Coeur Mining to Invest Further in Mexican Exploraiton Works

Coeur Mining reported its 2Q22 financial results, highlighting that despite lower ore prices, the company increased earnings and remains on track to reach its 2022 production guidance. In addition, the company will significantly increase its investment in its Mexican Palmarejo asset due to optimistic results from ongoing exploration efforts.

In a press release, Coeur highlighted that its revenues for 2Q22 were US$204 million, higher than the US$188 million of 1Q22, but lower than the US$215 million in 2Q21. During 2Q22, 83,772oz of gold and 2.5Moz of silver were produced. Sales totaled 84,786oz gold and 2.5Moz silver, representing 72 percent and 28 percent of 2Q22 revenues, respectively.

Additionally, the company's operating cash flow for the quarter was US$23 million, significantly more than the US$6 million obtained in the previous quarter. The increase was achieved  due to higher sales and changes in working capital. The latter decreased from US$30 million in 1Q22 to US$7 million in this quarter.

“Our second quarter results demonstrate the resilience of Coeur’s multi-asset mine portfolio. Despite weaker gold and silver prices, Company-wide revenue increased 8 percent versus the prior quarter due to higher production levels. With continued expected production growth during the second half of the year, we remain on track to achieve our 2022 production guidance for gold and silver,”said Mitchell J. Krebs, President and CEO, Coeur Mining.

Coeur Mining noted that its Palmarejo mine produced 27,109oz gold and 1.8Moz silver in 2Q22, similar to the 27,595oz gold and 1.7Moz silver produced in 2Q21. The company noted that production benefited from higher ore recoveries, but was offset by reduced milling and lower gold grades. However, Coeur is working on blending optimization and flotation processes. The company emphasized its production guidance for 2022 at Palmarejo remains on track, which is expected to be between 100,000 and 110,000oz of gold as well as between 6.0 and 7.0Moz of silver.

In addition, Coeur's exploration investment at Palmarejo increased 20 percent to around US$4 million, which is US$1 million more than the previous quarter. Regarding infill drilling, Coeur targeted specific areas of the Guadalupe deposits, while surface rigs targeted the Hidalgo zone. This exploration program found multiple mineralized veins, which could lead to an extension of the deposit. Meanwhile, expansion drilling focused on the northwest extension of the Hidalgo and La Carmela areas. The company announced that it expects to have four active drill rigs in 3Q22, which will carry out infill drilling in the Hidalgo and Nacion zones and expansion drilling in the Hidalgo and La Carmela zones.

The company announced that due to favorable exploration results, it will spend between US$47 and US$57 million on exploration in 2022. From US$25 to US$30 million will be expensed, meaning it will go on the income statement, and between US$22 and US$27 million capitalized, meaning it will go on the balance sheet. The investment will go mainly to the Palmarejo, Silvertrip and Kensington projects.

“Given ongoing impressive drilling results at Silvertip and Palmarejo and recent positive results from the upper portions of the main Kensington deposit that suggest strong potential for extended mine life, we plan to invest an additional US$11 million to accelerate these priority targets during the second half of the year. We remain committed to investing in brownfield exploration and development as a key element of our strategy and an important driver of future returns,” said Krebs.