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Silver Prices Aren't the Only Reason Coeur Mining Stock Jumped 56% in July

By Neha Chamaria – Aug 7, 2020 at 1:34PM

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The silver miner is making the most of a favorable pricing environment with higher production and exploration.

What happened

Shares of Coeur Mining (CDE 0.29%) clocked their best month so far this year in July, gaining a whopping 56.1% according to data provided by S&P Global Market Intelligence. Soaring precious-metal prices and an upbeat earnings report at the end of July have ensured the stock's continuing rally so far this month.

So what

Coeur Mining is a diversified precious-metals mining company. Until 2010, the company received as much as 69% of its revenue from silver. By 2019, silver's contribution to Coeur's total revenue came down to 27%, with gold overtaking it with a 69% share.

With prices of gold and silver hitting multi-year highs lately, Wall Street lapped up Coeur Mining stock and sent its price shooting through the roof. Fears of the COVID-19 pandemic's impact on global economies and volatility in stock markets are major reasons why investors have flocked to precious metals and bid their price higher. Metals like gold and silver are traditionally considered to be safe-haven assets during times of uncertainty.

Gold and silver bars.

Image source: Getty Images.

While nearly every precious metals company's stock has rallied in recent weeks, Coeur Mining delivered strong production and revenue growth in the past few quarters, fueling investor hopes that soaring metal prices should ring in even better days for the miner.

On that note, while Coeur's second-quarter numbers reported on July 29 were nothing to write home about as some mines were shut because of COVID-19, its largest and best-performing mine of 2019, Palmarejo in Mexico, ramped up production in June and is expected to continue to increase production through the second half of the year. Coeur is also making aggressive progress on its largest-ever exploration program, having pumped 90% higher capital in the second quarter versus the comparable quarter in 2019.

The miner continued to repay debt and generate positive operating cash flow in Q2.

Now what

Rising gold and silver prices offer Coeur Mining a great chance to leverage its rising production and boost its top and bottom lines. While the stock may have rallied too much too fast, investors should keep an eye out for management's update about its exploration program, expected to be released sometime this month.

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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