Tuesday, 6 November 2012

HL - another loss making miner

Hecla Mining (HL) reported lousy Q3 earnings, with a loss of around $0.9 million, on much lower revenue of $55 million. Like many miners, HL is suffering from falling commodity prices, which is certainly ironic considering the continued action of the central banks.

HL, daily


I am massive fan of the miners. They are one of the few decent sectors for whom I have genuine great respect. A damn hard job, real work, a real product, that has a real utility, a real benefit to mankind. Its something that is a stark contrast to the paper pushing/gambling maniacs in wall street.

Yet, with silver prices well below their 2011 highs, the little miners are suffering with lower margins, and in some cases, no margins at all!

HL lost just under 1 million, on revenue of 55 million. Its certainly not a disaster, but it sure is not good either. If they are having difficulty with making a profit whilst Silver is still in the 25/35 range, then they sure better hope silver does not break back <25 next year.

see: Hecla - the streak is broken

Today's price action was very appropriate, the obvious downside target in the days and weeks ahead is the big $5-00 level, where a rising 200 day MA also lurks.

HL is unquestionably a great company, but it is a loss making one, and today's price action certainly indicates 'stay away', at least until we see if the big $5 support level can hold.

If Mr Deflation does appear in 2013, with falling metal prices, then I'd guess the May low of $3.68 will be taken out, opening up the $3 to $2.50 zone.

HL remains a highly speculative little miner, but is one to watch..for the longer term.