CHICAGO, June 23, 2014 (GLOBE NEWSWIRE) -- Coeur Mining, Inc. ("Coeur" or the "Company") (NYSE:CDE) announced its intention to complete development of the Guadalupe underground mine at its Palmarejo operation in Mexico and expects initial production to begin during the first quarter of 2015. The new development and production plan supports the Company's strategy to transition the mine to a higher-margin, longer-life, underground-only operation.

In addition, Coeur announced it has entered into a letter of intent ("LOI") to terminate the existing royalty stream agreement with Franco-Nevada Corporation (TSX:FNV) (NYSE:FNV) ("Franco-Nevada") on 50% of gold production from the Palmarejo operation following the completion of the 400,000 ounce minimum obligation that will be met by September 2016. Both parties have also entered into an LOI for a new gold stream agreement which will take effect following the termination of the existing agreement. The second LOI provides that Franco-Nevada will contribute $22 million toward the capital required to develop Guadalupe and the cost contribution by Franco-Nevada for 50% of the gold production from the Palmarejo operation will be $800 per ounce, compared to $408 per ounce in the existing agreement. The new gold stream agreement is expected to result in improved mine economics and, when combined with the decision to place Guadalupe into production, is anticipated to facilitate a significant extension of mine life at the Palmarejo operation.

"In late 2013, we made the disciplined decision to suspend development activities at Guadalupe as we recognized that the original plan would not have generated an adequate return in the current metal price environment. Our revised mine plan is the result of a focused strategy to optimize Guadalupe to extract more value from this considerable deposit, maximize cash flow at the Palmarejo operation, and create further prospects for high-return growth through exploration," said Mitchell J. Krebs, Coeur's President and Chief Executive Officer. "We believe the new gold stream agreement will increase cash flow from the Palmarejo operation and extend its mine life, benefitting both Coeur and Franco-Nevada. We expect to provide additional details on Guadalupe as part of an updated mine plan for the Palmarejo operation within the next month, further demonstrating the improved production and cash flow profile of this flagship mine."

"Palmarejo has proven to be a good mine and we continue to see more exploration upside from this large property," said David Harquail, Chief Executive Officer of Franco-Nevada. "We are happy to support Coeur, our partner, in this project and consider the new arrangements to be a win-win for both companies."

Anticipated Benefits of the New Gold Stream Agreement to Coeur and Franco-Nevada

• Bolsters the long-term profile of Palmarejo and increases the mine's free cash flow
• Funding from Franco-Nevada improves the economics to develop Guadalupe
• Facilitates the potential for further reserve and resource additions by increasing the mine life and cash flow to support further exploration activity

Guadalupe Development

Coeur's revised plan minimizes underground development and focuses early mining activities on higher-grade ore at Guadalupe. Preliminary highlights of the expected mining profile at Guadalupe are as follows:

The preliminary Guadalupe development plan assumes the initial mining of 2.5 million tons at average grades that are 20% and 38% higher than the average Guadalupe underground silver and gold reserve grade, respectively. This plan selectively includes mining higher grade sections of the Guadalupe ore body, earlier in the mine life, that require approximately 40% less development compared to the original mine plan for Guadalupe.

Initial production at Guadalupe is expected by the end of the first quarter of 2015. The mining rate at Guadalupe is expected to average 1,300 tons/day in 2015 and 1,500 tons/day in 2016 - 2018.

Approximately $7 million of 2014 tailings-related capital expenditures at the Palmarejo mine have been deferred until 2015 as the current plan enables extension of the life of the current tailings facility. This capital is expected to be redeployed to develop Guadalupe during the second half of this year.

2013 Palmarejo Mineral Reserves

At December 31, 2013, Guadalupe contained 72% of the Palmarejo operation's underground reserve tons and 37% of its underground measured and indicated resource tons. The Company believes the most significant upside opportunity for Guadalupe to be in the underground inferred resources. Guadalupe contains 99% of the 3.6 million tons of underground inferred resources at the Palmarejo operation with average grades of 5.26 oz/t silver and 0.12 oz/t gold at year-end 2013. These underground inferred resource grades are significantly higher than Guadalupe's average reserve grades. Targeted drilling at Guadalupe focused on higher-grade, underground mineralization is a top priority in Coeur's 2014 exploration program.

Gold Stream Agreement with Franco-Nevada

Under the terms of the letters of intent, Coeur will pay $2 million to terminate the existing royalty stream agreement effective upon completion of the minimum obligation of 400,000 ounces of gold, which will be reached by September 2016. A new gold stream agreement with Franco-Nevada will then take effect for the Palmarejo operation. The key terms are summarized as follows:

The current royalty stream agreement would have added approximately $40.11 million to Palmarejo's annual costs applicable to sales, or $3.241 per silver equivalent ounce, upon completion of the minimum obligation. Under the new gold stream agreement, the annual expected value of gold payable to Franco-Nevada amounts to $22.51 million and would be recorded as a reduction in revenue rather than in costs applicable to sales.

To further support the development of Guadalupe, the new gold stream agreement letter of intent provides that Franco-Nevada will contribute $22 million toward the capital investment at Guadalupe, which will be funded in five quarterly installments beginning in the first quarter of 2015, subject to continued progress on the Guadalupe development plan.

Closing is currently expected to occur early in the third quarter of 2014, subject to completion of definitive agreements.

1. Based on gold price of $1,300, annual gold production of 90,000 ounces, annual silver production of 7.0 million ounces, and a silver to gold ratio of 60:1. Assumed annual gold and silver production are for illustrative purposes only and do not constitute guidance.