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Coeur Mining: Palmarejo 3Q Output Declines; Guidance Reiterated

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(Kitco News) - Coeur Mining, Inc. (NYSE: CDE) late Tuesday reported that a number of factors hurt silver production at the Palmarejo Mine in Mexico, although officials reiterated previously revised company-wide guidance for full-year 2018.

The company listed third-quarter consolidated production of 2.9 million ounces of silver, 88,833 ounces of gold, 2.2 million pounds of zinc and 1.2 million pounds of lead. This amounted to 8.5 million silver-equivalent ounces, assuming a 60:1 gold-silver ratio, or 10.4 million ounces based on average spot prices during the third quarter.

The July-September production was down from the same period a year ago, when silver and gold production came in at 4 million ounces and 93,293 ounces, respectively, according to Coeur’s earnings report for the third quarter of 2017. However, the company also has one less mine following the sale of San Bartolome in Bolivia, which produced nearly 1 million silver ounces in the year-ago period.

The company reiterated its Sept. 4 guidance of 36.1 million to 39.5 million silver-equivalent ounces. This was 44 million to 48 million ounces based on average spot prices during the third quarter. The guidance consisted of 13 million to 14.3 million silver ounces, 363,000 to 382,000 gold ounces, 13 million to 23 million pounds of zinc and 11 million to 18 million pounds of lead.

BMO Capital Markets described the July-September production as below its expectations. “Although (previously restated) guidance was reiterated, Q4 production will need to be strong across the portfolio in order to achieve targets,” BMO said. Nevertheless, BMO also said Coeur is positioned to deliver a “significantly stronger” fourth quarter and full-year 2019 as the new Silvertip operation in British Columbia continues to ramp up.

July-September silver output at Palmarejo fell to 1.5 million ounces from 1.9 million in the year-ago period, while gold production slipped to 27,885 from 28,948. The output was down from 2.1 million silver ounces and 33,702 gold ounces in the second quarter.

Coeur said Palmarejo production was impacted by the temporary suspension of mining due to fatalities during the quarter, supply-chain disruptions from local road blockades that temporarily interrupted the delivery of certain mining consumables, and a weather-related interruption that impacted the processing plant. The company also cited a “modest decline” in silver and gold grades.

Gold output at the Wharf Mine in South Dakota eased to 19,437 ounces in the third quarter from 25,849 in the year-ago period and 22,507 in the second quarter. Coeur blamed the decline on “unplanned weather-related downtime and timing of leach pad recoveries.”

Meanwhile, output at the Rochester Mine in Nevada rose. The company reported 1.3 million silver ounces and 14,702 gold ounces, up from 1.1 million and 10,955, respectively, in the third quarter of 2017. The July-September output was also up from 1.1 million silver ounces and 12,273 gold ounces in the second quarter.

At the Kensington mine in Alaska, gold output of 26,809 ounces in the third quarter was down from 27,541 in the year-ago period but up from 25,570 in the second quarter.

Meanwhile, at Coeur’s new Silvertip operation, silver output was 131,000 ounces, zinc output was 1.8 million pounds and lead output was 1.6 million. Commercial production was achieved on Sept. 1, although there was some mill downtime for repairs.


Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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