Shares of Coeur Mining (CDE 1.94%), a predominantly North American gold and silver miner, fell sharply in early trading on Feb. 17, losing just over 12.5% of their value. The big news came out after the close on Feb. 16 when the company reported earnings. It wasn't a particularly bad update, but clearly investors were expecting more.
Coeur's fourth-quarter 2021 production was 88,946 ounces of gold and 2.6 million ounces of silver. It sold basically all of the silver and 88,930 ounces of gold. Revenue of $208 million was down from the $228 million it brought in during the same quarter of 2020. The company's realized gold and silver prices were lower year over year. That said, the company explained that full-year 2021 revenue was 6% higher year over year and at the highest level in the last 10 years. While that's positive, it also suggests that the year ended on a relatively weak note revenue-wise given the fourth-quarter showing.
On the bottom line, Coeur lost $0.05 per share in the fourth quarter of 2021 while analysts were looking for a profit of $0.03 per share. The miner earned $0.08 per share in the same quarter of 2020. Investors don't like it when companies miss Wall Street estimates. The share price decline is notable, as well, because gold and silver prices were both in the green early in the day.
One of the earnings headwinds here is Coeur's capital spending program, which in 2021 was the largest it has even been. There's a trade-off, as management is basically trying to take advantage of the current high price of precious metals to invest for the future. The efforts it made on the exploration front in 2021 extended mine lives and increased the gold and silver it believes it can successfully mine. But the costs, much of which were expensed, were an earnings headwind.
From a big-picture perspective Coeur is taking advantage of the current strength in the gold and silver markets to invest for the future. That's not a bad plan, though it does come with some near-term pain. Today it seems like investors aren't pleased with the trade-off.