In a Jan. 16 research note, analyst Jake Sekelsky reported that Hecla Mining Co.'s (HL:NYSE) 2018 production was "in line with expectations."
However, because ROTH Capital Partners anticipates that the miner's ramp-up to 550 tons per day (550 tpd) at Fire Creek may take longer than ROTH originally expected and grades will be "modestly lower," it decreased its target price on Hecla to $4 per share from $5. Hecla stock is now trading at about $2.41 per share.
Sekelsky relayed that in Q4/18, Hecla produced 43.6 million ounces (43.6 Moz) of silver equivalent, composed of 10.4 Moz of silver and 262,103 ounces (262,103 oz) of gold. Whereas silver production was above ROTH's 9.7 Moz estimate, gold production was slightly below its forecast of 275,152 oz.
Looking forward, Sekelsky highlighted that ROTH expects Hecla's priorities will continue to be integrating its new Nevada assets and conducting development work rather than maximizing production at Fire Creek. Hecla has extended its exploration and development schedule. As such, the investment banking firm anticipates Hecla's ramp-up to 550 tpd of throughout at Fire Creek to be completed by year-end 2019. For these reasons, along with the expectation of slightly lower grades near term, ROTH reduced its target price on Hecla.
However, ROTH remains bullish on Fire Creek, Sekelsky pointed out, noting that a turnaround there is underway. "We believe the longer-term thesis at Fire Creek remains intact and believe management is methodically executing on its initial goal of developing Fire Creek into a mine with a stable production profile and extended mine life."
ROTH has a Buy rating on Hecla.
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Disclosures from ROTH Capital Partners, Hecla Mining Company, Company Note, January 16, 2019
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
ROTH makes a market in shares of Hecla Mining Company and as such, buys and sells from customers on a principal basis.
Shares of Hecla Mining Company may be subject to the Securities and Exchange Commission's Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.
