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Can Coeur Mining Continue to Outperform Peers in 2017?

PART:
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Part 2
Can Coeur Mining Continue to Outperform Peers in 2017? PART 2 OF 9

What Will Drive Coeur Mining’s Production Growth in 2017?

Coeur Mining’s 4Q16 production

Coeur Mining (CDE) reported a record quarterly silver equivalent production of 10.0 million ounces in 4Q16. The production for silver was 3.9 million ounces. It was 102,500 ounces for gold. That takes the full-year production to 14.8 million ounces for silver, which is in line with the company’s guidance of 14.4 million–15.7 million ounces.

On the other hand, gold production of 358,170 ounces for the year was higher than the upper end of the guidance range of 333,000–355,000 ounces.

What Will Drive Coeur Mining’s Production Growth in 2017?

What Will Drive Coeur Mining’s Production Growth in 2017?

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2017 production guidance

Coeur Mining expects its 2017 production to be 16.4 million–18.0 million ounces for silver and 362,000–387,000 ounces for gold. That implies a silver equivalent production (or SEO) of 38.1 million–41.2 million ounces. At the midpoint of this guidance range, expected production growth is 9.0% YoY (year-over-year).

Mine-by-mine production

The Palmarejo Complex is Coeur Mining’s silver and gold mine in Mexico. In 2016, Palmarejo produced 4.4 million ounces of silver and 73,913 ounces of gold. That’s in line with the company’s guidance. Coeur expects to increase the mining rate at its Guadalupe and Independencia complexes at Palmarejo to 4,500 tons per day in 2017 compared to an average of 2,500 tons per day in 2016.

The construction of the Stage IV leach pad expansion for the Rochester mine is on schedule and on budget with commissioning expected in early 3Q17.

For Kensington, production in the fourth quarter was the highest for the year, rising 27.0% quarter-over-quarter. Gold production at its Wharf mine in South Dakota was also the highest for the year at 30,675 ounces. The company expects a lower production from Wharf in 2017 at 85,000–90,000 ounces due to the anticipated completion of mining at the higher grade Golden Reward deposit in mid-2017.

Peer production

Coeur’s peers (SIL), including Pan American Silver (PAAS), Hecla Mining (HL), Silver Standard Resources (SSRI), and Newmont Mining (NEM), are also trying to increase production at the lowest possible cost. In the rest of this series, we’ll see how that could impact Coeur Mining’s revenues and earnings going forward.

But first, let’s look at analyst recommendations for Coeur Mining.

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