Increased gold, cash flow from Kensington
North of 60 Mining News – July 31, 2020 Newsletter Exclusive
Last updated 8/28/2020 at 5:02am
Coeur Mining Inc. July 29 reported increased gold production at Kensington, thanks in part to more ore from the higher-grade Jualin deposit at this Southeast Alaska mine.
Kensington produced 33,058 ounces of gold during the second quarter, which is slightly higher than the 32,022 oz during the first three months of the year but less than the 34,049 oz during the second quarter of 2019.
The steady gold output and strong gold prices helped Kensington generate US$23.9 million of free cash flow, significantly higher than the US$7.1 million generated during the first quarter.
This 65,080 oz produced through the first six months puts Kensington on pace to produce more than 130,000 oz of gold this year, which at mid-point of Coeur's 2020 gold production guidance of 125,000 to 135,000 oz for the Alaska operation.
During the second quarter, Kensington processed 170,478 tons of ore averaging 0.21 oz/ton gold, compared to 162,341 tons of ore averaging 0.21 oz/t gold during the first quarter.
Roughly 16% of the second quarter gold came from Jualin, a higher-grade deposit that reached commercial production late in 2018, compared to 8% during the first quarter.
Jualin is expected to account for roughly 15 to 20% of the total ore fed into the mill at Kensington this year.
On the exploration front, Coeur invested US$2.7 million in drilling and other activities at Kensington during the second quarter, which follows US$1.9 million during the first quarter.
The company had three core rigs exclusively focused on resource expansion drilling at Kensington during the second quarter – two underground and one surface.
The underground rigs initially focused on the Jualin and lower Kensington Zone 10 veins before being moved to target the upper Kensington Zone 30, Elmira, and Eureka veins.
The surface rig was added to test Jualin veins 1 and 2. Late in the quarter, a helicopter-supported surface rig began drilling on the Raven vein on the Kensington Mine side of the operation.
A total of 60 resource expansion holes were drilled during the quarter for a total of 12,262 meters.
In March, mining was classified as an essential business in Alaska, which allowed Kensington to operate without interruption throughout the COVID-19 pandemic.
In response to coronavirus-related concerns, rotational schedules at Kensington remain extended from 14 days to 28 days. Additionally, all employees are required to quarantine for seven days and undergo COVID-19 testing prior to starting their four-week rotation at the Southeast Alaska mine.
Coeur's five operations – Kensington, Silvertip, Palmarejo (Mexico), Rochester (Nevada) and Wharf (South Dakota) – produced 1.6 million oz of silver and 78,229 oz of gold during the second quarter, which is down from the 2.7 million oz of silver and 85,077 oz of gold produced during the first three months of 2020.
"Like most companies, our second quarter results were negatively impacted by COVID-19. Most notably at Palmarejo, our strongest performing asset in the first quarter, operations were temporarily suspended due to a decree from the federal government of Mexico," said Coeur Mining President and CEO Mitchell Krebs. "However, with Palmarejo now back in production, our three U.S. operations hitting their strides and the tailwind of higher gold and silver prices, we are anticipating a strong second half of 2020 and expect to continue this momentum into 2021."