By Dr. Allen Alper, PhD Economic Geology and Petrology, Columbia University, NYC, USA
Hecla Mining Company (NYSE: HL): Leading Low-Cost U.S. Silver Producer with Operating Mines in Alaska, Idaho and Mexico, and a Growing Gold Producer; Interview with Mike Westerlund, VP of Investor Relations
Hecla Mining Company (NYSE: HL) is a leading low-cost U.S. silver producer with operating mines in Alaska, Idaho and Mexico, and is a growing gold producer with an operating mine in Quebec, Canada. Hecla also has exploration and pre-development properties in seven world-class silver and gold mining districts in the U.S., Canada, and Mexico. We learned from Mike Westerlund, VP of Investor Relations for Hecla Mining, that 2016 was the record year for the company for revenue and silver production. The reason for that, according to Mr. Westerlund, is the strategy of investing in organic growth, even during tough times, that led to the opening of the new very profitable mine in Mexico, record production and excellent financial performance.
PDAC 2017: Mike Westerlund, VP of Investor Relations for Hecla Mining Company
Mr. Al Alper Jr.: Excellent. This is Al Alper, Jr., President of Metals News. We're here at PDAC 2017. I'm talking with Mike Westerlund, who's the VP of Investor Relations for Hecla Mining Company. Why don't you tell me how the show's going for you guys so far?
Mr. Mike Westerlund: I think it's a more upbeat show this year. There's a lot more interest. We've just come off a record year for the company. We've been in business 125 years and our best year for revenue and silver production was 2016. People are excited, and we have the results to show for it.
Mr. Al Alper Jr.: That's excellent. What do you think is driving your success?
Mr. Mike Westerlund: We made a decision a few years ago to invest in the business, even though the prices were declining, and our peers were shrinking their businesses and selling assets. We invested in organic production. That allowed us to complete our #4 Shaft project at the Lucky Friday, significantly extending the mine life, and to put San Sebastian back into production in Mexico. Very few mines went into production in the last three years, but our San Sebastian has been very profitable for us. The resulting production increase came at a time of strengthening prices, which has led to record production and excellent financial performance.
Mr. Al Alper Jr.: That's awesome. What are you doing now to continue this success?
Mr. Mike Westerlund: 2017, we should produce about the same amount of metal as '16. As you may know, Hecla is the largest primary producer of silver in the US and the third largest producer of lead and zinc, and we also produce a significant amount of gold. The base metals production is especially important this year with the strength those metals have shown. The higher metals prices are going to help our cashflow generation potential. What's very exciting longer-term, is we have two projects in Montana that we're permitting that are very large silver-copper projects. We're looking forward to getting them into production. It's going to take several years to do, but those are as big as our whole company from a reserve point of view. They're massive projects that should run for a long time. We're one of the very few mining companies where you can look out 20, 30 years into the future and see the production potential that we already have in place.
Mr. Al Alper Jr.: What is your mine life looking like now and in the future?
Mr. Mike Westerlund: We're a company that believes in the importance of having long-lived assets, because that gives us the opportunity to invest and improve the assets and to earn more money and to extend their lives. We're in the mining business, not the mine-closing business. Greens Creek, our Alaska mine, has had an eight to ten year mine life for 28 years of operations. Casa Berardi, our Quebec mine, has a 10 year mine life, plus a lot of additional material that we're finding. Lucky Friday, in Idaho, has a 20 to 30 year mine life that likely will extend further than that. And at San Sebastian in Mexico, the mine life is shorter right now, but it's a very high-grade, very profitable operation which has a significant impact on our financial performance. The exploration potential at San Sebastian is very good and our focus is on extending the mine life now.
Mr. Al Alper Jr.: What do you think the main thing is that your shareholders and investors should be taking away from working with Hecla?
Mr. Mike Westerlund: The fact that our strategy works. As a result of our strategy of investing in our business we had a record year in 2016 and expect to have a strong 2017 and beyond. With Rock Creek and Montanore, we have secured the long term future of the Company. Now our focus is on improving profitability and as always, extending our mine life.
Mr. Al Alper Jr.: Do you have any challenges you're overcoming? If so, what are you doing to overcome them?
Mr. Mike Westerlund: I think one of the biggest challenges we face is the permitting environment in the US. We acquired two large silver copper projects that are undergoing permitting with the view that sooner or later the environment would be more positive for approving new projects. We see, with the new administration in the US, that the climate for permitting has improved. This change comes from the top down, and is evident in the new appointments to head the various departments. For example, the new Secretary of the Interior is Ryan Zinke, and he's actually a geologist from Montana. He's a senator. He's aware of our projects. He grew up 100 miles from where our projects are, so we think that we'll be able to work with the new administration and advance that permitting more quickly, which'll bring these two big mines into production sooner. This is an area of Montana that has 30% unemployment, so for them to have a couple hundred high-paying jobs for 20, 30 years is going to make a big difference.
Mr. Al Alper Jr.: So do you think President Trump is more of a businessman and less of a bureaucrat or politician?
Mr. Mike Westerlund: The sense that we get in the industry is that they're looking for less regulation, more streamlined of regulation, and a general approach of looking for ways to make things happen. That's just a really positive change.
Mr. Al Alper Jr.: Do you have anything else you'd like to add?
Mr. Mike Westerlund: I think Hecla is one of those companies you want to keep an eye on because we're small enough to have phenomenal growth, which we will see again with our large Montana projects, and large enough to develop them. We're very profitable, we have long mine lives, great share price performance, and are looking for a strong 2017 too. We are the strongest we have been in our 125 year history. And the future looks very bright.
Mr. Al Alper Jr.: We, at Metals News, are a media partner and sponsor for the PDAC 2017. Could you tell me more about your involvement and history with PDAC?
Mr. Mike Westerlund: We've been coming to PDAC for the past 15 years. We're a NYSE listed company, but Toronto is one of the greatest mining centers in the world, and PDAC is one of the most famous mining conferences there is. We come, we have a presence. Last year we had a significant presence because we were celebrating 125 years in business. This year we still have more than10 of our people here talking to companies, talking to investors, talking to government officials. Everyone comes together for four days in Toronto. This is a must-do.
Mr. Al Alper Jr.: As always, we at Metals News enjoyed talking with Hecla Mining. We have great respect for what you’re doing. We also think of PDAC as a must-do.
Hecla Mining Company
Corporate Communications Coordinator