What Made Coeur Mining Change Its Production Guidance?

Coeur Mining (CDE) achieved a quarterly silver equivalent production of 8.9 million SEO (silver equivalent ounces) in 2Q17. This included silver production of 4.0 million ounces and gold production of nearly 83,000 ounces. This SEO implied a fall of 7.3% YoY (year-over-year) and a fall of 3.3% QoQ (quarter-over-quarter).

The company changed its fiscal 2017 guidance to reflect the following:

• higher expected gold production at the Wharf mine
• lower expected silver (AGQ) production at the San Bartolomé mine
• a pending agreement to sell the Endeavor silver stream, under which production will begin accruing to the buyer as of June 1, 2017

Coeur’s production fell 7.3% YoY, mainly due to the declines at the Rochester mine in Nevada, the Kensington mine in Alaska, and the Wharf mine in South Dakota.

Silver and gold production at Rochester fell 3% and 23%, respectively. The company expects a recovery in production in the second half, however, following the anticipated commissioning of the Stage-IV leach pad expansion.

The Kensington mine’s production was negatively impacted by lower grades due to mine sequencing in 2Q17. The company has noted that it is expecting higher grades in the second half of the year.

Its Wharf mine also produced lower gold and silver in 2Q17 as compared to 2Q16, mainly due to the lower production at its higher-grade Golden Reward deposit. Coeur expects to mine the remainder of the deposit in the third quarter. The company has increased its production guidance for Wharf mine due to higher-than-budgeted mining and crushing rates.

Among Coeur’s peers (SIL), Silver Standard Resources (SSRI), Pan American Silver (PAAS), Newmont Mining (NEM), and Hecla Mining (HL) are also trying to increase their production levels at the lowest possible costs.

In the next part, we’ll look at the cost performance and outlook for Coeur Mining.