Terrence,
Hope things have been well for you, its been awhile. I like the way Hecla jumped today even though it did retrace. Good to see it had a strong response to increase in POG and POS. This seemed much more responsive to these price moves than this stock has been in the past which will serve well when the metals move into a bull market.
Would you be kind enough to give me your opinion of this opinion of HL fundamentals I found on Kitco?
Hecla Mines
Sep 25 1998
10:34PM EDT
Based on 6mos results extrapolated for 12 months, HL will
do 75 million in gold and silver revenues. Their silver
production is increasing while gold seems to have tappered
off but is projected at 180koz with silver at 7 million oz
annualize.
Fiqure a 20% increase in gold and silver revenues ( silver
going from the first 6 mos'. $5.50 to $6.75 per oz sustained
for a year and gold to $350 ) . Revenues would increase
about 15 million devided by 55 million shares outstanding
and you have 24 cents +/-per share, times 30 would give
you a $7.50 -$11 dollar stock. EACH additional dollar rise
in silver coupled with a $10 rise in gold would produce an
additional 10 cents profit, plus or minus - or another $2-$3
in stock valuation..
So at $8 silver and $360-$370 gold you'd have a $10-$13
dollar stock, seems to me.
Not really grea,t but these stocks aren't like utilities where you fiqure the earnings at prospective metal levels and really
expect the stock to arrive there on time. The mining stocks
are really more like internet trading vehicles that get way
over valued and under valued. I frankly think the money
flow into these miing stocks on a move to $8 silver and
$365 gold would jump HL, for example, to $15 at least.
Above that I would fiqure it was overvalued and look for a
technical condition to trigger a sale.
Based on what I see having happened even as recently as
today, these metals are going to be prone to volitile spikes
and down drafts. I think the stocks got ahead of the metals
themselves, this week. I don't expect too big of a decline in
the metals next week dispite the weak close, Friday the
25th. The draw down in COMEX stocks and the seeming
increase in the gold lease rate and possible reluctance of
Central Banks to roll over loans will provide a fundlemental
foundation to a technically driven short term dip.
HL looks good in the low 4s but watch the metal price for a
buy trigger with a close above $5.17 or a move above
$5.25 following a lower opening on Monday.
Again, from my perspective and in my humbled opinion, HL
appears to be a leader for the initial stages of a silver rally.
Postsript: I've been thinking about the COMEX Silver STocks - 72 million oz -
sufficent to cover less than 1/5 th of the Silver futures open interest. About 4 months worth of the annual deficit of supply vs demand if you believe the figures. The value
of that silver is equal to the change in capitalization of Coca Cola when it moves a 1/4
point.
Something is out of whack here. I have some silver stocks, not as much as I will have if we go over $5.25 as noted above. I personnaly think KIP is right that the best way
to play silver is throgh the futures market. The low prices for silver the last ten years
have left these companies in near financial shambles with all types of complex
convoluted financing. Its hard, expensive and sometimes a mistake to try and mine silver. Speculative interest is low.
The market has been controlled by shorts enjoying the benefits of the lease trade. If
we don't sink into a financial meltdown world wide the supply demand imbalance if
true should compett the price of silver to $8 with in 18 months, probably less and
probably higher.
End of Quote,
Best Regards,
Roebear |
