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Coeur Mining, Inc. (NYSE:CDE) - Navigating a Transformative Year Ahead
Published on September 24, 2024 | Ticker: CDE

Coeur Mining, Inc. (NYSE:CDE) is a leading gold and silver producer with a diverse portfolio of operating assets located in the United States and Mexico. The company has navigated a challenging period in recent years, but is now poised to capitalize on a transformative year ahead as it completes the ramp-up of its flagship Rochester operation and unlocks value across its other key assets.

Financials

In 2023, Coeur reported annual revenue of $821.2 million and a net loss of $103.6 million. The company's operating cash flow for the year was $67.3 million, while free cash flow was negative $297.3 million, reflecting the significant capital expenditures associated with the Rochester expansion project.

Looking at the first quarter of 2024, Coeur reported revenue of $213.1 million, a 14% increase compared to the same period in 2023. This was driven by a 15% increase in gold ounces sold and a 4% and 1% increase in average realized gold and silver prices, respectively. The company reported a net loss of $29.1 million for the quarter, compared to a net loss of $24.6 million in the first quarter of 2023.

Recent Developments

Operationally, Coeur's Palmarejo and Wharf mines delivered strong performances in the first quarter, offsetting a planned transitional period at the Rochester operation as it completed the commissioning of its new three-stage crushing circuit. Palmarejo's gold and silver production increased 32% and 4% year-over-year, respectively, while Wharf's gold production increased 32% compared to the prior year period.

At Rochester, silver and gold production in the first quarter totaled nearly 700,000 and 5,800 ounces, respectively, in line with the company's expectations. Following the completion of the crushing circuit commissioning on March 8, 2024, the operation is now focused on ramping up to its targeted throughput of 88,000 tons per day by the end of the second quarter.

Coeur's Kensington mine also made progress during the quarter, with the company continuing its multi-year underground development and exploration program aimed at extending the mine's reserve-based life beyond five years by the end of 2024. The company's Silvertip exploration project in British Columbia remains a key long-term growth driver, with Coeur planning an aggressive drilling campaign this summer to rapidly expand the project's resource base.

Liquidity

From a financial perspective, Coeur ended the first quarter with $69.2 million in cash, cash equivalents and restricted cash, and $145.4 million available under its $400 million revolving credit facility. The company's net debt-to-EBITDA ratio improved to 3.2x, and it expects to begin aggressively paying down debt in the third quarter as Rochester ramps up and the company generates positive free cash flow.

Outlook

Looking ahead, Coeur has provided 2024 production guidance of 320,000 to 360,000 ounces of gold and 10.5 million to 12.0 million ounces of silver. The company expects capital expenditures for the year to be in the range of $180 million to $220 million, with the majority of this spending focused on sustaining and development activities across its portfolio.

Coeur's management team has outlined several key priorities for the remainder of 2024, including safely ramping up Rochester to its targeted throughput, continuing to advance exploration and development initiatives at Palmarejo, Kensington and Silvertip, and beginning the process of deleveraging the balance sheet. The company's U.S.-centric, precious metals-focused asset base positions it well to capitalize on the current strength in gold and silver prices.

Conclusion

Overall, Coeur is navigating a transformative year as it completes the Rochester expansion and unlocks value across its diversified portfolio of operating assets and exploration projects. With a strengthened financial position, the company is poised to deliver improved operational performance and generate significant free cash flow in the coming years, which it can deploy towards debt reduction and future growth initiatives.

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