Innovation Needs to Touch Every Part of the Mining Industry

Q: What were Coeur Mining's major milestones in 2023 and what role did Palmarejo play in its success?

A: We had many important milestones in 2023. Our silver-gold operation in Rochester, Nevada, United States – considered the top mining jurisdiction in the world – underwent a major expansion over the past three years and was completed late last year. Coeur Mining is a multi-asset company, but the main source of near-term growth is from Rochester, where production rates are expected to increase 2.5 times once the expanded operation is ramped up.

The Palmarejo gold-silver complex, located in Chihuahua, is a source of stable, significant production and cash flow for the company. Palmarejo is surrounded by a very large land position, which provides numerous opportunities to expand and extend the operation in the future. Palmarejo is responsible for about one-third of the company’s gold production and roughly half of our silver production. It is a great engine for the company that allows us to expand and fund expansion efforts such as the recent expansion in Nevada. 

One of our most important achievements last year was the transition of the legacy Palmarejo open pit into a tailings disposal facility. Palmarejo had been an open pit operation when it initially started up in 2010, but we later transitioned to 100% underground mining. To de-risk our tailings management efforts, provide additional tailings disposal capacity, and reduce our overall water usage at site, we completed the project to transition the open pit into a tailings facility in 2023.

Q: Why did the company decide to purchase Fresnillo’s concessions near its Palmarejo mine rather than develop another project?

A: The expansion of Palmarejo to the east of the existing operation opens up several lower-risk, higher-impact future growth opportunities. The Fresnillo concessions are important because they cover two key gaps in the Palmarejo land package. We have had these gaps since 2015 when we acquired Paramount Gold and Silver, which controlled a large land position adjacent to Palmarejo. It has taken a long time to reach agreement to purchase these concessions, which provide opportunities to leverage our existing surface and underground infrastructure at Palmarejo. In addition, as these lands are not covered by a gold stream held by Franco-Nevada Corporation, they offer opportunities for us to develop new, higher margin future production sources.

We see near-term, medium-term, and longer-term opportunities by adding these concessions.  Near term, we are currently mining deposits that extend directly onto these concessions, which presents an excellent opportunity to continue our current mining activities onto these extensions.  In the medium term, there are existing resources on our concession package further to the east that extend onto these new concessions that we can now drill and hopefully develop into future production courses.  Longer term, there are several large trends that our teams have identified from mapping and sampling that we are excited about testing and drilling in the hope that they can also become future sources of production. We are waiting for the Mexican government to approve the transfer of the concessions so we can close the transaction and start our exploration activities. Certain delays have arisen due to the new Mining Law, so we will have to wait patiently. 

Q: What are the main challenges Coeur Mining faces in Palmarejo?

A: The overall business environment has become more difficult: the approval of permits is slower, taxes are more complicated, security has worsened, and the peso has strengthened. Palmarejo is a mature operation – 2024 will be the mine’s fourteenth year of operation with the expectation of many more years ahead. We are confident in the project but when we look at the macro aspects, the picture has become more complicated. Rising material prices, inflation, and a strong peso have increased our costs, forcing us to be smarter in order to continue to have healthy margins. Gold and silver prices will hopefully continue to show strength and resilience to help offset some of these pressures. To protect ourselves from this volatility, we are looking for every opportunity at Palmarejo to increase productivity and become more efficient.

Q: What ESG trends is Coeur Mining exploring in its mining project in Mexico? 

A: We follow the same ESG procedures in our mines in Mexico as we do in the United States, but some aspects take priority depending on the location and needs of each operation. In Mexico, the priorities are water management, community engagement, and emissions. We see communities as our partners and work hard to develop and maintain a constructive two-way relationship. Our goal is to help communities in the most impactful and relevant ways possible. 

Water is a priority everywhere, but the approach varies widely. Our operations in Alaska have a lot of water but in Mexico water is scarce. Most water used at Palmarejo comes from the underground operation. Last year, we completed a project to convert the former open pit mine into a tailings impoundment, which allowed for smarter water management and a 15% reduction in water use. For remediation, we will now be backfilling the large pit that is no longer in use.

Q: How will the company’s objectives for 2024 be affected by the presidential elections and what are its prospects?

A: We aim higher every year. Our company motto is: “We Pursue a Higher Standard.”  Over the past few years, we have demonstrated our ability to operate within Mexico’s political environment. It has been challenging at times, but by doing things right, we can withstand any political climate. Mexico has many advantages for the mining industry: its geologic resources, its infrastructure, its geology, and its people. If the next government is more supportive of the mining sector, Mexico could be a more attractive destination. There are many opportunities in the mining industry as the green transition from fossil fuels to electrification requires more of the metals and minerals that the sector provides. The most pro-environmental approach any government can take is to support responsible mining, which provides the minerals and metals necessary to facilitate renewable energy sources, electric vehicles, batteries, and thousands of end-uses that require electricity.  

To support the industry, permits need to be granted faster, which would lead to the further expansion of the Palmarejo mine, increased production, and a longer mine life. We are not using all of the mine’s existing processing capacity and we have the potential to increase overall production. We are excited about Mexico's future. There are many Canadian and local companies in the country, but very few US companies. We believe we have a long track record as an efficient and responsible mining company that dates back to 1928. We have invested heavily in our projects in Mexico and Nevada, as well as in expansion and exploration across all of our operations. 2024 will reflect a turning point where we begin to see the benefits of these investments.

Q: What new technologies is the company looking to implement at Palmarejo to optimize its operations?

A: We have a business improvement team that is always looking for new technologies to make our operations safer, more responsible, productive, and efficient. For example, we pay special attention to small enhancements to our processing facilities that can incrementally increase recovery rates.

Our Nevada operation has a host of new technologies for monitoring performance, optimizing our crushing activities, and capturing data that can help us make better, quicker decisions. For Coeur Mining, innovation has to be everywhere from drilling, blasting, crushing, mining, and processing. Innovation also can lead to improved safety performance and enhanced environmental stewardship.  We will continue to implement new innovations to ensure the greatest impact on our people, the environment, and on our operations.

Coeur Mining is a well-diversified precious metals producer with four operations in North America. Coeur’s wholly-owned operations include the Palmarejo gold-silver complex in Mexico, the Rochester silver-gold mine in Nevada, the Kensington gold mine in Alaska and the Wharf gold mine in South Dakota. In addition, the company wholly owns the high-grade Silvertip polymetallic exploration project in British Columbia