Which Silver Miners Can Deliver Production Growth in 2016?



Upgrading guidance

Hecla Mining (HL) recorded strong 71% silver production growth and 41% gold production growth year-over-year in 2Q16. Due to this strong performance, the company increased its silver output guidance 5% to 15.8 million ounces and its gold guidance to 233,000 ounces from 207,000 ounces. This upgrade was due to strong performance at San Sebastian and Casa Berardi.

Tahoe Resources (TAHO) also beat production estimates with its 2Q16 results. Its 5.7 million ounces of silver and 110,000 ounces of gold production were higher than consensus estimates. Higher-than-expected silver grade and recoveries at Escobal helped achieve this strong performance. To reflect better-than-expected production, Tahoe is now targeting the top end of its production guidance of 18 million–21 million ounces of silver for 2016.

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Strong operating performance

Pan American Silver Corp (PAAS) delivered production of 6.3 million ounces of silver and 48,000 ounces of gold in 2Q16. The company maintained its production guidance of 24 million–25 million ounces of silver and 175,000-185,000 ounces of gold for 2016.

In 2Q16, Coeur Mining’s (CDE) silver and gold productions were slightly higher than market expectations. It produced 4.0 million ounces of silver and 92,726 ounces of gold. Volumes were helped by strong operating performances from the Palmarejo and Rochester mines. 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.

Downgrading guidance

First Majestic Silver (AG) reported silver equivalent production of 4.7 million ounces for 2Q16, a sequential drop of 8%. Due to weaker performance in 1H16, the company reduced its 2016 silver equivalent production guidance from 17.8 million–19.8 million ounces to 16.8 million–18.7 million ounces.

Most miners (SIL) either maintained or upgraded their production guidance for 2016. First Majestic slightly decreased its guidance.

While looking at near-term production growth is important, it’s even more important to look at producers’ medium-to-long-term production growth. This growth impacts companies’ mergers and acquisitions, exploration spending, and capital expenditure decisions.

In the next part of this series, we’ll look at this variable for silver miners.


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