Coeur Mining Inc (NYSE:CDE) in Heavy Investment Phase to Extract Value from Existing Mines

December 23, 2016

President and CEO Mitchell Krebs of Coeur Mining Inc (NYSE:CDE) says that as a result of lower silver and gold prices, his company is now focused on getting more value out of the five operations in which a big capital investment has already been made.

Our company built several new mines in that [2008 to 2010] period of time. Since then, we have seen the prices for both silver and gold decline quite a bit. The peak for silver and gold prices took place in the first half of 2011 when silver was nearly $50 an ounce and gold was more than $1,800 an ounce. As we sit here today, the price of gold is about $1,075, and silver is about $14 an ounce. So we have seen the prices for both silver and gold come down a lot over the last few years.

As a result, the current phase of our company’s progression is focused on getting more value out of our mines that were built between 2008 and 2010. So unlike a lot companies right now that have recently been building new mines, we’re in the fortunate position of having a diverse portfolio of five operations for which that big capital investment has already been made.

What we’re trying to do now is make some incremental capital investments in underground development to access higher-grade material. We’re also spending incremental money on exploration around our existing mines because we have historically had a much higher success rate. It takes much less to do this kind of exploration drilling, and it can have a more immediate impact on our cash flow because the sites are close to existing processing infrastructure.

So what we’re going through now is a very heavy investment phase, with a very execution-driven focus on extracting just as much value as we can around these existing mines that were built during the 2008 to 2010 time frame. We are offsetting the erosion in silver and gold prices, and getting ourselves in a position to generate positive cash flow in the current price environment.

Mitchell Krebs