I know, CDE has done nothing for a year while the rest of the metal stocks are moving higher.
Patience is a virtue but CDE is still a buy. It is the second largest silver miner out there.
Coeur d’Alene Mining Corp. (CDE:NYSE) said it would put its Rochester, Nev., mine up for sale. Even though this may sound like bad news, it actually is good because we find out that Rochester was the major black cloud that hurt the company’s share price.
The company halted its production at this silver- and gold-producing mine because of dwindling reserves. The relatively cheap costs associated with Rochester made it the largest and most important mine for the company over the past few years -- which is why news of the mine’s termination didn’t sit well with shareholders.
However, it’s one of the biggest reasons I jumped on this stock. Rochester historically produced around 5.5 million ounces of silver and 70,000 ounces of gold per year for Coeur. In 2006, that was about 40% of the company's production. That's why investors fled this stock in droves.
What people failed to take into account was that the company has three important mines about to come online in the next year and a half. And after those start producing, no one will even remember Rochester.
Selling the mine would be a huge relief for shareholders. I just had to wait to see if the company would fulfill its goals, and so far, it has.
The recent merger went off without a hitch, and both the Kensington and San Bartolome projects are set to begin producing shortly.
Action to take: Coeur d’Alene Mining Corp. (CDE:NYSE) remains a buy at $4.50 or better .