Research Update: Coeur Mining, Inc. Outlook Revised To Negative On Expected Lower Earnings and Tight Covenant Headroom; 'B' ICR Affirmed

S&P Global Ratings expects Chicago-based gold and silver producer Coeur Mining Inc.'s earnings to decline by 25%-35% in fiscal 2022 because of higher production costs and lower gold prices, leading to elevated leverage. Coeur will likely continue generating negative free operating cash flow (FOCF) due to capital spending on its Rochester mine expansion and upgrade, which should be completed by mid-2023. We also anticipate a reduction in Coeur's covenant headroom under the company's consolidated net leverage covenant, increasing the likelihood of a breach over the next 12-24 months if earnings do not recover sharply amid modestly lower gold prices in late 2022. As a result, S&P Global Ratings revised the outlook on Coeur to negative from stable and affirmed its

...- S&P Global Ratings expects Chicago-based gold and silver producer Coeur Mining Inc.'s earnings to decline by 25%-35% in fiscal 2022 because of higher production costs and lower gold prices, leading to elevated leverage. - Coeur will likely continue generating negative free operating cash flow (FOCF) due to capital spending on its Rochester mine expansion and upgrade, which should be completed by mid-2023. - We also anticipate a reduction in Coeur's covenant headroom under the company's consolidated net leverage covenant, increasing the likelihood of a breach over the next 12-24 months if earnings do not recover sharply amid modestly lower gold prices in late 2022. - As a result, S&P Global Ratings revised the outlook on Coeur to negative from stable and affirmed its 'B' issuer credit rating on the company. The issue-level ratings on the company's debt are unchanged and we revised the recovery rating on the company's $368.3 million senior unsecured notes to '4' from '3'. - The negative...

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