Coeur Mining announced an updated, re-scoped mine plan, and preliminary economic assessment for its Palmarejo silver and gold mine in Mexico, reflecting a lower tonnage, higher-grade transition to an underground source of ore, which should generate higher margins and improve cash flow.

“This updated outlook for Palmarejo is based on year-end 2013 reserves and resources that we believe are economic based on prices of $20/oz for silver and $1,300/oz for gold,” said Mitchell J. Krebs, president and CEO. “It demonstrates our commitment to prioritizing higher-quality, higher-margin ounces versus seeking to maximize the quantity of production ounces. It also demonstrates the significance of Guadalupe to Palmarejo’s future, which is why our recent decision to place Guadalupe into production next year was so important. In addition, the modified economics of the recently announced new gold stream agreement with Franco-Nevada will help boost Palmarejo’s future cash flow profile.

“This plan includes a small percentage of overall reserves and no resources other than 1.7 million tons of inferred resources that are included in the updated Guadalupe plan,” Krebs explained. “This represents a solid base from which we expect to expand and improve our operations over time. We are confident we will further add to Palmarejo’s mine life through ongoing exploration activities focused on adding higher-grade, higher-margin underground material.”

Higher underground (sulphide) grades from Guadalupe will offset lower open-pit (oxide) grades. The Palmarejo plant will process more sulphide ore and recovery rates are expected to improve. Coeur intends to process the oxide ore and sulfide ore separately by creating a bypass for the oxide ore by the end of 2014 to sidestep the flotation circuit and flow directly to an agitated leach circuit. The reduced milling rate for the new mine plan will result in higher retention times in the leach tanks, which is expected to result in higher recovery rates. These changes are expected to result in higher recoveries for silver and gold as well as lower production costs due to the reduced cyanide consumed during flotation.