Loading ...Coeur Mining may be in the process of changing its status as a primary silver producer to that of a primary gold producer with the acquisition of the Wharf gold mine in South Dakota.
Chicago headquartered primary silver miner, Coeur Mining, appears to be hedging its precious metals bets with the purchase, for $ 105 million, of the wharf gold mine from a Goldcorp subsidiary. While Wharf does produce some silver it is very definitely a primary gold mine, and will stand alongside the company’s Kensington gold mine in Alaska as the company’s second such producer.
Wharf is an open pit gold mining operation located in the Black Hills of South Dakota, USA – an historic gold mining area – and close to the location of what for many years was the nation’s largest gold producer, the Homestake mine. Wharf has been operating for 30 years and has measured and indicated reserves containing some 560,000 ounces of gold grading around 0.7 g/tonne (a low, but reasonable, open pit grade by modern standards). While this doesn’t suggest a long life operation (it is currently put at 7 years), it should be borne in mind that Wharf was developed those 30 years ago on the assumption of a 3-year mine life and has been going successfully ever since!
In a statement, Coeur states that it expects to produce 85,000 to 90,000 ounces of gold at Wharf in 2015. It is a fairly low cost heap leach operation and Coeur reckons on all in sustaining costs of around $800-875 per gold ounce taking byproduct silver into account. Coeur goes further in reckoning the mine will help increase the company’s EBITDA by over 30% and contribute to free cash flow from the start. It also provides a 24% increase in the company’s total gold reserves. As a lower cost operation than the company’s Kensington operation it should also help reduce Coeur’s overall consolidated unit costs.