The past few days have been quite good for the mining sector and many companies have seen their stocks make impressive gains. However, Hecla Mining (NYSE:HL) has been one of the exceptions in this regard and the stock declined by as much as 9% after the company missed earnings expectations in the third quarter. Here is a closer look at Hecla Mining and the latest developments that led to the decline.
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Third Quarter Performance
The best way of going about understanding the current situation is by having a look at the third-quarter performance. Hecla managed to generate revenues of as much as $199.7 million in the quarter, which reflected a year on year rise of as much as 24%.
That was however higher than analysts’ expectations of $195.2 million. Hecla also noted that it is going to boost its capital spending for the year to $100 million from $90 million. The adjusted EBITDA for the quarter came in at $75.7 million, which was again an improvement on the $69.8 million generated in the prior-year period.
However, the key takeaway was in the production metrics for silver and gold. Hecla’s silver output soared to 3.5 million ounces, which works out to a year on year rise of 7.7%. On the other hand, gold production nosedived by a whopping 46.7% to drop to 411700 ounces. That might have been a trigger for the decline.
Another important metric that investors need to look into is the average realized price for metals. For Hecla, that metric stood at $25.32 per ounce for silver and $1929 per ounce for silver in the third quarter. It represented a year on year rise of 39% in the case of silver and 31% in the case of gold.
Additionally, the dividend was bumped up by 50%, and the silver linked dividend was paid out for the first time as well. However, investors are going to be a bit disappointed at the fact that Hecla narrowed its gold production projection for the year to 200000 ounces to 207000 ounces from 199000 ounces to 210000 ounces.
It may be particularly worrying for many investors since only last month, Hecla had reiterated its earlier guidance with regards to gold production. At a time when gold prices are rising, higher gold production is a major advantage for companies involved in gold mining. It remains to be seen how the market reacts through the rest of the week.
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