidated silver production by 2017.
I've written extensively about the blue-sky potential that stands before Hecla Mining, and in a very fundamental way the reopening of Lucky Friday following a year of work to refurbish the main production shaft opens the gate for a luckier road forward for investors. But the continuing destruction of Goldageddon -- the shocking collapse in precious-metal equities that continues to test the fortitude of precious-metal investors -- has intervened for now to ensure that Hecla's stock does not currently reflect the full nature of the company's exciting organic growth potential.
Granted, embattled investors have every reason to keep mining companies on a very short leash. Coeur d'Alene Mines doesn't appear to enjoy much benefit of the doubt among shareholders with respect to the company's bid for Orko Silver. Coeur's shares have shed a further 20% just in the past week since the company first announced its bid. After watching as the market delivered a similar treatment to First Majestic Silver for its prior effort to acquire Orko, it's clear that any major acquisition effort in the midst of Goldageddon becomes a heavy burden to bear. Given the trailing track record of many major silver miners -- where Hecla is joined by Coeur, Pan American Silver , and Silvercorp Metals in suffering a decline of greater than 50% over the past five years of a powerful bull market for silver -- the market's dwindling optimism for these shares can be well understood. Have a look for yourself on the following five-year chart:
I've seen luck turn on a dime, and I still believe that the fortunes of Hecla Mining investors who stand strong with their shares here beneath $5 per share can likewise reverse course in very short order. An objective analysis of Hecla's property portfolio will reveal a menagerie of legendary past-producing mines that remain ripe for a return to commercial production in the years ahead. For those who conclude as I have that silver will likewise turn on a dime and resume its decade-long bull market trend, Hecla Mining offers one of several attractive stocks to consider.
To track my own ongoing coverage of Hecla Mining and its silver-mining peers, please bookmark my article list or follow me on Twitter. My Foolish colleague Dan Caplinger, meanwhile, has prepared a detailed report outlining the compelling investment thesis for Silver Wheaton, and I encourage Fools to access that special report by clicking here.
The article Hecla Needs This Lucky Friday originally appeared on Fool.com.Fool contributor Christopher Barker owns shares of First Majestic Silver and Hecla Mining. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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