Coeur suspends Silvertip on low prices for lead, zinc

Coeur Mining (NYSE: CDE), the largest U.S.-based primary silver producer, is temporarily halting operations at its Silvertip silver-zinc-lead mine, located in Canada’s northern British Columbia, due mainly to low prices for lead and zinc.

The decision caused Coeur to book a US$251 million impairment charge on the underperforming asset, acquired from private investor Denham Capital in 2017 for up to US$250 million.

Coeur’s stock was down 14% in mid-morning trading, with a volume exceeding 10 million, twice the daily average.

Silvertip, located just below the Yukon border, accounted for about 6% of Coeur’s 2019 revenue. According to the company’s website, it employs 167 people.

Severance costs related to work suspension are estimated to reach between $5-10 million during the first half of the year, while quarterly care and maintenance will cost $6 million.

CEO Michael Krebs said the move ultimately sought to increase Silvertip’s long-term value. While mining and processing activities are paused, he said, Coeur planned to more than double its investment in drilling to further expand the asset’s high-grade deposit and extend its mine life.

The Chicago, Illinois-based company has already begun working on a pre-feasibility study to evaluate a mill expansion, which could cost between US$50-US$75 million. The project, it says, would “significantly enhance Silvertip’s economics.”

Coeur does not anticipate restarting Silvertip until late 2021, depending on results from exploration and a new feasibility study, as well as prevailing market conditions.

— This news item first appeared on our sister publication, MINING.com.