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RHJ
Introduction
The Vancouver-based Hecla Mining (NYSE:HL) announced its preliminary silver and gold manufacturing and progress on Keno Hill for the primary quarter of 2023.
Notice: This text is an replace of my article published on January 30, 2023. I’ve adopted HL on Looking for Alpha since June 2019.
A fast presentation of the corporate.
HL Map Property presentation (HL Presentation)
1 – 1Q23 Manufacturing Snapshot
1.1 – First quarter manufacturing
HL delivered combined manufacturing outcomes this quarter. Gold manufacturing got here in at 39,571 Ozof gold, down 9.4% sequentially, and 4,041,878 Ozof silver, up 10.3% sequentially.
HL produced 13,236 tons of lead and 15,795 tons of zinc.
HL Quarterly silver and gold manufacturing historical past (Enjoyable Buying and selling)
Notice: Hecla Mining can also be producing lead and zinc as by-production metals. Manufacturing was 13,236 tons of lead and 15,795 tons of zinc in 1Q23.
The lead manufacturing elevated by 12%, and zinc manufacturing was unchanged YoY.
In 2022, the manufacturing of silver was barely above steering, whereas gold manufacturing was on the mid-point. Good efficiency total.
1.2 – First quarter manufacturing per mine
HL delivered combined manufacturing outcomes this quarter. Gold manufacturing got here in at 39,571 Ozof gold, down 9.4% sequentially, and 4,041,878 Ozof silver, up 10.3% sequentially.
HL produced 13,236 tons of lead and 15,795 tons of zinc.
HL Manufacturing silver and gold per mine historical past (Enjoyable Buying and selling)
1.2.1 – The Fortunate Friday Mine
The Fortunate Friday Mine produced 1,262,464 Ag Ozin 1Q23, or a rise of three% sequentially. The manufacturing improve is primarily because of a 5% improve in mill throughput. Mill throughput was 1,059 TPD within the first quarter of 2023. Good progress this quarter once more towards an anticipated annual throughput of 425,000 tons.
HL Manufacturing Fortunate Friday (Enjoyable Buying and selling)
1.2.2 – Casa Berardi’s gold manufacturing
The Casa Berardi Mine produced 24,686 Au Ozwithin the first quarter of 2023, a decline of 20% in comparison with 30,709 ounces within the fourth quarter. The mine additionally produced 6,554 Ag Oz.
Gold manufacturing declined primarily because of a “31% decline in underground tons processed and 14% decrease underground grades, partially offset by 27% greater floor tons processed”.
The mill operated at a median of 4,768 TPD, a rise of 4% over the previous quarter.
Reserve mine life is 14 years, with an extra 2.0Moz in M&I and Inferred sources.
HL Quarterly manufacturing Casa Berardi (Enjoyable Buying and selling)
1.2.3 – Greens Creek
The Greens Creek mine produced 2,772,860 Ag Ozand 14,885 Au Ozwithin the first quarter, a rise of 14% and 15% over the previous quarter.
The mill achieved a brand new throughput document of two,591 TPD for the quarter. Elevated silver manufacturing was because of a mixture of upper throughput, a 3% improve in grade, and a 9% improve in restoration.
Elevated gold manufacturing in 1Q23 was because of greater throughput and restoration partially offset by decrease grades.
HL Quarterly manufacturing Greens Creek (Enjoyable Buying and selling)
1.3 – The Keno Hill Mission
The corporate mentioned that the Keno Hill growth is on schedule, with manufacturing deliberate to start out in 3Q23, ramping as much as an anticipated 440 TPD by year-end.
HL expects between 2.5M Ag Ozand three.0M Ag Ozin 2023. Manufacturing is anticipated to be 4Moz in 2024.
Reserve Life is 8+ years with important progress potential. Mineral Reserves are 49Moz.
HL Keno Hill (HL Presentation)
2 – Inventory Efficiency
HL has outperformed the silver group and is now up 9% on a one-year foundation, whereas Coeur Mining (CDE) and Pan American Silver (PAAS) are lagging far behind.
3 – Funding Thesis
Hecla Mining advantages from greater commodity costs and elevated manufacturing in 2023, significantly in H2 2023. Silver manufacturing from Keno Hill will add between 2.5 Moz to three.0 Moz of silver in 2023.
2023 Steerage is anticipated to be 16.0Moz-17.5Moz of silver and 160K-170K of gold.
HL 2023 Steerage (HL Presentation)
One important plus is that Hecla Mining is producing from North America solely and pays a small dividend with a yield of 0.4%.
Gold and silver costs have recovered previously few months after the FED signaled that it’d pause mountain climbing pursuits after a attainable 25 factors remaining in 2023. The result’s that Gold is now buying and selling at $1,990 per ounce and Silver at $24.99 per ounce.
HL 1-12 months chart Gold, Silver, and Copper (Enjoyable Buying and selling StockCharts)
Nevertheless, as I mentioned in my previous article, the Firm is small and isn’t immune from technical points. At Casa Berardi, the grade per ton has dropped 14% not too long ago.
Thus, I counsel buying and selling short-term LIFO HL utilizing at the very least 50% of your whole place – extra particulars on the finish of this text.
Technical Evaluation (Quick Time period) and Commentary
HL TA Chart short-term (Enjoyable Buying and selling StockCharts)
Notice: The chart has been adjusted for the dividend.
HL chart reveals an ascending wedge sample with resistance at $7 and help at $6.10.
It’s important to know that Ascending wedge patterns are bearish chart sample that usually indicators an imminent breakout to the draw back. The current decline is typical, with a rebound at the moment after testing the help at $6.10.
The overall technique I normally promote in my market for HL is to maintain a core long-term place and use about 50% to commerce LIFO whereas ready for the next last value goal on your core place.
I counsel promoting about 50% of your HL place between $6.20 and $6.40, with attainable greater resistance at $6.75. Conversely, I like to recommend shopping for HL between $6.10 and $5.79, with attainable decrease help at $5.40.
Thus, watch the gold and silver value like a hawk.
Warning: The TA chart have to be up to date steadily to be related. It’s what I’m doing in my inventory tracker. The chart above has a attainable validity of a couple of week. Keep in mind, the TA chart is a device solely that will help you undertake the correct technique. It isn’t a option to foresee the long run. Nobody and nothing can.
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