Palmarejo’s Reserve Growth Is Moving East of the Franco-Nevada Stream

Coeur Mining’s latest Palmarejo updates show why the location of new ounces matters almost as much as their grade. The Mexican underground operation entered 2026 with higher gold and silver reserves, a longer mine life and an exploration programme increasingly directed toward the eastern district outside the area covered by the Franco-Nevada gold stream.

Palmarejo is expected to produce 95,000 to 105,000 ounces of gold and 6.25 million to 7.0 million ounces of silver in 2026. Coeur guides adjusted costs applicable to sales of US$700 to US$900 per gold ounce and US$21.50 to US$23.50 per silver ounce. Those figures describe mine performance, but the stream determines how much of the gold-price upside Coeur retains.

The stream creates two classes of gold ounce

In the first quarter of 2026, 11,692 ounces, or about 51% of Palmarejo’s gold sales, were delivered under the Franco-Nevada agreement at US$800 an ounce. Coeur expects roughly 40% to 50% of the mine’s 2026 gold sales to be subject to the stream.

That means an ounce discovered and mined inside the covered area has different economics from an otherwise identical ounce outside it. Streamed ounces still generate revenue and can carry attractive margins, but Coeur does not receive the full spot price. Unstreamed ounces provide more direct leverage to gold prices and can be more valuable on a net-present-value basis.

The distinction makes the East district strategically important. Coeur reported that inferred resources there increased by 86% at year-end 2025, and the company’s 2026 drilling programme is targeting resource conversion and additional veins outside the stream footprint.

Reserve replacement has improved the mine-life outlook

Palmarejo’s year-end 2025 gold reserves increased by 36%, while silver reserves rose by 40%. Coeur said the reserve additions extended the expected mine life by roughly five years. That is important for an underground operation where sustaining development and fixed infrastructure require a sufficiently long production horizon.

Longer mine life can also improve the economics of plant upgrades, underground development and exploration. However, reserve growth must translate into a practical sequence of stopes with manageable ground conditions, dilution and haulage distances. Resource ounces do not automatically become low-cost production.

First-quarter plant performance was strong. Palmarejo milled 441,721 tonnes at average grades of 1.7 grams per tonne gold and 116 grams per tonne silver, with recoveries of 96.2% for gold and 89.6% for silver. Those recoveries show the plant can extract value effectively from the current feed. The harder question is whether future East district ore can be developed and blended without raising costs.

Exploration quality matters more than headline metres

Coeur’s July exploration update emphasised the East district and Las Chispas as areas capable of extending mine life. Investors should focus on vein continuity, true width, metallurgical response and the capital needed to access new zones-not only high-grade intercepts.

Palmarejo remains a gold-silver mine with complex revenue attribution. Silver provides substantial value, while the Franco-Nevada agreement reduces exposure to gold-price upside on a large share of current ounces. New reserves outside the stream area can gradually improve that mix.

The 2026 exploration programme therefore has a clear economic objective: replace depleted reserves, preserve mill utilisation and shift more future gold production into areas where Coeur retains a larger share of the metal price.