Hecla Health Check

Long-Term Price Case$1,500 Au & $20/oz. Ag
Global Resource Base9,788,907 AuEq ozs.
Market Cap (6 June 2019)$700,100,000
Market Cap Valuation per Resource Ounce$72
Share Price Valuation by Resources in the Ground.02 ozs. ($27/sh.)
Resource Valuation as a Percentage of Market Cap5%
Cash Flow$7,812,000
Future Cash Flow ($1,500/oz. Au)$97,650,000
Market Cap Valuation ($1338/oz. Au)$1,964,633,635
Future Market Cap ($1,500/oz. Au)$2,202,504,075
Future Market Cap Growth215%
PMCV15 (Projected Market Cap Valuation at 15%)$4.53/sh.

Notes: All Values in U.S. Dollars. Hecla is a troubled miner with an unsustainable cost structure and cash flow headwinds. That being said, the company has made some tough decisions that will enable it to slash spending and remain in compliance with the covenants, should it need to borrow under the revolver.

Fire Creek, Midas and Hollister are proving as challenging as expected, but Hecla continues to hang hopes on the Hatter Graben vein system, though full-on development will be curtailed.

Austerity is a response to adversity, and by and large, in light of Hecla’s misfortunes, it is appropriate. That being said, I believe Hecla should, in addition to surface drilling, forge ahead with development efforts at Hatter Graben, and tap the revolver conservatively, if necessary, in order to ensure that the development pipeline is robust when the market turns.

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