Coeur Mining Inc. credit rating upgraded at S&P due to robust credit metrics

Investing.com -- S&P Global Ratings has upgraded the issuer credit rating of Coeur Mining (NYSE:CDE) Inc. to ’B+’ from ’B-’, citing strong credit metrics. The debt ratings of the company were also raised, with the senior secured debt moving to ’BB’ from ’B+’ and the unsecured notes going up to ’BB-’ from ’B’. The recovery ratings for both categories of debt remained unchanged.

Coeur Mining’s EBITDA saw a notable increase of more than 200% in 2024 compared to the previous year, largely due to increased gold and silver production at the Rochester mine, coupled with higher-than-expected gold and silver prices. The company anticipates significant improvements in gold and silver volumes from the Rochester mine and the newly added Las Chispas mine, following Coeur’s acquisition of SilverCrest Metals Inc (TSX:SIL).

The company’s leverage is expected to strengthen to below 1.5x over the next 12-24 months, based on the expectation of further earnings expansion. In 2025, management’s commitment to prioritize debt reduction using free cash flows could create an additional cushion in credit metrics beyond the current forecast.

The stable outlook reflects the expectation of an increased credit cushion from robust profits and cash flow over the next 12 months. Coeur Mining has consolidated its business with the expansion of operations at the Rochester mine and the acquisition of SilverCrest.

The Rochester mine accounted for about 11% of gold production and 38% of silver production in 2024. The mine is expected to nearly double its production in 2025, marking the first full year of operation following the completion of the expansion project.

Coeur’s acquisition of SilverCrest in February 2025 added the high-grade, low-cost Las Chispas mine to its portfolio. The acquisition increased the company’s active mines to five and positioned it as a leading U.S. silver producer based on its 2025 guidance. Coeur projects year-over-year increases of 20% and 62% in gold and silver production, respectively, which reflects the inclusion of Las Chispas and increased production from Rochester.

Coeur’s leverage strengthened to 2.5x in 2024, a notable improvement from 7.2x in 2023, driven by an EBITDA of $330 million, over three times that of 2023. The company expects another year of record profits, with an EBITDA of $600 million-$700 million in 2025 as it integrates Las Chipas and as Rochester nears doubling its production.

The company’s financial policy is a key rating consideration. Over the past three years, Coeur dedicated most of its financial resources toward the completion of the Rochester mine expansion. Following the completion of the project, Coeur’s management has declared its intention to prioritize debt repayment with free cash flows. The company has not made any distributions to shareholders over the past six years, and it is expected that this will continue over the next 24 months.

The stable outlook reflects the expectation for record profits over the next 12 months, improved production profile at Rochester and the inclusion of the Las Chispas mine. The company’s free cash flow is expected to turn significantly positive, providing opportunities for debt reduction.

S&P Global Ratings could lower the rating on Coeur over the next 12 months if it encounters challenges operating the Las Chispas mine or if prolonged operational disruptions at any of its mines lead to lower-than-expected volumes. Conversely, the rating could be raised if Coeur sustains its production profile at all mines, increases the life of its mines, and enhances its financial flexibility through debt reduction.

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