Currently viewing Global edition

Coeur books loss, but boosted by metal prices

Coeur Mining president and CEO Mitchell Krebs is confident the company can exit 2019 in better shape than it entered the year after reporting a second consecutive quarter of net cash generation on the back of better metal prices and operational improvements. The company also continues to make progress paying down a hefty debt load.
Coeur books loss, but boosted by metal prices Coeur books loss, but boosted by metal prices Coeur books loss, but boosted by metal prices Coeur books loss, but boosted by metal prices Coeur books loss, but boosted by metal prices

Coeur Mining's Wharf mine in South Dakota, USA

Staff reporter

New York-listed Coeur (CDE) has seen its share price nearly double since the end of May to yesterday's US$5.60 close, capitalising it at $1.24 billion. It started the year at $4.81.

The miner, which has gold, silver and base metal operations in the US, Mexico and Canada, reaffirmed its 2019 full-year guidance for production of 334,000-372,000oz gold, 12.2-14.7 million ounces of silver, 25-40Mlb of zinc and 20-35Mlb of lead.

It posted a US$14.3 million net loss for the September quarter, including $15 million of non-cash writedowns, but $61 million EBITDA and $11.3 million of free cash flow - double the June quarter FCF. Coeur said Wharf, in South Dakota, USA (gold production of 25,946oz 65% higher than June quarter), and Palmarejo in Mexico (13% higher gold output at 31,779oz/stable silver production of about 1.7 million ounces) were the main contributors to the cash flow result, while the new crushing circuit including high-pressure grinding roll mill at Rochester in Nevada, US, started to impact and is expected to contribute strongly in the current quarter in its first three months of operation.

Kensington in Alaska produced 34,156oz gold at costs applicable to sales (CAS) of US$822/oz, reflecting "the continued benefit of higher-grade ore from Jualin, which is expected to drive production and costs in-line with full-year guidance ranges". Coeur is guiding for 117,000-130,000oz at CAS of $950-1,050/oz from Kensington for the year to December 31.

Overall, higher gold production (100,407oz, plus 16% on June quarter) and realised gold and silver prices lifted Coeur revenues for the September quarter by 23% on the June quarter to $199.5 million, with silver output stable at about 3Moz, and zinc and lead output lower. Total CAS was up 7% quarter-on-quarter to $141 million.

Coeur said it retired $70 million of debt in the latest quarter, including the balance of its $250 million RCF loan, courtesy of equity-issue and debt-to-stock conversion proceeds, and had cut $160 million of debt since the start of 2019. Capex was $30.7 million in the September quarter compared with $20.7 million in the June quarter, reflecting the crushing circuit upgrade at Rochester and ongoing work to address milling issues at Silvertip in British Columbia.

Coeur had $65.3 million of cash and equivalents at the end of September.

Krebs said the company improved its financial flexibility by "materially reducing our debt level and bolstering our liquidity while continuing to invest in near-mine exploration and high-return organic growth opportunities". He expected the improved operational performance to continue in the current quarter "as we seek to generate a third consecutive quarter of increasing, positive free cash flow".