Hecla Mining Shares Got Crushed: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of gold and silver miner Hecla Mining (NYSE: HL  ) lost all their shine today when shares fell 25% after the company was ordered to close one of its mines.

So what: The Silver Shaft at the Lucky Friday Mine, which has been closed since a rock burst in December, will be closed to remove built-up material in the shaft. Production at the mine is expected to resume in early 2013. As a result of the news, management lowered 2012 silver production estimates to 7 million ounces from 9.5 million ounces.

Now what: There’s really nothing positive to say today considering the loss of production at the mine. Management was disappointed in the order, but the mine has been accident-prone and two miners died over the past year, so the ruling can’t be a complete surprise. No reason to buy the drop today, and keep an eye on future delays that may come from cleanup at the mine.

Interested in more info on Hecla Mining? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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Read/Post Comments (3) | Recommend This Article (6)

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  • Report this Comment On January 11, 2012, at 2:57 PM, operaman22 wrote:

    According to the conference call, since all cash flow from the Lucky Friday mine was put back into that mine for further development, there will be no change to earnings. Yes, revenues will be lower but in this case 100% of revenues from the mine went to that mines capex. So no change in earnings. The estimated cost of the cleanup is $20 mill and will come as a deduction from their $250 mill cash hoard. Looks like the shares are cheap to me if earnings aren't going to be impacted.

  • Report this Comment On January 11, 2012, at 11:40 PM, AngryPeasant wrote:

    Hmm, the timing of the feds move on the "Lucky Friday" mine is obviously what the CEO made a veiled reference to in the conference call about the closure order. He said something to effect that he can only assume the closure had to do with safety, even though no other silver mines have been ordered closed for safety reasons. The obvious hint was that the closure order was motivated by something more than safety of a mine shaft. Me smells a rat, or more likely, a big player with a huge short position and government influence. Somebody made a killing on this one day move. I wonder who? Can anybody help me on this?

  • Report this Comment On January 12, 2012, at 8:52 AM, XMFSinchiruna wrote:

    For more discussion of the mine closure, please find my analysis here:

    http://www.fool.com/investing/general/2012/01/11/heclas-hang...

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