Wednesday, 4 April 2012

HL - little Hecla...still problematic

I have a real soft spot for the miners, always have, always will. They are 'real' companies, they do 'real' work (no paper pushing, fractional banking nonsense)...for a real resource that people need.

Hecla is pretty small, current market cap of $1.3bn -  having lost two thirds of its value in the past 15 months.

See key stats :

HL, daily, near term

I'm guessing that despite the profitability of the company, Hecla will get sucked down by the rest of the declining mining sector this summer.

HL, weekly, 5yr historic

We have seen a pretty severe decline since January 2011. HL started to suffer (pre-emptive warning!) a few months before Silver hit $49..and then its fierce decline to $25 (currently 32). Hecla's next support level is probably somewhere around $3.50 to 3.00 - thats another 20% or so lower.

Will HL fall to the 2009 low of $1.00 ?

Its a crazy thought, but an exciting one. The idea of being able to pick up 1000 HL for just $1000, tuck it away, and sit on it for 5-10 years, with the real possibility (if Silver eventually hits $150+), would probably give HL a shot at hitting $25...50...or even higher.

Certainly, such ideas are speculative, and all these small mining stocks are arguably lottery plays, but already a tempting buy, but with SP @1413.. there is a lot of downside, with only minimal upside (1550, best bull case).

I will certainly refer back to HL, and other miners (along with GDX/GDXJ ETFs) in the coming months.

Good wishes to all the 'real workers out there!'..aka...the Miners!