Hecla Mining Company (HL) Accused of Making False and Misleading Statements
According to the complaint against the company for alleged violations of the Securities and Exchange Act of 1934 between March 19, 2018 and May 8, 2019, in March 2018, Hecla Mining Company (HL) announced the acquisition of three Nevada gold mines through its acquisition of Klondex Mines Ltd. Hecla’s President and CEO, Phillips S. Baker, Jr., falsely touted the potentially high returns and represented to investors that the operations would be cash flow positive, or at the very least “self-funding.” On May 9, 2019, Hecla shocked investors when it disclosed a comprehensive review of its Nevada operations and the suspension of annual production and cost estimates for its Nevada operations. It also admitted that the Nevada operations were cash flow negative. In a following conference call, Hecla not only confessed that it was uncertain as to whether it would ever see a return on its investment in the Nevada mines, but also disclosed that it had known about the material problems in the Nevada operations prior to the close of the merger. When the truth was revealed, Hecla’s stock declined by 23.5% over two trading days to close at $1.56 per share on May 10, 2019. The stock price has yet to recover.