Chicago, IL – The Q2-24 earnings season for North American precious metals companies has concluded, with Australian producers like Northern Star and Evolution Mining reporting their year-end fiscal 2024 results. Overall, the results were promising, driven by a higher gold/oil ratio and increased metals prices, counterbalancing some minor setbacks from a few producers. Coeur Mining stood out as a mid-tier producer that performed well in Q2-24, achieving higher gold and silver production levels. Notably, Coeur Mining successfully completed the Rochester Expansion ramp-up, marking the end of a period of elevated capital expenditure and positioning the company for a return to free cash flow generation in the second half of the year. Additionally, Coeur Mining has eliminated its hedges, allowing it to benefit from soaring metals prices after being previously hindered by hedging practices.
In the Q2-24 results released by Coeur Mining, the company reported approximately 78,700 ounces of gold and 2.6 million ounces of silver produced in the quarter. This represented a 15% increase in gold production and an 8% increase in silver production year-over-year. Despite the rise in production, the increase was not reflected on a per-share basis due to a 20% increase in share count year-over-year. Coeur Mining also experienced a decline in gold-equivalent production per share and cash flow per share. The company’s Palmarejo Mine in Mexico saw a notable increase in gold production, attributed to higher grades offset by lower throughput, while silver production benefited from higher grades as well. The mine managed to hold the line on costs, with adjusted costs applicable to sales per gold ounce decreasing from the year-ago period.
At the Rochester Mine in Nevada, Coeur Mining completed the commissioning and ramp-up process, resulting in increased gold and silver production levels. The mine achieved a significant improvement in production, with gold production up by 27% and silver production by 42% year-over-year. However, the mine-site free cash flow remained negative, but a robust outlook for H2-24 production was predicted. Coeur Mining also revised its cost guidance for the year, projecting increased adjusted costs applicable to sales per gold and silver ounce. Despite the higher costs, the company anticipates economies of scale to positively impact the asset’s cost profile in 2025.
The Kensington Mine in Alaska witnessed a substantial increase in gold production, although costs remained high above the industry average. Coeur Mining’s Wharf Mine delivered a solid quarter overall, generating positive free cash flow on the back of gold production. The company saw an increase in revenue due to higher metals prices, but it did not translate into positive earnings, as Coeur Mining continued to report net losses. Coeur Mining’s focus is now on deleveraging and reducing debt, with plans to aggressively pay down debt. The recent surge in metals prices is expected to benefit the company, potentially leading to increased free cash flow and earnings in the future.
Recent positive developments at Coeur Mining include the acquisition of new land holdings at the Palmarejo Mine, aimed at increasing cash flow generation. The company continues to invest in exploration across its portfolio, with promising exploration success at various mines. However, challenges remain in Mexico as a jurisdiction, impacting the company’s operations. Coeur Mining’s valuation, although reasonable, is deemed inferior to its peers due to its historical performance and operational challenges. As the company looks towards a future return to free cash flow generation, its ability to navigate these challenges will be crucial in determining its success in the market.
