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Coeur Mining Upgraded: Analyst Dives Deep Into Prospects Of Rochester Mine In Nevada

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Coeur Mining Upgraded: Analyst Dives Deep Into Prospects Of Rochester Mine In Nevada

Analyst Michael Siperco from RBC Capital Markets has upgraded Coeur Mining, Inc CDE from Sector Perform to Outperform. The price target remains unchanged at $4.

According to Siperco, the completion of the expansion project at the Rochester mine in Nevada is the key driver for the stock. The ramp-up process, set to continue until mid-2024, is crucial for Coeur Mining’s prospects.

During a recent site visit, Siperco observed the significant investment of over $700 million in throughput expansion at the mine. Once the expansion is complete and at full capacity in 2025, production is expected to increase by more than 120%.

Siperco is optimistic about Coeur Mining, citing higher price forecasts, reduced risk of further capital expenditure inflation, and the company’s relative value compared to its peers.

The construction phase of the project is nearly finished, and the new plant has already produced its first metal from ore placed on the new 300mt leach pad in September. The commissioning of the new three-stage crushing corridor is scheduled to begin in October, with the remaining capital spending completed by the end of 2023.

Siperco expects that economies of scale will drive down costs at the Rochester mine, resulting in a cash cost of approximately $15 per ounce of silver equivalent at steady state in 2025. This reduction in costs will also contribute to a consolidated cost reduction of about 15%.

With the expansion, the mining rate at Rochester is projected to increase from approximately 65,000 tonnes per day to up to 155,000 tonnes per day by the end of 2024. The crushing capacity will also increase to 88,000 tonnes per day, compared to the current capacity of 34,000 tonnes per day.

Overall, Siperco’s increased confidence in the Rochester mine, higher price forecasts, and the trading discount have led to the upgrade of Coeur Mining’s stock to Outperform.

Siperco has revised the adjusted earnings per share (EPS) estimates for Coeur Mining to $0.12 for FY24, up from $0.10, and to $0.29 for FY25, up from $0.15.

Price Action: Shares of Coeur Mining (CDE) are trading higher by 6.60% to $2.26 on Friday.