August 30, 2010
After spending much of the past year at a middle-of-the-road three-star ranking, Hecla Mining (NYSE: HL ) has impressed enough top-performing members of our 165,000-strong Motley Fool CAPS community to climb up to four stars. A total of 1,012 members have given their opinion on the precious metals miner, with many of them offering analysis and commentary explaining the recent optimism.
Part of the improved sentiment is market-related -- silver prices have improved in the past year, helping Hecla Mining put up another round of strong quarterly results while it still maintains a relatively low valuation.
But company operations are looking stronger as well, with Hecla Mining recently reporting that it more than doubled cash flow from operations and swung to a profit in the second quarter, helped by its low cost of production. Similar to peer Silvercorp Metals (NYSE: SVM ) , Hecla Mining sports a negative cash cost for silver production -- a negative $1.82 per ounce for the quarter. That gives it a big cost advantage over others like Silver Standard Resources (Nasdaq: SSRI ) or Coeur d'Alene Mines (NYSE: CDE ) , which have positive production costs. And Hecla was among a number of other silver producers such as Pan American Silver (Nasdaq: PAAS ) to enjoy higher realized silver and by-product metals prices in the quarter. The high prices helped lead to strength in Hecla's margin per ounce of silver and contributed to record cash operating margins per ounce in the second quarter for silver stream company Silver Wheaton (NYSE: SLW ) .
The sharp rise in silver prices in the past year has helped investors in silver exchange-traded fund iShares Silver Trust (NYSE: SLV ) pick up trailing one-year gains of roughly 29%, while investors have seen Hecla's share price increase nearly 80%. Many CAPS members see many reasons to be bullish on the precious metal because of the lingering economic uncertainty and because the many industrial uses for silver could keep fueling demand. And with its well-managed, low-cost operations and low valuation relative to some peers, investors think Hecla is uniquely positioned to continue its recent performance.
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