Here's my Q4 earnings forecast:
Average realized silver price of $32.60 per ounce,
4.2 million silver ounces sold,
therefore silver sales of approx $137 million.
Average realized gold price of $1,720 per ounce,
60,000 gold ounces sold,
therefore gold sales of approx $103 million.
Therefore, total sales/revenue of $240 million.
Silver production of 4.5 million ounces,
Gold production of 60,000 ounces.
Operating cash flow of $85 million,
Gain on derivatives of $20-25 million,
Capex of $30 million,
Payments to Franco Nevada of $20 million,
Continuing reduction of debt.
Here's the bad news in my estimates above ............. My revenue forecast of $240 million falls short of the analysts' average estimate of $257 million.
But here's the GOOD news in my estimates above ........... The Gain on Derivatives of $20-25 million will be a swing of approx $60 million over the $37 million loss experienced in Q3. This, although a non-cash item, will result in a very significant improvement in EPS over Q3. In addition, I may have been overly conservative in my Q4 silver sales and production estimates, as I assumed Palmarejo production to be again constrained for about half the quarter as in Q3 and assumed they wouldn't be able to sell all of their Q4 production by the end of the quarter. The upside is that revenue will increase by about $10 million for each 300,000 ounces of additional silver sold over the 4.2 million ounces I estimated. Let's hope it turns out that I've been too conservative.
Full year 2012 financial results will not be as strong as full year 2011 (primarily due to lower average metals prices). This would normally put downward pressure on the stock price. But since it has been widely known for quite some time, it is likely already factored into the price.
As always, there could be some surprises in the narrative of the earnings announcement, including additional mineral resources, the planned expansion of Palmarejo or development of the San Joaquin project. Offsetting these generally positive items could be a Q4 charge against the income statement for estimated corporate relocation expenses to be incurred in 2013.
As always, feel free to question or critique the above and/or post your own forecast. Unfortunately, we won't know the real numbers for another 6-8 weeks. And given the likely volatility in the markets due to the upcoming debt ceiling debates, who knows where the stock price will be at the time of the earnings announcement.
Thanks for your excellent informative posts .
We certainly seem to be getting a lot of trashy posters .
Busy putting them on ignore .
It must be there way of trying to manipulate the share price no matter how stupid it seems to the good posters who have followed Coeur's progress for a long time .
Thanks Stahlz, I appreciate your kind remarks. And you're right, the board has recently become infiltrated and infested by spammers, either by ignorantly trashing the stock or selling analytics or research reports. Too bad Yahoo doesn't give us the flexibility to not only ignore certain posters, but also to delete entire threads.
Rock_ as usual, you do us a great service by detailing your expectations for Coeur. Nothing I can find to add or subtract. I do wonder, however, if this might be the time Kensington hits the ore grade projected in reserve calculation, Coeur is still presenting that grade to be 0.28 ounces per ton. Looking at Q-3 figures, the milled ore yielded only 0.21 ounces for both that quarter and for the first 9 months of 2012. I had noted in 2011 that the ore had not met concentration projections at that time. Assuming no change in tons milled, a ~25% increase in gold produced would do wonders for the bottom line. I am not holding my breath but somewhere along the line the company needs to revamp reserve calculations or give us higher yields from Kenny. Thanks for your good work.
My Q4 revenue forecast, in total, is very similar to where Q3 ended up. But there is indeed upside potential in numerous areas -- at Kensington (as you mention), at San Bartolome, and at Rochester. If the Q4 actual revenues exceed Q3 and meet the analysts' expectations, the stock will likely move up sharply, as the huge swing in the derivatives gain/loss will precipitate a spike. Strange as it may seem, there has indeed been a strong correlation in the magnitude of the derivatives gain/loss and the movement of the stock price (strange in that a decline in the price of gold, which overall isn't to Coeur's benefit, precipitates a gain on derivatives, which drives up the stock price, and vice-versa).
thanks for your predictions, Rocky...
at some time in the future, the investments in other miners could produce strong positive
asset valuations...not just other options for CDE's expansion considerations...
I fail to see how CDE should continue to be so poorly share price valued...regardless of
the entire sector being "manipulated" to some degree...IMO...
but, volatility of companies in other sectors is often as high...and those fluctuations
are ridiculous, but offer opportunities for the nimble speculators...
Yes, those investments in other miners will likely become good money producing assets at some point. But at this point they're still primarily exploratory.
For multiple reasons, CDE tends to be undervalued relative to the market as a whole. But I have no reason to expect that situation to remedy itself any time in the near future. Yet I don't want to miss a run up, so I remain invested.