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Can Coeur Mining’s Production Levels Keep Accelerating?

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Dec. 4 2020, Updated 10:50 a.m. ET

Production guidance

In 1Q16, Coeur Mining’s (CDE) silver and gold productions were slightly lower than market expectations. The company produced 3.4 million ounces of silver and 78,000 ounces of gold, and these volumes were negatively impacted by mill maintenance at the mine in San Bartolomé, Bolivia, and the timing of leach pad recovery at the mine in Rochester, Nevada.

The company has, however, maintained its 2016 operating production guidance. It expects to produce 14.5 million–15.8 million ounces of silver and 320,000–347,000 ounces of gold in 2016.

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Production levels to accelerate

The Palmarejo Complex is Coeur Mining’s silver and gold mine located in Mexico. In 1Q16, Palmarejo produced 933,000 ounces of silver and 15,000 ounces of gold. This production was in line with the company’s expectations as the mine transitioned to lower tonnage and high-grade, high-margin operations.

Coeur implemented several process enhancements in 2015 that are now leading to higher recovery rates. The mining of open-pit and old underground is continuing at lower rates, and the company expects it to cease by mid-2016.

Rochester and Kensington

Coeur delivered lower-than-expected volumes in Rochester due to poor weather conditions and timing of recovery from its Stage III leach pad. The company said that production levels started increasing in March, and they are expected to accelerate throughout the year.

At its Kensington, Alaska, operations, the company achieved consistent production levels during the first quarter. The company also mentioned that the development of decline in the high-grade Jualin deposit is progressing well and is one-third complete.

Lower sequential production

The company delivered lower sequential production at its Wharf, Dakota, mine, mainly due to the timing of recovery from the current leach pad. However, the company expects higher production during the remainder of 2016.

Production in San Bartolome, Bolivia, was also lower quarter-over-quarter in 1Q16 due to mill maintenance. The company has recently installed an oxygen injection system in the agitation leach circuit to improve recovery rates.

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 their productions at the lowest possible costs.

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