Nothing goes up as much in a precious metals bull market than silver equities. At Swiss Gold Letter, we usually research unknown junior mining stocks in search of an outsized return.
However, in a bull market, Coeur Mining (CDE) is a serial 10-bagger with much less risk than a junior company. The stock is so cheap ($2.20) that it once again merits the attention of mining investors.
Monday, October 9, 2023
Coeur Mining (CDE) has 353 million shares outstanding and presently trades at $2.20 per share. The market capitalization is not small - $832 million.
Nevertheless, this strange animal - which still trades as a silver stock although it produces more yellow than white metal - regularly delivers 10 baggers to aggressive traders in gold bull markets.
At Swiss Gold Letter, we usually research unknown junior mining stocks in search of outsized returns.
However risk is huge in this field and many promising companies end up in bankruptcy.
Coeur Mining's 10-Bagger Tradition
It might be just easier to buy Coeur Mining now. This stock has a tradition of delivering ten baggers in precious metals bull markets.
From September 2001 to February 2004, CDE quoted in the US, went up 12 times.
From November 2008 to April 2011, Coeur again multiplied by 10.
From the 2016 low, this highly volatile stock increased again by 10 times - in just seven months.
Recently, from the March 2020 low at $1.98, Coeur Mining reached $12.60 by the end of February 2021.
Planting Time for Investors, Harvest Time for Coeur!
Between 2017 and 2023, this dynamic company invested US $1 billion in exploration and capital expenditures, which is much higher than its current market capitalization.
These huge investments should start to bear fruit in 2023 production numbers, which should total around 325,000 ounces of gold and 11,000,000 ounces of silver.
This means that the silver production growth 2023 to 2025 should be a huge 45%.
This comes from the Nevada-located Rochester Mine's new Stage VI leach pad and the Merrill-Crowe process plant - both of which were commissioned and began production in mid-September 2023. (Initial gold doré was poured on September 18th.)
Aerial View of Rochester Mine Expansion (CDE website)
Overall, the expansion of the Rochester mine should grow production by 31% over the next two years.
This means after three years of negative cash flow, a spectacular turnaround to massive free cash flow and huge profits could surprise the market.
Of course, there are notable risks since CDE is basically putting a new mine in operation and the difficult winter season is fast approaching. But it seems investors are compensated for this risk since this growth company is only trading at 0.6 times net asset value (NAV).
Further Exploration Upside
Although the Rochester mine hosts the largest silver reserve in the United States, the third largest in North America, and the fourth in the world, this reserve still has room to grow.
Coeur has four satellite deposits or prospects at the Rochester Mine and has enhanced its geological modeling with an aim towards targeting higher grades at these areas.
As proof of CDE's success in growing the resources of its properties, since its acquisition of the Silvertip property in British Columbia, resources have more than tripled.
Jurisdiction Premium is Warranted
CDE possesses three US-based mines: Rochester Mine in Nevada, Kensington Mine in Alaska, and the Wharf Mine in South Dakota. These mines in a stable tier-1 jurisdiction account for approximately 66% of revenue. (CDE also produces from its Mexican operation, Palmarejo, located in Chihuahua State.)
Upcoming Silver Premium
Nothing goes up as much in a precious metals bull market than silver equities.
There are very few quality silver producers, and even less in safe jurisdictions like the USA.
Coeur Mining has traded for decades as a silver stock. It will continue to do so, all the more that its silver production will increase dramatically by some 45%!
Bottom line: Huge Potential, Favorable Risk Reward
Undoubtedly, risk control is extremely difficult in the junior mining space.
CDE is however very liquid so anyone - except large institutions -can bail out if needed.
On the other hand, Coeur Mining is once again historically cheap and the potential is so remarkable that timing the market perfectly is not that important as long as one's overall position sizing and time horizon remains conservative.
Ultimately, if CDE returns to its ten-bagger tradition, who cares if one has to wait seven months, one year or three years!
Disclaimer: SGL does not provide investment advice and is not a registered investment advisor. Always do your own due diligence before making an investment. Investing in securities, especially junior miners, can be risky and never invest money you cannot afford to lose. SGL cannot guarantee the accuracy of the information in this post. SGL has attempted to present the information fairly, but it or its contributors may own shares of CDE so bias cannot be excluded. SGL or its contributors have no relationship with CDE. SGL may buy or sell shares at any time.
SGL makes no representations, and specifically disclaims all warranties, express, implied, or statutory, regarding the accuracy, timeliness, or completeness of any material on this website. You should seek the advice of a securities professional regarding any stock transactions. SGL cannot guarantee in any way that it is providing all of the information that may be available. Please do your own due diligence before buying or selling any security.