Hecla will show improved results as silver breaches $6.00 and gold, $340. Additionally, because their cash cost is discounted by the offset provided by the other base minerals mined as byproducts, I expect a firmer market for zinc, lead, clay and kaolin to develop as well, adding a boost to operating profits, and cash flow.
Discounted cash-flow is a recognized benchmark for valuation in the hard-asset industries. Net profitability is easily manipulated by any good accountant worth his salt. However, Hecla appears not to use aggressive accounting practices to "dress-up" earnings; management can be trusted to report results accurately. It is the primary reason I own Hecla, Battle Mountain, and Pioneer Natural Resources. The three ingredients to a successful company are, in order of importance: Management, Management and, finally, Management.
T.V.H. |
