Hecla Mining Co. (NYSE: HL) has been a down and out gold and silver producer for quite some time. Despite the huge retreat in gold and silver prices from their peak, Hecla’s turnaround is unique because so much of its production was offline during the boom and the bust. Now the question is whether this turnaround can keep turning around, now that its preliminary production figures have been released.

24/7 Wall St. featured Hecla as one of nine stocks that could double in 2014. The new preliminary production merits an updated outlook. After reviewing the figures, Hecla is still in turnaround mode and this stock can still potentially double.

One word of warning here: This view of Hecla’s turnaround is not meant to judge the production figures against what Wall Street analysts are calling for. It is also not intended to judge how traders and investors will treat Hecla’s reports either, because that can go either way.

We also would be quick to point out that Hecla’s short interest as of mid-March was at a nine-month high of 26.55 million shares. This implies that the bets against it are on the rise, and new short interest figures will be released shortly.

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All in all, Hecla’s production figures show a recovery. This supports the turnaround thesis, again without considering the one-day reaction as a yardstick for that long-term view. Hecla seems to have strong production growth in the start of 2014 versus 2013. Hecla talked up strong operating performance of its Greens Creek and updated its improvements at Lucky Friday.

Silver production was up 32%, and gold production tripled, when you include the acquisition of Aurizon Mine. Silver production was up nearly fivefold at Lucky Friday as well, due to its reopening during the first quarter a year ago.

President and CEO Phillips Baker said:

Hecla has begun 2014 with strong production growth compared to the first quarter of 2013. Greens Creek again delivered consistent, excellent operating performance. The Lucky Friday continues to improve its operations while the #4 Shaft is almost halfway to its final depth. … We are pleased to see Casa Berardi’s steady production profile over the past two quarters. Advanced engineering work is well underway with the goals of increasing metallurgical recoveries, better controlling dilution and reducing the amount of development necessary to maintain production. These initiatives should positively impact revenue, cash cost, after by-product credits, as well as reduce the capital required. Also, with our cash position at approximately $205 million at quarter end, Hecla continues to have a strong financial position.

Below is an operational update on a project-by-project basis (verbatim from the press release). We would again stress that more work has to be done and the turnaround remains a work in progress. This is a business sector where things can go wrong. And when they go wrong, they are often catastrophic.

• Greens Creek – first quarter production of 1.8 million ounces of silver is a similar level of production as the first quarter of 2013 and the fourth quarter of 2013. This consistent silver production is due, in part, to the Company’s focus, since acquiring full ownership, on investing capital that de-risks the operation. The mill operated at an average of 2,252 tpd for the quarter.
• Lucky Friday – increased silver production by more than four times over the first quarter of 2013, the quarter in which the mine restarted production. Silver production increased by 9% over the fourth quarter of 2013. The mill operated at an average of 879 tpd for the quarter. The #4 Shaft, a key growth project, is excavated below the 6500 level. The project is more than 60% complete and is expected to be finished in the third quarter of 2016 at a cost of approximately $215 million. With the remaining work now limited to the actual sinking of the shaft and development of the next level, the project risks continue to decline. As of March 31, 2014, the #4 Shaft team has worked 864 days without a lost-time accident.
• Casa Berardi – gold production is comparable to the fourth quarter of 2013. Completion of the paste backfill and concrete plants increased operating efficiency and reduced the set-up time required to cycle active stopes. In addition, improved ground control has resulted in generally safer operations, as well as a reduction in waste rock generation. The mill operated at an average of 2,066 tpd for the quarter. The new West Mine dry became operational during the quarter as well. Work on the West Mine Shaft deepening continues, with a focus during the first quarter on the construction of stations, a loading pocket and transfer raises. The project has approximately 38 meters remaining, and completion of the associated mechanical and electrical infrastructure is expected late in the third quarter of 2014, with commissioning to follow. This new shaft is expected to lower operating costs in future years as the mining horizon deepens. Additionally, the deeper shaft is expected to eventually provide a platform for deeper exploration.

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As a reminder, the consensus analyst estimate calls for Hecla to earn only $0.01 per share for all of 2014 — and some still expect a loss. That is expected to grow to $0.10 in earnings per share in 2015. Analysts expect sales growth to be nearly 32% higher to $504.8 million in 2014 and up more than 10% further in 2015 to $558.2 million. To show just how bad this was at the time, revenue dropped from $477 million in 2011 to $321 million in 2012. Hecla shares have not really responded to the news and the stock was trading at $3.11 afterward.

Again, this review is looking months and months out rather than trying to peg how the reaction will be from this news release. As of now, Hecla’s turnaround remains, and this one could still be a stock that could double if things continue to improve.

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