Hecla Mining Stock: A Good Start In 2023 (NYSE:HL)

Introduction

The Vancouver-based Hecla Mining (NYSE:HL) announced the fourth quarter and full-year 2022 preliminary gold production on January 11, 2023.

Note: This article is an update of my article published on December 7, 2022. I have followed HL on Seeking Alpha since June 2019.

A quick presentation of the company.

1 – 4Q22 and Full-year 2022 Production Snapshot

1.1 – Fourth quarter production

HL delivered mixed production results this quarter. Gold production came in at 43,699 Oz of gold, down 2% sequentially, and 3,663,434 Oz of silver, up 3% sequentially.

The Lucky Friday mine silver production increased by 14% sequentially.

HL produced 12,456 tons of lead and 15,892 tons of zinc.

However, Casa Berardi’s gold production was down 8% sequentially.

Note: I have calculated the silver production for 4Q22 because the company did not release it.

Greens Creek did quite well this quarter.

1.2 – Full-year 2022

Hecla Mining production for 2022 came in at 14.2 million ounces of silver, which is Hecla’s second highest. An increase of 10% over last year, driven by a 24% increase at Lucky Friday and a 5% increase at Greens Creek. However, as expected, gold production decreased 13% to 175,807 ounces as Nevada production ended.

	2020	2021	2022
Silver Oz	13,542,957	12,887,240	14,182,988
Gold Oz	208,962	201,327	175,807
Lead Tons	–	43,011	48,250
Zinc Tons	*	63,617	63,463

Click to enlarge

Hecla Mining is also producing lead and zinc as by-production metals.

The lead production increased by 12%, and zinc production was unchanged YoY.

In 2022, production of silver was slightly above guidance, whereas gold production was at the mid-point. Good performance overall.

Finally, the company said that the Keno Hill development is on schedule, with production planned to start in 3Q23, ramping up to an expected 440 tons per day (“tpd”) by year-end.

2 – Stock Performance

HL has outperformed the silver group and is now up 20% on a one-year basis, whereas Coeur Mining (CDE) and Pan American Silver (PAAS) are lagging far behind.

3 – Investment Thesis

Hecla Mining has recovered nicely from its September 2022 low and is doing well with rising gold and silver prices. The Keno Hill project is advancing on schedule and be producing silver commercially by the third quarter of 2023. Furthermore, HL is an American producer and pays a small dividend with a yield of 0.4%. On the commodities prices side, gold and silver have recovered in the past few weeks after the FED signaled that it would slow down the pace in 2023 with a possible 25-points-hiking strategy, encouraged by the rapid decline in inflation to 6.5% in December.

However, as I said in my preceding article, the Company is small and presents recurring technical weaknesses. Casa Berardi’s gold production is down, and inflationary pressures are still a threat. Thus, I suggest trading short-term LIFO HL using at least 40% of your total position – more details at the end of this article.

Technical Analysis (Short-Term) and Commentary

Note: The chart has been adjusted for the dividend.

HL chart shows an ascending wedge pattern with resistance at $6.28 and support at $5.95.

Caution: Ascending wedge patterns are bearish chart pattern that often signals an imminent breakout to the downside. It may not happen now because of the gold rally but stay alert.

The general strategy I usually promote in my marketplace for HL is to keep a core long-term position and use about 30%-40% to trade LIFO while waiting for a higher final price target for your core position.

I suggest selling about 30%-40% of your HL position between $6.20 and $6.40, with possible higher resistance at $6.75. Conversely, I recommend buying HL between $5.95 and $5.40, with possible lower support at $4.80.

The gold price jumped significantly in the past few weeks to $1,925+ per ounce, but volatility is extreme. The Gold price quickly turned bearish two days ago after the market got scared “as key members of the Federal Reserve signaled their intent to keep pushing interest rates higher to combat inflation.”

Thus, watch the gold and silver price like a hawk.

Warning: The TA chart must be updated frequently to be relevant. It is what I am doing in my stock tracker. The chart above has a possible validity of about a week. Remember, the TA chart is a tool only to help you adopt the right strategy. It is not a way to foresee the future. No one and nothing can.

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