Underwhelmed by the 2024 guidance on Keno Hill
Would I buy Hecla stock? Sure when silver rises, stock goes below 3, pays me 5% dividend and the pollution and Keno Hill production and ground issues are addressed.
I am not against mining. I do wonder about companies that appear to continue operating like it was last century.
In the case of mining until production is on the book “its just stuff in the ground”. Keno Hill was once profitable. Why? Less costs all around including mining practices, labour, transportation, methods, mine management, less environmental oversight (sad but true) and the list goes on.
To say that I am underwhelmed by the 2024 guidance on Keno Hill is an understatement.
In the case of the Keno Hill acquisition with additional startup costs with adjusted Inflation for equipment, additional environmental, increased remediation, increased personnel and increased personnel transportation costs along with transportation to smelter in relation to pre 1987 costs, higher silver pricing is needed especially if YTG enforces more stringent environmental requirements.
No one knows the future but mines such as Keno Hill can shut down on a moments notice. Happened in 1989 and then dragged on for 10 years with no buyers interested before it reverted back to the government with UKHM declaring bankrupcy.
Is Alexco still involved? Hope not. In 2024 according to the CBC “The Alexco Keno Hill Mining Corp.” made its first appearance in Yukon territorial court last week on one charge under the Quartz Mining Act and two more under the Waters Act” this was in regards storage of materials in 2022 but the discharges in mid -2023 are a lot more serious. There were a lot of quesions if this company was serious or a lifestyle company.
It is clear from anyone who has walked the Elsa tailings wasteland that it is clear that this situation needs to be rectified. Would be interesting to hear a bit about this from Hecla, silver content notwithstanding, there appears a reluctance to address this. In the meantime the dry stacks at Keno don't look any more promising.
In 2023 organizations were starting to question if Green Creeks needed more expansion.
There are lots of articles on this. "Hecla is seeking to extend production of the 34-year-old precious metals mine at the northern end of Admiralty Island National Monument beyond 2031, including expanding its 8.5-million-cubic yard disposal facility to hold up to an additional five million cubic yards of tailings and waste rock storage. Alternatives in the new report would extend the mine’s life up to 40 years."
“Allegations about the mine’s environmental impacts, including “serious concerns about fugitive dust from the tailings pile (that) have been raised for over a decade,” were expressed in a news release Thursday issued by the Southeast Alaska Conservation Council urging people to participate in the public comment process.”
https://miningconnection.com/surface/news/article/new_study_digs_into_alternatives_for_heclas_greens_creek_mine_expansion_ala/
Greens Creek operates in national monument area, will it operate beyond 2025, who knows but for sure Alaskans can be quite vocal about mines and shut them down.
An example of how quickly mines can fail was the Geddes Resources Windy Craggy it was a direct casualty of the Tatshenshini-Alsek nature area that was created as a direct result of Alaskans voicing downstream pollution concerns.
Costs of mining at Keno Hill, would be a lot higher if the true ASIC were to include the aftermath like shuttering costs, long term remediation and monitoring costs, usually paid for by the government (taxpayers), an inconvenient truth.
Hecla is not all blue sky. Is Keno Hill a blue sky stop gap measure. While Hecla is and has been a long term employer they are under pressure as inventory at current mines deplete and more stringent pollution controls are enacted.
Gross profit in 2023 was $112.9 million, a decrease of 3% over the prior year. The decrease is attributable to (i) lower gross profit at Casa Berardi due to lower sales volumes and accelerated depreciation, depletion, and amortization based on the shorter underground mine life, and (ii) only seven months of production at Lucky Friday partially offset by higher gross profit realized at Greens Creek.
Net loss applicable to common stockholders for the year was $84.8 million, an increase over the prior year primarily related to:
Ramp-up and suspension costs increased by $52.1 million, reflecting the impact of the Lucky Friday suspension, and the ramp-up of production at Keno Hill.
A foreign exchange loss of $3.8 million, compared to a gain of $7.2 million in the prior year, reflecting the impact of the U.S. dollar appreciation on Canadian dollar denominated monetary assets and liabilities.
An income tax provision of $1.2 million, compared to a benefit of $7.6 million due to an increase in the valuation allowance for losses incurred by Keno Hill during the year.
https://finance.yahoo.com/news/hecla-reports-fourth-quarter-full-230000272.html