Coeur Mining (NYSE:CDE), the largest US-based primary silver producer, is temporarily halting operations at its Silvertip silver-zinc-lead mine, located in Canada’s northern British Columbia, due mainly to low prices for lead and zinc.
The decision caused Coeur to book a $251 million impairment charge on the underperforming asset, acquired from private investor Denham Capital in 2017 for up to $250 million.
Silvertip, located just below the Yukon border, accounted
for about 6% of Coeur’s 2019 revenue. According to the company’s website, it
employs 167 people.
Severance costs related to work
suspension are estimated to reach between $5-10 million during the first half
of the year, while quarterly care and maintenance will cost $6 million.
Chief executive Michael J. Krebs
said the move ultimately sought to increase Silvertip’s long-term value. While
mining and processing activities are paused, he said Coeur planned to more than
double its investment in drilling to further expand the asset’s high-grade
deposit and extend its mine life.
The Chicago, Illinois-based company
has already begun working on a pre-feasibility study to evaluate a mill
expansion, which could cost between $50-$75 million. The project, it says,
would “significantly enhance Silvertip’s economics”.
Coeur does not anticipate
restarting Silvertip until late in 2021, depending on the results from
exploration and new feasibility study, as well as prevailing market conditions.