Coeur Mining, Inc. (CDE) Earnings Call Transcript & Summary

Okay. So, jumping right into our first question. Can you give us a recap of the first half of the year and remind us your outlook for the remainder of the year? I know your production's weighted to the back half of the year. What are the key drivers of that growth relative to the first half?

Yes. It was a busy first half of the year for us. The main thing that happened was we closed the New Gold transaction in late March. So the second quarter was the beginning of having 2 new Canadian assets at Rainy River in Ontario and New Afton out in British Columbia. Like you said, it's a very back half weighted year here in 2026, but this is really the coming out year for the company after a few years of heavy lifting, investing in some internal expansions, aggressive exploration, $9 billion of M&A in the last 2 years. And now, this is sort of the first year where all of that kind of comes together. And we should produce this year about 630,000 ounces of gold, around 19 million ounces of silver and about 40 million pounds of copper. So that means our revenue mix will be about 65% gold, 30% silver, 5% copper. So that's a nice mix from 7 operations, all North America, 2 in Mexico, 3 in the U.S. and now 2 in Canada. 2027 will be an even better year because we'll have New Gold's assets for a full 12 months. So back half of the year is really driven by some ramp-ups that are going on, not only at New Afton with a new C-Zone, that's a block caving operation and that C-Zone is just ramping up here in the back half of 2026 at the Rainy River asset, that's an underground mine ramp up here in the second half of the year. So that's another catalyst in the second half of the year. Our Rochester silver and gold mine out in Nevada has a very second half weighted year based on an expanded leach pad that we put in place in the first half of the year. So we've got a lot of material close to liner that should give us a nice surge of ounces in the back half of the year. And our Wharf mine out in South Dakota in the Black Hills, which is an amazing asset, has a very second half weighted year as well. They had a crusher -- some crusher projects in the first half of the year, and now they're on a pretty rapid trajectory here for a strong second half. So you add all that stuff up, and yes, second half is going to be very, very exciting for us.

So moving to the New Gold assets and full disclosure, I used to cover New Gold. So I'm very familiar with New Afton and Rainy River. Earlier last quarter, production guidance is modestly revised lower. Does that change your longer-term view of the role of these assets and how they play out in your portfolio? Or how are you thinking about those assets right now?

No, I think what we did in the second quarter was we dialed back full year guidance just to kind of level set after having taken over the reins there really starting April 1 to give us a more achievable set of guidance numbers for 2026. So I'd call those sort of near-term, short-term related tweaks. But longer term, at both of those assets, if anything, I think we're probably more excited about them now than we were from during our due diligence. I mentioned C-Zone at New Afton. That's the new cave right now. But on the back of that is K-Zone. We put out an initial resource on that just after the transaction closed with a total resource of about 54 million tonnes. The current reserve at New Afton from the C-Zone is something like 35 million tonnes. So we'll bring along that K-Zone to be ready when the C-Zone is done, probably around 2032, and that should give New Afton a really long mine life beyond into the 2040s. At Rainy River, what makes us excited is, yes, we're in the middle of this ramp-up on the underground, but there's a lot of open pit potential still there at Rainy River. There's a beautiful 26,000 tonne a day mill that we want to keep full for as long as possible from a mix of open pit and underground material. That's probably one of the biggest value drivers that we have in the entire business. So we'll be spending a lot of time on unlocking that value here in coming years.

Okay. Actually, that just brings me to a question about Rainy in terms of how does the tailings dam and the tailings capacity? I mean one of the things that was an issue with New Gold was the capital that would be required to build a new tailings facility, lots of exploration potential, but where do you put it at this point? So could you elaborate on that? What are your current thinking?

Tailings capacity there is sufficient, probably a little more than sufficient for the current life of mine, which goes out, I think, to 2035 or 2036. As we hopefully unlock some of this additional mine life, we'll have to find a place for that additional tailings. There's a few different options, and we'll have some time to figure that out, whether there's some opportunities for in-pit tailings disposal, whether we can go higher on the existing or if we need to build something new. What's nice is with this bigger platform and the kind of cash flow that we have and the balance sheet strength that we have, we've got the flexibility to allocate capital. It's a good problem to have, right, because that means we're going to have a lot more mine life.

Yes, something that a smaller company like New Gold is not able to work its way out of. So in terms of -- let's just move to some exploration. You just -- you touched on that recent exploration update. Could you just give us an overview on that and what you found at New Afton and Rainy? And then we'll move on to San Miguel and La Union after that.

Yes. Okay. Yes, we put out an exploration release last -- I think, last week, featuring some new drilling results from New Afton and from Rainy River. The story at New Afton was this K-Zone. In fact, why don't I use the slide deck that we have -- there we go. That's New Afton, and that's -- you can see the C-Zone where we're just ramping up, the drilling results there that we summarized in a release last week from the K-Zone. It is really about continued expansion of K-Zone and starting to do some infill drilling to improve our confidence level so that the team can really start on the engineering work on the feasibility study work related to K-Zone so that that's ready to go when the C-Zone is exhausted in 2032 or so. So those were the results from K-Zone. We've expanded it by 300 meters. It's looking like it's going to be not only a lot larger than C-Zone, but a lot larger than the initial resource that we put out back in March. And then at Rainy River, there are really 2 areas of focus. One was continuing to drill those underground structures where the underground now is ramping up. We plan to be at a 5,000 tonne a day underground mining rate at New Afton -- sorry, at Rainy River by the end of the year. So there are some really good results with those structures continuing at depth. What we also did is tested some of the potential on surface to kind of connect the dots between these different open pits with the idea of there being the potential for some additional laybacks in coming years to provide us with those tons to keep that mill full, like I was talking about and have that contribution between the open pit and the underground continue to be much more weighted to the open pit.

And then do you want to talk about La Union and San Miguel?

Yes. So La Union, we don't have a slide here, but I'll -- I'll just put that up. That's -- those are 2 deposits at Palmarejo. And the story at Palmarejo is a really, I think, interesting one. So we started up there in 2009. It was an underground and open pit operation, and now it's been a completely underground operation for the last several years. So I said we built it in about 2008, 2009, right in the middle of the global financial crisis. One of the forms of capital that we used to finish the construction of Palmarejo was a gold stream with Franco-Nevada, which was the last piece of capital to get us over the hump there at Palmarejo. It came with a pretty expensive set of terms on the gold stream that covers the existing mining area. So what we've been doing now over the last decade or more is trying to consolidate the ground off to the east of Palmarejo that sits outside of that area of interest that the gold stream covers. And just to give you a sense of how strong of an incentive we have inside that area, 50% of the gold that we produce, we sell to Franco-Nevada for $800 an ounce, right? Everybody winces when I say that usually. So we are trying to build new ore sources off to the east where we can sell all the gold for the spot price. And so there's some stuff that's near the border of where that area of interest is that we can get into in the next couple of years. But the real prize is off further to the east, La Union and San Miguel. We put out a release a couple of months ago that highlighted some of those results. I think the thing that we're going to have to -- deal with there is, do we build stand-alone infrastructure out there and does that become a whole new operation? Or do we do something with that material and haul it back to the existing Palmarejo processing mill either way? There's a whole other chapter at Palmarejo waiting to be unlocked sitting off to the east.

Can we talk a little bit about SilverCrest -- sorry, I mispronounced that. But yes, it was a strong acquisition made at a good time in 2024, just before silver and gold prices took off. So what are some of the opportunities you see at that asset?

Yes. In the middle box there, you can see the well-timed, disciplined acquisition. SilverCrest was a $2 billion transaction that we announced in November of 2024. We closed it in February of 2025, and it brought this very high-grade, high-margin, low-cost silver and gold mine in Sonora called Las Chispas, produces 5 million to 6 million ounces of silver a year, 50,000 to 60,000 ounces of gold a year. And so it was just into production for 2 years. So it's a nice steady-state operation. I mentioned a lot of ramp-ups at our company this year. Las Chispas is not one of those. Las Chispas is like the nice Steady Eddie, half of the production first half of the year, half the production in the second half of the year. We've been having some good exploration results there. Just -- it's one of these repetitive epithermal systems, like I said, narrow-vein, very high grade. We're just continuing to extend a lot of those veins, fill in some of those veins, connect the dots between some of those structures. And -- it's our lowest cost asset, highest margin asset, and it's a great -- it was a great addition not only from the operations standpoint, but the SilverCrest balance sheet that we inherited really accelerated our deleveraging initiatives, which we needed to do because on the back of all that heavy investment that we made over the last few years, we had a stretched balance sheet, and that SilverCrest transaction really helped accelerate that deleveraging and set us up really to do the New Gold transaction because the stock did great on the heels of the SilverCrest transaction and then set us up to do the New Gold deal on the heels of that.

So Wharf, let's talk about that one. You released an updated mine plan. I think it was 65% increase in reserves and nearly doubled the mine life to 12 years. Can you briefly touch on some of the key highlights for us then?