TORONTO (miningweekly.com) – The largest US silver producer by output, Coeur Mining, on Thursday reported a net loss of $35-million for the three months ended June 30, as a 20% drop in metals sales, combined with significantly lower realised prices and fewer ounces sold impacted on the company’s financial performance.
The Chicago, Illinois-based company reported an adjusted net loss of $34.6-million, or $0.35 a share, compared with an adjusted profit of $28-million, or $31 a share, in the same quarter of 2012. Wall Street analysts had, on average, expected an adjusted loss of $0.02 a share on revenue of $211.29-million.
Revenue in the period declined to $204.5-million, compared with $254.4-million, as silver ounces sold declined 75% to 5.2-million ounces and the average realised silver price dropped 22% year-on-year to $22.86/oz, as compared with $29.28/oz.
Coeur lifted gold sales by 6.4% to 63 389 oz, compared with 59 579 oz in the year-earlier period.
During the first half of the year, the company’s cost reduction programme had resulted in savings of $19-million and it expected to save $8-million to $9-million more during the remainder of the year. The expected cost savings would be lower than in the first half owing to higher than planned production levels in the second half of the year.
Further, the company would reduce its exploration expense by 17%, or about $3-million, during the remainder of the year, and reallocate $3-million in reductions to the La Preciosa project, in Mexico.
The company had eliminated or deferred $24-million of capital projects scheduled for 2013, resulting in full-year expected capital expenditures of $100-million to $110-million, an 18% decrease compared with previous guidance of $125-million to $140-million.
In 2014, the miner expects capital spending to total about $80-million in an effort to increase company-wide net cash flow.
The company reaffirmed its 2013 full-year production guidance of 18-million to 19.5-million ounces of silver and 250 000 oz to 265 000 oz of gold.
Despite lower gold prices used to calculate by-product credits, Coeur maintained its full-year cash operating cost guidance of $9.50/oz to $10.50/oz of silver, which reflected the effects of the company's ongoing cost reduction efforts.
Despite the company expecting its Alaskan Kensington gold mine’s second-half cash operating costs per gold ounce to be about 20% lower than the first half of the year, full-year 2013 cost guidance for Kensington was revised higher to between $950/oz and $1 000/oz, compared with the previous guidance of $900/oz to $950/oz.
At the end of June, Coeur settled a dispute with exploration junior Rye Patch Gold, over claims covering portions of the Rochester and Packard mine areas, in Nevada.
Under the terms of the settlement, which ended the legal dispute among the companies lodged in the Nevada Sixth District Court in 2011, Rye Patch would transfer the disputed claims to Coeur in exchange for $10-million, a 3.4% net smelter royalty (NSR) from revenue generated at the Rochester mine and an option to receive the Blue Bird claim next to Lincoln Hill, west of Rochester.
The NSR would be payable from Rochester production and sales starting on January 1, 2014, and was expected to be completed in about four years, once Coeur had produced 39.4-million ounces of silver at the Rochester mine.
Coeur’s NYSE-listed stock on Thursday closed up 8.31% at $13.29 apiece, having lost 51.31% of its value since the start of the year.