CDE Stock Plummets After Earnings Show Two Underperfoming Mines

CDE Stock

CDE stock is tanking on Friday after Coeur Mining (NYSE:CDE) released its preliminary Q4 2019 results, which showed a disappointing return from two of its key assets.

Three Mines Perform

The Chicago-based mining firm, which operates five mines in North America, reported fourth-quarter gold production of 94,716 ounces of gold, bringing its full-year production to 359,418 ounces. The best performing asset was the Palmajero mine, which produced nearly 112,000 ounces of gold in 2019, while the Kensington and Wharf mines saw a 12% and 10% increase in gold production, respectively. CDE stock is currently trading for $6.03, following the release of the results.

Two Don’t

While those three assets performed well in 2019, it wasn’t such a great year for the firm’s Rochester and Silvertip mines. At the Rochester site in Nevada, gold production was actually 35% higher than the previous quarter, but lower crushing rates led to full-year silver and gold production below expectations. However, the company has invested in a high pressure grinding roll to address this issue, which could be a boost for CDE stock in 2020.

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It was at the Silvertip mine in British Columbia, Canada, where the company really lost out. Fourth-quarter silver, zinc, and lead production decreased by 7%, 8%, and 10% quarter-over-quarter to 0.3 million ounces, 3.9 million pounds, and 4.0 million pounds, respectively. This falling production was mainly as a result of lower average recovery rates due to ongoing mill optimization initiatives. Mill throughput did climb 16% but still fell short of expectations. As a result, CDE stock is down nearly 15% on Friday.

CDE Stock Up 25% in Three Months

As part of an end-of-year review process, Coeur Mining is conducting an impairment test on the carrying value of the operation, which totaled approximately US$400 million as of December 31, 2019. The company will consider the slower than anticipated ramp-up of the Silvertip asset since acquiring it in 2017, as well as weaker zinc and lead prices combined with higher treatment charges. In October, we included CDE stock in our gold penny stocks to watch, and it has gained nearly 25% since. Can the company put today’s losses to one side and kick on again in 2020?

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