Coeur Mining, Inc. (“Coeur” or the “Company”) (NYSE: CDE) today
reported first quarter 2020 financial results, including revenue of
$173.2 million, cash flow from operating activities of $(8.0)
million and GAAP net loss from continuing operations of $11.9
million, or $0.05 per share. On an adjusted basis1, the Company
reported EBITDA of $46.6 million, cash flow from operating
activities prior to changes in working capital of $30.1 million and
net loss from continuing operations of $0.8 million, or $0.00 per
share.
Key Highlights
- Proactive response to managing impacts of global COVID-19
pandemic - As part of Coeur’s corporate crisis management
process, a special advisory committee was established in early
March to evaluate and address ongoing concerns, risks and
challenges associated with COVID-19. Primary objectives of the
committee remain (i) protecting the health of Coeur’s workforce and
communities, and (ii) ensuring continuity of the Company’s
operations to the extent possible
- Financial results reflective of key elements of Company
strategy - Gold sales represented a record high 74% of
quarterly revenue, while Coeur’s three U.S. operations – all of
which continue to operate – comprised 56% of quarterly revenue
- Strong operational and financial performance at
Palmarejo - Palmarejo was the Company’s top performing
operation, driven by a 10% increase in gold production
quarter-over-quarter. The operation generated $28.9 million in
operating cash flow and recorded adjusted costs applicable to sales
(“CAS”)1 of $645 per ounce of gold and $8.37 per ounce of silver.
Strong operational performance helped to generate $21.8 million of
free cash flow1 during the first quarter
- Improved crusher performance and major permitting milestone
achieved at Rochester - Coeur processed 37,677 tons per day
(“tpd”) through the upgraded crusher configuration at Rochester
during the first quarter, exceeding its target by 11% and was 33%
higher than the prior quarter. The Company also received the Record
of Decision from the Bureau of Land Management for Plan of
Operations Amendment 11 (“POA 11”), marking a significant
achievement toward the planned expansion at Rochester
- Advancing exploration efforts across portfolio - Coeur
began its largest exploration program in Company history, drilling
roughly 20% more footage than the prior period and nearly 60% more
than the first quarter of 2019. The increased exploration activity
was primarily related to the expanded drilling program underway at
Palmarejo and the ramp up in drilling at the Sterling and Crown
deposits in southern Nevada. Expanded drilling programs at
Kensington and Silvertip also commenced during the quarter
- Safe transition and advancing work on pre-feasibility study
at Silvertip - The Company safely ramped down Silvertip,
completing the transition to a temporary suspension of mining and
processing activities announced in February. Zinc and lead markets
continued to face significant headwinds during the first quarter,
further validating Coeur’s decision to temporarily suspend active
mining and processing activities. Work on the pre-feasibility study
to evaluate a mill expansion is advancing
- Additional execution of opportunistic hedging - The
Company continued to add to its zero-cost collar (“ZCC”) gold
hedging program during the quarter, with a total of 153,000 and
99,000 ounces now hedged through the remainder of 2020 and in 2021,
respectively. Coeur also capitalized on multi-year low exchange
rates for the Mexican Peso and Canadian Dollar by securing rate
protection on a portion of its foreign currency-denominated
expenses over the next two years. The increased hedging activity is
being implemented to provide downside protection in preparation for
the POA 11 expansion at Rochester, which is expected to be funded
with a combination of internally generated cash flow and its senior
secured revolving credit facility (“RCF”)
- Bolstered cash balance to enhance financial flexibility
- Coeur had $52.9 million of cash and cash equivalents as of March
31, 2020. As a precautionary measure, the Company further bolstered
its cash position by drawing down an additional $100.0 million from
its RCF shortly after the end of the quarter in response to
potential impacts of COVID-19, bringing the total amount drawn to
$150.0 million
“Our top priority as we navigate the COVID-19 situation
continues to be the health, safety and well-being of our workforce,
their families, and the communities where we operate,” said
Mitchell J. Krebs, President and Chief Executive Officer. “We have
put stringent controls and procedures in place throughout the
Company focused on (i) controlling and limiting access to our
sites, (ii) screening employees and visitors at entrance points,
(iii) reducing exposure risk through a range of social distancing
protocols as well as proactive sanitizing and cleaning procedures,
and (iv) mandating all office personnel work from home. We have
also implemented travel restrictions and reporting requirements for
all of our employees.”
“At this time, three of our four active mines remain in
operation. Our three U.S. assets continue to operate, while our
Palmarejo mine in Mexico has taken steps to suspend active mining
and processing activities in accordance with the Mexican
government’s decree to suspend non-essential business activities.
We safely ramped down mining and processing activities at our
Silvertip operation in British Columbia in February and are
successfully carrying out site-based activities and advancing our
drilling program. Finally, we continue to coordinate with federal,
state and local officials, our suppliers, health providers, and
other mining companies to share best practices, provide assistance
and support to local communities, and ensure we are doing
everything possible to mitigate the risks and potential impact of
this global health crisis.”
Mr. Krebs continued, “Our first quarter consolidated financial
results were in-line with our expectations, led again by strong
performance from Palmarejo. We made solid progress on several key
2020 priorities, including (i) advancing our efforts to further
expand and reposition Rochester as a long-life asset generating
strong, consistent cash flow, (ii) increasing our investment in
exploration to drive further reserve and resource growth throughout
the Company, and (iii) evaluating a potential expansion of
Silvertip. Additionally, we have taken proactive steps to maximize
our financial flexibility during this period of unprecedented
volatility and uncertainty. We look forward to delivering on our
key objectives during the remainder of the year in a constructive
gold price environment and to navigating the near-term uncertainty
related to COVID-19. We remain enthusiastic about the opportunities
we are pursuing to deliver high-return growth over the coming years
for our stockholders,” concluded Mr. Krebs.
Financial and Operating Highlights
(Unaudited)
(Amounts in millions, except per share
amounts, gold ounces produced & sold, and per-ounce/pound
metrics)
1Q 2020
4Q 2019
3Q 2019
2Q 2019
1Q 2019
Gold Sales
$
127.6
$
134.3
$
141.9
$
110.3
$
106.8
Silver Sales
$
44.9
$
54.8
$
51.6
$
45.0
$
40.1
Zinc Sales
$
(0.7
)
$
2.6
$
2.0
$
2.6
$
5.6
Lead Sales
$
1.3
$
3.3
$
4.0
$
4.2
$
2.4
Consolidated Revenue
$
173.2
$
195.0
$
199.5
$
162.1
$
154.9
Costs Applicable to Sales2
$
118.9
$
146.6
$
141.0
$
131.9
$
131.7
General and Administrative
Expenses
$
8.9
$
7.6
$
9.6
$
7.8
$
9.5
Net Income (Loss)
$
(11.9
)
$
(270.9
)
$
(14.3
)
$
(36.8
)
$
(24.9
)
Net Income (Loss) Per Share
$
(0.05
)
$
(1.13
)
$
(0.06
)
$
(0.18
)
$
(0.12
)
Adjusted Net Income (Loss)1
$
(0.8
)
$
(3.3
)
$
(5.3
)
$
(23.0
)
$
(23.0
)
Adjusted Net Income (Loss)1 Per
Share
$
0.00
$
(0.01
)
$
(0.02
)
$
(0.11
)
$
(0.11
)
Weighted Average Shares
Outstanding
240.3
238.7
225.9
207.8
202.4
EBITDA1
$
25.5
$
(214.5
)
$
37.6
$
7.7
$
14.8
Adjusted EBITDA1
$
46.6
$
59.8
$
61.0
$
30.6
$
26.1
Cash Flow from Operating
Activities
$
(8.0
)
$
39.3
$
42.0
$
26.4
$
(15.8
)
Capital Expenditures
$
22.2
$
21.0
$
30.7
$
20.7
$
27.4
Free Cash Flow1
$
(30.2
)
$
18.4
$
11.3
$
5.7
$
(43.3
)
Cash, Equivalents & Short-Term
Investments
$
52.9
$
55.6
$
65.3
$
37.9
$
69.0
Total Debt3
$
343.1
$
295.5
$
298.7
$
370.0
$
456.8
Average Realized Price Per Ounce –
Gold
$
1,490
$
1,407
$
1,413
$
1,277
$
1,251
Average Realized Price Per Ounce –
Silver
$
16.63
$
16.99
$
17.17
$
14.75
$
15.22
Average Realized Price Per Pound –
Zinc
$
(0.21
)
$
0.62
$
0.50
$
0.49
$
1.19
Average Realized Price Per Pound –
Lead
$
0.54
$
0.78
$
0.92
$
0.82
$
0.86
Gold Ounces Produced
85,077
94,716
99,782
86,584
78,336
Silver Ounces Produced
2.7
3.1
3.0
3.1
2.5
Zinc Pounds Produced
2.5
3.9
4.2
5.3
3.7
Lead Pounds Produced
2.2
4.0
4.5
5.0
3.1
Gold Ounces Sold
85,635
95,532
100,407
86,385
85,326
Silver Ounces Sold
2.7
3.3
3.0
3.0
2.6
Zinc Pounds Sold
3.2
4.1
4.1
5.3
4.7
Lead Pounds Sold
2.5
4.3
4.3
5.2
2.7
Financial Results
First quarter 2020 revenue totaled $173.2 million compared to
$195.0 million in the prior period and $154.9 million in the first
quarter of 2019. During the first quarter, the Company produced
85,077 ounces of gold, 2.7 million ounces of silver, 2.5 million
pounds of zinc and 2.2 million pounds of lead. Metal sales for the
quarter totaled 85,635 ounces of gold, 2.7 million ounces of
silver, 3.2 million pounds of zinc and 2.5 million pounds of
lead.
Average realized gold and silver prices for the quarter were
$1,490 and $16.63 per ounce, respectively, or 6% higher and 2%
lower quarter-over-quarter. Average realized zinc and lead prices,
net of treatment and refining charges and including the impact of
provisional price and quantity adjustments, for the quarter were
$(0.21) and $0.54 per pound, respectively, compared to $0.62 and
$0.78 per pound in the prior quarter. The significant decrease in
base metals prices, combined with the finalization of the annual
zinc and lead benchmark treatment charges at $299.75 and $182.50
per tonne, respectively, further validated the Company’s decision
to temporarily suspend active mining and processing activities at
Silvertip in mid-February.
Gold and silver sales accounted for 74% and 26% of first quarter
revenue, respectively, while combined zinc and lead sales were
minimal. The Company’s U.S. operations accounted for approximately
56% of first quarter revenue, down modestly from approximately 59%
in the prior period.
Costs applicable to sales of $118.9 million were 19% lower
quarter-over-quarter, reflecting the suspension of mining and
processing activities at Silvertip as well as lower production from
Rochester and Wharf. First quarter general and administrative
expenses totaled $8.9 million compared to $7.6 million in the prior
period, primarily driven by higher employee-related expenses.
First quarter exploration expense was $6.4 million, or 11% lower
quarter-over-quarter. The Company focused on infill and expansion
drilling at Palmarejo and Sterling as well as expansion drilling at
Kensington, Silvertip and the Crown Block. See the “Operations”
section and page 16 for additional details on the Company’s
exploration activities.
Coeur recorded an income tax benefit of $3.9 million during the
first quarter. Cash income and mining taxes paid during the quarter
totaled approximately $10.9 million, including the annual payment
of the Mexican Mining Royalty Tax of $4.6 million.
Quarterly operating cash flow totaled $(8.0) million, reflecting
lower operating cash flow across most of the Company’s operations
and unfavorable changes in working capital during the period. Cash
flow prior to changes in working capital totaled $30.1 million.
Operating cash flow in the first quarter was impacted by Silvertip,
including (i) cash outflow of approximately $10.4 million related
to an inventory adjustment prior to the suspension of active mining
and processing activities in mid-February and (ii) $6.3 million of
costs associated with the ramp down, including $3.7 million in
one-time costs primarily related to employee severance and
contractual obligations. The Company now expects ongoing carrying
costs during the suspension to total approximately $4.5 million per
quarter, down from its original estimate of approximately $6.0
million per quarter.
Additionally, first quarter operating cash flow includes
approximately $7.0 million of cash outflow associated with the
Company’s prepayment agreement at Kensington. Coeur expects the
remaining $8.0 million cash outflow under the arrangement will
occur in the second quarter.
First quarter capital expenditures remained relatively
consistent with the prior period, totaling $22.2 million.
Sustaining and development capital expenditures accounted for
approximately 77% and 23%, respectively, of the Company’s capital
expenditures during the quarter.
COVID-19 Update
Coeur established a special advisory committee to evaluate
ongoing concerns, risks and challenges with respect to COVID-19
across its operations and corporate headquarters in early March
2020. The primary goals of the committee include (i) protecting the
health, safety and well-being of Coeur’s workforce and communities,
and (ii) ensuring the continuity of business operations. The
committee meets regularly via video conference and has elevated its
level of communications by proactively engaging with various
stakeholders, including regulators, government officials, community
partners and healthcare providers, among others.
The current status of each of the Company’s operations is
highlighted below:
Operation
Location
Status
Commentary
Palmarejo
Chihuahua, Mexico
Temporarily suspended
Precious metals mining not considered
essential as part of decree issued by the Federal Government of
Mexico on March 31, 2020
Rochester
Nevada, United States
Operating
Mining considered essential as part of
State of Nevada regulations issued on March 20, 2020
Kensington
Alaska, United States
Operating
Mining considered essential as part of
State of Alaska declaration on March 27, 2020
Wharf
South Dakota, United States
Operating
State of South Dakota issued a public
order mandating the closure of all public-facing businesses, which
does not include Wharf, on March 23, 2020
Silvertip
British Columbia, Canada
Temporarily suspended
Previously announced temporary suspension
of mining and processing activities (unrelated to COVID-19). No
actions required at this time to comply with restrictions issued by
the Government of British Columbia
Each of the Company’s operations has developed site-specific
screening, education and modifications to work procedures to limit
and identify COVID-19 exposure and transmission. Operational
readiness is routinely being assessed as the situation continues to
evolve and each site has scenario plans in place, should the need
arise. Coeur is following guidance from the U.S. Centers for
Disease Control and Prevention, Mexican and Canadian public health
officials, World Health Organization as well as federal, state and
local authorities to safeguard the health, safety and well-being of
its employees, contractors and communities, and minimize business
interruption.
Key initiatives that the Company has undertaken include:
- Travel and site access restricted to business-critical needs;
discretionary travel strongly discouraged and must be reported
- Health and travel questionnaires as well as temperature checks
required prior to entering sites
- Increased cleaning and disinfecting of common areas
- Social distancing, including limiting meetings to ten people
(or less)
- Extended rotational schedules at certain operations to reduce
travel to and from site
- All site-level employees who can and all corporate headquarter
employees working remotely
- Providing ongoing support to local communities, including
donations of critical supplies
- Partnering with local communities in communication and response
efforts
Coeur has also evaluated its supply chain and metal sales risks
at each operation and remains in close contact with critical
vendors, customers and transportation providers, establishing
back-up arrangements to mitigate the impact of any disruptions
related to COVID-19. The Company has not experienced any material
disruptions and has incurred minimal additional operating costs to
date.
Liquidity Update
A key element of the Company’s strategy is prudent balance sheet
management. At March 31, 2020, Coeur had $252.9 million of total
liquidity, including $52.9 million of cash and cash equivalents and
$200.0 million of availability under its RCF that is scheduled to
mature in October 2022. The Company has completed various scenario
planning analyses to consider potential impacts of COVID-19 on its
business, including volatility in commodity prices, temporary
disruptions and/or curtailments of operating activities (voluntary
or involuntary).
To provide additional flexibility to respond to potential
downside scenarios, Coeur drew an additional $100.0 million from
its RCF shortly after the end of the first quarter as a
precautionary measure. As of April 22, 2020, the Company had
approximately $150.0 million drawn under its RCF. Additionally, as
Coeur seeks to proactively maximize its financial flexibility
during these unprecedented levels of volatility and uncertainty,
the Company intends to take the prudent step of re-establishing an
at-the-market equity facility.
Hedging Update
Building on the gold hedging program that commenced in 2019,
Coeur continued to execute additional series of ZCC hedges on a
portion of its gold production. The ZCC structure allows for
downside protection against potential decreases in the price of
gold, while enabling participation in the potential upside to a
specified ceiling price. An overview of the hedges currently
implemented is outlined below:
- 2Q 2020: 48,000 ounces of gold at an average floor of $1,426
per ounce and an average ceiling of $1,829 per ounce;
- 3Q 2020: 49,500 ounces of gold at an average floor of $1,441
per ounce and an average ceiling of $1,826 per ounce; and
- 4Q 2020: 55,500 ounces of gold at an average floor of $1,471
per ounce and an average ceiling of $1,823 per ounce
- 1H 2021: 28,500 ounces of gold per quarter at an average floor
of $1,600 per ounce and an average ceiling of $1,837 per ounce
- 2H 2021: 21,000 ounces of gold per quarter at an average floor
of $1,600 per ounce and an average ceiling of $1,815 per ounce
During the quarter, the Coeur also implemented a series of
foreign currency hedges to further enhance its downside protection.
The Company has secured rate protection on approximately 50% of its
Mexican peso- and Canadian dollar-denominated expenses for 2020 at
average rates of roughly 24.09 and 1.44, respectively, and
approximately 50% of its Mexican peso-denominated expenses for 2021
at an average rate of roughly 24.99.
Rochester Expansion
With the receipt of the Record of Decision in March 2020, the
Company received the key regulatory approval to begin advancing its
work on POA 11 at Rochester. The expansion project contemplates the
construction of a new leach pad, a new crushing facility equipped
with a second high-pressure grinding roll unit and a new
Merrill-Crowe process plant as well as additional infrastructure to
support the extension of Rochester’s mine life.
The Company is nearing completion of its internal studies to
support the expansion with the assistance of SNC-Lavalin who has
been selected to provide engineering, procurement and overall
project management services. Coeur intends to complete its internal
review of the business case supporting the expansion during the
second quarter of 2020.
The Company intends to file an updated technical report in
accordance with Canadian National Instrument 43-101 in late 2020
further outlining the expansion, including an updated mine plan and
proposed capital estimate as well as additional operational and
financial information regarding the expected impacts of
high-pressure grinding roll technology.
Operations
First quarter 2020 highlights for each of the Company’s
operations are provided below.
Palmarejo, Mexico
(Dollars in millions, except per ounce
amounts)
1Q 2020
4Q 2019
3Q 2019
2Q 2019
1Q 2019
Tons milled
479,562
486,779
442,464
447,727
378,987
Average gold grade (oz/t)
0.07
0.07
0.09
0.07
0.07
Average silver grade (oz/t)
4.69
5.11
4.88
4.74
4.64
Average recovery rate – Au
91.6%
84.9%
81.7%
87.7%
83.4%
Average recovery rate – Ag
81.5%
81.7%
79.6%
81.8%
72.8%
Gold ounces produced
31,578
28,702
31,779
28,246
23,205
Silver ounces produced (000’s)
1,835
2,029
1,720
1,735
1,278
Gold ounces sold
31,287
27,952
32,731
28,027
27,394
Silver ounces sold (000’s)
1,895
1,980
1,747
1,709
1,405
Average realized price per gold
ounce
$1,331
$1,238
$1,269
$1,210
$1,154
Average realized price per silver
ounce
$17.25
$17.28
$17.05
$14.86
$15.39
Metal sales
$74.3
$68.9
$71.3
$59.3
$53.2
Costs applicable to sales2
$36.0
$34.8
$37.4
$36.5
$33.2
Adjusted CAS per AuOz1
$645
$622
$660
$741
$713
Adjusted CAS per AgOz1
$8.37
$8.79
$8.95
$9.17
$9.66
Exploration expense
$1.5
$2.0
$1.6
$1.1
$1.0
Cash flow from operating
activities
$28.9
$41.4
$36.3
$15.6
$5.9
Sustaining capital expenditures
(excludes capital lease payments)
$7.1
$6.2
$4.7
$5.0
$6.0
Development capital
expenditures
$—
$2.4
$3.1
$2.6
$2.7
Total capital expenditures
$7.1
$8.6
$7.8
$7.6
$8.7
Free cash flow1
$21.8
$32.8
$28.5
$8.0
$(2.8)
- As previously disclosed, Coeur began taking steps toward
temporarily suspending active mining and processing activities at
Palmarejo in accordance with a government-mandated decree
- The Company is taking all appropriate actions to be able to
safely and expeditiously ramp production back up once the
suspension has been lifted
Operational
- First quarter gold production increased 10% to 31,578 ounces,
while silver production decreased 10% to 1.8 million ounces
compared to the prior quarter. Year-over-year gold and silver
production increased 36% and 44%, respectively
- Higher gold production during the quarter was driven by
improved recovery rates from ongoing grinding, blending and
flotation optimization initiatives. Lower quarter-over-quarter
silver production was largely due to a decrease in average grade,
in-line with mine plan sequencing
- Throughput from La Nación, located within the Independencia
mine complex, averaged approximately 518 tpd during the quarter,
lower than the Company’s target of 700 tpd target due to blending
adjustments
Financial
- First quarter adjusted CAS1 for gold on a co-product basis
increased 4% compared to the prior period to $645 per ounce, while
adjusted CAS1 for silver on a co-product basis decreased 5% to
$8.37 per ounce
- Quarterly capital expenditures decreased 17% to $7.1 million
and continued to focus on mine development and infrastructure
projects
- Free cash flow1 in the first quarter totaled $21.8 million,
compared to $32.8 million in the prior period. Lower
quarter-over-quarter free cash flow1 reflects the payment of cash
income and mining taxes paid during the first quarter totaling $8.9
million, partially offset by higher metal sales and lower capital
expenditures
Exploration
- Exploration investment for first quarter totaled approximately
$2.7 million ($1.5 million expensed and $1.2 million capitalized),
compared to roughly $3.0 million ($2.0 million expensed and $1.0
million capitalized) in the prior quarter
- Up to eight surface and underground core rigs were active
during the quarter, focusing on infill drilling within the two
underground mine complexes, Independencia and Guadalupe, and on
resource expansion both north and south of both mine complexes. New
resource expansion holes were also drilled east and north of
Independencia
- A total of 16 expansion and 47 infill holes were drilled during
the quarter for a total 66,331 feet (20,218 meters). Coeur expects
to ramp up to ten active rigs with an emphasis on expansion
drilling once the suspension has been lifted
Other
- Approximately 35% of Palmarejo’s gold sales in the first
quarter, or 10,996 ounces, were sold under its gold stream
agreement at a price of $800 per ounce
Rochester, Nevada
(Dollars in millions, except per ounce
amounts)
1Q 2020
4Q 2019
3Q 2019
2Q 2019
1Q 2019
Ore tons placed
3,428,578
2,612,319
2,516,353
2,786,287
2,667,559
Average silver grade (oz/t)
0.57
0.47
0.43
0.45
0.46
Average gold grade (oz/t)
0.002
0.003
0.004
0.003
0.003
Silver ounces produced (000’s)
687
848
982
971
960
Gold ounces produced
5,936
10,634
7,901
8,609
8,256
Silver ounces sold (000’s)
632
932
951
962
1,000
Gold ounces sold
5,473
11,248
7,651
8,642
8,511
Average realized price per silver
ounce
$16.99
$17.22
$17.02
$14.83
$15.31
Average realized price per gold
ounce
$1,583
$1,484
$1,476
$1,295
$1,299
Metal sales
$19.4
$32.6
$27.5
$25.5
$26.4
Costs applicable to sales2
$17.0
$25.3
$27.7
$24.7
$22.5
Adjusted CAS per AgOz1
$14.38
$13.25
$14.24
$13.19
$12.83
Adjusted CAS per AuOz1
$1,359
$1,142
$1,230
$1,153
$1,092
Exploration expense
$0.2
$0.4
$0.1
$0.1
$0.1
Cash flow from operating
activities
$(9.3)
$6.9
$8.3
$1.6
$(1.0)
Sustaining capital expenditures
(excludes capital lease payments)
$0.1
$0.9
$(1.0)
$0.4
$1.8
Development capital
expenditures
$5.0
$4.1
$11.2
$2.4
$2.8
Total capital expenditures
$5.1
$5.0
$10.2
$2.8
$4.6
Free cash flow1
$(14.4)
$1.9
$(1.9)
$(1.2)
$(5.6)
Operational
- Silver and gold production decreased 19% and 44%
quarter-over-quarter to approximately 0.7 million ounces and 5,936
ounces, respectively. Year-over-year silver and gold production
both decreased approximately 28%
- As anticipated, lower production during the quarter was
primarily driven by the restocking of metal inventory and
increasing depths to liner for inventory under leach as well as the
placement of lower grade gold material. Production is expected to
climb steadily through the end of the year as restocking continues
and expected accelerated silver recoveries are realized
- Overall crushing and placement rates were higher during the
quarter as the Company was able to process 37,677 tpd through the
new crushing circuit, exceeding its targeted rate of 34,000 tpd by
roughly 11% and approximately 33% higher than the prior period.
Better-than-anticipated processing rates were driven by blasting
optimization initiatives and modifications to the crushing
circuit
- Recovery rates on ore crushed through the new circuit continue
to track in-line with original expectations. Additional third-party
metallurgical test work is scheduled to be conducted during the
second quarter to further enhance the Company’s understanding of
silver recoveries utilizing the new crushing configuration
Financial
- First quarter adjusted CAS1 for silver and gold on a co-product
basis increased by approximately 9% and 19% quarter-over-quarter,
to $14.38 and $1,359 per ounce, respectively, reflecting lower
production levels and fewer ounces sold during the quarter
- Capital expenditures of $5.1 million remained consistent with
the prior period as the Company continued to progress POA 11
towards final construction approval
- Free cash flow1 totaled $(14.4) million in the first quarter,
compared to $1.9 million in the fourth quarter of 2019, largely
driven by lower production and metal sales
Exploration
- Exploration investment for the first quarter was minimal,
totaling approximately $0.4 million, and is expected to increase
throughout the year as weather conditions improve
- Shortly after the end of the first quarter, two core rigs began
directional drilling to continue testing areas of potential
mineralization under the Stage I and Stage II leach pads at East
Rochester. The targets are following the success of the drill
programs completed in 2016 and 2019
Other
- In mid-March 2020, mining was classified as an essential
business in Nevada. Coeur continues to implement its Companywide
safety protocols at Rochester to limit COVID-19 exposure and
transmission
- The final Environmental Impact Statement for POA 11 was
released on February 24, 2020, followed by the approval of the
Record of Decision on March 30, 2020. The federal approval by the
Bureau of Land Management is a major milestone in the Company’s
planned expansion at Rochester
- Coeur is also advancing state permits necessary to move forward
with the construction of POA 11, which is expected to begin in the
third quarter of 2020
Kensington, Alaska
(Dollars in millions, except per ounce
amounts)
1Q 2020
4Q 2019
3Q 2019
2Q 2019
1Q 2019
Tons milled
162,341
167,061
166,475
160,510
164,332
Average gold grade (oz/t)
0.21
0.20
0.22
0.23
0.20
Average recovery rate
93.5%
87.2%
93.2%
93.0%
90.2%
Gold ounces produced
32,022
29,736
34,156
34,049
29,973
Gold ounces sold
32,781
29,293
35,452
34,415
31,335
Average realized price per gold ounce,
gross
$1,603
$1,493
$1,505
$1,332
$1,301
Treatment and refining charges per gold
ounce
$27
$24
$20
$20
$15
Average realized price per gold ounce,
net
$1,576
$1,469
$1,485
$1,312
$1,286
Metal sales
$51.7
$43.0
$52.6
$45.2
$40.3
Costs applicable to sales2
$30.5
$28.8
$29.5
$29.1
$32.2
Adjusted CAS per AuOz1
$928
$976
$822
$842
$990
Prepayment, working capital cash
flow
$(7.0)
$4.7
$(14.7)
$25.0
$—
Exploration expense
$1.8
$1.6
$1.5
$2.0
$0.5
Cash flow from operating
activities
$11.9
$19.9
$4.5
$41.4
$6.2
Sustaining capital expenditures
(excludes capital lease payments)
$4.8
$4.3
$4.9
$4.9
$9.4
Development capital
expenditures
$—
$—
$—
$—
$—
Total capital expenditures
$4.8
$4.3
$4.9
$4.9
$9.4
Free cash flow1
$7.1
$15.6
$(0.4)
$36.5
$(3.2)
Operational
- Gold production increased 8% quarter-over-quarter and 7% year
over year to 32,022 ounces
- Higher gold production during the quarter was largely driven by
a slight increase in average grade due to positive grade
reconciliation in the Kensington Main deposit
- Higher recoveries in the first quarter were driven by
additional ounces that were liberated during a liner change on the
ball mill. The quarter-over-quarter recovery improvement reflects a
positive impact from the final settlements of gold shipments during
the first quarter, compared to unfavorable final settlements in the
prior period
- Jualin accounted for approximately 8% of Kensington’s first
quarter production, compared to approximately 15% in the prior
quarter. Jualin is now expected to account for approximately 15-20%
of Kensington’s total production in 2020, largely due to
infrastructure maintenance completed during the quarter as well as
changes to workforce rotations driven by COVID-19 mitigation
efforts
Financial
- Adjusted CAS1 decreased 5% quarter-over-quarter to $928 per
ounce, largely due the improvement in average grade and higher gold
sales during the first quarter
- Capital expenditures of $4.8 million were slightly higher
compared to the prior period, reflecting planned investment in
underground development and equipment purchases
- Free cash flow1 totaled $7.1 million during the first quarter,
including cash outflow of approximately $7.0 million associated
with the fourth quarter 2019 prepayment agreement at Kensington.
Excluding the effect of the prepayment, free cash flow1 totaled
approximately $14.1 million in the first quarter
Exploration
- Exploration investment during the first quarter totaled
approximately $1.9 million (substantially all expensed), compared
to approximately $1.7 million (substantially all expensed) in the
prior quarter
- Three core rigs were active during the quarter, two underground
and one surface, exclusively focused on resource expansion
drilling. The underground rigs initially focused on the Jualin and
lower Kensington Zone 10 veins and were moved to the Elmira vein
later in the quarter. The surface rig was added to test Jualin
veins #1 and #2
- A total of 29 resource expansion holes were drilled during the
quarter for a total of 29,407 feet (8,963 meters)
Other
- In March 2020, mining was classified as an essential business
in Alaska. Rotational schedules at site have been temporarily
extended from 14 days to 28 days in response to concerns related to
COVID-19. All employees are required to quarantine in a
Juneau-based facility for 14 days prior to starting their 28-day
rotation
Wharf, South Dakota
(Dollars in millions, except per ounce
amounts)
1Q 2020
4Q 2019
3Q 2019
2Q 2019
1Q 2019
Ore tons placed
946,449
1,100,393
1,503,021
919,435
1,090,510
Average gold grade (oz/t)
0.025
0.023
0.027
0.023
0.020
Gold ounces produced
15,541
25,644
25,946
15,680
16,902
Silver ounces produced (000’s)
15
20
18
12
13
Gold ounces sold
16,094
27,039
24,573
15,301
18,086
Silver ounces sold (000’s)
15
21
17
12
14
Average realized price per gold
ounce
$1,592
$1,482
$1,481
$1,311
$1,317
Metal sales
$25.9
$40.5
$36.7
$20.2
$24.0
Costs applicable to sales2
$17.8
$25.7
$22.1
$15.5
$17.4
Adjusted CAS per AuOz1
$1,090
$802
$887
$1,002
$949
Exploration expense
$—
$0.2
$0.1
$—
$—
Cash flow from operating
activities
$2.6
$17.0
$17.6
$0.5
$4.2
Sustaining capital expenditures
(excludes capital lease payments)
$0.4
$0.8
$0.8
$0.2
$0.4
Development capital
expenditures
$—
$—
$—
$—
$—
Total capital expenditures
$0.4
$0.8
$0.8
$0.2
$0.4
Free cash flow1
$2.2
$16.2
$16.8
$0.3
$3.8
Operational
- Gold production in the first quarter decreased 39%
quarter-over-quarter and 8% year-over-year to 15,541 ounces
- Similar to the first quarter of 2019, lower production was
primarily driven by adverse weather in the beginning of the year,
which impacted crusher performance and placement rates during the
quarter
- The Company has engaged a third-party contractor to supplement
crusher performance, which is expected to drive higher production
during the remainder of the year
Financial
- Adjusted CAS1 on a by-product basis increased 36%
quarter-over-quarter to $1,090 per ounce, primarily driven by lower
production during the first quarter
- First quarter capital expenditures totaled $0.4 million,
compared to $0.8 million in the prior period
- Free cash flow1 was $2.2 million in the first quarter and has
now totaled $175.0 million since Coeur acquired the operation in
February 2015 for approximately $99.5 million
Exploration
- As anticipated, exploration investment in the first quarter was
minimal and is expected to increase during the second half of the
year
- Exploration activities during the year are expected to focus on
geologic mapping, geochemical sampling and drilling at the Richmond
Hill project, which is located approximately four miles
north-northeast of Wharf. Coeur has an exclusive option agreement
with Barrick Gold Corp to acquire the project that expires in
September 2021
Other
- In late March 2020, South Dakota issued a public order
mandating the closure of all public-facing businesses, which does
not include Wharf. Coeur continues to implement its Companywide
safety protocols at Wharf to limit COVID-19 exposure and
transmission
Silvertip, British Columbia
(Dollars in millions, except per ounce
and per pound amounts)
1Q 2020
4Q 2019
3Q 2019
2Q 2019
1Q 2019
Tons milled
29,240
61,662
53,145
59,689
62,051
Average silver grade (oz/t)
7.03
6.97
7.54
7.48
5.50
Average zinc grade (%)
7.1%
7.5%
7.6%
7.5%
5.9%
Average lead grade (%)
5.2%
4.9%
5.4%
5.4%
3.7%
Average recovery rate – Ag
67.7%
65.1%
74.8%
77.0%
69.9%
Average recovery rate – Zn
59.3%
42.0%
51.7%
59.1%
50.5%
Average recovery rate – Pb
71.2%
66.4%
78.4%
77.3%
66.8%
Silver ounces produced (000's)
139
279
300
344
239
Zinc pounds produced (000's)
2,460
3,865
4,197
5,322
3,719
Lead pounds produced (000's)
2,177
4,021
4,478
4,980
3,077
Silver ounces sold (000's)
159
294
290
365
215
Zinc pounds sold (000's)
3,203
4,053
4,076
5,303
4,723
Lead pounds sold (000's)
2,453
4,223
4,331
5,186
2,748
Average realized price per silver
ounce, gross
$10.10
$16.61
$19.94
$15.18
$14.98
Treatment and refining charges per
silver ounce
$2.36
$2.34
$1.63
$1.18
$1.24
Average realized price per silver
ounce, net
$7.74
$14.27
$18.31
$14.00
$13.74
Average realized price per zinc pound,
gross
$0.15
$1.04
$0.86
$0.83
$1.50
Treatment and refining charges per zinc
pound
$0.36
$0.42
$0.36
$0.34
$0.31
Average realized price per zinc pound,
net
$(0.21)
$0.62
$0.50
$0.49
$1.19
Average realized price per lead pound,
gross
$0.65
$0.89
$0.98
$0.87
$0.92
Treatment and refining charges per lead
pound
$0.11
$0.11
$0.06
$0.05
$0.06
Average realized price per lead pound,
net
$0.54
$0.78
$0.92
$0.82
$0.86
Metal sales
$1.9
$10.2
$11.3
$11.9
$10.9
Costs applicable to sales2
$17.7
$32.0
$24.2
$26.2
$26.4
Adjusted CAS per AgOz1
$11.79
$11.22
$14.14
$13.31
$13.73
Adjusted CAS per ZnLb1
$1.12
$0.69
$0.75
$1.02
$1.18
Adjusted CAS per PbLb1
$0.74
$0.62
$0.71
$0.77
$0.88
Exploration expense
$0.3
$0.9
$0.8
$0.7
$0.1
Cash flow from operating
activities
$(27.1)
$(28.6)
$(15.3)
$(11.6)
$(13.9)
Sustaining capital expenditures
(excludes capital lease payments)
$4.6
$2.0
$6.4
$5.0
$4.1
Development capital
expenditures
$—
$—
$—
$—
$—
Total capital expenditures
$4.6
$2.0
$6.4
$5.0
$4.1
Free cash flow1
$(31.7)
$(30.6)
$(21.7)
$(16.6)
$(18.0)
- Silvertip temporarily suspended mining and operating activities
on February 19, 2020 (unrelated to COVID-19). Operational results
in the table above reflect performance prior to the temporary
suspension
Operational
- First quarter production totaled 0.1 million ounces of silver,
2.5 million pounds of zinc and 2.2 million pounds of lead, compared
to 0.3 million ounces, 3.9 million pounds and 4.0 million pounds,
respectively, in the prior period
Financial
- Adjusted CAS1 figures shown in the table above and highlighted
below exclude the impact of non-cash write downs of metal
inventory
- First quarter adjusted CAS1 on a co-product basis were $11.79
per silver ounce, $1.12 per payable zinc pound and $0.74 per
payable lead pound, compared to $11.22, $0.69 and $0.62,
respectively, in the prior period
- Costs related to the ramp down of active mining and processing
activities totaled $6.3 million in the first quarter, including (i)
$3.7 million in one-time costs primarily related to employee
severance and contractual obligations, and (ii) $2.6 million in
ongoing carrying costs
- Coeur now expects ongoing carrying costs during the suspension
to total approximately $4.5 million per quarter, down from its
original estimate of approximately $6.0 million per quarter
- Capital expenditures during the first quarter totaled $4.6
million and focused primarily on infrastructure projects and
underground development as well as capital projects completed in
the prior period
- Free cash flow1 for the quarter totaled $(31.7) million
Exploration
- Exploration investment in the first quarter totaled
approximately $0.3 million (substantially all expensed), compared
to approximately $1.0 million (substantially all expensed) in the
prior period
- Two surface core rigs began expansion drilling on the Discovery
North zone in early March, completing four holes that totaled 5,387
feet (1,642 meters) prior to the end of the quarter
- The Company plans to have up five active rigs drilling by end
of second quarter as weather conditions improve. Approximately 60%
of the planned expansion holes will be focused on large step out
targets to test the edges and limits of the known resource
shapes
Other
- Rotational schedules have been temporarily extended from 14
days to 21 days in response to concerns related to COVID-19. Due to
the temporary suspension of mining and processing activities as
well as the implementation of Coeur’s safety protocols, no further
actions are required at this time to comply with restrictions
currently issued by the Government of British Columbia
- As previously disclosed, Coeur paid the second milestone
payment under the Silvertip acquisition agreement tied to its
year-end reserves and resources in the first quarter. The payment
totaled $25.0 million, including approximately $18.8 million in
cash and $6.3 million in stock
- An internal pre-feasibility study commenced during the first
quarter and is expected to be completed mid-year
Exploration
During the first quarter, the Company drilled 169,680 feet
(51,719 meters) at a total investment of approximately $8.1 million
($6.4 million expensed and $1.7 million), compared to 142,385 feet
(43,400 meters) at a total investment of roughly $9.1 million ($7.2
million expensed and $1.9 million capitalized) in the fourth
quarter of 2019. Total feet drilled during the first quarter was
approximately 19% higher compared to the prior period and 58%
higher than the first quarter of 2019. The increase in drilling
activity was due primarily to an accelerated ramp up in drill rigs
at Palmarejo and the Sterling and Crown exploration properties in
southern Nevada.
At Sterling and Crown, up to three reverse circulation rigs and
a surface geology mapping program were active during the first
quarter. A total of 48,090 feet (14,658 meters) were drilled during
the quarter, compared to 35,610 feet (10,854 meters) in the prior
period. One smaller, track-mounted rig focused on expansion
drilling at the Secret Pass deposit, while a second, larger truck
rig focused on testing the new C-Horst geophysical target, located
approximately two miles north of the SNA deposit. Both the Secret
Pass and SNA deposits are contained within the Crown Block.
At Sterling, a third rig continued drilling both infill and
expansion holes in an effort to expand mineralization estimates by
the end of the year. The drilling is specifically targeting
higher-grade faults that controlled oxide gold mineralization in
historical mining areas as well as shallow horizontal mineralized
zones.
Both the infill and expansion drilling programs at Sterling and
Crown are expected to continue throughout 2020. As part of the
infill exploration, a core drilling program is scheduled to begin
early in the second quarter with the objective of collecting core
samples for density, metallurgy and engineering.
At the La Preciosa project located in Durango, Mexico, work on
updating a scoping study progressed using the new geological and
resource model. The scoping study is expected to be completed
during the second quarter. Geological mapping, sampling and
trenching continued during the quarter, while work commenced to
independently audit the location of historic drillhole collars.
Financial Results and Conference Call
Coeur will host a conference call to discuss its first quarter
2020 financial results on April 23, 2020 at 11:00 a.m. Eastern
Time.
Dial-In Numbers:
(855) 560-2581 (U.S.)
(855) 669-9657 (Canada)
(412) 542-4166 (International)
Conference ID:
Coeur Mining
Hosting the call will be Mitchell J. Krebs, President and Chief
Executive Officer of Coeur, who will be joined by Thomas S. Whelan,
Senior Vice President and Chief Financial Officer, Terry F. D.
Smith, Senior Vice President of Operations, Hans J. Rasmussen,
Senior Vice President of Exploration, and other members of
management. A replay of the call will be available through May 7,
2020.
Replay numbers:
(877) 344-7529 (U.S.)
(855) 669-9658 (Canada)
(412) 317-0088 (International)
Conference ID:
101 40 059
About Coeur
Coeur Mining, Inc. is a U.S.-based, well-diversified, growing
precious metals producer with five wholly-owned operations: the
Palmarejo gold-silver complex in Mexico, the Rochester silver-gold
mine in Nevada, the Kensington gold mine in Alaska, the Wharf gold
mine in South Dakota, and the Silvertip silver-zinc-lead mine in
British Columbia. In addition, the Company has interests in several
precious metals exploration projects throughout North America.
Cautionary Statements
This news release contains forward-looking statements within the
meaning of securities legislation in the United States and Canada,
including statements regarding exploration and development efforts
and plans, the pre-feasibility study regarding an expansion of the
mill at Silvertip, the impact of the new crushing circuit,
expansion project and technical report preparation at Rochester,
our hedging strategies, priorities, returns, growth, financial
flexibility, crushing, anticipated production, COVID-19 mitigation
efforts, strategic initiatives and operations at Palmarejo,
Rochester, Wharf, Kensington and Silvertip. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause Coeur’s actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. Such factors include, among others, the
risk that anticipated production levels are not attained, the risks
and hazards inherent in the mining business (including risks
inherent in developing large-scale mining projects, environmental
hazards, industrial accidents, weather or geologically-related
conditions), changes in the market prices of gold, silver, zinc and
lead and a sustained lower price or higher treatment and refining
charge environment, the uncertainties inherent in Coeur’s
production, exploratory and developmental activities, including
risks relating to permitting and regulatory delays (including the
impact of government shutdowns), ground conditions and, grade
variability, any future labor disputes or work stoppages (involving
the Company and its subsidiaries or third parties), the
uncertainties inherent in the estimation of mineral reserves,
changes that could result from Coeur’s future acquisition of new
mining properties or businesses, the loss of access or insolvency
of any third-party refiner or smelter to which Coeur markets its
production, the potential effects of the COVID-19 pandemic,
including impacts to the availability of our workforce, continued
access to financing sources, government orders that may require
temporary suspension of operations at one or more of our sites and
effects on our suppliers or the refiners and smelters to whom the
Company markets its production, the effects of environmental and
other governmental regulations and government shut-downs, the risks
inherent in the ownership or operation of or investment in mining
properties or businesses in foreign countries, Coeur’s ability to
raise additional financing necessary to conduct its business, make
payments or refinance its debt, as well as other uncertainties and
risk factors set out in filings made from time to time with the
United States Securities and Exchange Commission, and the Canadian
securities regulators, including, without limitation, Coeur’s most
recent reports on Form 10-K and Form 10-Q. Actual results,
developments and timetables could vary significantly from the
estimates presented. Readers are cautioned not to put undue
reliance on forward-looking statements. Coeur disclaims any intent
or obligation to update publicly such forward-looking statements,
whether as a result of new information, future events or otherwise.
Additionally, Coeur undertakes no obligation to comment on
analyses, expectations or statements made by third parties in
respect of Coeur, its financial or operating results or its
securities. This does not constitute an offer of any securities for
sale.
Christopher Pascoe, Coeur’s Director, Technical Services and a
qualified person under Canadian National Instrument 43-101,
approved the scientific and technical information concerning
Coeur’s mineral projects in this news release. For a description of
the key assumptions, parameters and methods used to estimate
mineral reserves and resources, as well as data verification
procedures and a general discussion of the extent to which the
estimates may be affected by any known environmental, permitting,
legal, title, taxation, socio-political, marketing or other
relevant factors, Canadian investors should refer to the Technical
Reports for each of Coeur’s properties as filed on SEDAR at
www.sedar.com.
Non-U.S. GAAP Measures
We supplement the reporting of our financial information
determined under United States generally accepted accounting
principles (U.S. GAAP) with certain non-U.S. GAAP financial
measures, including EBITDA, adjusted EBITDA, adjusted EBITDA
margin, free cash flow, adjusted net income (loss) and adjusted
costs applicable to sales per ounce (gold and silver) or pound
(zinc or lead). We believe that these adjusted measures provide
meaningful information to assist management, investors and analysts
in understanding our financial results and assessing our prospects
for future performance. We believe these adjusted financial
measures are important indicators of our recurring operations
because they exclude items that may not be indicative of, or are
unrelated to our core operating results, and provide a better
baseline for analyzing trends in our underlying businesses. We
believe EBITDA, adjusted EBITDA, adjusted EBITDA margin, free cash
flow, adjusted net income (loss) and adjusted costs applicable to
sales per ounce (gold and silver) and pound (zinc and lead) are
important measures in assessing the Company’s overall financial
performance. For additional explanation regarding our use of
non-U.S. GAAP financial measures, please refer to our Form 10-K for
the year ended December 31, 2019 and our Form 10-Q for the quarter
ended March 31, 2020.
Notes
- EBITDA, adjusted EBITDA, adjusted EBITDA margin, free cash
flow, adjusted net income (loss) and adjusted costs applicable to
sales per ounce (gold and silver) or pound (lead and zinc) are
non-GAAP measures. Please see tables in the Appendix for the
reconciliation to U.S. GAAP. Free cash flow is defined as cash flow
from operating activities less capital expenditures and gold
production royalty payments. Please see table in Appendix for the
calculation of consolidated free cash flow.
- Excludes amortization.
- Includes capital leases. Net of debt issuance costs and premium
received.
Average Spot Prices
1Q 2020
4Q 2019
3Q 2019
2Q 2019
1Q 2019
Average Gold Spot Price Per Ounce
$
1,583
$
1,481
$
1,472
$
1,309
$
1,304
Average Silver Spot Price Per Ounce
$
16.90
$
17.32
$
16.98
$
14.88
$
15.57
Average Zinc Spot Price Per Pound
$
0.96
$
1.08
$
1.07
$
1.25
$
1.23
Average Lead Spot Price Per Pound
$
0.84
$
0.93
$
0.92
$
0.85
$
0.92
CONDENSED COEUR MINING, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, 2019
December 31, 2019
ASSETS
In thousands, except share
data
CURRENT ASSETS
Cash and cash equivalents
$
52,895
$
55,645
Receivables
19,722
18,666
Inventory
51,857
55,886
Ore on leach pads
83,035
66,192
Prepaid expenses and other
14,150
14,047
221,659
210,436
NON-CURRENT ASSETS
Property, plant and equipment, net
242,018
248,789
Mining properties, net
702,960
711,955
Ore on leach pads
66,703
71,539
Restricted assets
8,123
8,752
Equity and debt securities
26,826
35,646
Receivables
23,149
28,709
Other
57,659
62,810
TOTAL ASSETS
$
1,349,097
$
1,378,636
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES
Accounts payable
$
61,519
$
69,176
Accrued liabilities and other
49,935
95,616
Debt
23,588
22,746
Reclamation
3,094
3,114
138,136
190,652
NON-CURRENT LIABILITIES
Debt
319,521
272,751
Reclamation
135,436
133,417
Deferred tax liabilities
36,472
41,976
Other long-term liabilities
58,888
72,836
550,317
520,980
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Common stock, par value $0.01 per share;
authorized 300,000,000 shares, 243,586,226 issued and outstanding
at March 31, 2020 and 241,529,021 at December 31, 2019
2,436
2,415
Additional paid-in capital
3,603,785
3,598,472
Accumulated other comprehensive income
(loss)
70
(136
)
Accumulated deficit
(2,945,647
)
(2,933,747
)
660,644
667,004
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
1,349,097
$
1,378,636
COEUR MINING, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
Three Months Ended March
31,
2020
2019
In thousands, except share
data
Revenue
$
173,167
$
154,870
COSTS AND EXPENSES
Costs applicable to sales(1)
118,917
131,650
Amortization
36,162
41,876
General and administrative
8,920
9,474
Exploration
6,386
3,714
Pre-development, reclamation, and
other
6,555
4,434
Total costs and expenses
176,940
191,148
OTHER INCOME (EXPENSE), NET
Fair value adjustments, net
(8,819
)
9,120
Interest expense, net of capitalized
interest
(5,128
)
(6,454
)
Other, net
1,881
60
Total other income (expense), net
(12,066
)
2,726
Income (loss) before income and mining
taxes
(15,839
)
(33,552
)
Income and mining tax (expense)
benefit
3,939
8,658
Income (loss) from continuing
operations
$
(11,900
)
$
(24,894
)
Income (loss) from discontinued
operations
—
5,693
NET INCOME (LOSS)
$
(11,900
)
$
(19,201
)
OTHER COMPREHENSIVE INCOME (LOSS), net of
tax:
Unrealized gain (loss) on cash flow
hedges, net of tax of $22 for the three months ended March 31,
2020
206
—
Unrealized gain (loss) on debt and equity
securities
—
59
Other comprehensive income (loss)
206
59
COMPREHENSIVE INCOME (LOSS)
$
(11,694
)
$
(19,142
)
NET INCOME (LOSS) PER SHARE
Basic income (loss) per share:
Net income (loss) from continuing
operations
$
(0.05
)
$
(0.12
)
Net income (loss) from discontinued
operations
0.00
0.03
Basic(2)
$
(0.05
)
$
(0.09
)
Diluted income (loss) per share:
Net income (loss) from continuing
operations
$
(0.05
)
$
(0.12
)
Net income (loss) from discontinued
operations
0.00
0.03
Diluted(2)
$
(0.05
)
$
(0.09
)
(1)
Excludes amortization.
(2)
Due to rounding, the sum of net income per
share from continuing operations and discontinued operations may
not equal net income per share.
.
COEUR MINING, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March
31,
2020
2019
In thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
(11,900
)
$
(19,201
)
(Income) loss from discontinued
operations
—
(5,693
)
Adjustments:
Amortization
36,162
41,876
Accretion
2,847
2,943
Deferred taxes
(5,487
)
(8,259
)
Fair value adjustments, net
8,819
(9,120
)
Stock-based compensation
2,013
2,223
Gain on modification of right of use
lease
(4,051
)
—
Write-downs
10,381
15,447
Deferred revenue recognition
(7,548
)
(445
)
Other
(1,092
)
1,695
Changes in operating assets and
liabilities:
Receivables
(813
)
(9,735
)
Prepaid expenses and other current
assets
(346
)
(2,684
)
Inventory and ore on leach pads
(21,925
)
(18,821
)
Accounts payable and accrued
liabilities
(15,051
)
(6,072
)
CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES OF CONTINUING OPERATIONS
(7,991
)
(15,846
)
CASH PROVIDED BY (USED IN )OPERATING
ACTIVITIES OF DISCONTINUED OPERATIONS
—
—
CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES
(7,991
)
(15,846
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(22,208
)
(27,438
)
Proceeds from the sale of assets
4,506
847
Proceeds from notes receivable
—
5,168
Other
(17
)
1,741
CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES OF CONTINUING OPERATIONS
(17,719
)
(19,682
)
CASH USED IN INVESTING ACTIVITIES OF
DISCONTINUED OPERATIONS
—
—
CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES
(17,719
)
(19,682
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of notes and bank borrowings, net
of issuance costs
50,000
15,000
Payments on debt, finance leases, and
associated costs
(5,901
)
(22,356
)
Silvertip contingent consideration
(18,750
)
—
Other
(1,973
)
(3,364
)
CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES OF CONTINUING OPERATIONS
23,376
(10,720
)
CASH USED IN FINANCING ACTIVITIES OF
DISCONTINUED OPERATIONS
—
—
CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES
23,376
(10,720
)
Effect of exchange rate changes on cash
and cash equivalents
(626
)
201
INCREASE (DECREASE) IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH
(2,960
)
(46,047
)
Less net cash used in discontinued
operations(1)
—
—
(2,960
)
(46,047
)
Cash, cash equivalents and restricted cash
at beginning of period
57,018
118,069
Cash, cash equivalents and restricted cash
at end of period
$
54,058
$
72,022
Adjusted EBITDA
Reconciliation
(Dollars in thousands except per share
amounts)
LTM 1Q 2020
1Q 2020
4Q 2019
3Q 2019
2Q 2019
1Q 2019
Net income (loss)
$
(333,902
)
$
(11,900
)
$
(270,961
)
$
(14,277
)
$
(36,764
)
$
(19,201
)
(Income) loss from discontinued
operations, net of tax
—
—
—
—
—
(5,693
)
Interest expense, net of capitalized
interest
23,445
5,128
5,512
5,980
6,825
6,454
Income tax provision (benefit)
(6,410
)
(3,939
)
2,857
218
(5,546
)
(8,658
)
Amortization
173,162
36,162
48,118
45,678
43,204
41,876
EBITDA
(143,705
)
25,451
(214,474
)
37,599
7,719
14,778
Fair value adjustments, net
1,909
8,819
(7,829
)
(4,377
)
5,296
(9,120
)
Foreign exchange (gain) loss
3,757
76
268
2,945
468
665
Asset retirement obligation accretion
12,058
2,847
3,124
3,080
3,007
2,943
Inventory adjustments and write-downs
5,747
476
363
5,371
2,193
1,623
(Gain) loss on sale of assets and
securities
392
(374
)
594
100
72
(52
)
Impairment of long-lived assets
250,814
—
250,814
—
—
—
Silvertip inventory write-down
59,544
10,381
23,325
13,966
11,872
15,447
Silvertip one-time costs
3,659
3,659
—
—
—
—
Silvertip lease modification
(4,051
)
(4,051
)
—
—
—
—
Silvertip gain on contingent
consideration
(955
)
(955
)
—
—
—
—
COVID-19 one-time costs
272
272
—
—
—
—
Wharf inventory write-down
3,596
—
3,596
—
—
—
Loss on debt extinguishment
1,282
—
—
1,282
—
—
Receivable write-down
1,040
—
—
1,040
—
—
Interest income on notes receivables
(18
)
—
—
—
(18
)
(180
)
Adjusted EBITDA
$
195,341
$
46,601
$
59,781
$
61,006
$
30,609
$
26,104
Revenue
$
729,799
$
173,167
$
195,040
$
199,469
$
162,123
$
154,870
Adjusted EBITDA Margin
27
%
27
%
31
%
31
%
19
%
17
%
Adjusted Net Income (Loss)
Reconciliation
(Dollars in thousands except per share
amounts)
1Q 2020
4Q 2019
3Q 2019
2Q 2019
1Q 2019
Net income (loss)
$
(11,900
)
$
(270,961
)
$
(14,277
)
$
(36,764
)
$
(19,201
)
Income loss from discontinued operations,
net of tax
—
—
—
—
(5,693
)
Fair value adjustments, net
8,819
(7,829
)
(4,377
)
5,296
(9,120
)
Foreign exchange loss (gain)
(6,620
)
1,733
2,022
889
1,256
(Gain) loss on sale of assets and
securities
(374
)
594
100
72
(52
)
Impairment of long-lived assets
—
250,814
—
—
—
Silvertip inventory write-down
10,381
23,325
13,966
11,872
15,447
Silvertip one-time costs
3,659
—
—
—
—
Silvertip lease modification
(4,051
)
—
—
—
—
Silvertip gain on contingent
consideration
(955
)
—
—
—
—
COVID-19 one-time costs
272
—
—
—
—
Wharf inventory write-down
—
3,596
—
—
—
Loss on debt extinguishment
—
—
1,282
—
—
Receivable write-down
—
—
1,040
—
—
Interest income on notes receivables
—
—
—
(18
)
(180
)
Tax effect of adjustments
—
(4,572
)
(5,096
)
(4,332
)
(5,415
)
Adjusted net income (loss)
$
(769
)
$
(3,300
)
$
(5,340
)
$
(22,985
)
$
(22,958
)
Adjusted net income (loss) per share -
Basic
$
0.00
$
(0.01
)
$
(0.02
)
$
(0.11
)
$
(0.11
)
Adjusted net income (loss) per share -
Diluted
$
0.00
$
(0.01
)
$
(0.02
)
$
(0.11
)
$
(0.11
)
Consolidated Free Cash Flow
Reconciliation
(Dollars in thousands)
1Q 2020
4Q 2019
3Q 2019
2Q 2019
1Q 2019
Cash flow from continuing operations
$
(7,991
)
$
39,295
$
41,996
$
26,435
$
(15,846
)
Capital expenditures from continuing
operations
22,208
20,907
30,678
20,749
27,438
Free cash flow
$
(30,199
)
$
18,388
$
11,318
$
5,686
$
(43,284
)
Consolidated Operating Cash
Flow
Before Working Capital Changes
Reconciliation
(Dollars in thousands)
1Q 2020
4Q 2019
3Q 2019
2Q 2019
1Q 2019
Cash provided by (used in) continuing
operating activities
$
(7,991
)
$
39,295
$
41,996
$
26,435
$
(15,846
)
Changes in operating assets and
liabilities:
Receivables
813
(17,970
)
3,350
7,624
9,735
Prepaid expenses and other
346
(2,423
)
(1,375
)
834
2,684
Inventories
21,925
20,397
9,389
14,391
18,821
Accounts payable and accrued
liabilities
15,051
18,318
(22,384
)
(25,109
)
6,072
Cash flow before changes in operating
assets and liabilities
$
30,144
$
57,617
$
30,976
$
24,175
$
21,466
Reconciliation of Costs
Applicable to Sales
for Three Months Ended March
31, 2020
In thousands except per ounce or per
pound amounts
Palmarejo
Rochester
Kensington
Wharf
Silvertip
Total
Costs applicable to sales, including
amortization (U.S. GAAP)
$
49,149
$
19,860
$
42,429
$
20,267
$
23,002
$
154,707
Amortization
(13,175
)
(2,904
)
(11,922
)
(2,444
)
(5,345
)
(35,790
)
Costs applicable to sales
$
35,974
$
16,956
$
30,507
$
17,823
$
17,657
$
118,917
Inventory Adjustments
73
(422
)
(101
)
(25
)
(10,381
)
(10,856
)
By-product credit
—
—
—
(248
)
—
(248
)
Adjusted costs applicable to
sales
$
36,047
$
16,534
$
30,406
$
17,550
$
7,276
$
107,813
Metal Sales
Gold ounces
31,287
5,473
32,781
16,094
85,635
Silver ounces
1,894,789
632,237
14,768
158,984
2,700,778
Zinc pounds
3,203,446
3,203,446
Lead pounds
2,453,485
2,453,485
Revenue Split
Gold
56
%
45
%
100
%
100
%
Silver
44
%
55
%
26
%
Zinc
48
%
Lead
26
%
Adjusted costs applicable to
sales
Gold ($/oz)
$
645
$
1,359
$
928
$
1,090
Silver ($/oz)
$
8.37
$
14.38
$
11.79
Zinc ($/lb)
$
1.12
Lead ($/lb)
$
0.74
Reconciliation of Costs
Applicable to Sales
for Three Months Ended
December 31, 2019
In thousands except per ounce or per
pound amounts
Palmarejo
Rochester
Kensington
Wharf
Silvertip
Total
Costs applicable to sales, including
amortization (U.S. GAAP)
$
49,590
$
31,100
$
41,537
$
29,818
$
42,189
$
194,234
Amortization
(14,799
)
(5,791
)
(12,776
)
(4,072
)
(10,166
)
(47,604
)
Costs applicable to sales
$
34,791
$
25,309
$
28,761
$
25,746
$
32,023
$
146,630
Inventory Adjustments
(11
)
(116
)
(176
)
(3,677
)
(23,325
)
(27,305
)
By-product credit
—
—
—
(373
)
—
(373
)
Adjusted costs applicable to
sales
$
34,780
$
25,193
$
28,585
$
21,696
$
8,698
$
118,952
Metal Sales
Gold ounces
27,953
11,248
29,293
27,039
—
95,533
Silver ounces
1,979,315
931,326
21,132
294,498
3,226,271
Zinc pounds
4,052,554
4,052,554
Lead pounds
4,223,504
4,223,504
Revenue Split
Gold
50
%
51
%
100
%
100
%
Silver
50
%
49
%
38
%
Zinc
32
%
Lead
30
%
Adjusted costs applicable to
sales
Gold ($/oz)
$
622
$
1,142
$
976
$
802
Silver ($/oz)
$
8.79
$
13.25
$
11.22
Zinc ($/lb)
$
0.69
Lead ($/lb)
$
0.62
Reconciliation of Costs
Applicable to Sales
for Three Months Ended
September 30, 2019
In thousands except per ounce or per
pound amounts
Palmarejo
Rochester
Kensington
Wharf
Silvertip
Total
Costs applicable to sales, including
amortization (U.S. GAAP)
$
53,237
$
31,999
$
43,085
$
25,385
$
32,457
$
186,163
Amortization
(15,840
)
(4,250
)
(13,552
)
(3,301
)
(8,268
)
(45,211
)
Costs applicable to sales
$
37,397
$
27,749
$
29,533
$
22,084
$
24,189
$
140,952
Inventory Adjustments
(175
)
(4,799
)
(405
)
(7
)
(13,966
)
(19,352
)
By-product credit
—
—
—
(293
)
—
(293
)
Adjusted costs applicable to
sales
$
37,222
$
22,950
$
29,128
$
21,784
$
10,223
$
121,307
Metal Sales
Gold ounces
32,731
7,651
35,452
24,573
100,407
Silver ounces
1,747,250
951,043
16,612
289,910
3,004,815
Zinc pounds
4,076,390
4,076,390
Lead pounds
4,330,862
4,330,862
Revenue Split
Gold
58
%
41
%
100
%
100
%
Silver
42
%
59
%
39
%
Zinc
29
%
Lead
32
%
Adjusted costs applicable to
sales
Gold ($/oz)
$
660
$
1,230
$
822
$
887
Silver ($/oz)
$
8.95
$
14.24
$
14.14
Zinc ($/lb)
$
0.75
Lead ($/lb)
$
0.71
Reconciliation of Costs
Applicable to Sales
for Three Months Ended June
30, 2019
In thousands except per ounce or per
pound amounts
Palmarejo
Rochester
Kensington
Wharf
Silvertip
Total
Costs applicable to sales, including
amortization (U.S. GAAP)
$
50,708
$
28,656
$
41,670
$
17,691
$
36,038
$
174,763
Amortization
(14,212
)
(3,963
)
(12,537
)
(2,225
)
(9,878
)
(42,815
)
Costs applicable to sales
$
36,496
$
24,693
$
29,133
$
15,466
$
26,160
$
131,948
Inventory Adjustments
(39
)
(2,045
)
(156
)
48
(11,872
)
(14,064
)
By-product credit
—
—
—
(188
)
—
(188
)
Adjusted costs applicable to
sales
$
36,457
$
22,648
$
28,977
$
15,326
$
14,288
$
117,696
Metal Sales
Gold ounces
28,027
8,642
34,415
15,301
—
86,385
Silver ounces
1,709,406
961,634
12,364
364,961
3,048,365
Zinc pounds
5,302,508
5,302,508
Lead pounds
5,185,634
5,185,634
Revenue Split
Gold
57
%
44
%
100
%
100
%
Silver
43
%
56
%
34
%
Zinc
38
%
Lead
28
%
Adjusted costs applicable to
sales
Gold ($/oz)
$
741
$
1,153
$
842
$
1,002
Silver ($/oz)
$
9.17
$
13.19
$
13.31
Zinc ($/lb)
$
1.02
Lead ($/lb)
$
0.77
Reconciliation of Costs
Applicable to Sales
for Three Months Ended March
31, 2019
In thousands except per ounce or per
pound amounts
Palmarejo
Rochester
Kensington
Wharf
Silvertip
Total
Costs applicable to sales, including
amortization (U.S. GAAP)
$
47,772
$
26,491
$
43,902
$
20,073
$
34,811
$
173,049
Amortization
(14,528
)
(4,037
)
(11,727
)
(2,681
)
(8,426
)
(41,399
)
Costs applicable to sales
$
33,244
$
22,454
$
32,175
$
17,392
$
26,385
$
131,650
Inventory Adjustments
(141
)
(323
)
(1,164
)
(5
)
(15,447
)
(17,080
)
By-product credit
—
—
—
(217
)
—
(217
)
Adjusted costs applicable to
sales
$
33,103
$
22,131
$
31,011
$
17,170
$
10,938
$
114,353
Metal Sales
Gold ounces
27,394
8,511
31,335
18,086
85,326
Silver ounces
1,405,409
1,000,453
—
14,052
215,101
2,635,015
Zinc pounds
4,723,069
4,723,069
Lead pounds
2,747,847
2,747,847
Revenue Split
Gold
59
%
42
%
100
%
100
%
Silver
41
%
58
%
27
%
Zinc
51
%
Lead
22
%
Adjusted costs applicable to
sales
Gold ($/oz)
$
713
$
1,092
$
990
$
949
Silver ($/oz)
$
9.66
$
12.83
$
13.73
Zinc ($/lb)
$
1.18
Lead ($/lb)
$
0.88
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200422005876/en/
For Additional Information Coeur Mining, Inc. 104 S.
Michigan Avenue, Suite 900 Chicago, IL 60603 Attention: Paul
DePartout, Director, Investor Relations Phone: (312) 489-5800
www.coeur.com
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