Coeur posts quarterly profit, positive free cash flow
Coeur Mining Inc. announced adjusted net income of $47.2 million, or 12 cents per share, for the third quarter, which included higher production from the expanded Rochester Mine in Nevada's Pershing County and anticipated free cash flow now that the Rochester work is done.
"Our strong results were driven by higher production including at all four operations, higher gold and silver prices and double-digit declines in our costs per ounce," Mitchell J. Krebs, chairman, president and chief executive officer of Chicago-based Coeur, said in the earnings webcast.
Coeur reported the average realized gold price in the third quarter was $2,309 per ounce, compared with $1,788 per ounce in the third quarter of last year, and the average realized silver price was $29.86, compared with $24.88 per ounce in the 2023 quarter.
"Although higher prices helped magnify our robust results, the team's continued focus on operational excellence drove costs down, leading to significantly higher margins," Krebs said in the company's Nov. 6 financial report.
The adjusted net income for the quarter of $47.2 million compared with a loss of $18.6 million, or 5 cents per share, in the 2023 quarter. Free cash flow in the quarter totaled $69.1 million, compared with a negative $114.7 million in the third quarter last year when the Rochester expansion was underway.
Krebs said in the call that most of the free cash flow will be used to pay down debt.
"Rochester continues to gather steam during the second half and remains on track to deliver a step-change in production and cash flow during the remainder of the year and be well-positioned to deliver a record breaking 2025," he also said in the earnings announcement.
Coeur is expecting to close on its all-stock acquisition of SilverCrest Metals Inc. in the first quarter of next year, Krebs said in the webcast, and the acquisition "will lead to a much stronger company."
He also said in the report that the acquisition of SilverCrest and its high-grade, low-cost Las Chispas Mine in Mexico, "coupled with Rochester's post-expansion profile, positions Coeur as a leading silver company in terms of production, market capitalization and liquidity, balance sheet flexibility, and cash flow profile at a time when silver's outlook continues to strengthen."
Companywide, Coeur posted a 21% increase in gold production and a 15% increase in silver production in the third quarter compared to the prior quarter. Production totaled 94,993 ounces of gold and 3 million ounces of silver. Rochester produced 1.2 million ounces of silver and 9,690 ounces of gold in the quarter, representing quarter-over-quarter increases of 19% and 21%, respectively.
"Operating strength across our portfolio continued easing costs and accelerated contributions from the Rochester expansion led to Coeur's strongest quarterly results in over a decade," said Michael "Mick" Routledge, senior vice president and chief operating officer.
Guidance for 2024 production from Coeur's operations is between 310,000 and 355,000 ounces of gold and 10.7 million to 13.3 million ounces of silver.
"During the third quarter, we saw 15% higher metal prices and a 12% decrease in operating costs to $1,113 per ounce of gold and $15.67 per ounce of silver," Thomas Whelan, senior vice president and chief financial officer, said in the webcast.
Coeur's exploration expenses in the quarter totaled $25 million companywide, including $3 million at Rochester. Two diamond drill rigs were active at East Rochester during the quarter targeting the Wedge and Black Ridge Fault areas immediately east of the Rochester open pit.
In addition, the company said that new geology models are underway for Nevada Packard, where mining occurred in the past, and at Lincoln Hill.
Full-year production at Rochester is expected to be between 4.8 million and 6.6 million ounces of silver and 37,000 to 50,000 ounces of gold.
The Wharf Mine in South Dakota produced 33,650 ounces of gold, up from 22,674 ounces in the 2023 quarter, an increase of 48%. Exploration at Wharf in the third quarter included two drill rigs at the Juno and North Foley deposits, doing infill and expansion drilling.
The mine is expected to produce 86,000 to 96,000 gold ounces in 2024.
Routledge said gold production at Wharf "set an all-time record high in the mine's 42-year history."
Palmarejo Mine in Mexico produced 27,549 ounces of gold and 1.8 million ounces of silver in the third quarter, compared with 25,467 gold ounces and 1.6 million silver ounces in the 2023 quarter, and Coeur reported that up to seven drilling rigs were actively exploring on the property in the quarter.
Production at the underground Kensington Mine in Alaska totaled 24,104 ounces of gold in the third quarter, slightly less than the 24,614 ounces in the third quarter of last year. Coeur said up to three rigs were drilling at the mine site in the quarter as Coeur continues to support multi-year development and exploration to expand the mine's life.
Coeur's financial report stated that the top exploration goals for the 2024 program included building reserves and extending mine life at Kensington to over five years by year end, as well as pursuing higher grade structures at Rochester to enhance the near-term margins.
The plan also includes "building out a robust pipeline of inferred resources at Palmarejo to potentially drive future reserve growth," further extending Wharf's mine life, and expanding and understanding the polymetallic system at Coeur's Silvertip property in British Columbia, according to the report.
Meanwhile, Coeur is "actively planning for a smooth transition" once the SilverCrest acquisition closes, Whelan said in the webcast.
The combined company is expected to generate 2025 production of approximately 21 million ounces of silver and 432,000 ounces of gold, according to the earnings slide presentation.
