The Gold Report - Mon, Oct 16, 2017

Trio of Firm's Mines Log Strong Performance in Q3/17

Analyst Andrew Kaip compared this silver, gold and base metals miner's reported Q3/17 production results to the numbers expected by his firm, BMO Capital Markets.

Mine trucks

In an Oct. 12, 2017 research report Kaip indicated that overall Q3/17 production was "strong" from three of Hecla Mining Co.'s (HL:NYSE) four mines: Greens Creek, Casa Berardi and San Sebastian.

This diversified company's Q3 production of silver, lead and zinc exceeded BMO's expectations, whereas that of gold reached the anticipated level, added Kaip. Actual versus estimated production was 3.3 versus 2.9 Moz for silver; 5.4 versus 5.1 Kt for lead; 14.5 versus 13.2 Kt for zinc; and 64 versus 63 Koz for gold.

The research note also detailed Q3/17 production for each of Hecla's producing mines:

Greens Creek in Alaska performed the best during the quarter, thanks to its silver production. When compared to Q2/17, it was up, from 1.9 to 2.3 Moz, while gold production of 12.6 Koz was flat. Kaip noted that "production benefited from the mill operating at 2,391 tons per day, which is a life-of-mine record."

Casa Berardi in Quebec produced 44.1 Koz gold, "slightly higher" than the 42.2 Koz estimate, wrote Kaip. He highlighted that "mining from the East Mine Crown Pillar pit continues to help supplement underground ore and fill the mill, which operated at 3.5 Ktpd in the quarter and set a monthly record in September at 3.9 Ktpd."

San Sebastian in Mexico met expectations, Kaip indicated, "producing 881 Koz of silver and 6.3 Koz of gold."

Lucky Friday in Idaho turned out "a nominal 88 Koz of silver," said Kaip, which was anticipated due to supervisory staff members making on-site capital improvements. "We currently assume the resumption of operations in Q1/18. . .the strike at Lucky Friday is still ongoing," he added.

As for Hecla's Q3/17 cash and cash equivalents, they "increased by $3 million ($3M) from Q2/17 to $205M," Kaip reported. The company will announce full Q3/17 financials on Nov. 7.

BMO Capital has a Market Perform rating and a $6 per share price target on Hecla Mining, whose stock is now trading at around $5.22 per share.

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