As a precious metals investor, you might know Coeur Mining Inc. (NYSE: CDE)as one of the many silver miners in a fragmented industry, but you probably didn't know that Coeur is the largest "primary" silver producer in the U.S. per its website, and it's also among the world's 10 largest silver-producing companies today. This is just one of the interesting things about Coeur; there are several others not many investors are aware of. Learning these facts could also help you make better investment decisions, so here are five such lesser-known things about Coeur Mining you should know.
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1. Coeur Mining recently changed its name
Until about four years ago, Coeur Mining was known as Coeur d'Alene Mines Corporation. It was only in May 2013 that the company changed its name to the simpler Coeur Mining, Inc., as we know it today, as it shifted its state of incorporation from Idaho, where it was originally incorporated in 1923, to Delaware.
Image source: Getty Images.
The move, which also included relocating the company's headquarters to Chicago from Idaho, was part of a broad restructuring program initiated by CEO Mitchell Krebbs in 2012 in a bid to transform Coeur into a leaner and stronger company amid the severe headwinds facing the industry back then.
2. Coeur is more about gold than silver
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Though known as a silver producer, you might be surprised to learn how dramatically Coeur's product mix has changed in recent years. Today, Coeur gets a little more than 60% of its revenues from gold. Comparatively, close peers such asHecla Mining Company (NYSE: HL) generated 39% revenues each from silver and gold last year (the rest came from lead and zinc), while Pan American Silver Corp.(NASDAQ: PAAS)gets only about a quarter of its revenue from gold. In fact, Coeur's silver production declined slightly in 2016, and it was entirely its record gold production of 358,170 ounces that pushed the miner's total silver equivalent ounces to all-time highs.
Image source: Getty Images.
These charts from Coeur's latest investor presentation give a glimpse into another fascinating aspect of Coeur's transformation: Two of the five mines it currently operates, Kensington and Wharf, are primarily gold mines. As you can see, Coeur now has substantial exposure to the U.S. thanks to gold.
3. Coeur is also a streaming company
Unlike most precious metal companies that are either pure-play mining or streaming plays, Coeur is an interesting mix of both. While you already know how mining works, a streaming company buys precious metals from other miners at discounted rates in return for funding them upfront.
Coeur has a silver stream agreement with a subsidiary of Tokyo-based Toho Zinc under which it is entitled to buy 100% of the silver produced at the Endeavor mine in Australia at a base cost of $1 per ounce, plus an amount based on the spot silver price. However, production from Endeavor is declining rapidly, which is why it contributed only about a percentage point to Coeur's revenues last year.
Interestingly, Coeur operates on both sides of the streaming scale -- it has been selling metal streams to streaming companies like Franco Nevada Corp. (NYSE: FNV) for several years. Coeur struck a fresh gold streaming agreement with Franco-Nevada last year wherein it will sell 50% of gold production from Palmarejo to Franco Nevada for $800 an ounce or the spot price, whichever is lower. It's a significant deal for Coeur since the renewed agreement is more than double that of what Franco Nevada earlier paid Coeur. Not surprisingly, Coeur expects its cash flows from Palmarejo to grow substantially going forward.
4. Coeur is among the few 100% underground miners
Until about four years ago, Coeur largely relied on open-pit techniques to extract metals. Today, it is an all-underground miner, as this overview of its primary mine Palmarjo reflects:
Image source: Coeur Mining.
This transition is important because underground mining has a higher recovery rate than surface mining. In other words, the final metal content after refining is higher in underground mining thanks to lower oxide content, which means higher production volumes and margins for miners. The proof is in Coeur's recovery rate, which has improved double-digit percentages since fiscal year 2013.Coeur even noted higher recovery rates, especially at Wharf, as an important driver of its gold production last year.
5. Coeur is rapidly expanding production
Having strengthened its asset base considerably in recent years via acquisitions, Coeur is now focused on organic growth. The miner's targeted capital spending of $115 million to $135 million is 24% higher than its fiscal year 2016 capex at mid-point, with the bulk of it going toward Palmarejo. Coeur expects silver and gold production from Palmarejo to jump 50% this year, pushing its silver equivalent ounces up 9% at mid-point from last year. That should mean higher profits and cash flows for Coeur Mining this year, which is great news for investors.
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