Superior Buy: Hecla Mining Company vs. Pan American Silver

Superior Buy: Hecla Mining Company vs. Pan American Silver

Hecla Mining Company (NYSE:HL) and Pan American Silver (NASDAQ:PAAS) are working very similar playbooks in 2017. Production growth will be so-so, at best, with spending on the future the primary focus. That makes it interesting to compare the financial foundations of this pair of gold and silver miners. When all is said and done, in a commodity industry subject to often-volatile price swings, investors might want to err on the side of caution as Hecla and Pan American invest in their future growth opportunities. Projections of future growth
Hecla Mining had a huge year, production-wise, in 2016, with silver production up 48% and gold higher by 24%. That all had to do with one mine, San Sabastian, coming online for the full year. The miner is calling for production to be less exciting this year, with silver production lower by at least 10%, and gold higher by as much as 7%. Hecla's big growth effort relies upon a trio of mines (Montanore, Rock Creek, and Donlin Creek) that won't be operational until around 2023-2024.  Hecla Mining employees walking.
IMAGE SOURCE: HECLA MINING.
Pan American Silver's production fell around 2.5% in 2016, with gold production basically flat year over year. Silver production is expected to be roughly flat in 2017, with gold production down at least 10%. Again, not a robust outlook. But the company is expecting gold and silver production to start picking up again in 2018 and 2019 as expansions at existing facilities bear fruit.So, the similarity here is that Hecla and Pan American are both expecting the near term to be less than inspiring on the production front. The story for these roughly $2 billion market cap miners is investing for the future, with Hecla's plans further out than Pan American's. That's why it's worth looking at the balance sheets that underpin those investments.