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« Endeavour Silver Corporation Q1 Results: Stock Up 4.06% today! | Main | Portfolio Update: 13 May 2008 »

Hecla Mining drops 10.13% on quarterly results!

When we look at these results they appear to be reasonably good to us. The problem comes when the results fall below analyst’s expectations, generating a myriad of notes from influential advisors downgrading the stock by a dollar or so.

What is a problem for them is an opportunity for us as they drive the stock price down we will prepare to pounce and bag a few more of this quality silver miner.

These are the highlights as given on their web site:

“Hecla Mining Company (HL: NYSE) today reported net income applicable to common shareholders of $12.1 million, or 10 cents per common share, on revenue of $46
million in the first quarter of 2008, compared to $8 million, or 7 cents per common share, on revenue of $54.6 million in the first quarter of 2007. Net income before dividend payments was $15.5 million, compared to $8.1 million in the first quarter of 2007.”

This does not read like a disaster to us, in fact the Company President and Chief Executive Officer, Phillips S. Baker, Jr., said:

“With completion of the acquisition of the remainder of the Greens Creek joint venture, we now own and operate 100% of the fifth largest silver mine in the world. Hecla is a dramatically different company, and we expect substantial improvements in revenue and cash flow over the course of the year.”

To read the article in full please click this link.

Taking a quick look at Hecla’s chart we can see just what a roller coaster ride it has been for this stock and these results have caused investors to cash up and go. Also note that HL is now below its 200dma and its technical indicators suggest that it is now oversold.

Hecla Chart 14 May 2008

This is what we said about Hecla Mining yesterday when we updated our portfolio of silver stocks:

“Hecla Mining Company (HL) – Initially we bought this stock for $5.27 - a quality silver stock which was going along nicely and then we thought Hecla was overbought, as it hadn’t corrected with other silver stocks, therefore we took profits on Hecla at $11.89, the stock price then dropped so we bought it back at $9.72, getting a 18% discount on our shares. On the 14th April we sold 50% of this stock for $11.79 in order to lock in some profits as we anticipated a fall. HL closed yesterday at $10.37. We are constantly monitoring this market with the view to identifying a suitable re-entry point when we can once again re-purchase HL shares.”

Today Hecla has closed at $9.32, which brings it right back into our sights again. The damage may not be totally over at this point as brokers notes go out and investors take their time in moving to the sidelines. So we will continue to monitor HL’s progress in the hope that we can spot a ‘bargain buy’ re-entry point and we will post the minute that we make a move.

A volatile market throws up opportunities that we believe we can trade and generate a profit, hence the need for ‘opportunity cash’ so do try and keep some of your funds available for deployment when these opportunities present themselves.

Stay on your toes and do as much research as your time allows, this is an exciting place to be, its small, thinly traded and at times very explosive.

Have a good one.

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Reader Comments (5)

I purchased HL Tuesday when a limit order filled at $9.75. May be looking to purchase more.

I am surprised how excellent quarterly results fail to move these PM stocks higher. If these outstanding results were reported by Dow 30 stocks, they would soar upward.

I wonder if and when mainstream investors are going to catch on to the PM sector the popularity of the PM ETFs, which I also own, causing PM stocks to lag even with spectacular earnings and revenue?

Your thoughts please.

May 14, 2008 | Unregistered Commenterjim Curtis

Caution warranted : I view this trashing as a possible a-b-c down , and they usually happen reliably when the second leg down (current one) has greater volume as it passes the -b- point. so I see this as going to retest the $8 range. the chart shows $13 to $10 as the 'a' to 'b'leg ( 3dollars down) , then a bounce 'b' to 'c' near $11 , and as it crosses below $10 on higher volume ,you usually get another $3 down from the bounce of near $11. retest $8 area , in my humble opinion. Could be wrong, rather be cautious. happy trades

May 14, 2008 | Unregistered CommenterRobert

Robert, thanks for the update on HL. I've been following that stock as well. On another note, could you please help me understand what is going on with UXG (US Gold)? My research indicates that the stock will hopefully take off on the next PM rally. Your thoughts please. Thank you.

May 15, 2008 | Unregistered CommenterJerry C.

As I commented before, HL was promoting the CFTC report from '04 commenting that there was "no manipulation" of the price of silver, and that HL hired an outside "investigator" that supported this. In fact, the report practically admitted that there was manipulation (requiring the resignation of the head of the CFTC). As far as I'm concerned, HL appears to be too chummy with the silver shorts. I sold my shares and bought SSRI who clearly doesn't support the shorts.

May 15, 2008 | Unregistered CommenterJohn Victor

Jerry , I used to own UXG also, mostly because Rob Mc knows what he is doing in the Gold business , he used to own Goldcorp. As for this chart , it looks like it may have bottomed ,but I got out quite a while ago because I was afraid that ( against all odds) it COULD go retest its origional break out of Aug 2005. I took a loss ,as I bought it on the way up , and rode it down a bit more than I should have. If I were looking at this now, I would let it prove itself by going up with volume and breaking beyond the downtrend line before I buy again.Its not giving a DEFINITE signal now. below the 50 d.m.a and 200d.m.a If I was in it, I may ride it in hopes that it goes up with the rest ( juniors look ready to play catch up w/the next run. REALLY tough call ( I look at it on a 3 year wkly chart , and see Aug 2005 break out ,$1 to $10 , and now back to $2...not a real confidence builder yet) sorry not more helpful.

May 15, 2008 | Unregistered CommenterRobert

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