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Key Takeaways from Coeur Mining’s Latest Exploration Update

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Exploration update

Coeur Mining (CDE) provided an exploration update on October 10, 2016. The update was mainly related to its expanded exploration initiatives at three of its five operating mines. The main aim of the exploration is to upgrade existing resources to reserves and find new resources. This will not only increase its production profile but will also lower its unit costs.

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Exploration highlights

Coeur is expecting to invest $30 million–$34 million in exploration in 2016. This is an impressive 82% increase in exploration expense compared to last year. Of the company’s exploration budget for 2016, 85% is expected to be allocated to drilling at or near Coeur’s existing operations.

Below are some major highlights for the drilling results at Palmarejo, Kensington, and Rochester:

  • At Palmarejo, the company’s efforts are focused on aiding mine planning at the Independencia underground deposit and upgrading resources at the Guadalupe underground deposit.
  • Coeur’s program at Kensington is generating high-grade results from the main deposit in addition to making a discovery of Jualin high-grade deposit in 2015. This will aid in higher production and lower unit costs at this mine going forward.
  • At Rochester, the company’s efforts are focused on in-fill and expansion drilling of the higher grade East Rochester expansion to support a revised economic analysis at the end of 2016.

Exploration opportunities

After years of cutting back on sustained capital expenditure, precious metal miners (SIL) (FDX) have started to refocus on production growth, as precious metal prices have remained buoyant in 2016. Rises in exploration and capital expenditure budgets were key themes of miners’ earnings in 2Q16.

Yamana Gold (AUY) recently provided a positive exploration update. Barrick Gold (ABX) is also pursuing growth through optimization and exploration. Kinross Gold (KGC) expects to convert a substantial part of Bald Mountain’s 4.0 million ounces of resources to reserves. Coeur’s silver peer Hecla Mining (HL) also increased exploration expenses in its 2Q16 earnings in bids to explore future production opportunities.

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