Shares of Coeur Mining (CDE -0.27%) fell over 17% today after the company reported preliminary fourth-quarter and full-year 2019 operating results. The precious metals miner delivered solid performance from three mines: Palmarejo (the best-performing asset in the portfolio), Kensington (a 12% year-over-year increase in gold output), and Wharf (10% year-over-year increase in gold output).
But two mines performed below expectations. Rochester suffered from lower crushing rates that weighed on full-year silver and gold production, while Silvertip underwhelmed in the final quarter of the year. That combined weakness resulted in the company missing full-year 2019 production guidance for silver, zinc, and lead.
As of 1:26 p.m. EST, the small-cap stock had settled to a 13.6% loss.
Despite the disappointing finish to the year, Coeur Mining has greatly improved operations at Silvertip. The asset increased silver, zinc, and lead output 241%, 152%, and 323%, respectively, from 2018 to 2019. It remains the only mine in the portfolio that produces zinc and lead.
The biggest headwind encountered by Coeur Mining was that it chewed through lower-grade silver ore last year. Each ton milled at Silvertip produced 15% less silver in 2019 than it did in the year-ago period. Rochester reported a silver grade that was 12% lower in that span.
To be blunt, ore grades are out of the company's control. But given the gap between guidance (at least 12.2 million ounces of silver) and actual performance (11.75 million ounces), it appears that Coeur Mining was unlikely to meet guidance after third-quarter 2019 results were reported. The company remains committed to improving operations at Silvertip, which could inject a significant amount of growth into the business, but management must do a better job of setting investor expectations.