When you're 120 years old, I suppose you're bound to have a few skeletons in your closet.
Hecla delayed its fourth-quarter earnings release in order to report on the progress of ongoing efforts to settle litigation brought by the Coeur d'Alene Indian Tribe and the federal government during the 1990s. The issue stems from the practices of multiple mining companies in Idaho's Coeur d'Alene River Basin prior to 1968, when some 100 million tons of waste rock carrying harmful heavy metals was reportedly introduced into the region's river system. Coeur d'Alene Mines
The resulting accrual of $193.2 million for Hecla -- beyond its previously estimated liability -- polluted Hecla's quarterly result, converting a laudable operating performance into a deeply disappointing $13.1 million net loss! Now, rather than hailing the miner's impressive cash cost of negative $0.14 per ounce of silver produced -- still trailing only Silvercorp Metals
Although seemingly much smaller in scale by comparison, a close inspection of the company's filings will reveal that Hecla may face additional environmental liabilities. For example, Burlington Northern Santa Fe, the railroad acquired by Berkshire Hathaway
While it's true that Hecla's cash balance of $283.6 million (with zero debt) provides an important cushion from the impact of this and potential future liabilities, this sizable hit does present a setback to Hecla's perceived ability to capitalize on strategic growth opportunities that may present themselves. With silver reaching new heights, and prime acquisition targets such as Endeavour Silver
Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Alexco Resource, Coeur d'Alene Mines, Endeavour Silver, Hecla Mining, and Silvercorp Metals. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a precious disclosure policy.
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