Also, as for today’s action, the vast majority of the PM mining stocks are in the red on the day, so that action is just par for the course. I picked up a bit more CDE today at $4.28.

I confirm CDE can move very big, quickly. In the 2007-08 debacle I bought near a low and it doubled in less than a month.

Yeah, some are worried that for Coeur to finish their Rochester Expansion development, that they may need to raise to dilute shareholders, and that was a big negative reaction from the earnings call announcement and another reason, besides the earnings miss, and lower projected gold production for this year that CDE sold off so hard.

However, a few things to consider. As Taylor noted in his piece:

“Once the Rochester Expansion is complete, production will ramp up to ~8 million ounces of silver per annum and ~77,000 ounces of gold at lower costs, with an average annual free cash flow figure of ~$90 million FY2024 to FY2034. This is based on estimates of a full year of commercial production in FY2024, and it will certainly help Coeur not only to pay down its debt but enjoy a major increase in consolidated free cash flow. However, while this growth is impressive and will drive meaningful earnings growth, the elephant in the room is the weak balance sheet.”

However, I’d disagree with assigning so little value to Silvertip, as it was already in production up until a year ago, but Coeur took it off-line to explore, expand, and optimize the future development and production of that project and it will be a key contributor to the company again, but Taylor usually errs on the conservative side of estimates, and doesn’t assign much value to development projects, which is not how I personally approach valuing companies. He wants to wait for them to put out their updated economic study first before giving Silvertip much credit, whereas I’m giving it much more credit as mine that was just in production and is getting a reboot that it’s a significant player on the company’s roster of assets, and is just getting a facelift.

You can see the hesitancy here from T.D. though:

“Obviously, one could assign value to Silvertip and the Rochester Expansion, which is not entirely captured in FY2023 earnings estimates (only partial growth at Rochester). However, the wild card is if there will be additional share dilution which could offset some of this earnings growth. Given the uncertainty and the fact that a new study will need to be completed on Silvertip to have confidence in a start, I think it’s still too early in my view to assign much value to the British Columbia asset.”

Again, I’d disagree and say it is not too early to assign more value to Silvertip, but to each their own. I’m sure he’ll update his outlook once the updated economic study comes out for the restart, but at that point the value arbitrage will be more obvious to most investors and analysts, and right now the market isn’t giving them much value for Silvertip at all, and and is punishing the company for the funds needed for the Rochester Expansion, but not giving them value for how significant that will be for costs, margins, and future revenues and free cash flows in 2024.

Also, everyone is so confident in the future dilution for the Rochester Expansion that they are completely overlooking the big ace in the hole that Coeur has in Sterling, that I don’t see being discussed anywhere. The company’s Sterling development project in Nevada was picked up when they acquired Northern Empire [which I was in when taken over by CDE], (next to the old Corvus Gold projects that Anglogold Ashanti which I was also in when AU acquired them last year, and is also adjacent to Anglogold Ashanti’s own Silicon deposit). Well that Sterling project has increased in intrinsic value in an underappreciated way. Even though AU has been very tight-lipped about Silicon and their plans with the Corvus acquisition, clearly they see a major project there in Nevada along the Walker Lane trend. At one point I thought Coeur may go after Corvus as well to bolt on their projects to Sterling, but now it is increasingly more likely that Coeur will offload Sterling to Anglogold Ashanti, and that would help fund the Rochester Expansion and reboot of Silvertip, without being as dilutive as many are projecting. It makes sense now for Sterling to come into the Anglogold Ashanti umbrella and that would be an accretive divestment for Coeur. Just some food for thought.
https://www.coeur.com/operations/project/sterling-gold-nevada/