It has been a long time since Coeur has any good news. The past 2 years has been mainly capital raising, production delays, and overblown capital cost. Hence every report is followed with price decline. This is the first time for a very long time when we see a price increase after a quarterly report. Here are some of the good news in this report. 1) price rise after report 2) production has been on target for San Bartolome, 3) Cosh cost has been contained. 4) Reduction in administrative cost 5) Has started making a profit though it is a small profit even though silver prices was not stellar at 8.84 per oz last quarter. 6) Still expect Palmarejo to be on target (hopefully it would unlike San Bartolome which was delayed and the first quarter of production was not up to par. That’s why it is important that San Bartolome’s production be up to expectation last quarter. 7) Increase in reserve 8) Forecast that it should have enough capital to finish the development projects (hope at this stage but likely outcome)
Is this the beginning of light at the end of the tunnel. We shall wait and see. This is one of those great projects but bad management has done it in. However it does look like they have woken up. The trouble with American companies is they have too many chiefs who are highly paid but not enough Indians to do the hard yakka to make enough the money for sharholders.
Looking forward if (and that is a big if ) they can produces 20 million ozs of silver a year it would really give a big kick to the share price. Imagine the cash cost in Parmarejo is 50 cents per oz after gold credit. And they forecast that they can produce 9 million oz of silver a year in Palmarejo alone. Assuming that the other mines can cover all the administrative cost which is a fair assumption and taking a 10 dollar per oz silver price that will easily give a profit of over 90 million before tax. Compare that with a market cap of about 500 million I think that is great value. Hence I am willing to take the risk considering that this can happen in a matter of months.
Lets hope for the next quarter results that they won’t let the long suffering shareholders down again. Goodoh
CXC Price at posting:
$11.50 Sentiment: None Disclosure: Held
