Outlook Revealed for These Silver Miners

Coeur d'Alene Mines, Endeavour Silver, and Silver Standard Resources published their second-quarter production updates.

Jul 13, 2014 at 11:14AM

Earnings season is under way, and several silver miners, including Coeur d'Alene Mines (NYSE:CDE), Endeavour Silver (NYSE:EXK), and Silver Standard Resources (NASDAQ:SSRI) have already revealed their second-quarter production results. This news gives investors an idea of what to expect from their second-quarter earnings. Without further ado, let's dive in.

Coeur d'Alene Mines: new stream deal could lead to lower costs
In the second quarter, Coeur d'Alene Mines produced 4.5 million ounces of silver and 61,025 ounces of gold. Silver production was up almost 10% in comparison with the first quarter, but down from 4.6 million ounces in the second quarter of 2013. This year, Coeur d'Alene Mines is not likely to achieve substantial production growth, and the results of the first half of the year confirm this thesis.

Coeur d'Alene's first-quarter silver production increased by 300,000 ounces in comparison with the same period of 2013, while second-quarter production was down by 100,000 ounces. As of now, Coeur d'Alene looks ready to hit the lower end of its 17 million–18.2 million silver production guidance. However, as costs are an issue for Coeur d'Alene, production increase would have been beneficial, as fixed costs would have been spread across more ounces.

On the positive side, the company recently announced a new gold stream agreement with Franco-Nevada (NYSE:FNV). The previous Franco-Nevada stream was a heavy burden on the company's Palmarejo operation, and this new deal is likely to improve Coeur d'Alene's cost structure. Coeur d'Alene Mines is underperforming this year, but any positives on the cost side will bring a boost to the company's shares when it reports its second quarter earnings.

Endeavour Silver: on path to beat full-year cost guidance
Endeavour Silver's first-quarter silver production was spectacular, and the production decrease in the second quarter was an expected event. Grades at the company's Guanacevi mine lowered from 350 g/t to 272 g/t, back to the levels seen in the fourth quarter of 2013. Still, silver production was up 9% compared to the second quarter of 2013, highlighting Endeavour Silver's position as a solid performer.

Given the production decrease, Endeavour Silver's second-quarter cost results will likely be higher than in the second quarter. Endeavour Silver's first quarter all-in sustaining costs were $12.15 per ounce of silver, but the company reaffirmed full-year cost guidance of $19 per ounce. Currently, the full-year cost number seems conservative, and Endeavour Silver must be able to beat it.

Silver Standard Resources: Marigold remains a big question
Finally, we can take a look at first results from Silver Standard Resources' fresh purchase, Marigold mine. The mine, which Silver Standard Resources acquired for $275 million, produced 22,060 ounces of gold, ahead of 20,000 ounces guidance. Low second-quarter production was expected, and the mine should produce more in the second half of the year.

However, costs are expected to be an issue in 2014. The company stated that it was developing the life of the mine plan and implementing operational changes at the mine. Costs at Marigold will be in the spotlight when the company reports its second quarter earnings on August 6. Meanwhile, the company's sole silver producing mine, Pirquitas, delivered 2 million ounces of silver in the second quarter. Thus, the mine is in on track to reach its full-year production guidance of 8.2 million–8.6 million ounces.

Bottom line
Coeur d'Alene Mines shareholders could hope for improvements on the cost side due to the new streaming deal, but the effect of the deal will not be reflected in the company's second quarter results. Endeavour Silver continues to deliver solid results, and the company could have more upside with a little help from silver prices. Silver Standard Resources' Marigold mine is starting with positive news, but cost information will be crucial for further assessment. 

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Vladimir Zernov has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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