Coeur Mining, Inc. (CDE) is a well-diversified, growing precious metals producer with a robust portfolio of five wholly-owned operations located across North America. Over the past decade, the company has transformed itself into a leading global silver and gold producer through a series of strategic acquisitions and operational improvements.
Business Overview and Company History
Coeur Mining, Inc. was founded in 1928 and is headquartered in Chicago, Illinois. The company's origins can be traced back to the silver boom in the Coeur d'Alene region of Idaho, where it initially operated as a silver mining operation in the Coeur d'Alene mining district of northern Idaho. Over the ensuing decades, Coeur grew steadily, expanding its operations to include gold mining as well.
A major milestone in the company's history came in the 1980s with the acquisition of the Palmarejo silver and gold mine in Mexico. This move significantly increased Coeur's precious metals production and marked its transition into an international mining company. However, this period also brought challenges, including fluctuating metal prices and operational issues at some of its mines.
The 2000s saw Coeur continue its growth trajectory through additional acquisitions, such as the Kensington gold mine in Alaska and the Wharf gold mine in South Dakota. These expansions allowed Coeur to further diversify its asset base and production profile. However, the company also faced industry-wide challenges during this time, including rising costs, permitting delays, and workforce shortages.
In recent years, Coeur has had to navigate additional hurdles, including a high-profile legal dispute in Mexico regarding value-added tax payments and the impacts of the COVID-19 pandemic, which disrupted global supply chains and affected production at some of its mines. Despite these challenges, Coeur has remained committed to its strategy of growth through targeted acquisitions and organic exploration and development.
Financial Overview
Financials
Coeur's financial performance has been strong in recent years, with the company reporting record revenue of $1.05 billion in 2024. This was driven by a 34% increase in silver production and a 20% increase in gold production compared to the prior year. The company's adjusted EBITDA more than doubled to $339 million in 2024, up from $113 million in 2023.
For the most recent fiscal year, Coeur reported net income of $58.9 million, operating cash flow of $110.44 million, and free cash flow of $25.03 million. In the most recent quarter, the company achieved revenue of $305.44 million, net income of $37.85 million, operating cash flow of $63.79 million, and free cash flow of $16.07 million. Year-over-year, revenue increased by 34%, net income grew significantly compared to a loss in the prior year quarter, operating cash flow increased, while free cash flow decreased.
Liquidity
The company's balance sheet has also strengthened significantly, with net debt to EBITDA improving from 3.4x a year ago to just 1.6x at the end of 2024. Coeur expects to fully repay its revolving credit facility by the second half of 2025, putting it in a position to further accelerate debt reduction and return capital to shareholders.
As of the most recent reporting period, Coeur's debt-to-equity ratio stood at 0.2774, with $76.92 million in cash and $145.4 million available under a $400 million revolving credit facility. The company's current ratio was 0.8255, and its quick ratio was 0.3076, indicating a relatively strong liquidity position.
Operational Highlights
Coeur's five operating mines - Palmarejo, Rochester, Kensington, Wharf, and the newly acquired Las Chispas - have all demonstrated strong operational performance in recent years.
At the Rochester mine in Nevada, the successful ramp-up of the new three-stage crushing circuit and expansion project led to a 34% increase in silver production and a 63% increase in gold production in 2024 compared to the prior year. Unit costs at Rochester have also declined significantly, with the mine expected to produce 7-8.3 million ounces of silver and 60,000-75,000 ounces of gold in 2025 at industry-leading cost levels.
The Palmarejo mine in Mexico had another solid year in 2024, with gold and silver production increasing 8% and 3% year-over-year, respectively. The completion of the Hidalgo portal project has enhanced operational flexibility and access to new ore drives, setting the stage for continued strong performance. In the third quarter of 2024, Palmarejo's gold and silver production increased 8% and 14% respectively compared to the prior quarter, driven by higher grades and recovery rates. Metal sales from Palmarejo were $110.38 million, representing 35% of Coeur's total metal sales.
At the Kensington mine in Alaska, gold production increased 13% in 2024 compared to the prior year, benefiting from the multi-year investment in underground development and exploration. Kensington's reserve-based mine life has now been extended to five years, double the life just three years ago. In the third quarter of 2024, gold production at Kensington increased 4% due to higher grades, partially offset by lower mill throughput and recovery rates. Metal sales from Kensington were $62.20 million, or 20% of Coeur's total metal sales.
The Wharf mine in South Dakota also delivered a strong performance in 2024, with gold production increasing 5% year-over-year and setting a new record for annual free cash flow generation of $95 million. Exploration success at Wharf has also identified opportunities to further extend the mine's life. In the third quarter of 2024, gold production at Wharf increased 53% driven by higher tons placed and grade, and timing of recoveries. Metal sales from Wharf were $85.00 million, or 27% of Coeur's total metal sales.
Lastly, the newly acquired Las Chispas mine in Mexico is expected to contribute significantly to Coeur's production and financial results in 2025, with the mine forecasted to produce 7-8 million ounces of silver and 75,000-90,000 ounces of gold at industry-leading costs.
Exploration and Growth
Coeur has placed a strong emphasis on exploration and mineral resource development in recent years, investing $285 million over the past five years. This has led to a 26% increase in gold reserves and a 30% increase in silver reserves across the company's portfolio.
Notable exploration successes include a 75% increase in inferred resources at Palmarejo and a doubling of measured and indicated resources at Wharf. Additionally, the integration of the high-grade Las Chispas deposit has provided a 12% boost to Coeur's overall reserve grade.
Looking ahead, Coeur plans to invest approximately $85 million in exploration in 2025, with a focus on further bolstering its inferred resource pipeline for future conversion to reserves. The company also aims to maintain steady mine lives across its operations, ensuring a sustainable production profile for years to come.
Risks and Challenges
As with any mining company, Coeur faces a variety of risks and challenges, including commodity price volatility, operational issues, permitting and regulatory hurdles, and political and social risks in the jurisdictions in which it operates.
The company's operations in Mexico, for example, expose it to certain economic and operational risks, such as currency exchange movements, local security concerns, and social and political instability. The successful integration of the Las Chispas mine will be critical in navigating these challenges.
Additionally, the company's heavy reliance on silver production, which accounts for approximately 30% of its revenue, leaves it vulnerable to fluctuations in silver prices. Coeur's ability to manage its cost structure and maintain operational efficiencies will be crucial in mitigating the impact of these market forces.
Outlook and Guidance
Coeur's 2025 guidance reflects the transformative impact of the SilverCrest acquisition and the continued ramp-up of its Rochester expansion project. The company expects to produce over 400,000 ounces of gold and more than 18 million ounces of silver in 2025, representing year-over-year increases of 20% and 62%, respectively.
Specifically, Coeur provided the following 2025 production guidance: - Silver production of 7 million to 8.3 million ounces, a 75% increase year-over-year. - Gold production of 60,000 to 75,000 ounces, a 72% increase year-over-year.
Free cash flow is expected to accelerate significantly in 2025, with the company targeting $75-$100 million per quarter beginning in the second quarter. This strong cash flow generation will enable Coeur to rapidly reduce its debt, with the goal of achieving a net debt to EBITDA ratio of zero by the end of the year.
Coeur expects to deliver record levels of EBITDA, earnings, and free cash flow in 2025. The company plans to use its strong cash flow to aggressively pay down debt and anticipates its net debt to EBITDA ratio reaching nil by the end of 2025.
It's worth noting that Coeur exceeded their 2024 production guidance, with full-year 2024 production reaching over 400,000 ounces of gold (20% higher than 2023) and over 18 million ounces of silver (62% higher than 2023). The company's full-year 2024 adjusted EBITDA more than doubled to $339 million compared to the prior year.
Industry Trends
The precious metals mining industry has seen a compound annual growth rate (CAGR) of 5-7% over the past 5 years, driven by rising gold and silver prices and increasing industrial demand. Coeur's strategic positioning and operational improvements have allowed it to capitalize on these favorable industry trends.
Conclusion
Coeur Mining, Inc. has transformed itself into a leading global silver and gold producer through a combination of strategic acquisitions and operational excellence. The company's diversified portfolio of high-quality assets, strong financial position, and robust exploration pipeline position it well to continue delivering value and growth for shareholders in the years ahead. With a focus on cost management, operational efficiency, and strategic growth initiatives, Coeur is well-positioned to capitalize on the positive trends in the precious metals market and generate substantial value for its stakeholders.