Moody's rates Hecla notes B2

Moody's Investors Service said it assigned a B1 corporate family rating, a B1-PD probability of default rating and an SGL-2 speculative grade liquidity rating to Hecla Mining Co. and a B2 (LGD4, 58%) rating to its proposed offering of senior notes due April 2021. The outlook is stable.

Proceeds from the offering will be used to partially finance Hecla's C$790 million acquisition of Aurizon Mines Ltd.

The agency said Hecla's B1 corporate family rating incorporates the company's relatively modest size, operating and development cost inflation exposure and substantial near-term investment requirements to grow and diversify its production profile and access higher ore grades. It also considers the execution risks associated with undertaking an acquisition that is large relative to the company's size and exposes the company's financial performance to unpredictable gold price movements.

Against these constraints, the rating reflects Hecla's portfolio of currently operating high quality assets that are located in politically stable regions, its anticipated diversification into gold production as an addition to its silver business and the current strength in metal prices, Moody's said.

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