Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Coeur Mining (NYSE: CDE) announced on Monday it has agreed with Mexican precious metals group Fresnillo plc for the purchase of mining concessions adjacent to the Palmarejo gold-silver complex located in Chihuahua state.
Together, these concessions comprise approximately 28 square kilometres and include claims adjacent to two primary zones within Palmarejo’s existing footprint. The current Palmarejo complex is host to a processing facility, three underground mines and various exploration targets.
The first set of concessions cover the southeast extensions of the Independencia and Nacion deposits, where mining currently takes place. The second set of concessions, located to the northeast, surrounds multiple targets containing mineralization and historic resources that were added through the 2015 acquisition of Paramount Gold and Silver.
Intensive field work including mapping and sampling across the entire eastern land package, which was ramped up over the past 12 months, is expected to accelerate further following closing to test the most advanced targets along these two main trends, Coeur said.
Total consideration includes a cash payment of approximately $25 million and a future royalty payment of $25 per ounce for new resource discovered within the purchased concessions. The transaction is expected to close in 2024.
Coeur’s Palmarejo mine operation is subjected to a gold-streaming agreement with Franco-Nevada, pursuant to which the latter would receive half of the gold byproduct produced from the underground mines.
“This transaction fills in two key strategic gaps in the large land package east of the Palmarejo mine, which unlocks significant potential in areas unencumbered by the existing Franco-Nevada gold stream,” Coeur chief executive Mitchell Krebs stated.
Once complete, Coeur’s landholdings outside the gold stream-encumbered areas will increase by nearly 20%, and the overall Palmarejo complex will consist of a single nearly contiguous district spanning over 280 square kilometres of underexplored ground in the heart of Mexico’s Sierra Madre Occidental.
“In the near-term, we intend to pursue the southeast extensions of existing deposits that trend onto the claims, which provides opportunities to add to Palmarejo’s mine life and leverage existing infrastructure,” Krebs added.
“Another near-term post-closing priority will be to integrate, update and potentially add to historic resources in the northeast area of the previously fragmented land package, which represents an opportunity to further boost Palmarejo’s overall mineral resources to the east.”
Shares of Coeur Mining rose by 2.6% as of 12:20 p.m. EDT. The Illinois-based miner has a market capitalization of $989 million.
