Coeur Mining, Inc. ("Coeur" or the "Company") (NYSE:CDE) announced
results from a feasibility study on the La Preciosa silver-gold
project located in Durango state, Mexico and announced the
Company's decision to defer construction activities at this time.
Mitchell J. Krebs, Coeur's President and Chief Executive
Officer, said, "Our team was able to improve the economics of La
Preciosa by an estimated $180 million since completing a
Preliminary Economic Assessment ("PEA") in June of last year.
However, a 29% decline in silver prices since announcing the
acquisition of Orko Silver in February 2013 and higher taxes on
precious metals mines in Mexico have led the Company to conclude
that now is not the optimal time to proceed with construction of La
Preciosa.
"We consider La Preciosa to be one of the best silver projects
in North America and I am confident it will become a cornerstone
mine for Coeur at some point in the future. The proposed mine would
be Coeur's largest source of silver production and would lower the
Company's overall cost structure. Our decision to not proceed at
this time was based on our disciplined capital deployment
philosophy and our commitment to retaining a flexible, liquid
balance sheet. The feasibility study demonstrates a very attractive
project at higher silver and gold prices. Deferring construction
enables us to maintain the project's leverage to better macro
conditions and provides time to pursue limited drilling and
metallurgical work to further improve the expected project
economics."
Highlights of the Feasibility Study:
- 10% internal rate of return ("IRR") based on silver and gold
prices of $22 and $1,350 per ounce, respectively
- Declared initial proven and probable mineral reserves of 126
million silver ounces and 209 thousand gold ounces increases
Companywide silver and gold reserves by 50% and 10%,
respectively
- Once in production, La Preciosa would be the world's sixth
largest primary silver mine1 with average annual silver production
of over ten million ounces
- 12% decrease in projected initial capital expenditures compared
to the PEA to $307 million
- 10% decline in expected costs applicable to sales per silver
equivalent ounce2 versus the PEA to $14.37
- 5% increase in overall silver grade compared to the PEA
- Feasibility work completed on time and under budget 1. Based on
2013 production published by The Silver Institute. 2. Non-GAAP
measure. Silver equivalence assumes 60:1 ratio.
Select 2014 Feasibility Study Metrics versus July 2013
PEA
|
2013 PEA |
2014
Feasibility |
Silver/gold price per ounce |
$25/$1,500 |
$22/$1,350 |
Initial estimated capital expenditures |
$348 million |
$307 million |
Estimated sustaining capital
expenditures |
$84 million |
$127 million |
Strip ratio |
10.6:1 |
15.6:1 |
Estimated initial mine life |
17.0 years |
10.5 years |
Average daily processing rate |
11,000 tons/day |
11,000 tons/day |
Average silver/gold grade |
2.7/0.004 oz/ton |
3.4/0.006 oz/ton |
Silver/gold recovery rate |
86% / 82% |
84% / 61% |
Average annual silver/gold production |
9.1m oz Ag / 15k oz Au |
10.3m oz Ag / 12k oz Au |
Total silver/gold production |
135m oz Ag / 226k oz Ag |
107m oz Ag / 128k oz Au |
Costs applicable to sales per AgEq
ounce1 |
$15.89 |
$14.37 |
After-tax IRR |
17% |
10% |
After-tax NPV (5% discount) |
$314 million |
$94 million |
After-tax NPV (10% discount) |
$130 million |
$(1) million |
Note: the scope of
the PEA includes inferred mineral resources at La Preciosa whereas
the feasibility study does not. |
|
|
1.
Non-GAAP measure. Silver equivalence assumes 60:1 ratio. |
|
|
Economic Sensitivity Analysis
Silver |
NPV@5% |
NPV@10% |
IRR% |
Payback |
Price |
($ millions) |
|
(years) |
$30 |
$498 |
$306 |
28% |
2.4 |
$28 |
$398 |
$230 |
24% |
2.7 |
$25 |
$255 |
$122 |
18% |
3.5 |
$22 |
$94 |
$(1) |
10% |
6.9 |
$20 |
$(9) |
$(80) |
5% |
9.3 |
Coeur plans to continue limited activity at La Preciosa,
including a $1.5 million exploration program with an emphasis on
potential high-grade resource conversion, metallurgical
optimization testwork, and testwork on a potential heap leach
scenario for lower-grade material. This additional optimization
work is expected to be completed by in the first half of 2015. The
expected annual holding cost of deferring mine construction is less
than $2 million.
On July 2, 2014, Coeur acquired a pre-existing 3% NSR on La
Preciosa for $12.0 million.
Detailed results of the feasibility study will be included in a
Canadian National Instrument 43-101 compliant Technical Report that
will be filed on SEDAR within 45 days.
La Preciosa Mineral Reserves and Resources
|
Short Tons |
Grade
(oz/t) |
|
Ounces
(000s) |
|
(000s) |
Silver |
Gold |
|
Silver |
Gold |
Proven Reserves |
20,244 |
3.31 |
0.006 |
|
66,920 |
118 |
Probable Reserves |
20,899 |
2.85 |
0.004 |
|
59,523 |
90 |
Total Proven and Probable
Reserves |
41,143 |
3.07 |
0.005 |
|
126,443 |
209 |
Measured Resources |
7,539 |
2.45 |
0.005 |
|
18,485 |
41 |
Indicated Resources |
11,618 |
2.58 |
0.005 |
|
29,920 |
54 |
Total Measured and Indicated
Resources |
19,157 |
2.53 |
0.005 |
|
48,405 |
95 |
Total Inferred
Resources |
2,082 |
2.26 |
0.004 |
|
4,705 |
8 |
Mineral reserves and
resources effective July 29, 2014 using metal prices of $22 per
silver ounce and $1,350 per gold ounce for reserves and $25 per
silver ounce and $1,400 per gold ounce for resources.For details on
the estimation of mineral resources and reserves for La Preciosa,
please refer to the new Technical Report for the La Preciosa
feasibility study to be filed within 45 days on www.sedar.com.
Mineral resources are in addition to mineral reserves and do not
have demonstrated economic viability. Inferred mineral resources
are considered too speculative geologically to have the economic
considerations applied to them that would enable them to be
considered for estimation of mineral reserves, and there is no
certainty that the inferred mineral resources will be
realized. |
|
|
|
|
|
|
About Coeur
Coeur Mining is the largest U.S.-based primary silver producer
and a significant gold producer with four precious metals mines in
the Americas employing nearly 2,000 people. Coeur produces from its
wholly owned operations: the Palmarejo silver-gold mine in Mexico,
the San Bartolomé silver mine in Bolivia, the Rochester silver-gold
mine in Nevada and the Kensington gold mine in Alaska. The Company
also has a non-operating interest in the Endeavor mine in Australia
in addition to net smelter royalties on the Cerro Bayo mine in
Chile, the El Gallo complex in Mexico, and the Zaruma mine in
Ecuador. In addition, the Company has two silver-gold feasibility
stage projects - the La Preciosa project in Mexico and the Joaquin
project in Argentina. The Company also conducts ongoing exploration
activities in Alaska, Argentina, Bolivia, Mexico, and Nevada. The
Company owns strategic investment positions in several silver and
gold development companies with projects in North and South
America.
Cautionary Statement
This news release contains forward-looking statements within the
meaning of securities legislation in the United States and Canada,
including statements regarding projected mine life, economics,
costs, capital expenditures, production, processing rates, grade,
recovery rates, and additional optimization work. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause Coeur's actual
results, performance or achievements to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. Such factors include,
among others, the risks and hazards inherent in the mining business
(including risks inherent in developing large-scale mining
projects, environmental hazards, industrial accidents, weather or
geologically related conditions), changes in the market prices of
gold and silver and a sustained lower price environment, the
uncertainties inherent in Coeur's production, exploratory and
developmental activities, including risks relating to permitting
and regulatory delays, ground conditions, grade variability, any
future labor disputes or work stoppages, the uncertainties inherent
in the estimation of gold and silver reserves and resources,
changes that could result from Coeur's future acquisition of new
mining properties or businesses, reliance on third parties to
operate certain mines where Coeur owns silver production and
reserves and the absence of control over mining operations in which
Coeur or its subsidiaries hold royalty or streaming interests and
risks related to these mining operations including results of
mining and exploration activities, environmental, economic and
political risks of the jurisdiction in which the mining operations
are located, the loss of access to any third-party smelter to which
Coeur markets silver and gold, the effects of environmental and
other governmental regulations, the risks inherent in the ownership
or operation of or investment in mining properties or businesses in
foreign countries, Coeur's ability to raise additional financing
necessary to conduct its business, make payments or refinance its
debt, as well as other uncertainties and risk factors set out in
filings made from time to time with the United States Securities
and Exchange Commission, and the Canadian securities regulators,
including, without limitation, Coeur's most recent reports on Form
10-K and Form 10-Q. Actual results, developments and timetables
could vary significantly from the estimates presented. Readers are
cautioned not to put undue reliance on forward-looking statements.
Coeur disclaims any intent or obligation to update publicly such
forward-looking statements, whether as a result of new information,
future events or otherwise. Additionally, Coeur undertakes no
obligation to comment on analyses, expectations or statements made
by third parties in respect of Coeur, its financial or operating
results or its securities.
W. David Tyler, Coeur's Vice President, Technical Services and a
qualified person under Canadian National Instrument 43-101,
supervised the preparation of the scientific and technical
information concerning Coeur's mineral projects in this news
release. Mineral resources are in addition to mineral reserves and
do not have demonstrated economic viability. Inferred mineral
resources are considered too speculative geologically to have the
economic considerations applied to them that would enable them to
be considered for estimation of mineral reserves, and there is no
certainty that the inferred mineral resources will be realized. For
a description of the key assumptions, parameters and methods used
to estimate mineral reserves and resources, as well as data
verification procedures and a general discussion of the extent to
which the estimates may be affected by any known environmental,
permitting, legal, title, taxation, socio-political, marketing or
other relevant factors, please refer to the relevant NI
43-101-compliant Technical Report on file at www.sedar.com and the
new Technical Report for the La Preciosa feasibility study to be
filed within 45 days on www.sedar.com.
Cautionary Note to U.S. Investors - The United States Securities
and Exchange Commission permits U.S. mining companies, in their
filings with the SEC, to disclose only those mineral deposits that
a company can economically and legally extract or produce. We may
use certain terms in public disclosures, such as "measured,"
"indicated," "inferred" and "resources," that are recognized by
Canadian regulations, but that SEC guidelines generally prohibit
U.S. registered companies from including in their filings with the
SEC. U.S. investors are urged to consider closely the disclosure in
our Form 10-K which may be secured from us, or from the SEC's
website at www.sec.gov.
We supplement the reporting of our financial information
determined under United States generally accepted accounting
principles (U.S. GAAP) with certain non-U.S. GAAP financial
measures, including costs applicable to sales per silver equivalent
ounce. We believe that this adjusted measure provides meaningful
information to assist management, investors and analysts in
understanding our financial results and assessing our prospects for
future performance. We believe this adjusted financial measure is
an important indicator of our recurring operations because it
excludes items that may not be indicative of, or are unrelated to
our core operating results, and provides a better baseline for
analyzing trends in our underlying businesses. We believe costs
applicable to sales per silver equivalent ounce is an important
measure in assessing the Company's overall financial
performance.
All tons are reported in U.S. standard short ton units. Grades
reported are troy ounces per short ton.
Proven and Probable Reserves
|
|
|
GRADE
(Oz/Ton) |
OUNCES |
|
LOCATION |
SHORT TONS |
SILVER |
GOLD |
SILVER |
GOLD |
PROVEN RESERVES |
|
|
|
|
|
|
Rochester |
Nevada, USA |
132,188,000 |
0.53 |
0.004 |
69,915,000 |
551,000 |
Martha |
Argentina |
— |
— |
— |
— |
— |
San Bartolomé |
Bolivia |
1,206,000 |
2.87 |
— |
3,456,000 |
— |
Kensington |
Alaska, USA |
309,000 |
— |
0.269 |
— |
83,000 |
Endeavor |
Australia |
2,646,000 |
2.58 |
— |
6,820,000 |
— |
Palmarejo |
Mexico |
5,100,000 |
3.68 |
0.05 |
18,762,000 |
256,000 |
Joaquin |
Argentina |
— |
— |
— |
— |
— |
|
|
|
|
|
|
|
La Preciosa |
Mexico |
20,244,000 |
3.31 |
0.006 |
66,920,000 |
118,000 |
Total |
|
161,693,000 |
|
|
165,873,000 |
1,008,000 |
PROBABLE RESERVES |
|
|
|
|
|
|
Rochester |
Nevada, USA |
55,046,000 |
0.57 |
0.002 |
31,454,000 |
130,000 |
Martha |
Argentina |
— |
— |
— |
— |
— |
San Bartolomé |
Bolivia |
39,700,000 |
2.52 |
— |
100,072,000 |
— |
Kensington |
Alaska, USA |
5,707,000 |
— |
0.144 |
— |
819,000 |
Endeavor |
Australia |
1,433,000 |
1.41 |
— |
2,026,000 |
— |
Palmarejo |
Mexico |
6,135,000 |
3.73 |
0.051 |
22,891,000 |
313,000 |
Joaquin |
Argentina |
— |
— |
— |
— |
— |
La Preciosa |
Mexico |
20,899,000 |
2.85 |
0.004 |
59,523,000 |
90,000 |
Total |
|
128,920,000 |
|
|
215,966,000 |
1,352,000 |
PROVEN AND PROBABLE
RESERVES |
|
|
|
|
|
|
Rochester |
Nevada, USA |
187,234,000 |
0.54 |
0.004 |
101,369,000 |
681,000 |
Martha |
Argentina |
— |
— |
— |
— |
— |
San Bartolomé |
Bolivia |
40,906,000 |
2.53 |
— |
103,528,000 |
— |
Kensington |
Alaska, USA |
6,016,000 |
— |
0.163 |
— |
902,000 |
Endeavor |
Australia |
4,079,000 |
2.17 |
— |
8,846,000 |
— |
Palmarejo |
Mexico |
11,235,000 |
3.71 |
0.051 |
41,653,000 |
569,000 |
Joaquin |
Argentina |
— |
— |
— |
— |
— |
La Preciosa |
Mexico |
41,143,000 |
3.07 |
0.005 |
126,443,000 |
209,000 |
Total Proven and
Probable |
|
290,613,000 |
|
|
381,839,000 |
2,361,000 |
Measured and Indicated Resources (Excluding Proven and
Probable Reserves)
|
|
|
GRADE
(Oz/Ton) |
OUNCES |
|
LOCATION |
SHORT TONS |
SILVER |
GOLD |
SILVER |
GOLD |
MEASURED RESOURCES |
|
|
|
|
|
|
Rochester |
Nevada, USA |
66,190,000 |
0.45 |
0.003 |
29,860,000 |
186,000 |
Martha |
Argentina |
— |
— |
— |
— |
— |
San Bartolomé |
Bolivia |
— |
— |
— |
— |
— |
Kensington |
Alaska, USA |
387,000 |
— |
0.238 |
— |
92,000 |
Endeavor |
Australia |
6,724,000 |
2.33 |
— |
15,690,000 |
— |
Palmarejo |
Mexico |
4,507,000 |
6.27 |
0.095 |
28,238,000 |
429,000 |
Joaquin |
Argentina |
5,865,000 |
4.62 |
0.003 |
27,106,000 |
19,000 |
La Preciosa |
Mexico |
7,539,000 |
2.45 |
0.005 |
18,485,000 |
41,000 |
Total |
|
91,212,000 |
|
|
119,379,000 |
767,000 |
INDICATED RESOURCES |
|
|
|
|
|
|
Rochester |
Nevada, USA |
75,532,000 |
0.42 |
0.004 |
31,893,000 |
268,000 |
Martha |
Argentina |
57,000 |
13.6 |
0.018 |
775,000 |
1,000 |
San Bartolomé |
Bolivia |
17,015,000 |
2.17 |
— |
36,869,000 |
— |
Kensington |
Alaska, USA |
2,299,000 |
— |
0.206 |
— |
474,000 |
Endeavor |
Australia |
8,267,000 |
2.51 |
— |
20,737,000 |
— |
Palmarejo |
Mexico |
21,795,000 |
1.33 |
0.033 |
28,950,000 |
711,000 |
Joaquin |
Argentina |
11,098,000 |
3.39 |
0.004 |
37,670,000 |
41,000 |
Lejano |
Argentina |
1,233,000 |
2.42 |
0.008 |
2,983,000 |
10,000 |
La Preciosa |
Mexico |
11,618,000 |
2.58 |
0.005 |
29,920,000 |
54,000 |
Total |
|
148,914,000 |
|
|
187,797,000 |
1,559,000 |
MEASURED AND INDICATED
RESOURCES |
|
|
|
|
|
Rochester |
Nevada, USA |
141,722,000 |
0.44 |
0.003 |
61,753,000 |
454,000 |
Martha |
Argentina |
57,000 |
13.6 |
0.018 |
775,000 |
1,000 |
San Bartolomé |
Bolivia |
17,015,000 |
2.17 |
— |
36,869,000 |
— |
Kensington |
Alaska, USA |
2,686,000 |
— |
0.211 |
— |
566,000 |
Endeavor |
Australia |
14,991,000 |
2.43 |
— |
36,427,000 |
— |
Palmarejo |
Mexico |
26,302,000 |
2.17 |
0.043 |
57,188,000 |
1,140,000 |
Joaquin |
Argentina |
16,963,000 |
3.82 |
0.004 |
64,776,000 |
60,000 |
Lejano |
Argentina |
1,233,000 |
2.42 |
0.008 |
2,983,000 |
10,000 |
La Preciosa |
Mexico |
19,157,000 |
2.53 |
0.005 |
48,405,000 |
95,000 |
Total Measured and
Indicated |
|
240,126,000 |
|
|
309,176,000 |
2,326,000 |
Inferred Resources
|
|
|
GRADE
(Oz/Ton) |
OUNCES |
|
LOCATION |
SHORT TONS |
SILVER |
GOLD |
SILVER |
GOLD |
INFERRED
RESOURCES |
|
|
|
|
|
Rochester |
Nevada, USA |
37,365,000 |
0.62 |
0.003 |
23,295,000 |
101,000 |
Martha |
Argentina |
204,000 |
4.75 |
0.005 |
969,000 |
1,000 |
San Bartolomé |
Bolivia |
3,683,000 |
1.26 |
— |
4,638,000 |
— |
Kensington |
Alaska, USA |
1,014,000 |
— |
0.259 |
— |
263,000 |
Endeavor |
Australia |
1,653,000 |
2.86 |
— |
4,726,000 |
— |
Palmarejo |
Mexico |
11,611,000 |
1.91 |
0.053 |
22,188,000 |
621,000 |
Joaquin |
Argentina |
1,022,000 |
3.02 |
0.004 |
3,084,000 |
4,000 |
Lejano |
Argentina |
3,307,000 |
1.73 |
0.006 |
5,713,000 |
19,000 |
|
|
|
|
|
|
|
La Preciosa |
Mexico |
2,082,000 |
2.26 |
0.004 |
4,705,000 |
8,000 |
Total
Inferred |
61,941,000 |
|
|
69,318,000 |
1,017,000 |
Notes to the above mineral reserves and resources:
- Effective December 31, 2013 except Endeavor, effective June 30,
2013, and La Preciosa effective July 29, 2014.
- Metal prices used for mineral reserves were $25.00 per ounce of
silver and $1,450 per ounce of gold, except Endeavor, at $2,300 per
metric ton of lead, $2,300 per metric ton of zinc, and $34.00 per
ounce of silver, and La Preciosa at $22.00 per ounce of silver and
$1,350 per ounce of gold. Metal prices used for mineral resources
were $29.00 per ounce of silver and $1,600 per ounce of gold,
except for Endeavor, at $2,300 per metric ton of lead, $2,300 per
metric ton of zinc and $34.00 per ounce of silver, and La Preciosa
at $25.00 per ounce of silver and $1,400 per ounce of gold.
- Palmarejo mineral resources (measured, indicated, and inferred)
reported above represent the sum of Palmarejo, Guadalupe, and La
Patria resources.
- Kensington proven and probable reserves adjusted April 2014 to
reduce the grade of internal dilution to zero.
- Mineral resources are in addition to mineral reserves and do
not have demonstrated economic viability. Inferred mineral
resources are considered too speculative geologically to have the
economic considerations applied to them that would enable them to
be considered for estimation of mineral reserves, and there is no
certainty that the inferred mineral resources will be
realized.
- Rounding of tons and ounces, as required by reporting
guidelines, may result in apparent differences between tons, grade,
and contained metal content.
- For details on the estimation of mineral resources and reserves
for each property, please refer to the relevant NI 43-101-compliant
Technical Report on file at www.sedar.com and the new Technical
Report for the La Preciosa feasibility study to be filed within 45
days on www.sedar.com.
Conversion
Table |
1 short ton |
= |
0.907185 metric tons |
1 troy ounce |
= |
31.10348 grams |
CONTACT: Bridget Freas, Director, Investor Relations
(312) 489-5819
Donna Mirandola, Director, Corporate Communications
(312) 489-5842
www.coeur.com
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