Which Silver Miners Could Surprise on the Downside of Production?


Dec. 4 2020, Updated 10:52 a.m. ET

Guidance suspended

Hecla Mining’s (HL) silver production recorded a fall of 27.0% year-over-year (or YoY) to 3.4 million ounces in 1Q17. While part of the lower production was expected due to lower grades, the strike by union workers at Hecla’s Lucky Friday mine in Idaho led to an unexpected fall. For fiscal 2017, the company had earlier guided for silver production of 46.5 million–49.4 million ounces, which implied a YoY rise of 4.0%. This guidance has now been suspended pending the ongoing strike at the mine.

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Higher guidance for 2017

Tahoe Resources (TAHO) reported production of 5.7 million ounces of silver and 119,100 ounces of gold in 1Q17. For 2017, the company has guided for 18.0 million–21.0 million ounces of silver (SLV) and 375,000–425,000 ounces of gold. This guidance was lower than what analysts expected when it was originally given in January 2017. In its 1Q17 results, the company maintained the guidance.

In 1Q17, Coeur Mining (CDE) reported a quarterly production of 9.2 million SEO (silver equivalent ounces). Silver and gold productions were 3.9 million ounces and 88,218 ounces, respectively. The SEO implied a rise of 14.0% YoY and a fall of 8.0% QoQ (quarter-over-quarter). Coeur’s 2017 guidance is unchanged at 16.4 million–18.0 million ounces of silver and 362,000–387,000 ounces of gold.

Strong operating performance

In 1Q17, Pan American Silver’s (PAAS) silver production was 6.2 million ounces, compared to 6.4 million ounces in 1Q16. The fall reflects lower anticipated production at Alamo Dorado. This mine has reached the end of its productive life. Its guidance for 2017 remains unchanged at 24.5 million–26.0 million ounces of silver and 155,000–165,000 ounces of gold.

Lower production

First Majestic Silver (AG) reported silver production of 2.7 million ounces in 1Q17. That’s a fall of 4.0% QoQ. The weaker performance was due to a 3.0% fall in tons milled due to the breakdown of one of the four power generators at its Santa Elena mine.

Now that we’ve looked at near-term production growth, let’s move on to the outlook for medium- to long-term production growth. The outlook for long-term growth is what impacts companies’ mergers and acquisitions, exploration spending, and capital expenditure decisions.


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