Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rochester's silver and gold production increased nearly 40% in the second quarter, indicating strong operational momentum.
- Palmarejo generated strong free cash flow, contributing positively to the company's financial performance.
- Coeur Mining Inc (CDE, Financial) reported a 136% increase in quarterly adjusted EBITDA, showcasing significant financial improvement.
- The company successfully closed the acquisition of key concessions from Fresnillo, enhancing its land package and future mining opportunities.
- Coeur Mining Inc (CDE) is on track to transition to positive free cash flow in the second half of the year, positioning it for aggressive debt reduction.
Negative Points
- Rochester's cost guidance was adjusted due to timing issues with ounces placement, indicating operational challenges.
- The company had to increase cost guidance at Rochester due to excess trucking capacity used for higher-cost material.
- There were delays in the placement of ounces at Rochester, affecting initial production plans.
- Increased capital expenditures were necessary at Rochester and Kensington, impacting short-term financial flexibility.
- The timeline for extracting ounces from newly acquired land near Palmarejo is projected to be around 2026, indicating a delay in realizing potential benefits.
Q & A Highlights
Q: Can you provide more details on the cost guidance adjustment for Rochester and any changes in cost expectations?
A: Mitchell Krebs, CEO, explained that the cost guidance adjustment was primarily due to the timing of ounces placed on Stage VI. The company took additional downtime to address ramp-up issues, affecting the timing of tons placed. Michael Routledge, COO, added that the ramp-up is progressing well, and they are optimizing operations to improve recoveries.
Q: When can we expect the first ounce from the newly acquired land near Palmarejo?
A: Mitchell Krebs, CEO, stated that drilling is expected to start in early 2025, with potential production by 2026. The area is close to existing infrastructure, which should facilitate development. Aoife Mcgrath, SVP of Exploration, mentioned that re-logging of old core and mapping are underway, with drilling planned for next year.
Q: What are the company's plans for debt repayment as cash flow increases?
A: Thomas Whelan, CFO, indicated that the goal is to achieve a total debt-to-EBITDA ratio of one and net debt-to-EBITDA of zero. The focus will be on repaying the revolver, with a target to significantly reduce debt by 2025 or 2026, depending on commodity prices. The company aims to maintain a minimum cash balance of $50 million.
Q: How is the Rochester crushing circuit performing in terms of reliability?
A: Michael Routledge, COO, reported that the circuit is performing well, with consistent daily throughput of 90,000 to 100,000 tonnes. The company expects to maintain or exceed these rates, optimizing size fractions to improve recoveries. The focus is on achieving 32 million tonnes in 2025.
Q: What is the current status of the Rochester ramp-up and optimization efforts?
A: Michael Routledge, COO, confirmed that the ramp-up phase is complete, and the focus is now on optimization. The company is working on fine-tuning operations to achieve optimal size fractions and recoveries by the end of the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
