Mining industry is projecting improved returns
~December 20th, 2018
Mining companies here are optimistic they’ll see improved returns in 2019, based on forward-looking statements in recent earnings reports.
“Our strategy is working. The (earning potential) we generated despite low metals prices is a result of the improvements we made in our mines,” Phillips S. Baker Jr., president and CEO of Coeur d’Alene-based Hecla Mining Co., asserted last month in the company’s 2018 third-quarter earnings statement.
For example, Baker said, Hecla’s Casa Berardi gold mine in western Quebec, Canada, is generating strong cash flow, with lower costs, higher production potential, and an extended mine life.
At the Lucky Friday mine in the Silver Valley, where union miners have been on strike since March 18, 2017, salaried employees are working on production, rather than development, to minimize the financial impact of the strike, the earnings report said.
Hecla reported a net loss of $23.3 million, or 5 cents a diluted share for the quarter ended Sept. 30, down from a net income of $176,000 for the year-earlier quarter.
The company also reported successes in its largest quarterly exploration program in company history, with 20 drills at 10 properties, including five operating mines in North America.
“All of Hecla’s (exploration) programs this year had success that will justify follow up in the future,” Phillips said.
Hecla spent $1.2 million in the third quarter toward permitting its Rock Creek and Montanore projects in northwest Montana. The U.S. Forest Service authorized the exploration phase for Rock Creek. At the Montanore project, the Forest Service is working on a supplemental environmental impact statement, which is anticipated in the first half of 2019.
Meantime, gold and silver prices fluctuated somewhat during the year.
The market price for gold was $1,250 a troy ounce as of Dec. 10, up slightly from $1,247 a year earlier. Gold peaked at $1,368 an ounce on Jan. 25 and fell to $1,184 on Aug. 16.
The market price for silver was $14.56 a troy ounce as of Dec. 10, down from $15.79 a year earlier. For the year so far, silver peaked $17.62 on Jan. 25 and dipped to a low of $14.01 on Nov. 12.
Coeur d’Alene-based New Jersey Mining Co., which operates the Golden Chest gold mine, near Murray, Idaho, recently reported a loss of $588,300 in the 2018 third quarter ended Sept. 30, compared with net income of $128,600 in the year-earlier quarter.
With planned production, New Jersey Mining Co. expects an improving trend of positive cash flow for the next 18 months, the company asserted in the earnings report.
Gold Reserve, which has its executive offices in Spokane, reported third-quarter net income of $3.7 million, or 4 cents per share compared with net income of $34.3 million or 36 cents per share in the year-earlier quarter.
The company has received a total of $276 million pursuant to its settlement agreement with Venezuela and holds Venezuelan sovereign bonds with an estimated market value of $77 million.
Gold Reserve expects to distribute a “substantial majority” of any remaining amounts from the settlement to shareholders.
“The company has continued to collect the amounts owed under the settlement agreement despite the difficulties the country faces and will work with (Venezuela) to collect the amounts remaining under the settlement agreement of U.S. $765 million,” Doug Belanger, Gold Reserve president said in the company’s third-quarter earnings statement.