Recently I wrote
an
article trying to reach out and find out what the heck was wrong with the
share of Hecla Mining (NYSE:HL). I also own some shares of
Nova Gold
(NYSE:NG) only to see that stock get crushed by bad news and the
seasonal correction that has hammered both gold and silver prices over the past
3 months.
Well, the next day my mentors over at Outstanding Investments (www.AgoraFinancial.com ) came up with some answers that
demonstrate why they continue to be one of the best-performing newsletters and
stock-pickers in the industry. Here's what they wrote to a subscriber who asked
the right questions:
"A reader named Susan asks: “What’s going on with Hecla Mining? The stock is
down from our entry point. Is there any news that is depressing the stock? Where
do you think Hecla is going from here?”
117-year-old Hecla Mining Co. (HL: NYSE) is headquartered in
the silver mining country around Coeur d’Alene, Idaho. Hecla explores for, mines
and processes silver and gold in the U.S. and Mexico. I added Hecla to the OI
portfolio just a couple of months ago, right after Hecla announced that it was
acquiring 100% interest in the Greens Creek silver mine south of Juneau, Alaska.
(Greens Creek is one of the largest silver mines in North America.)
In the original Hecla article, I noted that Hecla has a subsidiary in
Venezuela. In 2007, the Venezuelan operation contributed just 3% of Hecla’s
annual gross profit. I mentioned in the original article that the well-known
political issues of Venezuela could affect Hecla’s operations down there.
And just last week, Hecla announced that it is selling the Venezuelan unit to
Rusoro Mining Ltd. of Vancouver. The total deal is worth $25 million. Rusoro
will pay Hecla $20 million in cash and $5 million in Rusoro stock. In return,
Hecla will cede control over the Isidora gold mine and the La Camorra mining
facility in southeastern Venezuela, near a national forest.
By selling its Venezuelan assets, Hecla is making a virtue of necessity.
Venezuela’s Mining Ministry recently announced that the government of Hugo
Chavez was considering rescinding Hecla’s concessions. This was due to a
so-called “labor dispute” that interrupted operations at the Isidora mine.
Read between the lines. The Venezuelan government, basically, threatened
Hecla with a backdoor nationalization. So Hecla is getting out of there. Hecla
will leave it to someone else to smooth the waters with Senor Chavez.
And Hecla’s managers are no fools.
