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Here’s What Could Drive Coeur Mining’s Reserves Growth

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Reserve replacement

Precious metal miners (GDX) (SIL) face the problem of compensating for every ounce they take out of the ground. So it’s important to look at miners’ reserves and resource estimates and the assumptions used to calculate them.

Coeur Mining (CDE) reported a 9.0% rise in silver equivalent ounces reserves to 328.5 million ounces. Silver reserves rose 13.0% to 176.6 million ounces.

The rise in reserves was mainly due to the successful resources conversion at Rochester. That added 32.7 million silver ounces and 326,000 gold reserves ounces. The fall in reserves at other mines was mainly due to depletion.

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Exploration update

Coeur Mining stated in its reserves and resources statement that its near-mine exploration targets have started to pay off. That’s mainly reflected in the resource conversion at Rochester and resource upgrades at Kensington.

Similar to other silver miners, Coeur underinvested for several years due to a weaker precious metals price environment. But Coeur’s exploration spending started picking up in mid-2016. That should help it extend the mine lives at its operations.

Double exploration spending

For 2017, Coeur has almost doubled its exploration spending on new resource identification to $14.0 million–$17.0 million compared to 2016. A large part of the budget will be spent on its Palmarejo, Kensington, and La Precosia operations.

Along with Coeur, other miners such as Pan American Silver (PAAS), First Majestic Silver (AG), and Hecla Mining (HL) have also raised their exploration budgets to extend their mine lives.

In the next part of this series, we’ll look at Coeur Mining’s cost performance and its outlook.

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