Hook / Thesis
Coeur Mining just turned from a mid-cap precious-metals producer into something much larger after the New Gold transaction. That combination creates scale across North America, a bigger free cash-flow engine and optionality from diversified gold and silver assets. The market has taken notice — the shares have moved higher — but the step-up in revenue and operating cash flow in the most recent quarter suggests earnings power that could still be underappreciated if the company executes integration and synergy plans.
My trade idea: buy Coeur (CDE) on weakness around 20.50-21.50 with a protective stop at 18.00. First target is 26.00 as the market re-rates to reflect scale and visible free cash flow; second target 32.00 if management delivers on cost synergies and gold prices remain constructive. This is a position trade - keep a 6-12 month horizon to let integration news and first-year synergy realization play out.
What Coeur does and why the market should care
Coeur Mining operates precious-metal mines in the United States, Canada and Mexico. Its principal producing assets historically include Palmarejo, Rochester, Wharf and Kensington. The New Gold deal (announced publicly in early November) materially increases Coeur's scale and creates a combined company with far greater reserve and production diversity across both gold and silver.
Why care? Scale matters in precious metals: larger producers get better access to capital markets, lower per-ounce G&A and exploration overheads, and can optimize ore blending and processing across assets to flatten cost curves. The combined company also delivers a stronger and more predictable operating-cash profile, which is how management will pay down acquisition financing and fund growth — or return capital to shareholders if the board chooses.
Backing the thesis with the numbers
Coeur's most recent quarter (period ended 06/30/2025; filed 08/06/2025) shows the picture of a company scaling up:
- Revenue jumped to $480.65 million in Q2 2025, up from $360.06 million in Q1 2025 - roughly a 33.5% quarter-over-quarter increase.
- Net income for Q2 2025 was $70.73 million (diluted EPS $0.11) versus $33.35 million (diluted EPS $0.06) in Q1 2025 - more than double.
- Critically, operating cash flow surged to $206.95 million in Q2 2025 (from $67.64 million in Q1 2025), signaling the business is producing meaningful free cash when commodity prices and operations cooperate.
- Balance sheet scale: at 06/30/2025 total assets were $4.151 billion with equity of $2.828 billion and total liabilities of $1.3226 billion — a solid equity base to absorb acquisition-related liabilities and integration spend.
Those are real, recent numbers that demonstrate improved top-line and cash-generation capability. The operating cash flow number in Q2 is particularly important because it directly funds debt paydown, capex and integration costs — the three levers that determine whether a merger creates shareholder value.
Valuation framing
The market snapshot shows the stock trading in the low $20s (last visible trade ~ $21.34). Using the company’s diluted average shares reported in Q2 2025 (643,076,000), a simple implied market capitalization estimate is roughly $13.7 billion (21.34 x 643.076m) - this is an approximation because share counts can change during M&A closings and the dataset's diluted averages reflect quarter-specific measures.
Is that cheap or expensive? On one hand the company now carries larger asset value (assets > $4.15 billion) plus the potential synergies and increased earnings power from New Gold. On the other hand, the share count jumped materially quarter-over-quarter (Q1 2025 diluted avg shares 521.2m vs Q2 2025 643.1m), implying dilution of roughly 23% as part of financing the deal. That dilution is why you should not blindly extrapolate EPS accretion - the market needs to see synergy delivery to re-rate the stock higher.
Relative peer multiples are not provided here, so think of valuation qualitatively: you are paying today for combined scale and cash flow that must be realized. If management demonstrates that the combined entity can maintain the recent cash-flow run-rate and realize procurement/G&A synergies, the stock should rerate from single-digit multiples to mid-teen EV/EBITDA consistent with other scaled gold producers.
Trade specifics (actionable)
- Trade direction: Long CDE.
- Entry: 20.50-21.50 (buy the range; nibble in to manage execution).
- Stop: 18.00 (below recent consolidation and preserves a defined risk per share).
- Targets: Primary 26.00 (near-term re-rating / multiple expansion). Secondary 32.00 (upside if synergies are confirmed and commodity backdrop firm).
- Position sizing: treat as a medium-risk allocation. Because of merger/dilution risk, limit to a size where a 30% drawdown is tolerable.
- Time horizon: 6-12 months (position trade to allow integration progress and quarterly reports to re-price the company).
Catalysts to watch
- Integration updates and synergy realization announcements from management after closing - cost and procurement synergies are primary value drivers.
- Quarterly results showing sustained operating cash flow at or above Q2 2025 levels (net cash from operating activities $206.95m in Q2 2025 is the baseline to beat).
- Gold and silver price direction - higher prices amplify free cash flow and speed deleveraging; a sustained rally would accelerate the re-rate.
- Debt paydown or clearer capital allocation policy (dividends, buybacks) once acquisition financing is addressed.
Risks and counterarguments
- Dilution and financing risk: The jump in diluted average shares from ~521.2m in Q1 2025 to ~643.1m in Q2 2025 indicates meaningful dilution tied to the transaction. Further equity issuance or expensive debt would reduce per-share upside.
- Integration execution risk: Combining two mid-sized miners is operationally complex. Failure to deliver procurement or G&A synergies would leave the market assigning limited premium for scale.
- Commodity price volatility: Precious-metal prices drive margin and cash flow. A material drop in gold or silver would materially weaken the bull case and could push the stock below our stop.
- Legal / shareholder pushback: There are signs of post-announcement scrutiny (shareholder-rights activity has been reported publicly), which can cause delay, additional costs or governance distractions.
- Macro / liquidity risk: If the mining sector rotates out of favor or market liquidity dries, even a good integration story can see the stock languish as buyers retreat.
Counterargument: The market may already have priced the benefits of the New Gold deal and today's price reflects a re-rating. Given the dilution and the stock move since the announcement, upside could be limited and downside asymmetric if synergies disappoint.
What would change my mind
I would become more cautious or flip to a neutral/negative view if management misses the first post-transaction synergy targets by a wide margin, if operating cash flow does not hold above Q2 2025 levels, or if commodity prices fall materially. Conversely, if the company provides a clear, accelerated deleveraging plan and first-year synergies come in at or above guidance, I would add to a long position and raise price targets.
Bottom line
Coeur's acquisition of New Gold transforms it into a higher-scale gold-silver producer with materially better top-line and operating cash potential, as already hinted by the step-up in Q2 2025 revenue ($480.65m) and operating cash flow ($206.95m). The trade is a tactical long around $20.50-21.50 with a stop at $18.00 and measured upside targets of $26 and $32. The key is watching integration delivery, synergy announcements, and the commodity environment; those will determine whether this merger is simply accretive on paper or actually creates meaningful per-share value.
Disclosure: This is a tactical trade idea, not investment advice. Position sizes should be adjusted to individual risk tolerances.