Hecla Mining Company (NYSE:HL) has a long history of producing both gold and silver from its owned and operated properties.
Phillips S. Baker, Jr. has been a Director of Hecla Mining Company (NYSE:HL) since 2001, its Chief Executive Officer since May 2003, and has served as its President since November 2001.
He served as Hecla’s Chief Financial Officer from May 2001 to June 2003; Chief Operating Officer from November 2001 to May 2003; and Vice President from May 2001 to November 2001.
Mr. Baker has also served as a Director of QEP Resources, Inc. since May 2010, as well as serving as a Director for Questar Corporation from February 2004 through June 2010
Mr. Baker describes the investing high points for the Hecla Mining Company (NYSE:HL).
“I think the starting point is the fact that the company started as a silver producer, going all the way back to the very beginning.
The original mine was the Hecla mine, and that morphed into the Star-Morning mine.
Interestingly enough, those operations are within about a mile and a half of our Lucky Friday mine that has been operating now for 81 years this year.
I think the fact that we have continued to be a silver miner is probably one of the key things to know about Hecla and our history.
And as a result of that, and in addition to those properties, probably the most significant property in our history is a mine in Alaska called Greens Creek.
That mine started in 1987, so this is the 36th year for that mine, and we’ve been involved with it since the very beginning.
We weren’t originally the operator; one of the key milestones in our history was in 2008, we acquired the portion of Greens Creek that we didn’t own, which was 70%, from Rio Tinto, and we’ve been the operator ever since.
That mine has generated close to $2 billion of free cash flow over the last 25 years or so, and the future of it looks similar to the past.
So that’s been huge for us.
Then if you go forward to 2013, we acquired the gold asset that we have in Quebec, Casa Berardi.
That’s been a really good asset for us from the standpoint that it’s a gold asset, and it’s a gold asset that produces a dore rather than a concentrate.
The other mines we have produce concentrates, which means we are subject to the concentrate market.
So, the cost of producing the final product will vary.
It’s been good to have that dore-producing asset, and it’s been good that it’s a gold asset because it takes a little bit of the volatility out that we have with silver, and sometimes gold outperforms silver.
So, those are some of the key things, and the most recent is Keno Hill — that was an acquisition that we just recently made.”
Hecla Mining Company (NYSE:HL) operates a number of different mines, each with its unique economics and engineering.
“Greens Creek, the mine in Alaska, is the largest silver mine in the U.S.
It’s the 11th largest in the world. It produces roughly 10 million ounces of silver, which is kind of surprising that the 11th largest would only be 10 million ounces, but silver is hard to find and develop and mine, surprisingly.
It’s not in as many places as other metals might be, which is something that I didn’t realize when I first started working for the company.
But it is the 11th largest.
Certainly, of the primary silver mines, it’s probably the lowest cost, and it’s the lowest cost because of the amount of these other metals that it produces; they’re a byproduct to the silver.
And it’s been, as I mentioned, a great cash flow generator.
It has a mine life in front of it in excess of 10 years.
Of course, it’s had a mine life somewhere in excess of seven years since 1987, so it has replaced reserves consistently over the course of the last 35 years.
You don’t know what the extent of an underground mine life is, what its final life will be, for some time.
Do I expect it to operate for another 35 years?
It’s certainly possible.
But it’s clearly going to operate longer than the next decade.
We’re in the process of putting in the permitting requirements for a tailings facility that will take us well beyond our existing reserve life.
We’re highly confident that we’ll discover more and continue to see this mine operate into the future.
So that’s Greens Creek.
I mentioned Lucky Friday, that has had such a long history.
Lucky Friday in the past, on average, produced about 2.5 million ounces.
We’ve developed a new mining method that we recently received a patent for that will allow this mine to operate at a 5 million ounce per year clip, certainly over the next decade, and maybe two, and that really changes the economics of this mine.”
For a company with over 80 years of history, it’s interesting that Hecla Mining Company (NYSE:HL) is now entering a growth phase.
“We’ll end up producing an order of magnitude of around 14 million ounces of silver production. With that, it will put us in a position to maybe as much as 18 million ounces next year, and the year after maybe as much as 20 million ounces. So, nice growth.
In fact, I suspect that we’re the fastest growing established silver miner in the world. A company that doesn’t have any production, of course they’re growing faster, but for a company that’s in production, we’re probably the fastest growing…
Should I also talk about the exploration properties?
Because we have another 11 exploration and development properties, and we’re trying as best we can to advance those.
Sometimes they get more money, and some years they get less, to try to advance them.
But almost every one of these are in known mining districts with a strong history of production, and we’ve got large land packages and the prospectivity is extraordinary.
So we will continue to try to drive those.
One of the projects that we have which is closer to development is something called the Libby Exploration Project.
It’s also been known as Montanore.
We’ve renamed it Libby Exploration because we’re only getting permits to do the exploration with the infill drilling that we need to do in order to move this from a resource to reserves.
But this is part of a package of properties that represent about 3 billion pounds of copper and 300 million ounces of silver — so the third largest undeveloped copper asset in the U.S., and again, more silver in those deposits than what we have in our other existing operations.”
Get the complete investment picture of Hecla Mining Company (NYSE:HL) by reading the entire interview with CEO Phillips S. Baker, Jr. , exclusively in the Wall Street Transcript.
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