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These Silver Miners Are in Excellent Financial Shape

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Financial condition

As precious metal prices remain volatile, miners are aggressively pruning their balance sheets. Investors have become wary of companies with too much financial leverage.

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Reducing financial leverage

Coeur Mining (CDE) ended 2016 with an outstanding debt of $210.9 million. That’s 57.0% lower than its debt at the end of 2015. Its net debt was $48.7 million at the end of 2016. The repayment of debt during the year also led to a $30.0 million annual fall in interest expenses. Coeur Mining’s net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio was 3.8x at the end of 4Q15. It fell to less than 1.0x at the end of 4Q16, a 74.0% improvement. Lower debt and improved EBITDA led to this massive fall.

Financial health

Hecla Mining (HL) had a net debt of $314 million at the end of 4Q16, compared with $323 million at the end of 3Q16, and $365 million at the end of 4Q15. Most of its debt is long-dated, with notes coming due in 2021. Its liquidity was $300 million at the end of 4Q16. Fiscal 4Q16 was the fifth consecutive quarter of improving debt metrics for the company. Its net debt-to-EBITDA at the end of 4Q16 was 1.2x, compared with 3.1x at the end of 2015.

As of December 31, Tahoe Resources (TAHO) had cash and cash equivalents of $163.4 million and net cash of $113 million after debt and leases. It also has an undrawn line of credit of $150 million. Its balance sheet is strong, which should help fund its growth going forward.

First Majestic Silver (AG) ended 4Q16 with $129 million in cash and cash equivalents and $32 million in long-term debt. Along with cash generation, the company’s liquidity appears to be sufficient to fund internal growth projects as well as debt repayments.

Pan American Silver (PAAS) ended 4Q16 with $180.9 million in cash, which is an increase of $46.9 million from its standing on December 31, 2015. It also had an undrawn revolving credit facility of $263.8 million at the end of 2016. It had $43.3 million in debt at the end of 2016. Next, we’ll look at silver miners’ (SIL) liquidity profiles and see what we can learn from them.

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