Kensington up, Silvertip down during Q3

Coeur Mining Inc. Oct. 10 reported another strong quarter of gold production at its Kensington Mine in Southeast Alaska but a dip in silver, zinc and lead production at the Silvertip Mine in northern British Columbia.

Kensington produced 34,156 ounces of gold during the third quarter of this year, which is a slight increase over the 34,049 oz recovered at the Southeast Alaska mine during the previous quarter and 27 percent higher than the 26,809 oz produced during the third quarter of 2018.

Approximately 15 percent of the first quarter production came from Jualin, compared to roughly 17 percent during the prior quarter.

Going into 2019, Kensington (including Jualin) had 2.59 million tons of proven and probable reserves averaging 0.213 oz per ton (552,000 oz) gold.

In comparison, Jualin alone hosted 157,600 tons of ore averaging 0.47 oz/t (74,100 oz) gold, according to a maiden reserve calculation completed last year.

Coeur anticipates that higher-grade ore from the Jualin deposit will account for approximately 15 percent of the total gold production at Kensington this year.

Coeur continues to anticipate that Kensington will produce between 117,000 and 130,000 oz of gold this year. Through the first nine months, the Southeast Alaska operation has produced 98,178 oz of the precious metal.

While gold production at Kensington pulled back a bit, metals output at the Silvertip Mine near the B.C.-Yukon border rocketed during the first quarter of this year.

Coeur has filed for permits needed to extend the life of the Kensington Mine by about a decade, to 2033.

The Southeast Alaska operation currently has enough tailings and waste rock storage capacity to last until 2023.

In addition to adding a decade of mining to Kensington, the new permits would allow the mill at Kensington to process 3,000 tons of ore per day, which is a 50 percent increase over the currently permitted 2,000 t/day.

The U.S. Forest Service is currently collecting public comments during a 45-day scoping period on Coeur's proposal for Kensington, which will be used to develop an Environmental Impact Statement for the proposed expansion.

The public comment period for Kensington ends on Nov. 7.

As Coeur seeks to extend and upgrade its Alaska gold mine, its Silvertip Mine in northern B.C. has passed its first full year of commercial production.

Silvertip reached commercial production on Sept. 1, 2018. Over the past year, beginning on Oct. 1, this high-grade operation has produced 1.03 million oz of silver, 16.32 million pounds of zinc and 14.19 million lb of lead.

During the third quarter of 2019, Silvertip produced 300,000 oz of silver, a 13 percent drop from the 344,000 oz produced during the second quarter.

Silvertip also produced 4.2 million lb of zinc and 4.5 million lb of lead, down 21 percent and 10 percent, respectively.

The lower metals output at Silvertip was driven by higher tons milled, which was largely driven by lower mill availability due to both planned and unplanned downtime during the third quarter.

"At Silvertip, quarterly production rates declined as we took advantage of favorable weather to extend planned downtime to complete several key surface projects," said Coeur Mining President and CEO Mitchell Krebs.

Third-party maintenance resources were also added during the quarter to accelerate mill stabilization efforts.

Coeur has also deployed a human resources strategy to enhance Silvertip's leadership team; improve recruitment and retention efforts; and bolster training of mill operators.

The company said these efforts have resulted in significant improvements in mill availability late in the third quarter and into October.

Coeur forecasts the Silvertip Mine to produce 1.5 million to 2.5 million oz of silver, 25 million to 40 million lb of zinc and 20 million to 35 million lb of lead this year.

Through the first nine months of 2019, the northern B.C. mine has produced 883,000 oz of silver, 13.24 million lb of zinc and 12.54 million lb of lead.

Coeur's five operations – Kensington, Silvertip, Palmarejo (Mexico), Rochester (Nevada) and Wharf (South Dakota) – produced 3 million oz of silver, 99,782 oz of gold, 4.1 million lb of zinc and 4.3 million lb of lead during the third quarter of 2019.

"As anticipated, our third quarter operational results reflected the beginning of a strong second half that is expected to continue throughout the remainder of the year," said Krebs. "Overall, we expect to achieve production guidance at each of our operations with the companywide goal of returning to positive free cash flow in 2019."

–SHANE LASLEY