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Investing.com -- S&P Global Ratings revised its outlook on Hecla Mining Inc. to positive from stable, while affirming its ’B+’ issuer credit rating.
The rating agency cited Hecla’s significant debt reduction, which has created a strong credit cushion to help the company navigate potential periods of declining earnings due to unfavorable movements in gold and silver prices.
As of August 31, Hecla used free cash flow and proceeds from an at-the-market equity program to repay about $285 million of debt. This follows approximately $118 million of debt repayment in 2024. The company has reduced its S&P Global Ratings-adjusted debt by about 50% over the past 24 months.
Hecla’s rolling 12-month debt to EBITDA ratio was 1.6x as of June 30 (excluding the August debt reduction), compared with 3.7x at the same time in 2024. The company’s EBITDA more than doubled over this period, driven by favorable gold and silver prices.
S&P believes Hecla’s leverage could remain below 1.5x over the next 12-24 months, even if precious metal prices dropped by about 20%-30%.
In 2025, Hecla eliminated its silver-linked dividend policy in favor of minimum fixed dividends, which has helped conserve liquidity. S&P expects about a 60% reduction in shareholder returns this year, potentially resulting in higher discretionary cash flows for further debt reduction or business reinvestments.
Higher gold prices have allowed Hecla to extend underground operations at its Casa Berardi mine beyond the previously planned mid-2025 shutdown. The company continues its strategic review of the mine, considering options including a potential sale.
S&P could raise Hecla’s rating if it sustains its current robust profits and free cash flow generation over the next 12 months, with leverage sustained below 1.5x and free operating cash flow to debt above 25%.
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