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Shares of Coeur Mining (NYSE: CDE) tanked on Thursday, slumping more than 18% by 11:00 a.m. EST after the silver miner reported disappointing fourth-quarter results.
Coeur Mining's revenue fell 10% from last quarter to $159.2 million due to lower metal prices, which missed estimates by $30.7 million. Those lower prices, along with a one-time loss relating to the redemption of some of its senior notes, resulted in the company reporting a net loss of $8.3 million, or $0.03 per share. However, after adjusting for that one-time item, the company did manage to report a profit of $0.01 per share, though that was $0.08 per share less than analysts were expecting. That is despite the fact that the company achieved record production of 3.9 million ounces of silver during the quarter and total output of 10 million silver ounces equivalent.
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The company also failed to generate any free cash flow during the quarter, with that metric plunging from $14.6 million in the thirdquarter to a negative $4.5 million during the fourth quarter. In addition to falling commodity prices, also weighing on free cash flow was an increase in inventory at its Palmarejo mine as well as an acceleration of cash interest paid on the notes it redeemed during the quarter. The reason inventory grew at Palmarejo was due to the timing of a quarter-end shipment and gold retained for purchase by Franco-Nevada (NYSE: FNV) earlier this year. That Franco-Nevada purchase relates to the company's transition from a royalty to a streaming agreement at that mine last July.
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Silver prices are well off their high from last year, which is clearly having an impact on Coeur Mining. Its cost structure is higher than most rivals, and despite the debt reduction last year, it still has a sizable amount of debt. Because of that, it is more sensitive to the ebb and flow of silver prices than higher-margin precious metal companies like Franco-Nevada. As such, a rebound in silver prices could quickly erase today's decline, while slumping prices could put more pressure on Coeur's profitability and stock price.
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