While a number of miners were reporting reserve cuts due to lower price assumptions this earnings season, Hecla Mining (NYSE:HL) did the exact opposite. The company recently reported a 13% increase in silver reserves and a 190% increase in gold reserves. With the increase in reserve numbers and continued production growth, Hecla is well positioned to outperform its peers this year.

Growth in gold
Hecla moved into gold in 2013 with the purchase of Aurizon Mines. With this purchase, the company acquired the gold-producing Casa Berardi mine. Production at the mine rose steadily throughout the year. As a result, Hecla's gold production rose from 37,000 ounces in the third quarter to 47,100 in the fourth quarter.

The increase in production helped lower the costs. While cash costs were $1,065 per ounce in the third quarter, they were $824 per ounce in the fourth quarter. Going forward, the company expects that the mine will produce 125,000 ounces at cash costs of $900 per ounce. Production from another Hecla mine, Green Creek, will contribute another 55,000 ounces of gold.

Hecla's success with moving into gold inspired another silver miner, Silver Standard Resources (NASDAQ: SSRI), to purchase the Marigold mine from Goldcorp and Barrick Gold. Silver Standard's only producing mine was situated in Argentina, where economic prospects are uncertain with inflation close to 30%. As a result, costs are hard to control. This move brought another producing mine in a safe jurisdiction and was warmly greeted by investors, as the stock rose significantly after the announcement of the purchase.

Another silver miner, Pan American Silver (NASDAQ:PAAS), was also active on the gold front, growing its gold production by 33% in 2013. The company plans further growth in gold production, anticipating production of 155,000 –165,000 ounces of gold in 2014, up from 149,800 in 2013. It looks like silver miners view gold production as a safety cushion, as gold prices have recently outperformed silver prices.

Silver production will grow too
Although gold's share overtook silver's share in Hecla's fourth quarter revenue mix, silver will remain an important source of income for the company in the foreseeable future. While gold brought 40% of revenue in the fourth quarter, silver accounted for 33% of revenue.

Hecla expects to grow its silver production to 9.5 million – 10.5 million ounces this year, up from 8.9 million ounces in 2013. Investors can also anticipate improvements on the cost front, as Lucky Friday mine is finally operating at full power. This fact has already contributed to cost decreases, as fourth quarter cash costs at the mine were $13.59 per ounce, down from $16.50 per ounce in the third quarter.

Bottom line
Hecla is a well-diversified miner with growing production and reserves. The company's move to add gold to its production mix paid off, and now gold is a major source of income. Hecla stated that it was pleased with the success of its debt offering in 2013 and expects to be a seasoned issuer going forward. 

The company expects to fund further growth with the help of additional debt, if it finds attractive investment targets. Hecla's balance sheet remains strong, and the miner can afford more leverage. All in all, Hecla's future growth will ultimately be reflected in its share price.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.