At Hecla, Short-Term Woes Move to Very Long-Term Woes (HL)

When you see mine problems from miners of just about anything have a severe issue at a mine outside of a wage dispute, investors usually get worried that the problem may be an integrated problem in the company rather than a one-off event.  That is the case for Hecla Mining Co. (NYSE: HL) today and this is a story that is not going to just solve itself overnight.

The company has lowered its silver production targets after federal regulators ordered a mine of the company in Idaho to shut down.  The order comes after several accidents and ultimately after two deaths at the mine.

This one is not as bad as some, but the mine will be closed for a year as the sand and debris has to be removed by the Mine Safety and Health Administration.  Needless to say, the agency might not be as in quite as much of a hurry as the company would be.

We do not have the 2011 annual report yet, but the 2010 annual report shows a significant dependence upon this Lucky Friday mine in question.  Unless Hecla can suddenly replace this much of its effort rapidly, this will be a severe interruption for a year and that assumes all things move along smoothly without interruption. 

Hecla is down 21% at $4.60 and the stock hit a new 52-week low of $4.25 today against a 52-week high of $11.08.  Even after losing well over half its value from the silver peak, the market cap here is sill $1.3 billion.

As of September 30, 2011, Hecla had $413.7 million in cash on hand.  It should have plenty of breathing room to keep going, but this is going to throw its results into the ugly-bin for quite some time.

JON C. OGG