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S&P Global Ratings upgrades Coeur Mining on debt-reduction measures

S&P Global Ratings on Dec. 19 upgraded its corporate credit rating on Coeur Mining Inc. to BB- from B+, with a stable outlook.

The upgrade reflects anticipated sustained improvement in the miner's credit measures, which saw its debt reduced by more than half from 2015 year-end levels.

The Chicago-based company recently redeemed US$190 million of its 7.875% notes due 2021 with proceeds from a US$200 million equity offering and repaid a US$100 million five-year senior secured term loan earlier in the year.

In addition, the rating agency expects the company's increasing production, lower cash costs and improved gold streaming deal with Franco-Nevada Corp. at the Palmarejo silver-gold operation in Mexico to offset the impact of lower silver and gold prices.

Although the company has benefited from higher average silver and gold prices in 2016, if prices trend lower, Coeur's credit measures will weaken relative to S&P's current forecast.

S&P sees gold and silver prices of US$1,300 per ounce and US$18 per ounce, respectively, for the rest of 2016, with gold prices expected to gradually decline to US$1,250 per ounce in 2017 and to US$1,200 per ounce in 2018. The analysts also forecast a silver price of US$17 per ounce in 2018.

The stable outlook reflects S&P Global Ratings' expectation that the miner will meet its production and cost targets and generate EBITDA such that adjusted debt leverage will remain in the 1x to 2x range over the next 12 months.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.