RBC Capital Markets analyst Michael Siperco upgraded Coeur Mining, Inc (NYSE:CDE) from Sector Perform to Outperform, with an unchanged price target of $4.

The expansion at Nevada's Rochester mine is almost complete, and execution on the ramp-up through mid-2024 is the crucial catalyst for the stock, Siperco notes.

The site visit, which the analyst attended, highlighted the +$700 million investment in throughput expansion, which should lead to +120% higher production once at full capacity in 2025.

Siperco is bullish about the stock, highlighting higher price forecasts, the diminishing risk of further capex inflation, and the relative value vs. peers.

Construction is essentially complete in the project, and the new plant has produced its first metal in September from ore placed on the new 300mt leach pad, the analyst mentions. 

The new three-stage crushing corridor should see commissioning start in October, with the remaining capital spending completed by YE23.

Siperco expects economies of scale to drive costs at Rochester down +20% to cash cost of ~$15/oz AgEq at steady state in 2025, and contributing to consolidated cost reduction of ~15%.

The expansion should see the mining rate increase from ~65ktpd to up to 155ktpd by YE24, with crushing capacity up to 88ktpd vs. 34ktpd currently, the analyst adds.

Overall, the analyst's increased confidence in Rochester, higher price forecasts, and the trading discount drove the stock's upgrade to Outperform.

For FY24, the analyst raised Adjusted EPS estimates to $0.12 from $0.10.

The analyst increased Adjusted EPS estimate for FY25 to $0.29 from $0.15.

Price Action: CDE shares are trading higher by 6.60% to $2.26 on Friday.