HL stock has had it rough over the past year or so due to a range of factors. Some of the factors behind the poor performance for Hecla Mining Company (NYSE:HL) include labor unrest at an important mine, a colossal debt burden, and consequent weakness when it comes to earning figures.
In 2018 alone, HL stock tanked by as much as 40% as Hecla struggled. Despite all that, the company has continued to invest, and two of its key investments in Montana are probably going to be the major drivers behind any potential growth.
HL Stock: Bad News
Hecla Mining’s move to invest in two mines in the state of Montana is no doubt strategic in nature, and for a mining company, it helps to operate more than one mine in a state. The economies of scale are usually highly favorable. However, it has not quite worked out due to the fact that a judge in the state has already blocked the company’s Rock Creek mine.
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Such a judgment could prove to be extremely damaging for the company’s other projects in the state. The very fact that one of the mines has been blocked could create a knock on effect and create adversities for the other mine. The news proved bad for HL stock, which sunk 10% after the judgment came in.
Hecla Mining’s Outlook
Although the blocking of the Rock Creek mine is, without a doubt, a major setback for the company, it is also important to keep in mind that Hecla still has a range of mining interests that will offset the problems in the short term.
However, in the longer term, the two mines in Montana are supposed to be of huge strategic interest. Considering the fact that the company has invested heavily in both, it would be quite ruinous for Hecla’s long-term health if these mines prove to be failures. The mines are yet to be fully operational and were not supposed to have a huge bearing on the company’s bottom line.
However, in the longer term, they are extremely important projects for HL stock.
Featured image: DepositPhotos © TTstudio
