Item 1. Financial Statements and Supplementary Data
COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020
|
|
December 31, 2019
|
|
ASSETS
|
Notes
|
In thousands, except share data
|
|
CURRENT ASSETS
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
77,148
|
|
|
$
|
55,645
|
|
|
|
|
|
|
|
|
Receivables
|
4
|
22,490
|
|
|
18,666
|
|
|
Inventory
|
5
|
46,978
|
|
|
55,886
|
|
|
Ore on leach pads
|
5
|
72,326
|
|
|
66,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other
|
|
20,285
|
|
|
14,047
|
|
|
|
|
|
|
|
|
|
|
239,227
|
|
|
210,436
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
Property, plant and equipment, net
|
|
226,115
|
|
|
248,789
|
|
|
Mining properties, net
|
|
708,744
|
|
|
711,955
|
|
|
Ore on leach pads
|
5
|
87,420
|
|
|
71,539
|
|
|
Restricted assets
|
|
8,819
|
|
|
8,752
|
|
|
Equity and debt securities
|
6
|
19,862
|
|
|
35,646
|
|
|
Receivables
|
4
|
23,493
|
|
|
28,709
|
|
|
|
|
|
|
|
|
Other
|
|
57,466
|
|
|
62,810
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
1,371,146
|
|
|
$
|
1,378,636
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
Accounts payable
|
|
$
|
71,461
|
|
|
$
|
69,176
|
|
|
Accrued liabilities and other
|
19
|
107,990
|
|
|
95,616
|
|
|
Debt
|
8
|
23,265
|
|
|
22,746
|
|
|
|
|
|
|
|
|
Reclamation
|
9
|
3,094
|
|
|
3,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
205,810
|
|
|
190,652
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
Debt
|
8
|
277,873
|
|
|
272,751
|
|
|
|
|
|
|
|
|
Reclamation
|
9
|
139,608
|
|
|
133,417
|
|
|
Deferred tax liabilities
|
|
30,947
|
|
|
41,976
|
|
|
Other long-term liabilities
|
|
52,681
|
|
|
72,836
|
|
|
|
|
|
|
|
|
|
|
501,109
|
|
|
520,980
|
|
|
COMMITMENTS AND CONTINGENCIES
|
17
|
|
|
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
Common stock, par value $0.01 per share; authorized 300,000,000 shares, 243,744,601 issued and outstanding at September 30, 2020 and 241,529,021 at December 31, 2019
|
|
2,437
|
|
|
2,415
|
|
|
Additional paid-in capital
|
|
3,608,102
|
|
|
3,598,472
|
|
|
Accumulated other comprehensive income (loss)
|
|
(26,312)
|
|
|
(136)
|
|
|
Accumulated deficit
|
|
(2,920,000)
|
|
|
(2,933,747)
|
|
|
|
|
664,227
|
|
|
667,004
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
1,371,146
|
|
|
$
|
1,378,636
|
|
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
Notes
|
In thousands, except share data
|
|
Revenue
|
3
|
$
|
229,728
|
|
|
$
|
199,469
|
|
|
$
|
557,144
|
|
|
$
|
516,462
|
|
|
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales(1)
|
3
|
112,772
|
|
|
140,952
|
|
|
321,704
|
|
|
404,550
|
|
|
|
|
Amortization
|
|
32,216
|
|
|
45,678
|
|
|
96,254
|
|
|
130,758
|
|
|
|
|
General and administrative
|
|
7,757
|
|
|
9,635
|
|
|
25,293
|
|
|
26,859
|
|
|
|
|
Exploration
|
|
12,818
|
|
|
5,893
|
|
|
31,059
|
|
|
15,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-development, reclamation, and other
|
|
15,031
|
|
|
4,851
|
|
|
40,261
|
|
|
13,619
|
|
|
|
|
Total costs and expenses
|
|
180,594
|
|
|
207,009
|
|
|
514,571
|
|
|
591,112
|
|
|
|
|
OTHER INCOME (EXPENSE), NET
|
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment
|
12
|
—
|
|
|
(1,282)
|
|
|
—
|
|
|
(1,282)
|
|
|
|
|
Fair value adjustments, net
|
12
|
2,243
|
|
|
4,377
|
|
|
3,491
|
|
|
8,201
|
|
|
|
|
Interest expense, net of capitalized interest
|
8
|
(5,096)
|
|
|
(5,980)
|
|
|
(15,989)
|
|
|
(19,259)
|
|
|
|
|
Other, net
|
14
|
(6,312)
|
|
|
(3,634)
|
|
|
(4,310)
|
|
|
(2,931)
|
|
|
|
|
Total other income (expense), net
|
|
(9,165)
|
|
|
(6,519)
|
|
|
(16,808)
|
|
|
(15,271)
|
|
|
|
|
Income (loss) before income and mining taxes
|
|
39,969
|
|
|
(14,059)
|
|
|
25,765
|
|
|
(89,921)
|
|
|
|
|
Income and mining tax (expense) benefit
|
10
|
(13,113)
|
|
|
(218)
|
|
|
(12,018)
|
|
|
13,986
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
26,856
|
|
|
$
|
(14,277)
|
|
|
$
|
13,747
|
|
|
$
|
(75,935)
|
|
|
|
|
Income (loss) from discontinued operations
|
18
|
—
|
|
|
—
|
|
|
—
|
|
|
5,693
|
|
|
|
|
NET INCOME (LOSS)
|
|
$
|
26,856
|
|
|
$
|
(14,277)
|
|
|
$
|
13,747
|
|
|
$
|
(70,242)
|
|
|
|
|
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of derivative contracts designated as cash flow hedges, net of tax of $0 and $365 for the three and nine months ended September 30, 2020 and 2019 respectively.
|
|
(18,606)
|
|
|
1,132
|
|
|
(26,176)
|
|
|
1,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on debt and equity securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
(18,606)
|
|
|
1,132
|
|
|
(26,176)
|
|
|
1,191
|
|
|
|
|
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
8,250
|
|
|
$
|
(13,145)
|
|
|
$
|
(12,429)
|
|
|
$
|
(69,051)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER SHARE
|
15
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
$
|
0.11
|
|
|
$
|
(0.06)
|
|
|
$
|
0.06
|
|
|
$
|
(0.36)
|
|
|
|
|
Net income (loss) from discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.03
|
|
|
|
|
Basic(2)
|
|
$
|
0.11
|
|
|
$
|
(0.06)
|
|
|
$
|
0.06
|
|
|
$
|
(0.33)
|
|
|
|
|
Diluted income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
$
|
0.11
|
|
|
$
|
(0.06)
|
|
|
$
|
0.06
|
|
|
$
|
(0.36)
|
|
|
|
|
Net income (loss) from discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.03
|
|
|
|
|
Diluted(2)
|
|
$
|
0.11
|
|
|
$
|
(0.06)
|
|
|
$
|
0.06
|
|
|
$
|
(0.33)
|
|
|
|
(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.
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
Notes
|
In thousands
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
26,856
|
|
|
$
|
(14,277)
|
|
|
$
|
13,747
|
|
|
$
|
(70,242)
|
|
|
|
|
|
|
(Income) loss from discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,693)
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
32,216
|
|
|
45,678
|
|
|
96,254
|
|
|
130,758
|
|
|
|
|
|
|
Accretion
|
|
2,969
|
|
|
3,073
|
|
|
8,724
|
|
|
9,023
|
|
|
|
|
|
|
Deferred taxes
|
|
(4,515)
|
|
|
(10,545)
|
|
|
(11,547)
|
|
|
(27,962)
|
|
|
|
|
|
|
Loss on debt extinguishment
|
12
|
—
|
|
|
1,282
|
|
|
—
|
|
|
1,282
|
|
|
|
|
|
|
Fair value adjustments, net
|
12
|
(2,243)
|
|
|
(4,377)
|
|
|
(3,491)
|
|
|
(8,201)
|
|
|
|
|
|
|
Stock-based compensation
|
11
|
1,969
|
|
|
2,432
|
|
|
6,269
|
|
|
6,642
|
|
|
|
|
|
|
Gain on modification of right of use lease
|
7
|
—
|
|
|
—
|
|
|
(4,051)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-downs
|
|
1,232
|
|
|
13,966
|
|
|
16,821
|
|
|
41,285
|
|
|
|
|
|
|
Deferred revenue recognition
|
17
|
(5,485)
|
|
|
(15,250)
|
|
|
(21,167)
|
|
|
(16,008)
|
|
|
|
|
|
|
Other
|
|
4,379
|
|
|
8,994
|
|
|
2,374
|
|
|
15,733
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
(1,497)
|
|
|
(3,350)
|
|
|
(3,846)
|
|
|
(20,709)
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
(1,921)
|
|
|
1,375
|
|
|
(1,186)
|
|
|
(2,143)
|
|
|
|
|
|
|
Inventory and ore on leach pads
|
|
(3,066)
|
|
|
(9,389)
|
|
|
(33,047)
|
|
|
(42,601)
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
28,570
|
|
|
22,384
|
|
|
15,566
|
|
|
41,421
|
|
|
|
|
|
|
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES OF CONTINUING OPERATIONS
|
|
79,464
|
|
|
41,996
|
|
|
81,420
|
|
|
52,585
|
|
|
|
|
|
|
CASH PROVIDED BY (USED IN )OPERATING ACTIVITIES OF DISCONTINUED OPERATIONS
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|
79,464
|
|
|
41,996
|
|
|
81,420
|
|
|
52,585
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
(22,996)
|
|
|
(30,678)
|
|
|
(61,886)
|
|
|
(78,865)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from the sale of assets
|
18
|
730
|
|
|
26
|
|
|
5,245
|
|
|
930
|
|
|
|
|
|
|
Purchase of investments
|
|
(2,500)
|
|
|
—
|
|
|
(2,500)
|
|
|
—
|
|
|
|
|
|
|
Sale of investments
|
|
—
|
|
|
1,007
|
|
|
19,802
|
|
|
2,109
|
|
|
|
|
|
|
Proceeds from notes receivable
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,168
|
|
|
|
|
|
|
Other
|
|
(25)
|
|
|
(57)
|
|
|
(225)
|
|
|
1,961
|
|
|
|
|
|
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES OF CONTINUING OPERATIONS
|
|
(24,791)
|
|
|
(29,702)
|
|
|
(39,564)
|
|
|
(66,697)
|
|
|
|
|
|
|
CASH USED IN INVESTING ACTIVITIES OF DISCONTINUED OPERATIONS
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
(24,791)
|
|
|
(29,702)
|
|
|
(39,564)
|
|
|
(66,697)
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
|
19
|
—
|
|
|
73,781
|
|
|
—
|
|
|
122,668
|
|
|
|
|
|
|
Issuance of notes and bank borrowings, net of issuance costs
|
8
|
—
|
|
|
30,000
|
|
|
150,000
|
|
|
45,000
|
|
|
|
|
|
|
Payments on debt, finance leases, and associated costs
|
8
|
(48,557)
|
|
|
(87,778)
|
|
|
(150,171)
|
|
|
(201,051)
|
|
|
|
|
|
|
Silvertip contingent consideration
|
17
|
—
|
|
|
—
|
|
|
(18,750)
|
|
|
—
|
|
|
|
|
|
|
Other
|
|
114
|
|
|
301
|
|
|
(1,718)
|
|
|
(2,958)
|
|
|
|
|
|
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES OF CONTINUING OPERATIONS
|
|
(48,443)
|
|
|
16,304
|
|
|
(20,639)
|
|
|
(36,341)
|
|
|
|
|
|
|
CASH USED IN FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
(48,443)
|
|
|
16,304
|
|
|
(20,639)
|
|
|
(36,341)
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(10)
|
|
|
(192)
|
|
|
293
|
|
|
65
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
|
6,220
|
|
|
28,406
|
|
|
21,510
|
|
|
(50,388)
|
|
|
|
|
|
|
Less net cash used in discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
6,220
|
|
|
28,406
|
|
|
21,510
|
|
|
(50,388)
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
|
72,308
|
|
|
39,275
|
|
|
57,018
|
|
|
118,069
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
78,528
|
|
|
$
|
67,681
|
|
|
$
|
78,528
|
|
|
$
|
67,681
|
|
|
|
|
|
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
COEUR MINING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
Common
Stock
Shares
|
|
Common
Stock Par
Value
|
|
Additional
Paid-In Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2019
|
241,529
|
|
|
$
|
2,415
|
|
|
$
|
3,598,472
|
|
|
$
|
(2,933,747)
|
|
|
$
|
(136)
|
|
|
$
|
667,004
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,900)
|
|
|
—
|
|
|
(11,900)
|
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
206
|
|
|
206
|
|
|
Common stock issued for Silvertip contingent consideration payment
|
878
|
|
|
9
|
|
|
5,286
|
|
|
—
|
|
|
—
|
|
|
5,295
|
|
|
Common stock issued/canceled under long-term incentive plans and director fees and options, net
|
1,179
|
|
|
12
|
|
|
27
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|
Balances at March 31, 2020
|
243,586
|
|
|
$
|
2,436
|
|
|
$
|
3,603,785
|
|
|
$
|
(2,945,647)
|
|
|
$
|
70
|
|
|
$
|
660,644
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,209)
|
|
|
—
|
|
|
(1,209)
|
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,776)
|
|
|
(7,776)
|
|
|
Common stock issued/canceled under long-term incentive plans and director fees and options, net
|
146
|
|
|
1
|
|
|
2,197
|
|
|
—
|
|
|
—
|
|
|
2,198
|
|
|
Balances at June 30, 2020
|
243,732
|
|
|
$
|
2,437
|
|
|
$
|
3,605,982
|
|
|
$
|
(2,946,856)
|
|
|
$
|
(7,706)
|
|
|
$
|
653,857
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
26,856
|
|
|
—
|
|
|
26,856
|
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,606)
|
|
|
(18,606)
|
|
|
Common stock issued/canceled under long-term incentive plans and director fees and options, net
|
13
|
|
|
—
|
|
|
2,120
|
|
|
—
|
|
|
—
|
|
|
2,120
|
|
|
Balances at September 30, 2020
|
243,745
|
|
|
$
|
2,437
|
|
|
$
|
3,608,102
|
|
|
$
|
(2,920,000)
|
|
|
$
|
(26,312)
|
|
|
$
|
664,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
Common
Stock
Shares
|
|
Common
Stock Par
Value
|
|
Additional
Paid-In Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2018
|
203,310
|
|
|
$
|
2,033
|
|
|
$
|
3,443,082
|
|
|
$
|
(2,592,544)
|
|
|
$
|
(59)
|
|
|
852,512
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(19,201)
|
|
|
—
|
|
|
(19,201)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued under stock-based compensation plans, net
|
1,801
|
|
|
18
|
|
|
(1,053)
|
|
|
—
|
|
|
—
|
|
|
(1,035)
|
|
|
Balances at March 31, 2019
|
205,111
|
|
|
$
|
2,051
|
|
|
$
|
3,442,029
|
|
|
$
|
(2,611,745)
|
|
|
$
|
—
|
|
|
832,335
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(36,764)
|
|
|
—
|
|
|
(36,764)
|
|
|
Common stock issued under "at the market" stock offering
|
16,631
|
|
|
166
|
|
|
48,721
|
|
|
—
|
|
|
—
|
|
|
48,887
|
|
|
Common stock issued under stock-based compensation plans, net
|
117
|
|
|
2
|
|
|
1,986
|
|
|
—
|
|
|
—
|
|
|
1,988
|
|
|
Balances at June 30, 2019
|
221,859
|
|
|
$
|
2,219
|
|
|
$
|
3,492,736
|
|
|
$
|
(2,648,509)
|
|
|
$
|
—
|
|
|
846,446
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,277)
|
|
|
—
|
|
|
(14,277)
|
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,132
|
|
|
1,132
|
|
|
Common stock issued for the extinguishment of Senior Notes
|
4,452
|
|
|
44
|
|
|
21,246
|
|
|
—
|
|
|
—
|
|
|
21,290
|
|
|
Common stock issued under "at the market" stock offering
|
14,220
|
|
|
142
|
|
|
73,639
|
|
|
—
|
|
|
—
|
|
|
73,781
|
|
|
Common stock issued under stock-based compensation plans, net
|
(22)
|
|
|
—
|
|
|
2,435
|
|
|
—
|
|
|
—
|
|
|
2,435
|
|
|
Balances at September 30, 2019
|
240,509
|
|
|
$
|
2,405
|
|
|
$
|
3,590,056
|
|
|
$
|
(2,662,786)
|
|
|
$
|
1,132
|
|
|
930,807
|
|
The accompanying notes are an integral part of these Consolidated Financial Statements.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 1 - BASIS OF PRESENTATION
The interim condensed consolidated financial statements of Coeur Mining, Inc. and its subsidiaries (collectively, “Coeur” or the “Company”) are unaudited. In the opinion of management, all adjustments and disclosures necessary for the fair presentation of these interim statements have been included. The results reported in these interim statements may not be indicative of the results which will be reported for the year ending December 31, 2020. The condensed consolidated December 31, 2019 balance sheet data was derived from audited consolidated financial statements. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 10-K”).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant Accounting Policies
Please see Note 2 -- Summary of Significant Accounting Policies contained in the 2019 10-K.
Use of Estimates
The Company's Condensed Consolidated Financial Statements have been prepared in accordance with United States Generally Accepted Accounting Principles. The preparation of the Company's Condensed Consolidated Financial Statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results will differ from the amounts estimated in these financial statements. The severity, magnitude and duration, as well as the economic consequences of the COVID-19 pandemic, are uncertain, rapidly changing and difficult to predict. Therefore, the Company’s accounting estimates and assumptions may change over time in response to the COVID-19 pandemic and may change materially in future periods.
Revenue Recognition
The Company’s gold stream agreement with a subsidiary of Franco-Nevada Corporation (“Franco-Nevada”) provided for a $20.0 million, net, deposit paid by Franco-Nevada in exchange for the right and obligation, commencing in 2016, to purchase 50% of a portion of Palmarejo gold production at the lesser of $800 or market price per ounce. Because there is no minimum obligation associated with the deposit, it is not considered financing, and each shipment is considered to be a separate performance obligation. The streaming agreement represents a contract liability under ASC 606, which requires the Company to recognize ratably a portion of the deposit as revenue for each gold ounce delivered to Franco-Nevada. See Note 17 -- Commitments and Contingencies for additional detail.
The following table presents a rollforward of the Franco-Nevada contract liability balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
In thousands
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Opening Balance
|
$
|
10,389
|
|
|
$
|
12,160
|
|
|
$
|
11,061
|
|
|
$
|
12,918
|
|
|
Revenue Recognized
|
(393)
|
|
|
(545)
|
|
|
(1,065)
|
|
|
(1,303)
|
|
|
Closing Balance
|
$
|
9,996
|
|
|
$
|
11,615
|
|
|
$
|
9,996
|
|
|
$
|
11,615
|
|
In June 2020, the Company received a $15.0 million prepayment (the “June 2020 Prepayment” as defined in Note 17) for deliveries of gold concentrate from the Kensington mine pursuant to the Amended Sales Contract (as defined below). The Amended Sales Contract represents a contract liability under ASC 606, which requires the Company to recognize ratably a portion of the deposit as revenue for each gold ounce delivered to the customer. See Note 17 -- Commitments and Contingencies for additional detail.
The following table presents a rollforward of the Amended Sales Contract liability balance:
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
In thousands
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Opening Balance
|
$
|
15,006
|
|
|
$
|
25,021
|
|
|
$
|
15,010
|
|
|
$
|
—
|
|
|
Additions
|
108
|
|
|
276
|
|
|
15,114
|
|
|
25,297
|
|
|
Revenue Recognized
|
(5,200)
|
|
|
(14,705)
|
|
|
(20,210)
|
|
|
(14,705)
|
|
|
Closing Balance
|
$
|
9,914
|
|
|
$
|
10,592
|
|
|
$
|
9,914
|
|
|
$
|
10,592
|
|
Recently Adopted Accounting Standards
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326)”. The new standard is effective for reporting periods beginning after December 15, 2019. The standard replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. The standard requires a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company adopted the new credit loss standard effective January 1, 2020. The adoption of the new standard did not have a material impact on the Company’s consolidated net income, financial position or cash flows.
Recently Issued Accounting Standards
In December 2019, the FASB issued ASU 2019-12, “Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740)” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 will be effective for interim and annual periods beginning after December 15, 2020 (January 1, 2021 for the Company). Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2019-12 will have on its consolidated financial statements.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 3 – SEGMENT REPORTING
The Company’s operating segments include the Palmarejo, Rochester, Kensington, Wharf and Silvertip mines. Except for the Silvertip mine, all operating segments are engaged in the discovery, mining, and production of gold and/or silver. The Silvertip mine, which temporarily suspended mining and processing activities in February 2020, is engaged in the discovery, mining, and production of silver, zinc and lead. Other includes the Sterling/Crown and La Preciosa projects, other mineral interests, strategic equity investments, corporate office, elimination of intersegment transactions, and other items necessary to reconcile to consolidated amounts.
The 2019 novel strain of coronavirus causing a contagious respiratory disease known as COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, poses a material risk to our business and operations. Early in the second quarter of 2020, we temporarily suspended active mining and processing activities at the Palmarejo complex in the State of Chihuahua, Mexico, in accordance with a government decree in response to COVID-19, and we began taking steps to restart active mining, processing and exploration activities at Palmarejo in accordance with updated guidance from the government approximately 45 days later. In addition, as a result of several reported positive COVID-19 cases at our Kensington mine outside of Juneau, Alaska, during the third quarter of 2020 we experienced a minor short-term production impact associated with this situation, which has adversely impacted production and cash flows. We continue to require all employees who travel to the Kensington mine to submit to a 7-day quarantine and testing protocol in Juneau, Alaska before traveling to the mine. We believe this is an important step to protect the health and safety of all workers who stay at the Kensington camp, although it has required changes to worker scheduling and is expected to result in higher labor costs due to additional overtime pay and pay during the quarantine period.
Incremental costs associated with the Company’s COVID-19 health and safety protocols are recorded in Pre-development, reclamation, and other expenses in our Condensed Consolidated Statement of Comprehensive Income (Loss) and are included in Other operating expenses in the table below. Because of the highly uncertain and dynamic nature of events relating to the COVID-19 pandemic, it is not currently possible to estimate the impact of the pandemic on the Company’s operating segments. However, these effects could have a material impact on our operations, and we will continue to monitor the COVID-19 situation closely.
Financial information relating to the Company’s segments is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2020
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
Silvertip
|
|
Other
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold sales
|
$
|
39,416
|
|
|
$
|
12,860
|
|
|
$
|
52,357
|
|
|
$
|
62,499
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
167,132
|
|
|
Silver sales
|
42,339
|
|
|
19,250
|
|
|
—
|
|
|
1,007
|
|
|
—
|
|
|
—
|
|
|
62,596
|
|
|
Zinc sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Lead sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Metal sales
|
81,755
|
|
|
32,110
|
|
|
52,357
|
|
|
63,506
|
|
|
—
|
|
|
—
|
|
|
229,728
|
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales(1)
|
34,251
|
|
|
19,104
|
|
|
31,530
|
|
|
27,887
|
|
|
—
|
|
|
—
|
|
|
112,772
|
|
|
Amortization
|
11,912
|
|
|
3,278
|
|
|
11,523
|
|
|
4,000
|
|
|
1,185
|
|
|
318
|
|
|
32,216
|
|
|
Exploration
|
1,978
|
|
|
465
|
|
|
3,397
|
|
|
534
|
|
|
3,920
|
|
|
2,524
|
|
|
12,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses
|
2,378
|
|
|
1,376
|
|
|
3,448
|
|
|
127
|
|
|
5,916
|
|
|
9,543
|
|
|
22,788
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Fair value adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,243
|
|
|
2,243
|
|
|
Interest expense, net
|
(201)
|
|
|
(283)
|
|
|
(296)
|
|
|
(48)
|
|
|
(124)
|
|
|
(4,144)
|
|
|
(5,096)
|
|
|
Other, net
|
(1,168)
|
|
|
(2,502)
|
|
|
(34)
|
|
|
7
|
|
|
451
|
|
|
(3,066)
|
|
|
(6,312)
|
|
|
Income and mining tax (expense) benefit
|
(6,841)
|
|
|
(143)
|
|
|
(380)
|
|
|
(2,630)
|
|
|
21
|
|
|
(3,140)
|
|
|
(13,113)
|
|
|
Income (loss) from continuing operations
|
$
|
23,026
|
|
|
$
|
4,959
|
|
|
$
|
1,749
|
|
|
$
|
28,287
|
|
|
$
|
(10,673)
|
|
|
$
|
(20,492)
|
|
|
$
|
26,856
|
|
|
Income (loss) from discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Segment assets(2)
|
$
|
302,599
|
|
|
$
|
325,165
|
|
|
$
|
177,700
|
|
|
$
|
76,247
|
|
|
$
|
155,932
|
|
|
$
|
170,208
|
|
|
$
|
1,207,851
|
|
|
Capital expenditures
|
$
|
4,998
|
|
|
$
|
9,773
|
|
|
$
|
5,333
|
|
|
$
|
545
|
|
|
$
|
2,065
|
|
|
$
|
282
|
|
|
$
|
22,996
|
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2019
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
Silvertip
|
|
Other
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold sales
|
$
|
41,547
|
|
|
$
|
11,290
|
|
|
$
|
52,636
|
|
|
$
|
36,398
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
141,871
|
|
|
Silver sales
|
29,790
|
|
|
16,191
|
|
|
—
|
|
|
293
|
|
|
5,307
|
|
|
—
|
|
|
51,581
|
|
|
Zinc sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,046
|
|
|
—
|
|
|
2,046
|
|
|
Lead sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,971
|
|
|
—
|
|
|
3,971
|
|
|
Metal sales
|
71,337
|
|
|
27,481
|
|
|
52,636
|
|
|
36,691
|
|
|
11,324
|
|
|
—
|
|
|
199,469
|
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales(1)
|
37,397
|
|
|
27,749
|
|
|
29,533
|
|
|
22,084
|
|
|
24,189
|
|
|
—
|
|
|
140,952
|
|
|
Amortization
|
15,840
|
|
|
4,250
|
|
|
13,552
|
|
|
3,301
|
|
|
8,268
|
|
|
467
|
|
|
45,678
|
|
|
Exploration
|
1,608
|
|
|
145
|
|
|
1,465
|
|
|
102
|
|
|
828
|
|
|
1,745
|
|
|
5,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses
|
1,327
|
|
|
1,210
|
|
|
281
|
|
|
698
|
|
|
254
|
|
|
10,716
|
|
|
14,486
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,282)
|
|
|
(1,282)
|
|
|
Fair value adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,377
|
|
|
4,377
|
|
|
Interest expense, net
|
(74)
|
|
|
(287)
|
|
|
(453)
|
|
|
(26)
|
|
|
(410)
|
|
|
(4,730)
|
|
|
(5,980)
|
|
|
Other, net
|
(2,535)
|
|
|
(368)
|
|
|
(99)
|
|
|
(151)
|
|
|
(190)
|
|
|
(291)
|
|
|
(3,634)
|
|
|
Income and mining tax (expense) benefit
|
(1,630)
|
|
|
(2,067)
|
|
|
—
|
|
|
(1,672)
|
|
|
916
|
|
|
4,235
|
|
|
(218)
|
|
|
Income (loss) from continuing operations
|
10,926
|
|
|
(8,595)
|
|
|
7,253
|
|
|
8,657
|
|
|
(21,899)
|
|
|
(10,619)
|
|
|
(14,277)
|
|
|
Income (loss) from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Segment assets(2)
|
342,274
|
|
|
283,229
|
|
|
204,926
|
|
|
99,600
|
|
|
417,678
|
|
|
172,735
|
|
|
1,520,442
|
|
|
Capital expenditures
|
7,818
|
|
|
10,248
|
|
|
4,944
|
|
|
759
|
|
|
6,359
|
|
|
550
|
|
|
30,678
|
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2020
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
Silvertip
|
|
Other
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold sales
|
$
|
104,732
|
|
|
$
|
30,508
|
|
|
$
|
159,200
|
|
|
$
|
128,199
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
422,639
|
|
|
Silver sales
|
89,332
|
|
|
41,650
|
|
|
—
|
|
|
1,640
|
|
|
1,230
|
|
|
—
|
|
|
133,852
|
|
|
Zinc sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(662)
|
|
|
—
|
|
|
(662)
|
|
|
Lead sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,315
|
|
|
—
|
|
|
1,315
|
|
|
Metal sales
|
194,064
|
|
|
72,158
|
|
|
159,200
|
|
|
129,839
|
|
|
1,883
|
|
|
—
|
|
|
557,144
|
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales(1)
|
89,050
|
|
|
54,396
|
|
|
92,419
|
|
|
68,182
|
|
|
17,657
|
|
|
—
|
|
|
321,704
|
|
|
Amortization
|
32,357
|
|
|
9,194
|
|
|
36,298
|
|
|
9,625
|
|
|
7,761
|
|
|
1,019
|
|
|
96,254
|
|
|
Exploration
|
4,373
|
|
|
2,529
|
|
|
7,746
|
|
|
639
|
|
|
7,073
|
|
|
8,699
|
|
|
31,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses
|
6,279
|
|
|
3,835
|
|
|
7,298
|
|
|
451
|
|
|
17,770
|
|
|
29,921
|
|
|
65,554
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Fair value adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,491
|
|
|
3,491
|
|
|
Interest expense, net
|
(667)
|
|
|
(851)
|
|
|
(819)
|
|
|
(149)
|
|
|
(603)
|
|
|
(12,900)
|
|
|
(15,989)
|
|
|
Other, net
|
(2,866)
|
|
|
(2,580)
|
|
|
1
|
|
|
(12)
|
|
|
2,005
|
|
|
(858)
|
|
|
(4,310)
|
|
|
Income and mining tax (expense) benefit
|
(7,938)
|
|
|
(186)
|
|
|
(854)
|
|
|
(4,806)
|
|
|
(234)
|
|
|
2,000
|
|
|
(12,018)
|
|
|
Income (loss) from continuing operations
|
$
|
50,534
|
|
|
$
|
(1,413)
|
|
|
$
|
13,767
|
|
|
$
|
45,975
|
|
|
$
|
(47,210)
|
|
|
$
|
(47,906)
|
|
|
$
|
13,747
|
|
|
Income (loss) from discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Segment assets(2)
|
$
|
302,599
|
|
|
$
|
325,165
|
|
|
$
|
177,700
|
|
|
$
|
76,247
|
|
|
$
|
155,932
|
|
|
$
|
170,208
|
|
|
$
|
1,207,851
|
|
|
Capital expenditures
|
$
|
16,611
|
|
|
$
|
20,634
|
|
|
$
|
14,050
|
|
|
$
|
1,219
|
|
|
$
|
8,630
|
|
|
$
|
742
|
|
|
$
|
61,886
|
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2019
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
Silvertip
|
|
Other
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold sales
|
$
|
107,063
|
|
|
$
|
33,538
|
|
|
$
|
138,083
|
|
|
$
|
80,277
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
358,961
|
|
|
Silver sales
|
76,821
|
|
|
45,765
|
|
|
—
|
|
|
699
|
|
|
13,373
|
|
|
$
|
—
|
|
|
136,658
|
|
|
Zinc sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,284
|
|
|
—
|
|
|
10,284
|
|
|
Lead sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,559
|
|
|
—
|
|
|
10,559
|
|
|
Metal sales
|
183,884
|
|
|
79,303
|
|
|
138,083
|
|
|
80,976
|
|
|
34,216
|
|
|
—
|
|
|
516,462
|
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales(1)
|
107,137
|
|
|
74,896
|
|
|
90,841
|
|
|
54,942
|
|
|
76,734
|
|
|
—
|
|
|
404,550
|
|
|
Amortization
|
44,580
|
|
|
12,250
|
|
|
37,816
|
|
|
8,207
|
|
|
26,572
|
|
|
1,333
|
|
|
130,758
|
|
|
Exploration
|
3,758
|
|
|
331
|
|
|
3,970
|
|
|
102
|
|
|
1,559
|
|
|
5,606
|
|
|
15,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses
|
3,798
|
|
|
3,518
|
|
|
962
|
|
|
2,115
|
|
|
881
|
|
|
29,204
|
|
|
40,478
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,282)
|
|
|
(1,282)
|
|
|
Fair value adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,201
|
|
|
8,201
|
|
|
Interest expense, net
|
(322)
|
|
|
(599)
|
|
|
(992)
|
|
|
(75)
|
|
|
(997)
|
|
|
(16,274)
|
|
|
(19,259)
|
|
|
Other, net
|
(4,149)
|
|
|
(352)
|
|
|
(102)
|
|
|
174
|
|
|
(411)
|
|
|
1,909
|
|
|
(2,931)
|
|
|
Income and mining tax (expense) benefit
|
(684)
|
|
|
(2,737)
|
|
|
—
|
|
|
(2,149)
|
|
|
18,256
|
|
|
1,300
|
|
|
13,986
|
|
|
Income (loss) from continuing operations
|
$
|
19,456
|
|
|
$
|
(15,380)
|
|
|
$
|
3,400
|
|
|
$
|
13,560
|
|
|
$
|
(54,682)
|
|
|
$
|
(42,289)
|
|
|
$
|
(75,935)
|
|
|
Income (loss) from discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
5,693
|
|
|
$
|
5,693
|
|
|
Segment assets(2)
|
$
|
342,274
|
|
|
$
|
283,229
|
|
|
$
|
204,926
|
|
|
$
|
99,600
|
|
|
417,678
|
|
|
$
|
172,735
|
|
|
$
|
1,520,442
|
|
|
Capital expenditures
|
$
|
24,060
|
|
|
$
|
17,665
|
|
|
$
|
19,175
|
|
|
$
|
1,361
|
|
|
15,456
|
|
|
$
|
1,148
|
|
|
$
|
78,865
|
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
September 30, 2020
|
|
December 31, 2019
|
|
Total assets for reportable segments
|
$
|
1,207,851
|
|
|
$
|
1,215,783
|
|
|
Cash and cash equivalents
|
77,148
|
|
|
55,645
|
|
|
Other assets
|
86,147
|
|
|
107,208
|
|
|
Total consolidated assets
|
$
|
1,371,146
|
|
|
$
|
1,378,636
|
|
Geographic Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Lived Assets
|
September 30, 2020
|
|
December 31, 2019
|
|
United States
|
$
|
489,614
|
|
|
$
|
494,286
|
|
|
Mexico
|
297,386
|
|
|
312,168
|
|
|
Canada
|
147,197
|
|
|
146,804
|
|
|
Other
|
662
|
|
|
7,486
|
|
|
Total
|
$
|
934,859
|
|
|
$
|
960,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
United States
|
$
|
147,973
|
|
|
$
|
116,808
|
|
|
$
|
361,197
|
|
|
$
|
298,362
|
|
|
Mexico
|
81,755
|
|
|
71,337
|
|
|
194,064
|
|
|
183,884
|
|
|
Canada
|
—
|
|
|
11,324
|
|
|
1,883
|
|
|
34,216
|
|
|
Total
|
229,728
|
|
|
$
|
199,469
|
|
|
$
|
557,144
|
|
|
$
|
516,462
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 4 – RECEIVABLES
Receivables consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
September 30, 2020
|
|
December 31, 2019
|
|
Current receivables:
|
|
|
|
|
Trade receivables
|
$
|
6,589
|
|
|
$
|
6,028
|
|
|
Value added tax (“VAT”) receivable
|
13,156
|
|
|
10,729
|
|
|
Income tax receivable
|
173
|
|
|
105
|
|
|
|
|
|
|
|
Other
|
2,572
|
|
|
1,804
|
|
|
|
$
|
22,490
|
|
|
$
|
18,666
|
|
|
Non-current receivables:
|
|
|
|
|
VAT receivable(1)
|
$
|
23,493
|
|
|
$
|
28,009
|
|
|
RMC receivable(2)
|
—
|
|
|
700
|
|
|
|
|
|
|
|
|
23,493
|
|
|
28,709
|
|
|
Total receivables
|
$
|
45,983
|
|
|
$
|
47,375
|
|
(1) Represents VAT that was paid to the Mexican government associated with Coeur Mexicana’s prior royalty agreement with a subsidiary of Franco-Nevada Corporation. The Company continues to pursue recovery from the Mexican government (including through ongoing litigation). See Note 17 -- Commitments and Contingencies for additional detail. The $4.5 million decrease in the nine months ended September 30, 2020 is attributable to a weaker Mexican Peso.
(2) Represents receivable due from the successor to Republic Metals Corporation, whose bankruptcy filing in November 2018 impacted approximately 0.4 million ounces of Coeur’s silver and 6,500 ounces of Coeur’s gold. In June 2020, the Company received a $0.7 million payment in respect of certain of its claims in the bankruptcy proceedings.
NOTE 5 – INVENTORY AND ORE ON LEACH PADS
Inventory consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
September 30, 2020
|
|
December 31, 2019
|
|
Inventory:
|
|
|
|
|
Concentrate
|
$
|
1,854
|
|
|
$
|
6,557
|
|
|
Precious metals
|
13,237
|
|
|
14,040
|
|
|
Supplies
|
31,887
|
|
|
35,289
|
|
|
|
46,978
|
|
|
55,886
|
|
|
Ore on leach pads:
|
|
|
|
|
Current
|
72,326
|
|
|
66,192
|
|
|
Non-current
|
87,420
|
|
|
71,539
|
|
|
|
159,746
|
|
|
137,731
|
|
|
|
|
|
|
|
Long-term stockpile
|
$
|
3,691
|
|
|
$
|
—
|
|
|
|
|
|
|
|
Total inventory and ore on leach pads
|
$
|
210,415
|
|
|
$
|
193,617
|
|
Prior to the temporary suspension of mining activities at Silvertip, as a result of lower than expected production levels, grades and recovery rates as well as reduced process plant availability, Silvertip recognized inventory write-downs of $10.4 million, which are reflected in Costs applicable to sales for the nine months ended September 30, 2020. Subsequent to the suspension of mining activities, Silvertip has recognized additional supply inventory write-downs of $3.3 million, which are reflected in Pre-development, reclamation, and other for the nine months ended September 30, 2020.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 6 – INVESTMENTS
Equity and Debt Securities
The Company makes strategic investments in equity and debt securities of silver and gold exploration, development and royalty and streaming companies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2020
|
|
In thousands
|
Cost
|
|
Gross
Unrealized
Losses
|
|
Gross
Unrealized
Gains
|
|
Estimated
Fair Value
|
|
Equity Securities
|
|
|
|
|
|
|
|
|
Metalla Royalty & Streaming Ltd.
|
$
|
1,851
|
|
|
$
|
—
|
|
|
$
|
5,269
|
|
|
$
|
7,120
|
|
|
Integra Resources Corp.
|
7,500
|
|
|
—
|
|
|
2,576
|
|
|
10,076
|
|
|
Rockhaven Resources Ltd.
|
2,064
|
|
|
(136)
|
|
|
—
|
|
|
1,928
|
|
|
Other
|
448
|
|
|
—
|
|
|
290
|
|
|
738
|
|
|
Equity securities
|
$
|
11,863
|
|
|
$
|
(136)
|
|
|
$
|
8,135
|
|
|
$
|
19,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2019
|
|
In thousands
|
Cost
|
|
Gross
Unrealized
Losses
|
|
Gross
Unrealized
Gains
|
|
Estimated
Fair Value
|
|
Equity Securities
|
|
|
|
|
|
|
|
|
Metalla Royalty & Streaming Ltd.
|
$
|
10,463
|
|
|
$
|
—
|
|
|
$
|
17,725
|
|
|
$
|
28,188
|
|
|
Integra Resources Corp.
|
5,000
|
|
|
—
|
|
|
355
|
|
|
5,355
|
|
|
Rockhaven Resources, Ltd.
|
2,064
|
|
|
(376)
|
|
|
—
|
|
|
1,688
|
|
|
Other
|
1,304
|
|
|
(889)
|
|
|
—
|
|
|
415
|
|
|
Equity securities
|
$
|
18,831
|
|
|
$
|
(1,265)
|
|
|
$
|
18,080
|
|
|
$
|
35,646
|
|
On June 30, 2020, the Company completed the sale of 3,910,000 shares of common stock of Metalla Royalty & Streaming Ltd. (“Metalla”) (“Metalla Common Shares”) at a price of $5.30 per Metalla Common Share for gross proceeds of $20.7 million. After transaction related expenses of $1.3 million, the Company recorded a realized gain of $11.6 million on the sale of the Metalla Common Shares. In addition, on June 30, 2020, one of the Company’s subsidiaries completed the repurchase from Metalla of a 0.3875% royalty interest in the Company’s Wharf mine in exchange for 421,554 Metalla Common Shares. Based on the closing price of Metalla Common Shares on June 30, 2020, the Company recorded a realized gain of $1.4 million on the royalty repurchase transaction. Following the completion of both transactions, the Company held 909,756 Metalla Common Shares.
On September 14, 2020, the Company participated in an offering of shares of common stock of Integra Resources Corp. (“Integra”) (“Integra Common Shares”), exercising a previously-acquired participation right, and purchased an additional 735,294 Integra Common Shares at a price of $3.40 per Integra Common Share for a total of $2.5 million. Following completion of the transaction, Coeur owned approximately 5.6% of issued and outstanding Integra Common Shares.
NOTE 7 – LEASES
Right of Use Assets and Liabilities
The following table summarizes quantitative information pertaining to the Company’s finance and operating leases.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
In thousands
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Lease Cost
|
|
|
|
|
|
|
|
|
|
|
Operating lease cost
|
|
|
$
|
3,067
|
|
|
$
|
2,735
|
|
|
$
|
8,969
|
|
|
$
|
8,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term operating lease cost
|
|
|
$
|
2,465
|
|
|
$
|
2,899
|
|
|
$
|
6,293
|
|
|
$
|
9,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance Lease Cost:
|
|
|
|
|
|
|
|
|
|
|
Amortization of leased assets
|
|
|
$
|
4,109
|
|
|
$
|
4,287
|
|
|
$
|
16,506
|
|
|
$
|
14,078
|
|
|
Interest on lease liabilities
|
|
|
927
|
|
|
1,210
|
|
|
2,852
|
|
|
3,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total finance lease cost
|
|
|
$
|
5,036
|
|
|
$
|
5,497
|
|
|
$
|
19,358
|
|
|
$
|
17,537
|
|
Supplemental cash flow information related to leases was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
In thousands
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Other Information
|
|
|
|
|
|
|
|
|
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows from operating leases
|
|
|
$
|
5,850
|
|
|
$
|
5,634
|
|
|
$
|
16,201
|
|
|
$
|
18,234
|
|
|
Operating cash flows from finance leases
|
|
|
$
|
927
|
|
|
$
|
1,210
|
|
|
$
|
2,852
|
|
|
$
|
3,459
|
|
|
Financing cash flows from finance leases
|
|
|
$
|
8,557
|
|
|
$
|
4,744
|
|
|
$
|
20,171
|
|
|
$
|
20,210
|
|
Supplemental balance sheet information related to leases was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
September 30, 2020
|
|
December 31, 2019
|
|
Operating Leases
|
|
|
|
|
Other assets, non-current
|
$
|
41,506
|
|
|
$
|
49,169
|
|
|
|
|
|
|
|
Accrued liabilities and other
|
$
|
12,716
|
|
|
$
|
13,104
|
|
|
Other long-term liabilities
|
28,364
|
|
|
40,634
|
|
|
Total operating lease liabilities
|
$
|
41,080
|
|
|
$
|
53,738
|
|
|
|
|
|
|
|
Finance Leases
|
|
|
|
|
Property and equipment, gross
|
$
|
100,474
|
|
|
$
|
103,903
|
|
|
Accumulated depreciation
|
(54,275)
|
|
|
(42,209)
|
|
|
Property and equipment, net
|
$
|
46,199
|
|
|
$
|
61,694
|
|
|
|
|
|
|
|
Debt, current
|
$
|
23,265
|
|
|
$
|
22,746
|
|
|
Debt, non-current
|
30,459
|
|
|
45,866
|
|
|
Total finance lease liabilities
|
$
|
53,724
|
|
|
$
|
68,612
|
|
|
|
|
|
|
|
Weighted Average Remaining Lease Term
|
|
|
|
|
Weighted-average remaining lease term - finance leases
|
1.45
|
|
1.73
|
|
Weighted-average remaining lease term - operating leases
|
3.93
|
|
4.70
|
|
|
|
|
|
|
Weighted Average Discount Rate
|
|
|
|
|
Weighted-average discount rate - finance leases
|
5.35
|
%
|
|
5.40
|
%
|
|
Weighted-average discount rate - operating leases
|
5.17
|
%
|
|
5.20
|
%
|
In the quarter ended June 30, 2020, the Company entered into an agreement to modify one of its operating leases, significantly reducing the lease amount and lease term, thereby decreasing the operating lease liability at remeasurement. The Company recognized a gain of $4.1 million in connection with this lease modification, which is recognized in Pre-development, reclamation, and other, together with the adjustment to the right of use asset and operating lease liability.
Minimum future lease payments under finance and operating leases with terms longer than one year are as follows:
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2020 (In thousands)
|
|
|
|
|
|
Operating leases
|
|
Finance leases
|
|
2020
|
$
|
3,174
|
|
|
$
|
5,975
|
|
|
2021
|
11,119
|
|
|
24,670
|
|
|
2022
|
10,684
|
|
|
17,822
|
|
|
2023
|
10,205
|
|
|
8,501
|
|
|
2024
|
8,605
|
|
|
1,699
|
|
|
Thereafter
|
—
|
|
|
134
|
|
|
Total
|
$
|
43,787
|
|
|
$
|
58,801
|
|
|
Less: imputed interest
|
(2,707)
|
|
|
(5,077)
|
|
|
Net lease obligation
|
$
|
41,080
|
|
|
$
|
53,724
|
|
NOTE 8 – DEBT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020
|
|
December 31, 2019
|
|
In thousands
|
Current
|
|
Non-Current
|
|
Current
|
|
Non-Current
|
|
2024 Senior Notes, net(1)
|
$
|
—
|
|
|
$
|
227,414
|
|
|
$
|
—
|
|
|
$
|
226,885
|
|
|
Revolving Credit Facility(2)
|
—
|
|
|
20,000
|
|
|
—
|
|
|
—
|
|
|
Finance lease obligations
|
23,265
|
|
|
30,459
|
|
|
22,746
|
|
|
45,866
|
|
|
|
$
|
23,265
|
|
|
$
|
277,873
|
|
|
$
|
22,746
|
|
|
$
|
272,751
|
|
(1) Net of unamortized debt issuance costs of $2.6 million and $3.1 million at September 30, 2020 and December 31, 2019, respectively.
(2) Unamortized debt issuance costs of $1.7 million and $2.3 million at September 30, 2020 and December 31, 2019, respectively, included in Other Non-Current Assets.
2024 Senior Notes
In May 2017, the Company completed an offering of $250.0 million in aggregate principal amount of 5.875% Senior Notes due 2024 (“2024 Senior Notes”) in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, for net proceeds of approximately $245.0 million, followed by an exchange offer for publicly-traded 2024 Senior Notes. For more details, please see Note 12 -- Debt contained in the 2019 10-K.
Revolving Credit Facility
At September 30, 2020, the Company had $20.0 million drawn, and $20.5 million in letters of credit outstanding under, its $250.0 million revolving credit facility pursuant to the credit agreement originally entered into in September 2017 and subsequently amended among the Company, as borrower, and certain subsidiaries of the Company, as guarantors, and Bank of America, N.A., Royal Bank of Canada, Bank of Montreal, Chicago Branch, and the Bank of Nova Scotia as lenders (the “RCF”), leaving $209.5 million available under the RCF. At September 30, 2020, the interest rate on the principal of the RCF was 2.7%.
Finance Lease Obligations
From time-to-time, the Company acquires mining equipment and facilities under finance lease agreements. In the nine months ended September 30, 2020, the Company entered into new lease financing arrangements primarily for mining equipment at Kensington and Palmarejo. All capital lease obligations are recorded, upon lease inception, at the present value of future minimum lease payments. See Note 7 -- Leases for additional qualitative and quantitative disclosures related to finance leasing arrangements.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Interest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
|
In thousands
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
2024 Senior Notes
|
$
|
3,378
|
|
|
$
|
3,563
|
|
|
$
|
10,134
|
|
|
$
|
10,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving Credit Facility
|
767
|
|
|
963
|
|
|
2,520
|
|
|
4,769
|
|
|
|
|
Finance lease obligations
|
927
|
|
|
1,210
|
|
|
2,852
|
|
|
3,459
|
|
|
|
|
Amortization of debt issuance costs
|
372
|
|
|
378
|
|
|
1,143
|
|
|
1,110
|
|
|
|
|
Accretion of Silvertip contingent consideration
|
—
|
|
|
182
|
|
|
—
|
|
|
541
|
|
|
|
|
Other debt obligations
|
45
|
|
|
58
|
|
|
261
|
|
|
60
|
|
|
|
|
Capitalized interest
|
(393)
|
|
|
(374)
|
|
|
(921)
|
|
|
(1,587)
|
|
|
|
|
Total interest expense, net of capitalized interest
|
$
|
5,096
|
|
|
$
|
5,980
|
|
|
$
|
15,989
|
|
|
$
|
19,259
|
|
|
|
NOTE 9 – RECLAMATION
Reclamation and mine closure costs are based principally on legal and regulatory requirements. Management estimates costs associated with reclamation of mining properties. On an ongoing basis, management evaluates its estimates and assumptions, and future expenditures could differ from current estimates.
Changes to the Company’s asset retirement obligations for its operating sites are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
In thousands
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Asset retirement obligation - Beginning
|
$
|
138,904
|
|
|
$
|
137,545
|
|
|
$
|
134,543
|
|
|
$
|
133,508
|
|
|
Accretion
|
2,924
|
|
|
3,024
|
|
|
8,591
|
|
|
8,878
|
|
|
|
|
|
|
|
|
|
|
|
Settlements
|
(930)
|
|
|
(833)
|
|
|
(2,236)
|
|
|
(2,650)
|
|
|
Asset retirement obligation - Ending
|
$
|
140,898
|
|
|
$
|
139,736
|
|
|
$
|
140,898
|
|
|
$
|
139,736
|
|
The Company accrued $1.8 million and $1.9 million at each of September 30, 2020 and December 31, 2019, respectively, for reclamation liabilities related to former mining activities, which are included in Reclamation.
NOTE 10 - INCOME AND MINING TAXES
The following table summarizes the components of Income and mining tax (expense) benefit for the three and nine months ended September 30, 2020 and 2019 by significant jurisdiction:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
In thousands
|
Income (loss) before tax
|
Tax (expense) benefit
|
|
Income (loss) before tax
|
Tax (expense) benefit
|
|
Income (loss) before tax
|
Tax (expense) benefit
|
|
Income (loss) before tax
|
Tax (expense) benefit
|
|
United States
|
$
|
24,592
|
|
$
|
(6,003)
|
|
|
$
|
968
|
|
$
|
13
|
|
|
$
|
26,132
|
|
$
|
(5,913)
|
|
|
$
|
(21,914)
|
|
$
|
(3,549)
|
|
|
Canada
|
(12,895)
|
|
—
|
|
|
(24,844)
|
|
1,123
|
|
|
(54,544)
|
|
232
|
|
|
(78,937)
|
|
18,462
|
|
|
Mexico
|
28,320
|
|
(7,110)
|
|
|
9,882
|
|
(1,363)
|
|
|
54,483
|
|
(6,366)
|
|
|
11,403
|
|
(938)
|
|
|
Other jurisdictions
|
(48)
|
|
—
|
|
|
(65)
|
|
9
|
|
|
(306)
|
|
29
|
|
|
(473)
|
|
11
|
|
|
|
$
|
39,969
|
|
$
|
(13,113)
|
|
|
$
|
(14,059)
|
|
$
|
(218)
|
|
|
$
|
25,765
|
|
$
|
(12,018)
|
|
|
$
|
(89,921)
|
|
$
|
13,986
|
|
During the third quarter of 2020, the Company reported estimated income and mining tax expense of approximately $13.1 million, resulting in an effective tax rate of 32.8%. This compares to income tax expense of $0.2 million for an effective tax rate of 1.6% during the third quarter of 2019. The comparability of the Company’s income and mining tax (expense) benefit and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) mining taxes; (ii) variations in our income before income taxes; (iii) geographic distribution of that income (iv) foreign exchange rates; (v) the impact of uncertain tax positions; and (vi) the non-recognition of tax assets. Therefore, the effective tax rate will fluctuate, sometimes significantly, period to period.
A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
that the Company ultimately will be more likely than not able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of factors that impact the Company’s ability to realize its deferred tax assets. For additional information, please see the section titled “Risk Factors” in the 2019 10-K.
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The statute of limitations remains open from 2016 forward for the U.S. federal jurisdiction and from 2011 forward for certain other foreign jurisdictions. As a result of statutes of limitation that will begin to expire within the next twelve months in various jurisdictions and possible settlements of audit-related issues with taxing authorities in various jurisdictions with respect to which none of the issues are individually significant, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits will decrease between $0.5 million and $1.5 million in the next twelve months.
At September 30, 2020 and December 31, 2019, the Company had $0.6 million and $2.7 million of total gross unrecognized tax benefits from continuing operations, respectively, that, if recognized, would positively impact the Company’s effective income tax rate. The Company’s continuing practice is to recognize potential interest and/or penalties related to unrecognized tax benefits as part of its income tax expense. At September 30, 2020 and December 31, 2019, the amount of accrued income-tax-related interest and penalties was $1.0 million and $2.3 million, respectively.
NOTE 11 – STOCK-BASED COMPENSATION
The Company has stock incentive plans for executives, directors and eligible employees. Stock awards include performance shares, restricted stock and stock options. Stock-based compensation expense in the three and nine months ended September 30, 2020 was $2.0 million and $6.3 million, respectively, compared to $2.5 million and $6.7 million for the three and nine months ended September 30, 2019, respectively. At September 30, 2020, there was $10.4 million of unrecognized stock-based compensation cost which is expected to be recognized over a weighted-average remaining vesting period of 1.7 years.
The following table summarizes the grants awarded during the nine months ended September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant date
|
|
Restricted
stock
|
|
Grant date fair
value of
restricted stock
|
|
Performance
shares
|
|
Grant date fair
value of
performance
shares
|
|
June 3, 2020
|
|
167,125
|
|
|
$
|
5.21
|
|
|
123,777
|
|
|
$
|
3.91
|
|
|
May 19, 2020
|
|
—
|
|
|
$
|
—
|
|
|
198,273
|
|
|
$
|
3.91
|
|
|
May 13, 2020
|
|
54,660
|
|
|
$
|
3.97
|
|
|
998,618
|
|
|
$
|
3.91
|
|
|
February 25, 2020
|
|
120,491
|
|
|
$
|
4.94
|
|
|
—
|
|
|
$
|
—
|
|
|
February 24, 2020
|
|
1,304,763
|
|
|
$
|
5.12
|
|
|
—
|
|
|
$
|
—
|
|
NOTE 12 – FAIR VALUE MEASUREMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
In thousands
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
Unrealized gain (loss) on equity securities
|
$
|
2,276
|
|
|
$
|
3,877
|
|
|
$
|
12,307
|
|
|
$
|
7,515
|
|
|
|
|
Realized gain (loss) on equity securities
|
(33)
|
|
|
485
|
|
|
(8,816)
|
|
|
859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap, net
|
—
|
|
|
15
|
|
|
—
|
|
|
(173)
|
|
|
|
|
Fair value adjustments, net
|
$
|
2,243
|
|
|
$
|
4,377
|
|
|
$
|
3,491
|
|
|
$
|
8,201
|
|
|
|
Accounting standards establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1), secondary priority to quoted prices in inactive markets or observable inputs (Level 2), and the lowest priority to unobservable inputs (Level 3).
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at September 30, 2020
|
|
In thousands
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
19,862
|
|
|
$
|
19,862
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Foreign currency forward exchange contracts
|
7,614
|
|
|
—
|
|
|
7,614
|
|
|
—
|
|
|
Provisional metal sales contracts
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
|
$
|
27,479
|
|
|
$
|
19,862
|
|
|
$
|
7,617
|
|
|
$
|
—
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Gold zero cost collars
|
$
|
33,926
|
|
|
$
|
—
|
|
|
$
|
33,926
|
|
|
$
|
—
|
|
|
Provisional metal sales contracts
|
299
|
|
|
—
|
|
|
299
|
|
|
—
|
|
|
|
$
|
34,225
|
|
|
$
|
—
|
|
|
$
|
34,225
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at December 31, 2019
|
|
In thousands
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
Equity and debt securities
|
$
|
35,646
|
|
|
$
|
35,646
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Provisional metal sales contracts
|
753
|
|
|
—
|
|
|
753
|
|
|
—
|
|
|
|
$
|
36,399
|
|
|
$
|
35,646
|
|
|
$
|
753
|
|
|
$
|
—
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Silvertip contingent consideration
|
$
|
25,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25,000
|
|
|
Provisional metal sales contracts
|
275
|
|
|
—
|
|
|
275
|
|
|
—
|
|
|
Gold zero cost collars
|
136
|
|
|
—
|
|
|
136
|
|
|
—
|
|
|
|
$
|
25,411
|
|
|
$
|
—
|
|
|
$
|
411
|
|
|
$
|
25,000
|
|
The Company’s investments in equity securities are recorded at fair market value in the financial statements based primarily on quoted market prices. Such instruments are classified within Level 1 of the fair value hierarchy.
The Company’s foreign currency forward exchange contracts are valued using pricing models with inputs derived from observable market data, including forward market prices and other unobservable inputs. The Company’s gold zero cost collars are valued using pricing models with inputs derived from observable market data, including forward market prices, yield curves, credit spreads, and other unobservable inputs. The Company’s provisional metal sales contracts include concentrate and certain doré sales contracts that are valued using pricing models with inputs derived from observable market data, including forward market prices and other unobservable inputs. The model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.
In October 2017, the Company acquired the Silvertip mine from shareholders of JDS Silver Holdings Ltd (the “Silvertip Acquisition”). The consideration for the Silvertip Acquisition included two $25.0 million contingent payments, which were payable in cash and common stock upon reaching a future permitting milestone and resource declaration milestone, respectively. The fair value of the Silvertip contingent consideration was estimated based on an estimated discount rate of 2.5% for the contingent permitting payment and 2.9% for the contingent resource declaration payment and was classified within Level 3 of the fair value hierarchy. During 2019, the Company paid the $25.0 million due for the permitting milestone in the form of cash and common stock, and in the first quarter of 2020, the Company paid the remaining $25.0 million due for the resource declaration milestone in the form of cash and common stock.
No assets or liabilities were transferred between fair value levels in the nine months ended September 30, 2020.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
The following tables present the changes in the fair value of the Company's Level 3 financial assets and liabilities in the nine months ended September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
In thousands
|
Balance at the beginning of the period
|
|
|
|
Revaluation
|
|
Settlements
|
|
Accretion
|
|
Balance at the
end of the
period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Silvertip contingent consideration
|
$
|
25,000
|
|
|
|
|
$
|
—
|
|
|
$
|
(25,000)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
The fair value of financial assets and liabilities carried at book value in the financial statements at September 30, 2020 and December 31, 2019 is presented in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020
|
|
In thousands
|
Book Value
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
2024 Senior Notes(1)
|
$
|
227,414
|
|
|
$
|
228,824
|
|
|
$
|
—
|
|
|
$
|
228,824
|
|
|
$
|
—
|
|
|
Revolving Credit Facility(2)
|
$
|
20,000
|
|
|
$
|
20,000
|
|
|
$
|
—
|
|
|
$
|
20,000
|
|
|
$
|
—
|
|
(1) Net of unamortized debt issuance costs of $2.6 million.
(2) Unamortized debt issuance costs of $1.7 million included in Other Non-Current Assets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
In thousands
|
Book Value
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
2024 Senior Notes(1)
|
$
|
226,885
|
|
|
$
|
228,585
|
|
|
$
|
—
|
|
|
$
|
228,585
|
|
|
$
|
—
|
|
|
Revolving Credit Facility(2)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1) Net of unamortized debt issuance costs of $3.1 million.
(2) Unamortized debt issuance costs of $2.3 million included in Other Non-Current Assets.
The fair value of the 2024 Senior Notes was estimated using quoted market prices. The fair value of the RCF approximates book value as the liability is secured, has a variable interest rate, and lacks significant credit concerns.
NOTE 13 – DERIVATIVE FINANCIAL INSTRUMENTS & HEDGING ACTIVITIES
The Company is exposed to various market risks, including the effect of changes in metal prices, foreign currency exchange rates and interest rates, and uses derivatives to manage financial exposures that occur in the normal course of business. The Company does not hold or issue derivatives for trading or speculative purposes.
The Company may elect to designate certain derivatives as hedging instruments under U.S. GAAP. The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking hedge transactions. This process includes linking all derivatives designated as hedges to either recognized assets or liabilities or forecasted transactions and assessing, both at inception and on an ongoing basis, the effectiveness of the hedging relationships.
Derivatives Not Designated as Hedging Instruments
Provisional Metal Sales
The Company enters into sales contracts with third-party smelters, refiners and off-take customers which, in some cases, provide for a provisional payment based upon preliminary assays and quoted metal prices. The provisionally priced sales contracts contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable recorded at the forward price at the time of sale. The embedded derivatives do not qualify for hedge accounting and are marked to market through earnings each period until final settlement.
At September 30, 2020, the Company had the following derivative instruments that settle as follows:
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands except average prices and notional ounces
|
2020
|
|
Thereafter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisional gold sales contracts
|
$
|
16,396
|
|
|
$
|
—
|
|
|
Average gold price per ounce
|
$
|
1,928
|
|
|
$
|
—
|
|
|
Notional ounces
|
8,504
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following summarizes the classification of the fair value of the derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020
|
|
|
|
|
|
|
|
In thousands
|
Prepaid expenses and other
|
|
Accrued liabilities and other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisional metal sales contracts
|
$
|
3
|
|
|
$
|
299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
In thousands
|
Prepaid expenses and other
|
|
Accrued liabilities and other
|
|
|
|
|
|
|
|
Provisional metal sales contracts
|
$
|
753
|
|
|
$
|
275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following represent mark-to-market gains (losses) on derivative instruments in the three and nine months ended September 30, 2020 and 2019, respectively (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
|
Financial statement line
|
Derivative
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
Revenue
|
Provisional metal sales contracts
|
$
|
(962)
|
|
|
$
|
233
|
|
|
$
|
250
|
|
|
$
|
(1,461)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustments, net
|
Interest rate swaps
|
—
|
|
|
15
|
|
|
—
|
|
|
(173)
|
|
|
|
|
|
|
$
|
(962)
|
|
|
$
|
248
|
|
|
$
|
250
|
|
|
$
|
(1,634)
|
|
|
|
Derivatives Designated as Cash Flow Hedging Strategies
To protect the Company’s exposure to fluctuations in metal prices the Company entered into Asian (or average value) put and call option contracts in net-zero-cost collar arrangements. The contracts are net cash settled monthly and, if the price of gold at the time of expiration is between the put and call prices, would expire at no cost to the Company. If the price of gold at the time of expiration is lower than the put prices or higher than the call prices, it would result in a realized gain or loss, respectively. The Company has elected to designate these instruments as cash flow hedges of forecasted transactions at their inception.
To protect the Company’s exposure to fluctuations in foreign currency exchange rates for subsidiaries whose functional currency is U.S dollar and are exposed to forecasted transaction denominated in the Mexican Peso and the Canadian Dollar, in March 2020, the Company entered into foreign currency forward exchange contracts to manage this risk and designated these instruments as cash flow hedges of forecasted foreign denominated transactions.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
At September 30, 2020, the Company had the following derivative cash flow hedge instruments that settle as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands except average prices and notional ounces
|
|
|
2020
|
2021 and Thereafter
|
|
|
|
Gold put options
|
|
|
|
|
|
|
|
Average gold strike price per ounce
|
|
|
$
|
1,471
|
|
$
|
1,612
|
|
|
|
|
Notional ounces
|
|
|
55,500
|
|
284,700
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold call options
|
|
|
|
|
|
|
|
Average gold strike price per ounce
|
|
|
$
|
1,823
|
|
$
|
1,943
|
|
|
|
|
Notional ounces
|
|
|
55,500
|
|
284,700
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward exchange contracts - Mexican Peso
|
|
|
|
|
|
|
|
Average Mexican Peso exchange rate
|
|
|
$
|
24.35
|
|
$
|
25.00
|
|
|
|
|
Notional US dollar
|
|
|
15,000
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward exchange contracts - Canadian Dollar
|
|
|
|
|
|
|
|
Average Canadian Dollar exchange rate
|
|
|
$
|
1.44
|
|
—
|
|
|
|
|
Notional US dollar
|
|
|
7,500
|
|
$
|
—
|
|
|
|
The effective portions of cash flow hedges are recorded in accumulated other comprehensive income (loss) (“AOCI”) until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of metal sales revenue are recognized as a component of net sales in the same period as the related revenue is recognized. Deferred gains and losses associated with cash flow hedges of foreign currency transactions are recognized as a component of costs applicable to sales in the same period the related expenses are incurred.
As of September 30, 2020, the Company had $26.3 million of net after-tax loss in AOCI related to losses from cash flow hedge transactions, of which $13.8 million of net after-tax losses is expected to be recognized in its Condensed Consolidated Statement of Comprehensive Income (Loss) during the next 12 months. Actual amounts ultimately reclassified to net income are dependent on the price of gold for metal contracts and the Canadian and Mexican exchange rates for foreign currency contracts.
The following summarizes the classification of the fair value of the derivative instruments designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020
|
|
|
|
|
|
|
|
In thousands
|
Prepaid expenses and other
|
|
Accrued liabilities and other
|
|
|
|
|
|
|
|
Gold zero cost collars
|
$
|
—
|
|
|
$
|
33,926
|
|
|
|
|
|
|
|
|
Foreign currency forward exchange contracts
|
7,614
|
|
|
—
|
|
|
|
|
|
|
|
|
|
$
|
7,614
|
|
|
$
|
33,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
In thousands
|
Prepaid expenses and other
|
|
Accrued liabilities and other
|
|
|
|
|
|
|
|
Gold zero cost collars
|
$
|
—
|
|
|
$
|
136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
The following table sets forth the pre-tax gains (losses) on derivatives designated as cash flow hedges that have been included in Accumulated Other Comprehensive Income (“AOCI”) and the Condensed Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30, 2020 and 2019, respectively (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
Amount of Gain (Loss) Recognized in AOCI
|
|
|
|
|
|
|
|
|
|
|
Gold zero cost collars
|
$
|
(24,003)
|
|
|
$
|
—
|
|
|
$
|
(38,353)
|
|
|
$
|
—
|
|
|
|
|
Foreign currency forward exchange contracts
|
2,755
|
|
|
—
|
|
|
10,214
|
|
|
—
|
|
|
|
|
|
$
|
(21,248)
|
|
|
$
|
—
|
|
|
$
|
(28,139)
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of (Gain) Loss Reclassified From AOCI to Earnings
|
|
|
|
|
|
|
|
|
|
|
Gold zero cost collars
|
$
|
4,563
|
|
|
$
|
—
|
|
|
$
|
4,563
|
|
|
$
|
—
|
|
|
|
|
Foreign currency forward exchange contracts
|
(1,921)
|
|
|
—
|
|
|
(2,600)
|
|
|
—
|
|
|
|
|
|
$
|
2,642
|
|
|
$
|
—
|
|
|
$
|
1,963
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On August 10, 2020, in order to obtain more working capital flexibility, the Company novated certain of its gold zero cost collar option contracts to a different counterparty. Other than a change in counterparty and the credit support provided under the agreements with the old and new counterparties, the novation did not result in any changes to the critical terms of the applicable option contracts, nor was there a change in creditworthiness in relation to the new counterparty. To execute the novation, the Company was required to make an upfront payment of $3.8 million, as compensation for more favorable credit and margin requirements.
Credit Risk
The credit risk exposure related to any derivative instrument is limited to the unrealized gains, if any, on outstanding contracts based on current market prices. To reduce counter-party credit exposure, the Company enters into contracts with institutions management deems credit-worthy and limits credit exposure to each institution. The Company does not anticipate non-performance by any of its counterparties.
NOTE 14 - OTHER, NET
Other, net consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
In thousands
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
Foreign exchange gain (loss)
|
$
|
(599)
|
|
|
$
|
(2,945)
|
|
|
$
|
(665)
|
|
|
$
|
(4,078)
|
|
|
|
|
Gain (loss) on sale of assets and investments
|
(2,476)
|
|
|
(100)
|
|
|
(2,458)
|
|
|
(120)
|
|
|
|
|
Gold zero cost collars novation fee
|
(3,819)
|
|
|
—
|
|
|
(3,819)
|
|
|
—
|
|
|
|
|
Gain (loss) on sale of Manquiri NSR consideration(1)
|
—
|
|
|
—
|
|
|
365
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on Silvertip contingent consideration
|
—
|
|
|
—
|
|
|
955
|
|
|
—
|
|
|
|
|
Interest income on notes receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
199
|
|
|
|
|
Other
|
582
|
|
|
(589)
|
|
|
1,312
|
|
|
1,068
|
|
|
|
|
Other, net
|
$
|
(6,312)
|
|
|
$
|
(3,634)
|
|
|
$
|
(4,310)
|
|
|
$
|
(2,931)
|
|
|
|
(1) As defined in Note 18 -- Discontinued Operations.
NOTE 15 – NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of the Company’s common stock outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.
For the three and nine months ended September 30, 2020, there were 182,803 and 1,722,014 common stock equivalents, respectively, related to equity-based awards were not included in the diluted earnings per share calculation as the
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
shares would be antidilutive. Similarly, 319,162 and 1,312,737 common stock equivalents were excluded in the diluted earnings per share calculation for the three and nine months ended September 30, 2019, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
|
|
In thousands except per share amounts
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
Net income (loss) available to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
$
|
26,856
|
|
|
$
|
(14,277)
|
|
|
$
|
13,747
|
|
|
$
|
(75,935)
|
|
|
|
|
Income (loss) from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
5,693
|
|
|
|
|
|
$
|
26,856
|
|
|
$
|
(14,277)
|
|
|
$
|
13,747
|
|
|
$
|
(70,242)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
240,983
|
|
|
225,860
|
|
|
240,729
|
|
|
212,098
|
|
|
|
|
Effect of stock-based compensation plans
|
2,866
|
|
|
—
|
|
|
1,277
|
|
|
—
|
|
|
|
|
Diluted
|
243,849
|
|
|
225,860
|
|
|
242,006
|
|
|
212,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
$
|
0.11
|
|
|
$
|
(0.06)
|
|
|
$
|
0.06
|
|
|
$
|
(0.36)
|
|
|
|
|
Income (loss) from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
0.03
|
|
|
|
|
Basic(1)
|
$
|
0.11
|
|
|
$
|
(0.06)
|
|
|
$
|
0.06
|
|
|
$
|
(0.33)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
$
|
0.11
|
|
|
$
|
(0.06)
|
|
|
$
|
0.06
|
|
|
$
|
(0.36)
|
|
|
|
|
Income (loss) from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
0.03
|
|
|
|
|
Diluted(1)
|
$
|
0.11
|
|
|
$
|
(0.06)
|
|
|
$
|
0.06
|
|
|
$
|
(0.33)
|
|
|
|
(1) Due to rounding, the sum of net income per share from continuing operations and discontinued operations may not equal net income per share.
On April 23, 2020 the Company entered into an ATM Equity Offering Sales Agreement (the “Sales Agreement”) with BofA Securities, Inc. and RBC Capital Markets, LLC as sales agents (the “Sales Agents”) and filed a prospectus supplement for the sale of its common stock, par value $0.01 per share, by way of an “at the market” offering having an aggregate offering price of up to $100,000,000 (the “ATM Program”). Sales under the ATM Program, if any, will be made pursuant to the terms of the Sales Agreement. At September 30, 2020, the Company had not sold any of its common stock under the ATM Program.
NOTE 16 - SUPPLEMENTAL GUARANTOR INFORMATION
The following Consolidating Financial Statements are presented to satisfy disclosure requirements of Rule 3-10 of Regulation S-X resulting from the guarantees by Coeur Alaska, Inc., Coeur Explorations, Inc., Coeur Rochester, Inc., Coeur South America Corp., Wharf Resources (U.S.A.), Inc. and its subsidiaries, Coeur Capital, Inc., Coeur Sterling, Inc., Sterling Intermediate Holdco, Inc., and Coeur Sterling Holdings LLC (collectively, the “Subsidiary Guarantors”) of the 2024 Senior Notes. The following schedules present Consolidating Financial Statements of (a) Coeur, the parent company; (b) the Subsidiary Guarantors; and (c) certain wholly-owned domestic and foreign subsidiaries of the Company (collectively, the “Non-Guarantor Subsidiaries”). Each of the Subsidiary Guarantors is 100% owned by Coeur and the guarantees are full and unconditional and joint and several obligations. There are no restrictions on the ability of Coeur to obtain funds from the Subsidiary Guarantors by dividend or loan.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
13,702
|
|
|
$
|
12,359
|
|
|
$
|
51,087
|
|
|
$
|
—
|
|
|
$
|
77,148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
(43)
|
|
|
7,150
|
|
|
15,383
|
|
|
—
|
|
|
22,490
|
|
|
Ore on leach pads
|
—
|
|
|
72,326
|
|
|
—
|
|
|
—
|
|
|
72,326
|
|
|
Inventory
|
—
|
|
|
23,103
|
|
|
23,875
|
|
|
—
|
|
|
46,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other
|
13,313
|
|
|
1,218
|
|
|
5,754
|
|
|
—
|
|
|
20,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,972
|
|
|
116,156
|
|
|
96,099
|
|
|
—
|
|
|
239,227
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
2,045
|
|
|
149,088
|
|
|
74,982
|
|
|
—
|
|
|
226,115
|
|
|
Mining properties, net
|
—
|
|
|
339,067
|
|
|
369,677
|
|
|
—
|
|
|
708,744
|
|
|
Ore on leach pads
|
—
|
|
|
87,420
|
|
|
—
|
|
|
—
|
|
|
87,420
|
|
|
Restricted assets
|
1,474
|
|
|
206
|
|
|
7,139
|
|
|
—
|
|
|
8,819
|
|
|
Equity and debt securities
|
19,862
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,862
|
|
|
Receivables
|
—
|
|
|
—
|
|
|
23,493
|
|
|
—
|
|
|
23,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment in subsidiaries
|
476,547
|
|
|
75,497
|
|
|
(74,760)
|
|
|
(477,284)
|
|
|
—
|
|
|
Other
|
234,363
|
|
|
50,949
|
|
|
2,641
|
|
|
(230,487)
|
|
|
57,466
|
|
|
TOTAL ASSETS
|
$
|
761,263
|
|
|
$
|
818,383
|
|
|
$
|
499,271
|
|
|
$
|
(707,771)
|
|
|
$
|
1,371,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
3,622
|
|
|
$
|
37,662
|
|
|
$
|
30,177
|
|
|
$
|
—
|
|
|
$
|
71,461
|
|
|
Other accrued liabilities
|
45,787
|
|
|
39,482
|
|
|
22,721
|
|
|
—
|
|
|
107,990
|
|
|
Debt
|
—
|
|
|
15,823
|
|
|
7,442
|
|
|
—
|
|
|
23,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclamation
|
—
|
|
|
1,628
|
|
|
1,466
|
|
|
—
|
|
|
3,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,409
|
|
|
94,595
|
|
|
61,806
|
|
|
—
|
|
|
205,810
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Debt
|
247,415
|
|
|
32,876
|
|
|
228,069
|
|
|
(230,487)
|
|
|
277,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclamation
|
—
|
|
|
95,187
|
|
|
44,421
|
|
|
—
|
|
|
139,608
|
|
|
Deferred tax liabilities
|
113
|
|
|
8,190
|
|
|
22,644
|
|
|
—
|
|
|
30,947
|
|
|
Other long-term liabilities
|
3,543
|
|
|
31,347
|
|
|
17,791
|
|
|
—
|
|
|
52,681
|
|
|
Intercompany payable (receivable)
|
(203,444)
|
|
|
182,672
|
|
|
20,772
|
|
|
—
|
|
|
—
|
|
|
|
47,627
|
|
|
350,272
|
|
|
333,697
|
|
|
(230,487)
|
|
|
501,109
|
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
2,437
|
|
|
20,401
|
|
|
214,816
|
|
|
(235,217)
|
|
|
2,437
|
|
|
Additional paid-in capital
|
3,608,102
|
|
|
340,700
|
|
|
2,053,231
|
|
|
(2,393,931)
|
|
|
3,608,102
|
|
|
Accumulated deficit
|
(2,920,000)
|
|
|
12,415
|
|
|
(2,164,279)
|
|
|
2,151,864
|
|
|
(2,920,000)
|
|
|
Accumulated other comprehensive income (loss)
|
(26,312)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,312)
|
|
|
|
664,227
|
|
|
373,516
|
|
|
103,768
|
|
|
(477,284)
|
|
|
664,227
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
761,263
|
|
|
$
|
818,383
|
|
|
$
|
499,271
|
|
|
$
|
(707,771)
|
|
|
$
|
1,371,146
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
2,985
|
|
|
$
|
27,217
|
|
|
$
|
25,443
|
|
|
$
|
—
|
|
|
$
|
55,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
(65)
|
|
|
5,978
|
|
|
12,753
|
|
|
—
|
|
|
18,666
|
|
|
Ore on leach pads
|
—
|
|
|
66,192
|
|
|
—
|
|
|
—
|
|
|
66,192
|
|
|
Inventory
|
—
|
|
|
24,763
|
|
|
31,123
|
|
|
—
|
|
|
55,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other
|
6,202
|
|
|
1,192
|
|
|
6,653
|
|
|
—
|
|
|
14,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,122
|
|
|
125,342
|
|
|
75,972
|
|
|
—
|
|
|
210,436
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
2,370
|
|
|
167,159
|
|
|
79,260
|
|
|
—
|
|
|
248,789
|
|
|
Mining properties, net
|
4,452
|
|
|
327,685
|
|
|
379,818
|
|
|
—
|
|
|
711,955
|
|
|
Ore on leach pads
|
—
|
|
|
71,539
|
|
|
—
|
|
|
—
|
|
|
71,539
|
|
|
Restricted assets
|
1,470
|
|
|
206
|
|
|
7,076
|
|
|
—
|
|
|
8,752
|
|
|
Equity and debt securities
|
35,646
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,646
|
|
|
Receivables
|
—
|
|
|
—
|
|
|
28,709
|
|
|
—
|
|
|
28,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment in subsidiaries
|
325,723
|
|
|
85,755
|
|
|
(85,740)
|
|
|
(325,738)
|
|
|
—
|
|
|
Other
|
267,281
|
|
|
52,040
|
|
|
20,937
|
|
|
(277,448)
|
|
|
62,810
|
|
|
TOTAL ASSETS
|
$
|
646,064
|
|
|
$
|
829,726
|
|
|
$
|
506,032
|
|
|
$
|
(603,186)
|
|
|
$
|
1,378,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
1,277
|
|
|
$
|
26,211
|
|
|
$
|
41,688
|
|
|
$
|
—
|
|
|
$
|
69,176
|
|
|
Other accrued liabilities
|
9,036
|
|
|
35,547
|
|
|
51,033
|
|
|
—
|
|
|
95,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
|
—
|
|
|
15,347
|
|
|
7,399
|
|
|
—
|
|
|
22,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclamation
|
—
|
|
|
1,628
|
|
|
1,486
|
|
|
—
|
|
|
3,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,313
|
|
|
78,733
|
|
|
101,606
|
|
|
—
|
|
|
190,652
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Debt
|
226,885
|
|
|
32,989
|
|
|
290,325
|
|
|
(277,448)
|
|
|
272,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclamation
|
—
|
|
|
91,524
|
|
|
41,893
|
|
|
—
|
|
|
133,417
|
|
|
Deferred tax liabilities
|
50
|
|
|
8,104
|
|
|
33,822
|
|
|
—
|
|
|
41,976
|
|
|
Other long-term liabilities
|
4,225
|
|
|
40,012
|
|
|
28,599
|
|
|
—
|
|
|
72,836
|
|
|
Intercompany payable (receivable)
|
(262,413)
|
|
|
246,186
|
|
|
16,227
|
|
|
—
|
|
|
—
|
|
|
|
(31,253)
|
|
|
418,815
|
|
|
410,866
|
|
|
(277,448)
|
|
|
520,980
|
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
2,415
|
|
|
20,309
|
|
|
215,792
|
|
|
(236,101)
|
|
|
2,415
|
|
|
Additional paid-in capital
|
3,598,472
|
|
|
337,975
|
|
|
1,960,187
|
|
|
(2,298,162)
|
|
|
3,598,472
|
|
|
Accumulated deficit
|
(2,933,747)
|
|
|
(26,106)
|
|
|
(2,182,419)
|
|
|
2,208,525
|
|
|
(2,933,747)
|
|
|
Accumulated other comprehensive income (loss)
|
(136)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(136)
|
|
|
|
667,004
|
|
|
332,178
|
|
|
(6,440)
|
|
|
(325,738)
|
|
|
667,004
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
646,064
|
|
|
$
|
829,726
|
|
|
$
|
506,032
|
|
|
$
|
(603,186)
|
|
|
$
|
1,378,636
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED SEPTEMBER 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
|
Revenue
|
$
|
—
|
|
|
$
|
147,973
|
|
|
$
|
81,755
|
|
|
$
|
—
|
|
|
$
|
229,728
|
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales(1)
|
—
|
|
|
78,521
|
|
|
34,251
|
|
|
—
|
|
|
112,772
|
|
|
Amortization
|
175
|
|
|
18,944
|
|
|
13,097
|
|
|
—
|
|
|
32,216
|
|
|
General and administrative
|
7,754
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
7,757
|
|
|
Exploration
|
288
|
|
|
6,633
|
|
|
5,897
|
|
|
—
|
|
|
12,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-development, reclamation, and other
|
1,728
|
|
|
4,379
|
|
|
8,924
|
|
|
—
|
|
|
15,031
|
|
|
Total costs and expenses
|
9,945
|
|
|
108,478
|
|
|
62,171
|
|
|
—
|
|
|
180,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE), NET
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Fair value adjustments, net
|
2,243
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,243
|
|
|
Other, net
|
163
|
|
|
(2,540)
|
|
|
(229)
|
|
|
(3,706)
|
|
|
(6,312)
|
|
|
Interest expense, net of capitalized interest
|
(4,145)
|
|
|
(862)
|
|
|
(3,795)
|
|
|
3,706
|
|
|
(5,096)
|
|
|
Total other income (expense), net
|
(1,739)
|
|
|
(3,402)
|
|
|
(4,024)
|
|
|
—
|
|
|
(9,165)
|
|
|
Income (loss) from continuing operations before income and mining taxes
|
(11,684)
|
|
|
36,093
|
|
|
15,560
|
|
|
—
|
|
|
39,969
|
|
|
Income and mining tax (expense) benefit
|
(2,872)
|
|
|
(3,153)
|
|
|
(7,088)
|
|
|
—
|
|
|
(13,113)
|
|
|
Income (loss) from continuing operations
|
(14,556)
|
|
|
32,940
|
|
|
8,472
|
|
|
—
|
|
|
26,856
|
|
|
Equity income (loss) in consolidated subsidiaries
|
41,410
|
|
|
(3,046)
|
|
|
3,052
|
|
|
(41,416)
|
|
|
—
|
|
|
Income (loss) from discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
NET INCOME (LOSS)
|
$
|
26,854
|
|
|
$
|
29,894
|
|
|
$
|
11,524
|
|
|
$
|
(41,416)
|
|
|
$
|
26,856
|
|
|
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of derivative contracts designated as cash flow hedges
|
(18,606)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,606)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
(18,606)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,606)
|
|
|
COMPREHENSIVE INCOME (LOSS)
|
$
|
8,248
|
|
|
$
|
29,894
|
|
|
$
|
11,524
|
|
|
$
|
(41,416)
|
|
|
$
|
8,250
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED SEPTEMBER 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
|
Revenue
|
$
|
—
|
|
|
$
|
116,808
|
|
|
$
|
82,661
|
|
|
$
|
—
|
|
|
$
|
199,469
|
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales(1)
|
—
|
|
|
79,367
|
|
|
61,585
|
|
|
—
|
|
|
140,952
|
|
|
Amortization
|
216
|
|
|
21,751
|
|
|
23,711
|
|
|
—
|
|
|
45,678
|
|
|
General and administrative
|
8,973
|
|
|
208
|
|
|
454
|
|
|
—
|
|
|
9,635
|
|
|
Exploration
|
430
|
|
|
5,010
|
|
|
453
|
|
|
—
|
|
|
5,893
|
|
|
Pre-development, reclamation, and other
|
15
|
|
|
4,465
|
|
|
371
|
|
|
—
|
|
|
4,851
|
|
|
Total costs and expenses
|
9,634
|
|
|
110,801
|
|
|
86,574
|
|
|
—
|
|
|
207,009
|
|
|
OTHER INCOME (EXPENSE), NET
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment
|
(1,282)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,282)
|
|
|
Fair value adjustments, net
|
4,378
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
4,377
|
|
|
Other, net
|
4,557
|
|
|
(814)
|
|
|
(3,017)
|
|
|
(4,360)
|
|
|
(3,634)
|
|
|
Interest expense, net of capitalized interest
|
(4,729)
|
|
|
(838)
|
|
|
(4,773)
|
|
|
4,360
|
|
|
(5,980)
|
|
|
Total other income (expense), net
|
2,924
|
|
|
(1,653)
|
|
|
(7,790)
|
|
|
—
|
|
|
(6,519)
|
|
|
Income (loss) from continuing operations before income and mining taxes
|
(6,710)
|
|
|
4,354
|
|
|
(11,703)
|
|
|
—
|
|
|
(14,059)
|
|
|
Income and mining tax (expense) benefit
|
3,808
|
|
|
(3,740)
|
|
|
(286)
|
|
|
—
|
|
|
(218)
|
|
|
Income (loss) from continuing operations
|
(2,902)
|
|
|
614
|
|
|
(11,989)
|
|
|
—
|
|
|
(14,277)
|
|
|
Equity income (loss) in consolidated subsidiaries
|
(11,371)
|
|
|
(4)
|
|
|
95
|
|
|
11,280
|
|
|
—
|
|
|
NET INCOME (LOSS)
|
$
|
(14,273)
|
|
|
$
|
610
|
|
|
$
|
(11,894)
|
|
|
$
|
11,280
|
|
|
$
|
(14,277)
|
|
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on hedges, net of tax of $363 for the three and nine months ended September 30, 2019
|
1,132
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,132
|
|
|
COMPREHENSIVE INCOME (LOSS)
|
$
|
(13,141)
|
|
|
$
|
610
|
|
|
$
|
(11,894)
|
|
|
$
|
11,280
|
|
|
$
|
(13,145)
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in) activities of continuing operations
|
30,905
|
|
|
48,535
|
|
|
41,440
|
|
|
(41,416)
|
|
|
79,464
|
|
|
Cash provided by (used in) activities of discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
30,905
|
|
|
48,535
|
|
|
41,440
|
|
|
(41,416)
|
|
|
79,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
(74)
|
|
|
(15,859)
|
|
|
(7,063)
|
|
|
—
|
|
|
(22,996)
|
|
|
Proceeds from the sale of assets
|
—
|
|
|
730
|
|
|
—
|
|
|
—
|
|
|
730
|
|
|
Purchase of investments
|
(2,500)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,500)
|
|
|
Sales of investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from notes receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other
|
—
|
|
|
—
|
|
|
(25)
|
|
|
—
|
|
|
(25)
|
|
|
Investments in consolidated subsidiaries
|
(41,410)
|
|
|
—
|
|
|
(6)
|
|
|
41,416
|
|
|
—
|
|
|
Cash provided by (used in) activities of operations
|
(43,984)
|
|
|
(15,129)
|
|
|
(7,094)
|
|
|
41,416
|
|
|
(24,791)
|
|
|
Cash provided by (used in) activities of discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
(43,984)
|
|
|
(15,129)
|
|
|
(7,094)
|
|
|
41,416
|
|
|
(24,791)
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of notes and bank borrowings, net of issuance costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Payments on debt, capital leases, and associated costs
|
(40,000)
|
|
|
(4,009)
|
|
|
(4,548)
|
|
|
—
|
|
|
(48,557)
|
|
|
Silvertip Contingent Consideration
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Net intercompany financing activity
|
43,347
|
|
|
(38,968)
|
|
1
|
(4,379)
|
|
|
—
|
|
|
—
|
|
|
Other
|
114
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
114
|
|
|
Cash provided by (used in) activities of operations
|
3,461
|
|
|
(42,977)
|
|
|
(8,927)
|
|
|
—
|
|
|
(48,443)
|
|
|
Cash provided by (used in) activities of discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
3,461
|
|
|
(42,977)
|
|
|
(8,927)
|
|
|
—
|
|
|
(48,443)
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
6
|
|
|
(16)
|
|
|
—
|
|
|
(10)
|
|
|
Less net cash provided by (used in) discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(9,618)
|
|
|
(9,565)
|
|
|
25,403
|
|
|
—
|
|
|
6,220
|
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
27,016
|
|
|
21,884
|
|
|
23,408
|
|
|
—
|
|
|
72,308
|
|
|
Cash, cash equivalents and restricted cash at end of period
|
$
|
17,398
|
|
|
$
|
12,319
|
|
|
$
|
48,811
|
|
|
$
|
—
|
|
|
$
|
78,528
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in) activities of continuing operations
|
(18,772)
|
|
|
24,553
|
|
|
24,935
|
|
|
11,280
|
|
|
41,996
|
|
|
Cash provided by (used in) activities of discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
(18,772)
|
|
|
24,553
|
|
|
24,935
|
|
|
11,280
|
|
|
41,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
(239)
|
|
|
(16,748)
|
|
|
(13,691)
|
|
|
—
|
|
|
(30,678)
|
|
|
Proceeds from the sale of assets
|
—
|
|
|
26
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
Purchase of investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Sales of investments
|
1,007
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from notes receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other
|
2
|
|
|
(44)
|
|
|
(15)
|
|
|
—
|
|
|
(57)
|
|
|
Investments in consolidated subsidiaries
|
11,372
|
|
|
45
|
|
|
(137)
|
|
|
(11,280)
|
|
|
—
|
|
|
Cash provided by (used in) activities of continuing operations
|
12,142
|
|
|
(16,721)
|
|
|
(13,843)
|
|
|
(11,280)
|
|
|
(29,702)
|
|
|
Cash provided by (used in) activities of discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
12,142
|
|
|
(16,721)
|
|
|
(13,843)
|
|
|
(11,280)
|
|
|
(29,702)
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
|
73,781
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
73,781
|
|
|
Issuance of notes and bank borrowings, net of issuance costs
|
30,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,000
|
|
|
Payments on debt, capital leases, and associated costs
|
(83,034)
|
|
|
(3,305)
|
|
|
(1,439)
|
|
|
—
|
|
|
(87,778)
|
|
|
Net intercompany financing activity
|
(6,842)
|
|
|
(12,322)
|
|
1
|
19,164
|
|
1
|
—
|
|
|
—
|
|
|
Other
|
301
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
301
|
|
|
Cash provided by (used in) activities of continuing operations
|
14,206
|
|
|
(15,627)
|
|
|
17,725
|
|
|
—
|
|
|
16,304
|
|
|
Cash provided by (used in) activities of discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
14,206
|
|
|
(15,627)
|
|
|
17,725
|
|
|
—
|
|
|
16,304
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
74
|
|
|
(266)
|
|
|
—
|
|
|
(192)
|
|
|
Less net cash provided by (used in) discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
7,576
|
|
|
(7,721)
|
|
|
28,551
|
|
|
—
|
|
|
28,406
|
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
4,043
|
|
|
16,669
|
|
|
18,563
|
|
|
—
|
|
|
39,275
|
|
|
Cash, cash equivalents and restricted cash at end of period
|
$
|
11,619
|
|
|
$
|
8,948
|
|
|
$
|
47,114
|
|
|
$
|
—
|
|
|
$
|
67,681
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
NINE MONTHS ENDED SEPTEMBER 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
|
Revenue
|
$
|
—
|
|
|
$
|
361,197
|
|
|
$
|
195,947
|
|
|
$
|
—
|
|
|
$
|
557,144
|
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales(1)
|
—
|
|
|
214,997
|
|
|
106,707
|
|
|
—
|
|
|
321,704
|
|
|
Amortization
|
577
|
|
|
55,547
|
|
|
40,130
|
|
|
—
|
|
|
96,254
|
|
|
General and administrative
|
25,276
|
|
|
3
|
|
|
14
|
|
|
—
|
|
|
25,293
|
|
|
Exploration
|
998
|
|
|
18,613
|
|
|
11,448
|
|
|
—
|
|
|
31,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-development, reclamation, and other
|
1,850
|
|
|
12,353
|
|
|
26,058
|
|
|
—
|
|
|
40,261
|
|
|
Total costs and expenses
|
28,701
|
|
|
301,513
|
|
|
184,357
|
|
|
—
|
|
|
514,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE), NET
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Fair value adjustments, net
|
3,491
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,491
|
|
|
Other, net
|
8,701
|
|
|
(2,638)
|
|
|
688
|
|
|
(11,061)
|
|
|
(4,310)
|
|
|
Interest expense, net of capitalized interest
|
(12,920)
|
|
|
(2,331)
|
|
|
(11,799)
|
|
|
11,061
|
|
|
(15,989)
|
|
|
Total other income (expense), net
|
(728)
|
|
|
(4,969)
|
|
|
(11,111)
|
|
|
—
|
|
|
(16,808)
|
|
|
Income (loss) from continuing operations before income and mining taxes
|
(29,429)
|
|
|
54,715
|
|
|
479
|
|
|
—
|
|
|
25,765
|
|
|
Income and mining tax (expense) benefit
|
166
|
|
|
(5,846)
|
|
|
(6,338)
|
|
|
—
|
|
|
(12,018)
|
|
|
Income (loss) from continuing operations
|
(29,263)
|
|
|
48,869
|
|
|
(5,859)
|
|
|
—
|
|
|
13,747
|
|
|
Equity income (loss) in consolidated subsidiaries
|
43,008
|
|
|
(10,221)
|
|
|
10,027
|
|
|
(42,814)
|
|
|
—
|
|
|
Income (loss) from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
NET INCOME (LOSS)
|
$
|
13,745
|
|
|
$
|
38,648
|
|
|
$
|
4,168
|
|
|
$
|
(42,814)
|
|
|
$
|
13,747
|
|
|
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of derivative contracts designated as cash flow hedges
|
(26,176)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,176)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
(26,176)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,176)
|
|
|
COMPREHENSIVE INCOME (LOSS)
|
$
|
(12,431)
|
|
|
$
|
38,648
|
|
|
$
|
4,168
|
|
|
$
|
(42,814)
|
|
|
$
|
(12,429)
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
NINE MONTHS ENDED SEPTEMBER 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
|
Revenue
|
$
|
—
|
|
|
$
|
298,361
|
|
|
$
|
218,101
|
|
|
$
|
—
|
|
|
$
|
516,462
|
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales(1)
|
—
|
|
|
220,680
|
|
|
183,870
|
|
|
—
|
|
|
404,550
|
|
|
Amortization
|
656
|
|
|
58,922
|
|
|
71,180
|
|
|
—
|
|
|
130,758
|
|
|
General and administrative
|
24,429
|
|
|
778
|
|
|
1,652
|
|
|
—
|
|
|
26,859
|
|
|
Exploration
|
1,116
|
|
|
8,219
|
|
|
5,991
|
|
|
—
|
|
|
15,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-development, reclamation, and other
|
255
|
|
|
8,397
|
|
|
4,967
|
|
|
—
|
|
|
13,619
|
|
|
Total costs and expenses
|
26,456
|
|
|
296,996
|
|
|
267,660
|
|
|
—
|
|
|
591,112
|
|
|
OTHER INCOME (EXPENSE), NET
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment
|
(1,282)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,282)
|
|
|
Fair value adjustments, net
|
8,210
|
|
|
(9)
|
|
|
—
|
|
|
—
|
|
|
8,201
|
|
|
Other, net
|
14,648
|
|
|
(376)
|
|
|
(4,230)
|
|
|
(12,973)
|
|
|
(2,931)
|
|
|
Interest expense, net of capitalized interest
|
(16,273)
|
|
|
(1,738)
|
|
|
(14,221)
|
|
|
12,973
|
|
|
(19,259)
|
|
|
Total other income (expense), net
|
5,303
|
|
|
(2,123)
|
|
|
(18,451)
|
|
|
—
|
|
|
(15,271)
|
|
|
Income (loss) from continuing operations before income and mining taxes
|
(21,153)
|
|
|
(758)
|
|
|
(68,010)
|
|
|
—
|
|
|
(89,921)
|
|
|
Income and mining tax (expense) benefit
|
1,420
|
|
|
(4,888)
|
|
|
17,454
|
|
|
—
|
|
|
13,986
|
|
|
Income (loss) from continuing operations
|
(19,733)
|
|
|
(5,646)
|
|
|
(50,556)
|
|
|
—
|
|
|
(75,935)
|
|
|
Equity income (loss) in consolidated subsidiaries
|
(56,200)
|
|
|
(634)
|
|
|
355
|
|
|
56,479
|
|
|
—
|
|
|
Income (loss) from discontinued operations
|
$
|
5,693
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,693
|
|
|
NET INCOME (LOSS)
|
$
|
(70,240)
|
|
|
$
|
(6,280)
|
|
|
$
|
(50,201)
|
|
|
$
|
56,479
|
|
|
$
|
(70,242)
|
|
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on debt securities, net of tax
|
59
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59
|
|
|
Unrealized gain (loss) on hedges, net of tax of $363 for the three and nine months ended September 30, 2019
|
1,132
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
1,191
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,191
|
|
|
COMPREHENSIVE INCOME (LOSS)
|
$
|
(69,049)
|
|
|
$
|
(6,280)
|
|
|
$
|
(50,201)
|
|
|
$
|
56,479
|
|
|
$
|
(69,051)
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in) activities of operations
|
$
|
12,764
|
|
|
$
|
88,894
|
|
|
$
|
22,576
|
|
|
$
|
(42,814)
|
|
|
$
|
81,420
|
|
|
Cash provided by (used in) activities of discontinued operations
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
$
|
12,764
|
|
|
$
|
88,894
|
|
|
$
|
22,576
|
|
|
$
|
(42,814)
|
|
|
$
|
81,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
(251)
|
|
|
(36,394)
|
|
|
(25,241)
|
|
|
—
|
|
|
(61,886)
|
|
|
Proceeds from the sale of assets
|
4,500
|
|
|
745
|
|
|
—
|
|
|
—
|
|
|
5,245
|
|
|
Purchase of investments
|
(2,500)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,500)
|
|
|
Sales of investments
|
19,802
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from notes receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other
|
—
|
|
|
—
|
|
|
(225)
|
|
|
—
|
|
|
(225)
|
|
|
Investments in consolidated subsidiaries
|
(43,008)
|
|
|
(38)
|
|
|
232
|
|
|
42,814
|
|
|
—
|
|
|
Cash provided by (used in) activities of continuing operations
|
(21,457)
|
|
|
(35,687)
|
|
|
(25,234)
|
|
|
42,814
|
|
|
(39,564)
|
|
|
Cash provided by (used in) activities of discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
(21,457)
|
|
|
(35,687)
|
|
|
(25,234)
|
|
|
42,814
|
|
|
(39,564)
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of notes and bank borrowings, net of issuance costs
|
150,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150,000
|
|
|
Payments on debt, capital leases, and associated costs
|
(130,000)
|
|
|
(11,658)
|
|
|
(8,513)
|
|
|
—
|
|
|
(150,171)
|
|
|
Silvertip contingent consideration
|
—
|
|
|
—
|
|
|
(18,750)
|
|
|
—
|
|
|
(18,750)
|
|
|
Net intercompany financing activity
|
1,131
|
|
|
(56,439)
|
|
|
55,308
|
|
|
—
|
|
|
—
|
|
|
Other
|
(1,718)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,718)
|
|
|
Cash provided by (used in) activities of operations
|
19,413
|
|
|
(68,097)
|
|
|
28,045
|
|
|
—
|
|
|
(20,639)
|
|
|
Cash provided by (used in) activities of discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
19,413
|
|
|
(68,097)
|
|
|
28,045
|
|
|
—
|
|
|
(20,639)
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
3
|
|
|
(29)
|
|
|
319
|
|
|
—
|
|
|
293
|
|
|
Less net cash provided by (used in) discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
10,723
|
|
|
(14,919)
|
|
|
25,706
|
|
|
—
|
|
|
21,510
|
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
6,675
|
|
|
27,238
|
|
|
23,105
|
|
|
—
|
|
|
57,018
|
|
|
Cash, cash equivalents and restricted cash at end of period
|
$
|
17,398
|
|
|
$
|
12,319
|
|
|
$
|
48,811
|
|
|
$
|
—
|
|
|
$
|
78,528
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in) activities of continuing operations
|
(96,935)
|
|
|
76,116
|
|
|
16,925
|
|
|
56,479
|
|
|
52,585
|
|
|
Cash provided by (used in) activities of discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
(96,935)
|
|
|
76,116
|
|
|
16,925
|
|
|
56,479
|
|
|
52,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
(349)
|
|
|
(38,999)
|
|
|
(39,517)
|
|
|
—
|
|
|
(78,865)
|
|
|
Proceeds from the sale of assets
|
—
|
|
|
836
|
|
|
94
|
|
|
—
|
|
|
930
|
|
|
Purchase of investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Sales of investments
|
2,109
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from notes receivable
|
7,168
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,168
|
|
|
Other
|
2,034
|
|
|
69
|
|
|
(142)
|
|
|
—
|
|
|
1,961
|
|
|
Investments in consolidated subsidiaries
|
56,112
|
|
|
130
|
|
|
237
|
|
|
(56,479)
|
|
|
—
|
|
|
Cash provided by (used in) activities of continuing operations
|
67,074
|
|
|
(37,964)
|
|
|
(39,328)
|
|
|
(56,479)
|
|
|
(66,697)
|
|
|
Cash provided by (used in) activities of discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
67,074
|
|
|
(37,964)
|
|
|
(39,328)
|
|
|
(56,479)
|
|
|
(66,697)
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
|
122,668
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
122,668
|
|
|
Issuance of notes and bank borrowings, net of issuance costs
|
45,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45,000
|
|
|
Payments on debt, capital leases, and associated costs
|
(180,841)
|
|
|
(13,445)
|
|
|
(6,765)
|
|
|
—
|
|
|
(201,051)
|
|
|
Net intercompany financing activity
|
44,863
|
|
|
(48,628)
|
|
|
3,765
|
|
|
—
|
|
|
—
|
|
|
Other
|
(2,958)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,958)
|
|
|
Cash provided by (used in) activities of continuing operations
|
28,732
|
|
|
(62,073)
|
|
|
(3,000)
|
|
|
—
|
|
|
(36,341)
|
|
|
Cash provided by (used in) activities of discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
28,732
|
|
|
(62,073)
|
|
|
(3,000)
|
|
|
—
|
|
|
(36,341)
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
76
|
|
|
(11)
|
|
|
—
|
|
|
65
|
|
|
Less net cash provided by (used in) discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(1,129)
|
|
|
(23,845)
|
|
|
(25,414)
|
|
|
—
|
|
|
(50,388)
|
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
12,748
|
|
|
32,793
|
|
|
72,528
|
|
|
—
|
|
|
118,069
|
|
|
Cash, cash equivalents and restricted cash at end of period
|
$
|
11,619
|
|
|
$
|
8,948
|
|
|
$
|
47,114
|
|
|
$
|
—
|
|
|
$
|
67,681
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 17 – COMMITMENTS AND CONTINGENCIES
Palmarejo Gold Stream
Coeur Mexicana, S.A. de C.V. (“Coeur Mexicana”), a subsidiary of Coeur, sells 50% of Palmarejo gold production (excluding production from certain properties acquired in 2015) to a subsidiary of Franco-Nevada Corporation (“Franco-Nevada”) under a gold stream agreement for the lesser of $800 or spot price per ounce. In 2015, Coeur Mexicana received a $22.0 million deposit toward future deliveries under the gold stream agreement. In accordance with generally accepted accounting principles, although Coeur Mexicana has satisfied its contractual obligation to repay the deposit to Franco-Nevada, the deposit is accounted for as deferred revenue and is recognized as revenue on a units of production basis as ounces are sold to Franco-Nevada. At September 30, 2020 the remaining unamortized balance was $10.0 million, which is included in Accrued liabilities and other and Other long-term liabilities on the Consolidated Balance Sheet.
Kensington Prepayment
In June 2019, Coeur entered into a transaction with an existing metal sales counterparty whereby it amended its existing sales and purchase contract for gold concentrate from its Kensington mine (the “Amended Sales Contract”) to allow for a $25.0 million prepayment for deliveries of gold concentrate from the Kensington mine, for which deliveries were made to the counterparty in 2019. The Amended Sales Contract also includes an option for an additional $15.0 million prepayment for deliveries of gold concentrate, which Coeur exercised in December 2019. In the first half of 2020, the Kensington mine delivered $15.0 million of gold concentrate to the counterparty in satisfaction of this prepayment obligation. The Amended Sales Contract was further amended in June 2020 to include options for Coeur to receive up to two additional prepayments of up to $15.0 million each for deliveries of gold concentrate from the Kensington mine, and Coeur exercised the option to receive the first $15.0 million prepayment in June 2020 (the “June 2020 Prepayment”). In the third quarter of 2020, the Kensington mine delivered $5.2 million. The remaining deliveries of $9.9 million under the June 2020 Prepayment are recognized as a deferred revenue liability and are presented in Accrued liabilities and other on the Consolidated Balance Sheet. Under the relevant terms of the Amended Sales Contract, Coeur maintains its exposure to the price of gold and expects to recognize the remaining value of the accrued liability by December 31, 2020.
Silvertip Contingent Consideration
A total of up to $50.0 million of contingent consideration, payable in cash and common stock, was payable in conjunction with the Silvertip Acquisition based upon the achievement of two milestones, one of which was achieved and paid during 2019 and the other of which was achieved and paid during the first quarter of 2020. The first milestone payment of $25.0 million was contingent upon receipt of a permit expansion for a sustained mining and milling rate of 1,000 tonnes per day (the “Permit contingent consideration”). The permit application was submitted to the British Columbia Ministry of Energy and Mining on April 30, 2018 and following its approval in November 2019, the Company made a payment of $25.0 million in the form of $18.7 million in cash and 1.0 million shares of common stock to satisfy the Permit contingent consideration obligation. At December 31, 2019, based on the Silvertip mine’s total mineralized material (including reserves) (the “Resource contingent consideration”), the former JDS Silver Holdings Ltd. shareholders were entitled to the full second contingent payment of $25.0 million. In the first quarter of 2020, the Company made a payment of $25.0 million in the form of $18.8 million in cash and 0.9 million shares of common stock to satisfy the Resource contingent consideration obligation.
Mexico VAT Litigation
Included in non-current receivables as of September 30, 2020 are $23.5 million due from the Mexican government associated with VAT that was paid under Coeur Mexicana’s prior royalty agreement with a subsidiary of Franco-Nevada Corporation, which was terminated in 2016. Under the royalty agreement, Coeur applied for and initially received VAT refunds associated with the royalty payments in the normal course; however, in 2011 the Mexican tax authorities began denying the Company’s VAT refunds based on the argument that VAT was not legally due on the royalty payments. Accordingly, Coeur began to request refunds of the VAT as undue payments, which the Mexican tax authorities also denied. The Company has since been engaged in ongoing efforts to recover the VAT from the Mexican government (including through litigation and potential arbitration). Despite a favorable ruling from Mexican tax courts in this matter in 2018, litigation continues, some of which was determined unfavorably to the Company in 2019 and 2020 based on interpretations of applicable law and prior court decisions which the Company and its counsel believe are erroneous and which are now under appeal. While the Company believes that it remains legally entitled to be refunded the full amount of the VAT receivable, the Company may continue to experience delays or obstacles in the recovery of VAT and it is possible that some or all of the VAT receivable may not ultimately be recovered as outcomes in Mexican tax courts and the process for recovering funds even if there is a successful outcome in litigation can be unpredictable. The continued failure to recover the VAT receivable may result in the Company recording a reserve against some or all of this amount, which, if material, may have a material adverse impact on the Company’s financial statements.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Other Commitments and Contingencies
As part of its ongoing business and operations, the Company and its affiliates are required to provide surety bonds, bank letters of credit, bank guarantees and, in some cases, cash as financial support for various purposes, including environmental remediation, reclamation, collateral for gold hedges and other general corporate purposes. As of September 30, 2020 and December 31, 2019, the Company had surety bonds totaling $212.8 million and $215.6 million, respectively, in place as financial support for future reclamation and closure costs. The obligations associated with these instruments are generally related to performance requirements that the Company addresses through its ongoing operations and from time-to-time, the Company may be required to post collateral, including cash, to support these instruments. As the specific requirements are met, the beneficiary of the associated instrument cancels and/or returns the instrument to the issuing entity. Certain of these instruments are associated with operating sites with long-lived assets and will remain outstanding until closure. The Company believes it is in compliance with all applicable bonding obligations and will be able to satisfy future bonding requirements through existing or alternative means, as they arise.
NOTE 18 – DISCONTINUED OPERATIONS
In December 2017, the Company and certain of its subsidiaries entered into a definitive agreement (as amended, the “Manquiri Agreement”) to sell all of the outstanding capital stock of Empresa Minera Manquiri S.A. (“Manquiri”), which is the operator of the San Bartolomé mine and processing facility (the “Manquiri Divestiture”). On February 28, 2018, the Manquiri Divestiture was completed, and, in accordance with the Manquiri Agreement, the capital stock in Manquiri was sold to Ag-Mining Investments, AB, a privately-held Swedish company (the “Buyer”), in exchange for, among other items, (A) 2.0% net smelter returns royalty on all metals processed through the San Bartolomé mine’s processing facility (the “NSR”) and (B) promissory notes payable by the Buyer with an aggregate principal amount equal to $27.6 million (the “Manquiri Notes Receivable”). In September 2018, the Company entered into the Letter Agreement with the Buyer pursuant to which the total aggregate principal amount of the Manquiri Notes Receivable was reduced to $25.0 million, and the Buyer made a concurrent cash payment of $15.0 million to the Sellers in respect of the Manquiri Notes Receivable. In addition, the Company also agreed to forgo any rights to any value added tax refunds collected or received by Manquiri.
On February 28, 2019, the parties executed a letter agreement (the “February Letter Agreement”), which amended certain terms of the Manquiri Agreement. Pursuant to the February Letter Agreement, the Buyer agreed to accelerate repayment of the remaining aggregate $6.0 million owed under the Manquiri Notes Receivable, which was received. As of the date of the entry into the February Letter Agreement, the remaining obligations under the Manquiri Agreement (including post-closing indemnification obligations) terminated. The Company recorded a $5.7 million gain on the sale Manquiri following the release of the indemnification liability (associated with termination of post-closing indemnification obligations) pursuant to the February Letter Agreement.
In January 2020, the Buyer purchased the NSR from Coeur by making a payment to Coeur of $4.5 million. Coeur recorded a gain of $0.4 million following the payment.
NOTE 19 – ADDITIONAL BALANCE SHEET DETAIL AND SUPPLEMENTAL CASH FLOW INFORMATION
Accrued liabilities and other consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
September 30, 2020
|
|
December 31, 2019
|
|
Accrued salaries and wages
|
$
|
23,202
|
|
|
$
|
20,047
|
|
|
Silvertip contingent consideration
|
—
|
|
|
25,000
|
|
|
Deferred revenue (1)
|
11,463
|
|
|
16,672
|
|
|
Income and mining taxes
|
14,784
|
|
|
11,243
|
|
|
Accrued operating costs
|
2,991
|
|
|
3,752
|
|
|
Unrealized losses on derivatives
|
34,224
|
|
|
411
|
|
|
Taxes other than income and mining
|
3,392
|
|
|
3,554
|
|
|
Accrued interest payable
|
5,218
|
|
|
1,833
|
|
|
Operating lease liabilities
|
12,716
|
|
|
13,104
|
|
|
Accrued liabilities and other
|
$
|
107,990
|
|
|
$
|
95,616
|
|
(1) See Note 17 -- Commitments and Contingencies for additional details on deferred revenue liabilities
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that total the same such amounts shown in the statement of cash flows in the three and nine months ended September 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
|
|
|
September 30, 2020
|
|
September 30, 2019
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
77,148
|
|
|
$
|
65,319
|
|
|
Restricted cash equivalents
|
|
|
|
|
1,380
|
|
|
2,362
|
|
|
Total cash, cash equivalents and restricted cash shown in the statement of cash flows
|
|
|
|
|
$
|
78,528
|
|
|
$
|
67,681
|
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis (“MD&A”) provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Coeur Mining, Inc. and its subsidiaries (collectively the “Company”, “our”, or “we”). We use certain non-GAAP financial performance measures in our MD&A. For a detailed description of these measures, please see “Non-GAAP Financial Performance Measures” at the end of this Item. We provide Costs applicable to sales (“CAS”) split, referred to as the co-product method, based on revenue contribution for Palmarejo, Rochester and Silvertip and based on the primary metal, referred to as the by-product method, for Wharf. Revenue from secondary metal, such as silver at Wharf, is treated as a cost credit.
Overview
We are primarily a gold and silver producer with five mines located in the United States, Mexico and Canada and several exploration projects in North America.
Third Quarter Highlights
For the quarter, Coeur reported revenue of $229.7 million and cash flow from operating activities of $79.5 million. The Company reported GAAP net income from continuing operations of $26.9 million, or $0.11 per share. On an adjusted basis1, the Company reported EBITDA of $90.8 million and net income from continuing operations of $38.2 million, or $0.16 per share. For nine months ended September 30, 2020, Coeur reported revenue of $557.1 million and cash flow from operating activities of $81.4 million. The Company reported GAAP net income from continuing operations of $13.7 million, or $0.06 per share. On an adjusted basis1, the Company reported EBITDA of $179.4 million and net income from continuing operations of $39.9 million, or $0.17 per share.
•Highest quarterly financial results in nearly a decade - Revenue increased 49% and adjusted EBITDA1 more than doubled quarter-over-quarter. Operating cash flow was eight-times higher and now totals $81.4 million through the first nine months of the year. Free cash flow1 increased significantly to $56.5 million, leading to year-to-date positive free cash flow1 of $19.5 million
•Strong quarter-over-quarter production growth - Gold production increased 23% to 95,995 ounces driven by improved operational performance at Palmarejo, Rochester and Wharf, while silver production of 2.6 million ounces was 58% higher largely due to positive results at Palmarejo
•Well-executed restart at Palmarejo following temporary suspension - Palmarejo generated strong operational and financial results after being temporarily suspended for approximately 45 days in the prior period due to a COVID-19 related government decree. Gold production nearly doubled while silver production was more than two-times higher quarter-over-quarter, helping to generate $49.7 million and $44.7 million in operating and free cash flow1, respectively
•Successfully commenced construction on schedule for Rochester expansion - The Company broke ground in early August on the Plan of Operations Amendment 11 (“POA 11”) expansion project at its Rochester mine. Coeur plans to file an updated technical report in December, which will provide a detailed economic and technical overview of the expansion project
•Record quarterly results at Wharf - Wharf produced 33,440 ounces of gold, which generated $39.1 million in operating cash flow and $38.6 million free cash flow1 during the third quarter - all new quarterly records since Coeur’s acquisition of Wharf in early 2015 for approximately $99.5 million. Cumulative operating and free cash flow1 since acquisition now totals $256.0 million and $232.4 million, respectively
•Continued execution of the Company’s largest exploration program in its history - Building on the success from the first half of the year, approximately 20 drill rigs continue to operate across the Company, including at the new C-Horst discovery located in the northernmost portion of the Crown Block in southern Nevada. Results indicate potential for strong resource growth at Palmarejo, Rochester, Kensington, Silvertip and C-Horst, while infill drilling has demonstrated near-term upside potential for reserve growth at Palmarejo and Rochester
•Bolstered balance sheet and financial flexibility - The Company reduced total debt2 by $47.5 million, or 14%, quarter-over-quarter while cash and cash equivalents increased 9% to $77.1 million as of September 30, 2020
Selected Financial and Operating Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
In thousands
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
Financial Results from Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
Gold sales
|
$
|
167,132
|
|
|
$
|
141,871
|
|
|
$
|
422,639
|
|
|
$
|
358,961
|
|
|
|
|
Silver sales
|
$
|
62,596
|
|
|
$
|
51,581
|
|
|
$
|
133,852
|
|
|
$
|
136,658
|
|
|
|
|
Zinc sales
|
$
|
—
|
|
|
$
|
2,046
|
|
|
$
|
(662)
|
|
|
$
|
10,284
|
|
|
|
|
Lead sales
|
$
|
—
|
|
|
$
|
3,971
|
|
|
$
|
1,315
|
|
|
$
|
10,559
|
|
|
|
|
Consolidated Revenue
|
$
|
229,728
|
|
|
$
|
199,469
|
|
|
$
|
557,144
|
|
|
$
|
516,462
|
|
|
|
|
Net income (loss)
|
$
|
26,856
|
|
|
$
|
(14,277)
|
|
|
$
|
13,747
|
|
|
$
|
(75,935)
|
|
|
|
|
Net income (loss) per share, diluted
|
$
|
0.11
|
|
|
$
|
(0.06)
|
|
|
$
|
0.06
|
|
|
$
|
(0.36)
|
|
|
|
|
Adjusted net income (loss)(1)
|
$
|
38,248
|
|
|
$
|
(5,340)
|
|
|
$
|
39,932
|
|
|
$
|
(51,283)
|
|
|
|
|
Adjusted net income (loss) per share, diluted(1)
|
$
|
0.16
|
|
|
$
|
(0.02)
|
|
|
$
|
0.17
|
|
|
$
|
(0.24)
|
|
|
|
|
EBITDA(1)
|
$
|
77,281
|
|
|
$
|
37,599
|
|
|
$
|
138,008
|
|
|
$
|
60,096
|
|
|
|
|
Adjusted EBITDA(1)
|
$
|
90,777
|
|
|
$
|
61,006
|
|
|
$
|
179,381
|
|
|
$
|
114,918
|
|
|
|
|
Total debt(2)
|
$
|
301,138
|
|
|
$
|
298,720
|
|
|
$
|
301,138
|
|
|
$
|
298,720
|
|
|
|
|
Operating Results from Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
Gold ounces produced
|
95,995
|
|
|
99,782
|
|
|
259,301
|
|
|
264,702
|
|
|
|
|
Silver ounces produced
|
2,565,349
|
|
|
3,019,869
|
|
|
6,862,177
|
|
|
8,571,796
|
|
|
|
|
Zinc pounds produced
|
—
|
|
|
4,197,110
|
|
|
2,459,756
|
|
|
13,237,837
|
|
|
|
|
Lead pounds produced
|
—
|
|
|
4,477,653
|
|
|
2,176,847
|
|
|
12,534,228
|
|
|
|
|
Gold ounces sold
|
95,283
|
|
|
100,407
|
|
|
258,851
|
|
|
272,118
|
|
|
|
|
Silver ounces sold
|
2,591,779
|
|
|
3,004,815
|
|
|
6,913,585
|
|
|
8,688,195
|
|
|
|
|
Zinc pounds sold
|
—
|
|
|
4,076,390
|
|
|
3,203,446
|
|
|
14,101,967
|
|
|
|
|
Lead pounds sold
|
—
|
|
|
4,330,862
|
|
|
2,453,485
|
|
|
12,264,343
|
|
|
|
|
Average realized price per gold ounce
|
$
|
1,754
|
|
|
$
|
1,413
|
|
|
$
|
1,633
|
|
|
$
|
1,319
|
|
|
|
|
Average realized price per silver ounce
|
$
|
24.15
|
|
|
$
|
17.17
|
|
|
$
|
19.36
|
|
|
$
|
15.73
|
|
|
|
|
Average realized price per zinc pound, gross
|
$
|
—
|
|
|
$
|
0.86
|
|
|
$
|
(0.21)
|
|
|
$
|
1.07
|
|
|
|
|
Average realized price per lead pound, gross
|
$
|
—
|
|
|
$
|
0.98
|
|
|
$
|
0.54
|
|
|
$
|
0.92
|
|
|
|
|
Financial and Operating Results from Discontinued Operations:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)See “Non-GAAP Financial Performance Measures.”
(2)Includes capital leases. Net of debt issuance costs and premium received.
Consolidated Financial Results
Three Months Ended September 30, 2020 compared to Three Months Ended September 30, 2019
Revenue
Revenue increased by $30.3 million or 15%, as a result of a 24% and 41% increase in average realized gold and silver prices, respectively, combined with a 36% increase in gold ounces sold at Wharf, partially offset by lower gold and silver ounces sold (5% and 14%, respectively) due to lower gold grades at Kensington, recovery delays at Rochester and the temporary suspension of operations at Silvertip in February. The Company sold 95,283 gold ounces and 2.6 million silver ounces compared to 100,407 gold ounces, 3.0 million silver ounces, 4.1 million zinc pounds and 4.3 million lead pounds in the prior year. Gold contributed to 73% of sales, silver contributed 27%, compared to 71% of sales from gold, 26% from silver, 1% from zinc and less than 2% from lead.
The following table summarizes consolidated metal sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Increase (Decrease)
|
|
Percentage Change
|
|
In thousands
|
2020
|
|
2019
|
|
|
|
Gold sales
|
$
|
167,132
|
|
|
$
|
141,871
|
|
|
$
|
25,261
|
|
|
18
|
%
|
|
Silver sales
|
62,596
|
|
|
51,581
|
|
|
11,015
|
|
|
21
|
%
|
|
Zinc sales
|
—
|
|
|
2,046
|
|
|
(2,046)
|
|
|
(100)
|
%
|
|
Lead sales
|
—
|
|
|
3,971
|
|
|
(3,971)
|
|
|
(100)
|
%
|
|
Metal sales
|
$
|
229,728
|
|
|
$
|
199,469
|
|
|
$
|
30,259
|
|
|
15
|
%
|
Costs Applicable to Sales
Costs applicable to sales decreased primarily due to the temporary suspension at Silvertip and lower sales at Rochester For a complete discussion of costs applicable to sales, see Results of Operations below.
Amortization
Amortization decreased $13.5 million, or 29%, resulting from lower sales volumes and the temporary suspension at Silvertip.
Expenses
General and administrative expenses decreased $1.9 million, or 19%, primarily due to lower compensation costs, legal fees and travel costs.
Exploration expense increased $6.9 million, or 118%, as a result of exploration expense at the Sterling/Crown project located in southern Nevada and higher exploration expense at Silvertip, Kensington and Palmarejo. The Company completed 217,768 feet (66,376 meters) of expansion drilling and 39,114 feet (11,922 meters) of infill drilling in the third quarter of 2020 compared to 86,018 feet (26,218 meters) of resource expansion drilling and 24,343 feet (7,420 meters) of resource infill drilling in the third quarter of 2019.
Pre-development, reclamation, and other expenses increased $10.2 million, or 210%, stemming from ongoing carrying and temporary suspension costs at Silvertip and incremental costs incurred to comply with the Company’s COVID-19 health and safety protocols.
The following table summarizes pre-development, reclamation, and other expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Increase (Decrease)
|
|
Percentage Change
|
|
In thousands
|
2020
|
|
2019
|
|
|
|
COVID-19
|
$
|
4,037
|
|
|
$
|
—
|
|
|
$
|
4,037
|
|
|
100
|
%
|
|
Silvertip ongoing carrying costs
|
3,913
|
|
|
—
|
|
|
3,913
|
|
|
100
|
%
|
|
Silvertip temporary suspension costs
|
2,768
|
|
|
—
|
|
|
2,768
|
|
|
100
|
%
|
|
Asset retirement accretion
|
2,968
|
|
|
3,080
|
|
|
(112)
|
|
|
(4)
|
%
|
|
Other
|
1,345
|
|
|
1,771
|
|
|
(426)
|
|
|
(24)
|
%
|
|
Pre-development, reclamation and other expense
|
$
|
15,031
|
|
|
$
|
4,851
|
|
|
$
|
10,180
|
|
|
210
|
%
|
Other Income and Expenses
Fair value adjustments, net, decreased to a gain of $2.2 million compared to $4.4 million as a result of lower favorable fair value adjustments and realized gains primarily related to the Company’s equity investments in Integra and Metalla, which had estimated fair values of $10.1 million and $7.1 million, respectively, at September 30, 2020.
Interest expense (net of capitalized interest of $0.4 million) decreased to $5.1 million from $6.0 million due to a lower interest rate paid on the debt under the RCF and lower average debt levels related to the RCF and 2024 Senior Notes.
Other, net decreased to a loss of $6.3 million compared to a loss of $3.6 million due to an increase in losses on the sale of assets and a one-time fee of $3.8 million related to the novation of certain of the Company’s gold zero cost collars, partially offset by a reduction in foreign exchange losses
Income and Mining Taxes
During the third quarter of 2020, income and mining tax expense of approximately $13.1 million resulted in an effective tax rate of 32.8% for 2020. This compares to income tax expense of $0.2 million or effective tax rate of 1.6% for 2019. The comparability of the Company’s income and mining tax (expense) benefit and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) mining taxes; (ii) variations in our income before income taxes; (iii) geographic distribution of that income; (iv) foreign exchange rates; (v) the impact of uncertain tax positions; and (vi) the non-recognition of tax assets. Therefore, the effective tax rate will fluctuate, sometimes significantly, period to period.
The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
|
|
|
|
|
2020
|
|
2019
|
|
In thousands
|
|
|
|
|
|
|
Income (loss) before tax
|
Tax (expense) benefit
|
|
Income (loss) before tax
|
Tax (expense) benefit
|
|
United States
|
|
|
|
|
|
|
$
|
24,592
|
|
$
|
(6,003)
|
|
|
$
|
968
|
|
$
|
13
|
|
|
Canada
|
|
|
|
|
|
|
(12,895)
|
|
—
|
|
|
(24,844)
|
|
1,123
|
|
|
Mexico
|
|
|
|
|
|
|
28,320
|
|
(7,110)
|
|
|
9,882
|
|
(1,363)
|
|
|
Other jurisdictions
|
|
|
|
|
|
|
(48)
|
|
—
|
|
|
(65)
|
|
9
|
|
|
|
|
|
|
|
|
|
$
|
39,969
|
|
$
|
(13,113)
|
|
|
$
|
(14,059)
|
|
$
|
(218)
|
|
A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company will ultimately be more likely than not able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of factors that impact the Company’s ability to realize its deferred tax assets. For additional information, please see “Item 1A - Risk Factors” in the 2019 10-K.
Net Income (Loss) from Continuing Operations
Net income from continuing operations was $26.9 million, or $0.11 per share, compared to net loss of $14.3 million, or $0.06 per share. The increase in net income from continuing operations was driven by strong operating results at Wharf and Palmarejo, a 24% and 41% increase in average realized gold and silver prices, respectively, and lower operating costs at Rochester and Silvertip. This was partially offset by lower sales of gold and silver (5% and 14%, respectively), higher exploration expense, ongoing carrying and severance costs at Silvertip and incremental costs associated with the Company’s COVID-19 health and safety protocols. Adjusted net income was $38.2 million, or $0.16 per share, compared to adjusted net loss of $5.3 million, or $0.02 per share (see “Non-GAAP Financial Performance Measures”).
Nine Months Ended September 30, 2020 compared to Nine Months Ended September 30, 2019
Revenue
Revenue increased by $40.7 million or 8%, as a result of a 24% and 23% increase in average realized gold and silver prices, respectively, and 26% increase in gold ounces sold at Wharf, partially offset by lower sales of gold and silver (5% and 20%, respectively) due to the temporary suspension of active mining operations at Palmarejo during a portion of the second quarter, the temporary suspension of operations at Silvertip in February, lower gold grades at Kensington, and recovery delays at Rochester. The Company sold 258,851 gold ounces, 6.9 million silver ounces, 3.2 million zinc pounds and 2.5 million lead pounds compared to 272,118 gold ounces, 8.7 million silver ounces, 14.1 million zinc pounds and 12.3 million lead pounds in the prior year. Gold contributed to 76% of sales, silver contributed 24%, compared to 70% of sales from gold, 26% from silver, 2% from zinc and less than 2% from lead.
The following table summarizes consolidated metal sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30,
|
|
Increase (Decrease)
|
|
Percentage Change
|
|
In thousands
|
2020
|
|
2019
|
|
|
|
Gold sales
|
$
|
422,639
|
|
|
$
|
358,961
|
|
|
$
|
63,678
|
|
|
18
|
%
|
|
Silver sales
|
133,852
|
|
|
136,658
|
|
|
(2,806)
|
|
|
(2)
|
%
|
|
Zinc sales
|
(662)
|
|
|
10,284
|
|
|
(10,946)
|
|
|
(106)
|
%
|
|
Lead sales
|
1,315
|
|
|
10,559
|
|
|
(9,244)
|
|
|
(88)
|
%
|
|
Metal sales
|
$
|
557,144
|
|
|
$
|
516,462
|
|
|
$
|
40,682
|
|
|
8
|
%
|
Costs Applicable to Sales
Costs applicable to sales decreased primarily due to the temporary suspensions at Palmarejo and Silvertip and lower sales at Rochester. For a complete discussion of costs applicable to sales, see Results of Operations below.
Amortization
Amortization decreased $34.5 million, or 26%, resulting from lower sales volume and the temporary suspensions at Palmarejo and Silvertip.
Expenses
General and administrative expenses decreased by $1.6 million, or 6%, primarily due to lower travel costs and legal fees, partially offset by higher compensation costs.
Exploration expense increased $15.7 million, or 103%, as a result of exploration expense at the Sterling/Crown project located in southern Nevada and higher exploration expense at Silvertip, Kensington and Palmarejo. The Company completed 477,454 feet (145,528 meters) of expansion drilling and 122,686 feet (37,395 meters) of infill drilling in the nine months of 2020 compared to 239,266 (72,928 meters) of resource expansion drilling and 129,514 feet (39,476 meters) of resource infill drilling in the first nine months of 2019.
Pre-development, reclamation, and other expenses increased $26.6 million, or 196%, stemming from ongoing carrying and temporary suspension costs at Silvertip including a $3.3 million write down of obsolete supply inventory and incremental costs associated with the Company’s COVID-19 health and safety protocols, partially offset by a gain resulting from the modification of a right of use lease.
The following table summarizes pre-development, reclamation, and other expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30,
|
|
Increase (Decrease)
|
|
Percentage Change
|
|
In thousands
|
2020
|
|
2019
|
|
|
|
COVID-19
|
$
|
10,418
|
|
|
$
|
—
|
|
|
$
|
10,418
|
|
|
—
|
%
|
|
Silvertip ongoing carrying costs
|
11,704
|
|
|
—
|
|
|
11,704
|
|
|
—
|
%
|
|
Silvertip temporary suspension costs
|
10,107
|
|
|
—
|
|
|
10,107
|
|
|
—
|
%
|
|
Gain on modification of right of use lease
|
(4,051)
|
|
|
—
|
|
|
(4,051)
|
|
|
—
|
%
|
|
Asset retirement accretion
|
8,724
|
|
|
9,030
|
|
|
(306)
|
|
|
(3)
|
%
|
|
Other
|
3,359
|
|
|
4,589
|
|
|
(1,230)
|
|
|
(27)
|
%
|
|
Pre-development, reclamation and other expense
|
$
|
40,261
|
|
|
$
|
13,619
|
|
|
$
|
26,642
|
|
|
196
|
%
|
Other Income and Expenses
Fair value adjustments, net, decreased to a gain of $3.5 million compared to $8.2 million as a result of lower favorable fair value adjustments and realized gains primarily related to the Company’s equity investments in Integra and Metalla, which had estimated fair values of $10.1 million and $7.1 million, respectively, at September 30, 2020.
Interest expense (net of capitalized interest of $0.9 million) decreased to $16.0 million from $19.3 million due to due to a lower interest rate paid on the debt under the RCF and average debt levels related to the RCF and 2024 Senior Notes.
Other, net decreased to a loss of $4.3 million compared to a loss of $2.9 million due to an increase in losses on sale of assets, a one-time fee of $3.8 million related to the novation of certain of the Company’s gold zero cost collars, partially offset by a reduction in foreign exchange losses.
Income and Mining Taxes
During the first nine months of 2020, income and mining tax expense of approximately $12.0 million resulted in an effective tax rate of 46.7% for 2020. This compares to income tax benefit of $14.0 million or effective tax rate of 15.6% for 2019. The comparability of the Company’s income and mining tax (expense) benefit and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) mining taxes; (ii) variations in our income before income taxes; (iii) geographic distribution of that income; (iv) foreign exchange rates; (v) the impact of uncertain tax positions; and (vi) the non-recognition of tax assets. Therefore, the effective tax rate will fluctuate, sometimes significantly, period to period.
The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30,
|
|
|
|
|
|
|
2020
|
|
2019
|
|
In thousands
|
|
|
|
|
|
|
Income (loss) before tax
|
Tax (expense) benefit
|
|
Income (loss) before tax
|
Tax (expense) benefit
|
|
United States
|
|
|
|
|
|
|
$
|
26,132
|
|
$
|
(5,913)
|
|
|
$
|
(21,914)
|
|
$
|
(3,549)
|
|
|
Canada
|
|
|
|
|
|
|
(54,544)
|
|
232
|
|
|
(78,937)
|
|
18,462
|
|
|
Mexico
|
|
|
|
|
|
|
54,483
|
|
(6,366)
|
|
|
11,403
|
|
(938)
|
|
|
Other jurisdictions
|
|
|
|
|
|
|
(306)
|
|
29
|
|
|
(473)
|
|
11
|
|
|
|
|
|
|
|
|
|
$
|
25,765
|
|
$
|
(12,018)
|
|
|
$
|
(89,921)
|
|
$
|
13,986
|
|
A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company will ultimately be more likely than not able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of factors that impact the Company’s ability to realize its deferred tax assets. For additional information, please see “Item 1A - Risk Factors” in the 2019 10-K.
Net Income (Loss) from Continuing Operations
Net income from continuing operations was $13.7 million, or $0.06 per share, compared to net loss of $75.9 million, or $0.36 per share. The increase in net income from continuing operations was driven by strong operating results at Wharf, a 24% and 23% increase in average realized gold and silver prices, respectively, and lower operating costs at Palmarejo and Silvertip. This was partially offset by lower sales from Palmarejo, Kensington and Rochester, higher explorations costs, ongoing carrying and severance costs at Silvertip and incremental costs associated with the Company’s COVID-19 health and safety protocols. Adjusted net income was $39.9 million, or $0.17 per share, compared to adjusted net loss of $51.3 million, or $0.24 per share (see “Non-GAAP Financial Performance Measures”).
Net Income (loss) from Discontinued Operations
In respect of the San Bartolomé mine and processing facility’s operating results, income decreased $5.7 million. In February 2019, the Company recorded an adjustment to the gain from the Manquiri Divestiture following the release of a liability associated with the Company’s post-closing indemnification obligations which were extinguished at that time.
2020 Guidance Framework
2020 Production Guidance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previous
|
|
Updated
|
|
|
Gold
|
Silver
|
|
Gold
|
Silver
|
|
|
(oz)
|
(K oz)
|
|
(oz)
|
(K oz)
|
|
Palmarejo
|
95,000 - 105,000
|
6,000 - 7,000
|
|
100,000 - 110,000
|
6,000 - 7,000
|
|
Rochester
|
27,000 - 33,000
|
3,500 - 4,500
|
|
27,000 - 33,000
|
3,100 - 3,700
|
|
Kensington
|
125,000 - 135,000
|
—
|
|
122,500 - 130,000
|
—
|
|
Wharf
|
80,000 - 90,000
|
—
|
|
85,000 - 95,000
|
—
|
|
|
|
|
|
|
|
|
Total
|
327,000 - 363,000
|
9,500 - 11,500
|
|
334,500 - 368,000
|
9,100 - 10,700
|
2020 Costs Applicable to Sales Guidance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previous
|
|
Updated
|
|
|
Gold
|
Silver
|
|
Gold
|
Silver
|
|
|
($/oz)
|
($/oz)
|
|
($/oz)
|
($/oz)
|
|
Palmarejo (co-product)
|
$785 - $885
|
$9.50 - $10.50
|
|
$650 - $750
|
$9.50 - $10.50
|
|
Rochester (co-product)
|
$1,250 - $1,400
|
$12.75 - $14.00
|
|
$1,150 - $1,300
|
$13.50 - $14.75
|
|
Kensington
|
$900 - $1,000
|
—
|
|
$900 - $1,000
|
—
|
|
Wharf (by-product)
|
$950 - $1,000
|
—
|
|
$875 - $925
|
—
|
|
|
|
|
|
|
|
2020 Capital, Exploration and G&A Guidance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previous
|
|
Updated
|
|
|
|
|
($M)
|
|
($M)
|
|
Capital Expenditures, Sustaining
|
|
|
$70 - $85
|
|
$55 - $60
|
|
Capital Expenditures, Development
|
|
|
$40 - $45
|
|
$45 - $55
|
|
Exploration, Expensed
|
|
|
$37 - $43
|
|
$43 - $49
|
|
Exploration, Capitalized
|
|
|
$7 - $11
|
|
$7 - $11
|
|
General & Administrative Expenses
|
|
|
$32 - $36
|
|
$32 - $36
|
Note: The Company’s previous guidance reflects realized prices through the first half of 2020 and estimated prices of $1,650/oz gold and $16.50/oz silver as well as CAD of 1.36 and MXN of 21.00 for the second half of the year. The Company’s updated guidance reflects realized prices through September 30, 2020 and estimated prices of $1,850/oz gold and $24.00/oz silver as well as CAD of 1.30 and MXN of 21.00 for the fourth quarter.
Results of Continuing Operations
Palmarejo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|
|
|
2020
|
|
2019
|
2020
|
|
2019
|
|
|
|
|
|
|
Tons milled
|
492,474
|
|
|
442,464
|
|
1,241,677
|
|
|
1,269,178
|
|
|
|
|
|
|
|
Average gold grade (oz/t)
|
0.07
|
|
|
0.09
|
|
0.07
|
|
|
0.08
|
|
|
|
|
|
|
|
Average silver grade (oz/t)
|
4.37
|
|
|
4.88
|
|
4.52
|
|
|
4.76
|
|
|
|
|
|
|
|
Average recovery rate – Au
|
91.3
|
%
|
|
81.7
|
%
|
90.3
|
%
|
|
84.1
|
%
|
|
|
|
|
|
|
Average recovery rate – Ag
|
82.8
|
%
|
|
79.6
|
%
|
80.0
|
%
|
|
78.4
|
%
|
|
|
|
|
|
|
Gold ounces produced
|
29,296
|
|
|
31,779
|
|
76,097
|
|
|
83,230
|
|
|
|
|
|
|
|
Silver ounces produced
|
1,783,524
|
|
|
1,719,815
|
|
4,485,549
|
|
|
4,732,870
|
|
|
|
|
|
|
|
Gold ounces sold
|
27,252
|
|
|
32,731
|
|
75,463
|
|
|
88,152
|
|
|
|
|
|
|
|
Silver ounces sold
|
1,765,371
|
|
|
1,747,250
|
|
4,534,802
|
|
|
4,862,065
|
|
|
|
|
|
|
|
Costs applicable to sales per gold ounce(1)
|
$
|
603
|
|
|
$
|
663
|
|
$
|
637
|
|
|
$
|
705
|
|
|
|
|
|
|
|
Costs applicable to sales per silver ounce(1)
|
$
|
10.09
|
|
|
$
|
8.99
|
|
$
|
9.03
|
|
|
$
|
9.25
|
|
|
|
|
|
|
(1)See Non-GAAP Financial Performance Measures.
Three Months Ended September 30, 2020 compared to Three Months Ended September 30, 2019
Gold production decreased 8% as a result of lower grade, partially offset by higher mill throughput and recovery, while silver production increased 4% due to higher mill throughput and recovery, partially offset by lower grade. Metal sales were $81.8 million, or 36% of Coeur’s metal sales, compared with $71.3 million, or 36% of Coeur’s metal sales. Costs applicable to sales per gold ounce decreased 9% and per silver ounce increased 12% due to higher revenue contribution from silver sales compared to gold as well as favorable foreign exchange rates and lower consumable costs. Amortization decreased to $11.9 million due to lower gold ounces sold. Capital expenditures decreased to $5.0 million from $7.8 million due to lower underground development and infill drilling activities.
Nine Months Ended September 30, 2020 compared to Nine Months Ended September 30, 2019
Gold and silver production decreased 9% and 5%, respectively, due to lower gold and silver grades and the temporary suspension of active mining and processing activities in accordance with a COVID-related government decree issued in the second quarter. After receiving guidance from the Mexican government in May that the suspension decree did not apply to precious metals mining, production began ramping back up in June, increasing steadily during the month. Workforce staffing levels gradually increased to near full capacity during September, up from approximately 85% earlier in the third quarter due to compliance with restrictions related to COVID-19. Coeur expects workforce staffing to stay at similar levels for the remainder of 2020.
Metal sales were $194.1 million, or 35% of Coeur’s metal sales, compared with $183.9 million, or 36% of Coeur’s metal sales. Favorable foreign exchange rates and lower consumable costs led to a 10% and 2% decrease in costs applicable to sales per gold and silver ounce, respectively. Amortization decreased to $32.4 million due to lower ounces sold. Capital expenditures decreased to $16.6 million from $24.1 million due to the impact of the temporary suspension on underground development and infill drilling activities and fewer mining equipment purchases.
Rochester
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|
|
|
2020
|
|
2019
|
2020
|
|
2019
|
|
|
|
|
|
|
Tons placed
|
4,523,767
|
|
|
2,516,353
|
|
11,695,676
|
|
|
7,970,199
|
|
|
|
|
|
|
|
Average gold grade (oz/t)
|
0.002
|
|
|
0.004
|
0.002
|
|
|
0.003
|
|
|
|
|
|
|
Average silver grade (oz/t)
|
0.49
|
|
|
0.43
|
0.52
|
|
|
0.45
|
|
|
|
|
|
|
Gold ounces produced
|
6,462
|
|
|
7,901
|
|
17,557
|
|
|
24,766
|
|
|
|
|
|
|
|
Silver ounces produced
|
739,886
|
|
|
982,455
|
|
2,155,577
|
|
|
2,913,033
|
|
|
|
|
|
|
|
Gold ounces sold
|
6,834
|
|
|
7,651
|
|
17,585
|
|
|
24,804
|
|
|
|
|
|
|
|
Silver ounces sold
|
785,887
|
|
|
951,043
|
|
2,141,803
|
|
|
2,913,130
|
|
|
|
|
|
|
|
Costs applicable to sales per gold ounce(1)
|
$
|
1,118
|
|
|
$
|
1,487
|
|
$
|
1,299
|
|
|
$
|
1,268
|
|
|
|
|
|
|
|
Costs applicable to sales per silver ounce(1)
|
$
|
14.58
|
|
|
$
|
17.21
|
|
$
|
14.73
|
|
|
$
|
14.91
|
|
|
|
|
|
|
(1)See Non-GAAP Financial Performance Measures.
Three Months Ended September 30, 2020 compared to Three Months Ended September 30, 2019
Gold and silver production decreased 18% and 25%, respectively, due to the impact of dilution from stacking high-pressure grinding roll (“HPGR”) crushed material on top of historic ore on the Stage IV leach pad and upset conditions in the Merrill-Crowe process plant due to higher-than-expected fine particulates in pregnant solution (“turbidity”) from ore placed on newly constructed inter-lift liners. Metal sales were $32.1 million, or 14% of Coeur’s metal sales, compared with $27.5 million, or 14% of Coeur’s metal sales. Costs applicable to sales per gold and silver ounce decreased 25% and 15%, respectively, driven by lower diesel costs and a one-time charge associated with the operation’s power costs in 2019. Amortization decreased to $3.3 million due to lower ounces sold. Capital expenditures decreased to $9.8 million from $10.2 million due to the timing of payments related to the commencement of construction activities related to POA 11.
Nine Months Ended September 30, 2020 compared to Nine Months Ended September 30, 2019
Gold and silver production decreased 29% and 26%, respectively, due to the impact of dilution from stacking HPGR-crushed material on top of historic ore on the Stage IV leach pad and upset conditions in the Merrill-Crowe process plant due to high turbidity of solution. Metal sales were $72.2 million, or 13% of Coeur’s metal sales, compared with $79.3 million, or 15% of Coeur’s metal sales. Costs applicable to sales per gold ounce increased 2% and silver ounce decreased 1%, respectively, driven by higher revenue contribution from gold sales compared to silver, higher outside service costs, partially offset by higher silver grades and lower diesel costs. Amortization decreased to $9.2 million due to lower ounces sold. Capital expenditures increased to $20.6 million from $17.7 million due to the commencement of construction activities related to POA 11.
Mining remains an essential business in Nevada. The Company implemented and continues to maintain strong health and safety protocols, aimed at limiting the exposure to, and transmission of, COVID-19.
Kensington
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|
|
|
2020
|
|
2019
|
2020
|
|
2019
|
|
|
|
|
|
|
Tons milled
|
163,276
|
|
|
166,475
|
|
496,095
|
|
|
491,317
|
|
|
|
|
|
|
|
Average gold grade (oz/t)
|
0.18
|
|
|
0.22
|
|
0.20
|
|
|
0.22
|
|
|
|
|
|
|
|
Average recovery rate
|
93.7
|
%
|
|
93.2
|
%
|
93.0
|
%
|
|
92.2
|
%
|
|
|
|
|
|
|
Gold ounces produced
|
26,797
|
|
|
34,156
|
|
91,877
|
|
|
98,178
|
|
|
|
|
|
|
|
Gold ounces sold
|
27,815
|
|
|
35,452
|
|
92,963
|
|
|
101,202
|
|
|
|
|
|
|
|
Costs applicable to sales per gold ounce(1)
|
$
|
1,134
|
|
|
$
|
833
|
|
$
|
994
|
|
|
$
|
898
|
|
|
|
|
|
|
(1)See Non-GAAP Financial Performance Measures.
Three Months Ended September 30, 2020 compared to Three Months Ended September 30, 2019
Gold production decreased 22% resulting from processing of additional lower grade development ore and surface stockpile material as a result of mine sequencing and COVID-19 contact tracing temporarily impacting mine production, respectively. Metal sales were $52.4 million, or 23% of Coeur’s metal sales, compared to $52.6 million, or 26% of Coeur’s metal sales. Costs applicable to sales per gold ounce increased 36% due to lower production and higher maintenance costs, partially offset by lower diesel costs. Amortization decreased to $11.5 million due to lower ounces sold. Capital expenditures increased to $5.3 million from $4.9 million due to higher mining infrastructure capital expenditures.
Nine Months Ended September 30, 2020 compared to Nine Months Ended September 30, 2019
Gold production decreased 6% due to processing of additional lower grade development ore and surface stockpile material as a result of mine sequencing and COVID-19 contact tracing temporarily impacting mine production, respectively. Metal sales were $159.2 million, or 29% of Coeur’s metal sales, compared to $138.1 million, or 27% of Coeur’s metal sales. Costs applicable to sales per gold ounce increased 11% due to lower production and higher maintenance costs, partially offset by lower diesel costs. Amortization decreased to $36.3 million due to lower ounces sold. Capital expenditures decreased to $14.1 million from $19.2 million due to lower underground development at Kensington and Jualin, and lower infill drilling and mining equipment expenditures.
Mining continues to be considered an essential business in Alaska. Rotational schedules remain extended from 14 days to 21 days in response to concerns related to COVID-19. All employees are required to quarantine for 7 days and undergo a testing protocol prior to starting their 21-day rotation.
Wharf
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|
|
|
2020
|
|
2019
|
2020
|
|
2019
|
|
|
|
|
|
|
Tons placed
|
1,315,542
|
|
|
1,503,021
|
|
3,663,228
|
|
|
3,512,966
|
|
|
|
|
|
|
|
Average gold grade (oz/t)
|
0.025
|
|
|
0.027
|
0.028
|
|
|
0.024
|
|
|
|
|
|
|
Gold ounces produced
|
33,440
|
|
|
25,946
|
|
73,770
|
|
|
58,528
|
|
|
|
|
|
|
|
Silver ounces produced
|
41,939
|
|
|
17,975
|
|
81,764
|
|
|
43,838
|
|
|
|
|
|
|
|
Gold ounces sold
|
33,382
|
|
|
24,573
|
|
72,840
|
|
|
57,960
|
|
|
|
|
|
|
|
Silver ounces sold
|
40,521
|
|
|
16,612
|
|
77,996
|
|
|
43,028
|
|
|
|
|
|
|
|
Costs applicable to sales per gold ounce(1)
|
$
|
805
|
|
|
$
|
887
|
|
$
|
914
|
|
|
$
|
936
|
|
|
|
|
|
|
(1)See Non-GAAP Financial Performance Measures.
Three Months Ended September 30, 2020 compared to Three Months Ended September 30, 2019
Gold production increased 29% driven by timing of recoveries. Metal sales were $63.5 million, or 28% of Coeur’s metal sales, compared to $36.7 million, or 18% of Coeur’s metal sales. Costs applicable to sales per gold ounce decreased 9% due to higher production and lower diesel costs. Amortization increased to $4.0 million due to higher ounces sold. Capital expenditures were $0.5 million.
Nine Months Ended September 30, 2020 compared to Nine Months Ended September 30, 2019
Gold production increased 26% due to substantially higher crushing rates in the second quarter, higher grades, and timing of recoveries. Metal sales were $129.8 million, or 23% of Coeur’s metal sales, compared to $81.0 million, or 16% of Coeur’s metal sales. Costs applicable to sales per gold ounce decreased 2% due to higher production and lower diesel costs partially offset by higher equipment rental and outside service costs and a $3.3 million inventory write-down related to lower expected recoveries from leach pads 4 and 5. Amortization increased to $9.6 million due to higher ounces sold. Capital expenditures were $1.2 million.
South Dakota’s public order mandating the closure of all public-facing businesses does not include Wharf. The Company implemented and continues to maintain strong health and safety protocols, aimed at limiting the exposure to, and transmission of, COVID-19 at Wharf.
Silvertip
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|
|
|
2020
|
|
2019
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver ounces produced
|
—
|
|
|
299,624
|
|
139,287
|
|
|
882,055
|
|
|
|
|
|
|
|
Zinc pounds produced
|
—
|
|
|
4,197,110
|
|
2,459,756
|
|
|
13,237,837
|
|
|
|
|
|
|
|
Lead pounds produced
|
—
|
|
|
4,477,653
|
|
2,176,847
|
|
|
12,534,228
|
|
|
|
|
|
|
|
Silver ounces sold
|
—
|
|
|
289,910
|
|
158,984
|
|
|
869,972
|
|
|
|
|
|
|
|
Zinc pounds sold
|
—
|
|
|
4,076,390
|
|
3,203,446
|
|
|
14,101,967
|
|
|
|
|
|
|
|
Lead pounds sold
|
—
|
|
|
4,330,862
|
|
2,453,485
|
|
|
12,264,343
|
|
|
|
|
|
|
|
Costs applicable to sales per silver ounce(2)
|
—
|
|
|
32.92
|
NM (3)
|
|
29.09
|
|
|
|
|
|
|
Costs applicable to sales per zinc pound(2)
|
—
|
|
|
1.74
|
NM (3)
|
|
2.24
|
|
|
|
|
|
|
Costs applicable to sales per lead ounce(2)
|
—
|
|
|
1.74
|
NM (3)
|
|
1.62
|
|
|
|
|
|
(1)Operational results in the table above reflect performance prior to the temporary suspension of mining and processing activities in February 2020.
(2)See Non-GAAP Financial Performance Measures.
(3)Due to the temporary suspension of mining and processing activities these amounts are not meaningful.
Silvertip temporarily suspended mining and processing activities (unrelated to COVID-19) in February 2020. Operational results in the table above reflect performance prior to the temporary suspension of mining and processing activities. Ongoing carrying and temporary suspension costs are included in Pre-development, reclamation, and other.
Rotational schedules have been transitioned back to 14 days (previously 21 days) as a result of easing concerns related to COVID-19 in British Columbia.
Liquidity and Capital Resources
At September 30, 2020, the Company had $78.5 million of cash, cash equivalents and restricted cash and $209.5 million available under its RCF. Cash and cash equivalents increased $21.5 million in the nine months ended September 30, 2020, due to a 24% and 23% increase in average realized gold and silver prices, respectively, strong operational results from Wharf, lower capital expenditures, proceeds from the sale of Metalla Common Shares and a $20.0 million increase in the amount outstanding under the RCF, partially offset by lower ounces sold at Palmarejo, Rochester and Kensington, ongoing carrying costs at Silvertip and the payment of the cash portion of the contingent consideration of $18.8 million associated with the Silvertip acquisition. 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, the Company has been able to periodically draw and make repayments under its RCF throughout the first nine months of 2020 and at September 30, 2020 had $20.0 million outstanding under the RCF. Additionally, Coeur established the $100.0 million ATM Program during the second quarter as a means to proactively increase its financial flexibility during the current period of
volatility and uncertainty. At the date of this filing, the Company has yet to issue shares of its common stock under the ATM Program.
Cash Provided by Operating Activities from Continuing Operations
Net cash provided by operating activities for the three months ended September 30, 2020 was $79.5 million, compared to $42.0 million for the three months ended September 30, 2019. Net cash provided by operating activities for the nine months ended September 30, 2020 was $81.4 million, compared to $52.6 million for the nine months ended September 30, 2019. Adjusted EBITDA from continuing operations for the three months ended September 30, 2020 was $90.8 million, compared to $61.0 million for the three months ended September 30, 2019. Adjusted EBITDA from continuing operations for the nine months ended September 30, 2020 was $179.4 million, compared to $114.9 million for the nine months ended September 30, 2019 (see “Non-GAAP Financial Performance Measures”). Net cash used in operating activities was impacted by the following key factors for the applicable periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
In thousands
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
Cash flow before changes in operating assets and liabilities
|
$
|
57,378
|
|
|
$
|
30,976
|
|
|
$
|
103,933
|
|
|
$
|
76,617
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
(1,497)
|
|
|
(3,350)
|
|
|
(3,846)
|
|
|
(20,709)
|
|
|
|
|
Prepaid expenses and other
|
(1,921)
|
|
|
1,375
|
|
|
(1,186)
|
|
|
(2,143)
|
|
|
|
|
Inventories
|
(3,066)
|
|
|
(9,389)
|
|
|
(33,047)
|
|
|
(42,601)
|
|
|
|
|
Accounts payable and accrued liabilities
|
28,570
|
|
|
22,384
|
|
|
15,566
|
|
|
41,421
|
|
|
|
|
Cash provided by (used in) continuing operating activities
|
$
|
79,464
|
|
|
$
|
41,996
|
|
|
$
|
81,420
|
|
|
$
|
52,585
|
|
|
|
Net cash provided by operating activities increased $37.5 million in the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to a 24% and 41% increase in average realized gold and silver prices, respectively, and lower metal inventory write-downs at Silvertip, partially offset by lower sales of gold and silver (5% and 14%, respectively). Revenue for the three months ended September 30, 2020 increased by $30.3 million, of which $49.2 million was the result of higher average realized gold and silver prices, partially offset by a decrease of $19.0 million due to lower volume of gold and silver sales.
Net cash provided by operating activities increased $28.8 million in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due a 24% and 23% increase in average realized gold and silver prices, respectively, lower metal inventory write-downs at Silvertip, and the timing of VAT collection at Palmarejo, partially offset by payments for accounts payable at Silvertip, the receipt of prepayment for deliveries of concentrate from Kensington of $10.6 million in 2019 compared to the delivery of gold concentrate of $5.1 million in 2020, and lower sales of gold and silver (5% and 20%, respectively). Revenue for the nine months ended September 30, 2020 increased by $40.7 million, of which $99.7 million was the result of higher average realized gold and silver prices, partially offset by a decrease of $59.0 million due to lower volume of gold and silver sales.
Cash Used in Investing Activities from Continuing Operations
Net cash used in investing activities in the three months ended September 30, 2020 was $24.8 million compared to $29.7 million in the three months ended September 30, 2019. Cash used in investing activities decreased primarily due to lower capital expenditures, partially offset by the purchase of $2.5 million of additional Integra Common Shares. The Company had capital expenditures of $23.0 million in the three months ended September 30, 2020 compared with $30.7 million in the three months ended September 30, 2019. Capital expenditures in the three months ended September 30, 2020 were primarily related to the commencement of POA 11 construction activities at Rochester and underground development at Palmarejo and Kensington. Capital expenditures in the three months ended September 30, 2019 were primarily related to underground development at Silvertip, Palmarejo, and Kensington, a new thickener at Palmarejo, POA 11 and the new crushing circuit, including the HPGR unit, at Rochester.
Net cash used in investing activities in the nine months ended September 30, 2020 was $39.6 million compared to $66.7 million in the nine months ended September 30, 2019. Cash used in investing activities decreased primarily due to lower capital expenditures and net proceeds of $19.4 million from the sale of Metalla Common Shares. The Company had capital expenditures of $61.9 million in the nine months ended September 30, 2020 compared with $78.9 million in the nine months ended September 30, 2019. Capital expenditures in the nine months ended September 30, 2020 were primarily related to POA 11 at Rochester, which commenced construction activities during the third quarter, and underground development at Palmarejo and Kensington. Capital expenditures in the nine months ended September 30, 2019 were primarily related to underground development at Silvertip, Palmarejo, and Kensington, a new thickener at Palmarejo, POA 11 and the new crushing circuit, including the HPGR unit, at Rochester.
Cash Provided by (Used in) Financing Activities from Continuing Operations
Net cash used in financing activities in the three months ended September 30, 2020 was $48.4 million compared to net cash provided by financing activities of $16.3 million in the three months ended September 30, 2019. During the three months ended September 30, 2020, the Company repaid $40.0 million under the RCF. During the three months ended September 30, 2019, the Company received net proceeds of approximately $73.8 million from the sale of 14.2 million shares of its common stock, partially offset by the repayment $53.0 million, net, of outstanding amounts under the RCF.
Net cash used in financing activities in the nine months ended September 30, 2020 was $20.6 million compared to $36.3 million in the nine months ended September 30, 2019. During the nine months ended September 30, 2020, the Company drew $20.0 million, net, from the RCF, and paid cash contingent consideration of $18.8 million associated with the Silvertip acquisition. During the nine months ended September 30, 2019, the Company repaid $135.0 million, net, of outstanding amounts under the RCF and received net proceeds of approximately $122.7 million from the sale of 30.9 million shares of its common stock.
Critical Accounting Policies and Accounting Developments
Please see Note 2 -- Summary of Significant Accounting Policies contained in the 2019 10-K and in Note 2 - Summary of Significant Accounting Policies contained in this Report for the Company’s critical accounting policies and estimates.
Other Liquidity Matters
We believe that our liquidity and capital resources in the U.S. are adequate to fund our U.S. operations and corporate activities. The Company has asserted indefinite reinvestment of earnings from its Mexican operations as determined by management’s judgment about and intentions concerning the future operations of the Company. The Company does not believe that the amounts reinvested will have a material impact on liquidity.
In order to reduce indebtedness, future cash interest payments and/or amounts due at maturity or upon redemption and for general working capital purposes, from time-to-time we may (1) issue equity securities for cash in public or private offerings or (2) repurchase certain of our debt securities for cash or in exchange for other securities, which may include secured or unsecured notes or equity, in each case in open market or privately negotiated transactions. We evaluate any such transactions in light of prevailing market conditions, liquidity requirements, contractual restrictions, and other factors. The amounts involved may be significant and any debt repurchase transactions may occur at a substantial discount to the debt securities’ face amount.
Non-GAAP Financial Performance Measures
Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles (“GAAP”). Unless otherwise noted, we present the Non-GAAP financial measures of our continuing operations in the tables below. For additional information regarding our discontinued operations, see Note 18 -- to the Consolidated Financial Statements. These measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.
Adjusted Net Income (Loss)
Management uses Adjusted net income (loss) to evaluate the Company’s operating performance, and to plan and forecast its operations. The Company believes the use of Adjusted net income (loss) reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies. Management’s determination of the components of Adjusted net income (loss) are evaluated periodically and is based, in part, on a review of non-GAAP financial measures used by mining industry analysts. The tax effect of adjustments are based on statutory tax rates and the Company’s tax attributes, including the impact through the Company’s valuation allowance. The combined effective rate of tax adjustments may not be consistent with the statutory tax rates or the Company’s effective tax rate due to jurisdictional tax attributes and related valuation allowance impacts which may minimize the tax effect of certain adjustments and may not apply to gains and losses equally. Adjusted net income (loss) is reconciled to Net income (loss) in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
|
In thousands except per share amounts
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
Net income (loss)
|
$
|
26,856
|
|
|
$
|
(14,277)
|
|
|
$
|
13,747
|
|
|
$
|
(70,242)
|
|
|
|
|
(Income) loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,693)
|
|
|
|
|
Fair value adjustments, net
|
(2,243)
|
|
|
(4,377)
|
|
|
(3,491)
|
|
|
(8,201)
|
|
|
|
|
Foreign exchange loss (gain)
|
1,233
|
|
|
2,022
|
|
|
(4,761)
|
|
|
4,167
|
|
|
|
|
(Gain) loss on sale of assets and securities
|
2,476
|
|
|
100
|
|
2,093
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silvertip inventory write-down
|
1,232
|
|
|
13,966
|
|
|
13,717
|
|
|
41,285
|
|
|
|
|
Wharf inventory write-down
|
—
|
|
|
—
|
|
|
3,323
|
|
|
—
|
|
|
|
|
Loss on debt extinguishment
|
—
|
|
|
1,282
|
|
|
—
|
|
|
1,282
|
|
|
|
|
Silvertip temporary suspension costs
|
838
|
|
|
—
|
|
|
6,073
|
|
|
—
|
|
|
|
|
Silvertip lease modification
|
—
|
|
|
—
|
|
|
(4,051)
|
|
|
—
|
|
|
|
|
Silvertip gain on contingent consideration
|
—
|
|
|
—
|
|
|
(955)
|
|
|
—
|
|
|
|
|
Novation
|
3,819
|
|
|
—
|
|
|
3,819
|
|
|
—
|
|
|
|
|
COVID-19 costs
|
4,037
|
|
|
—
|
|
|
10,418
|
|
|
—
|
|
|
|
|
Receivable write-down
|
—
|
|
|
1,040
|
|
|
—
|
|
|
1,040
|
|
|
|
|
Interest income on notes receivables
|
—
|
|
|
—
|
|
|
—
|
|
|
(198)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect of adjustments(1)(2)
|
—
|
|
|
(5,096)
|
|
|
—
|
|
|
(14,843)
|
|
|
|
|
Adjusted net income (loss)
|
$
|
38,248
|
|
|
$
|
(5,340)
|
|
|
$
|
39,932
|
|
|
$
|
(51,283)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income (loss) per share - Basic
|
$
|
0.16
|
|
|
$
|
(0.02)
|
|
|
$
|
0.17
|
|
|
$
|
(0.24)
|
|
|
|
|
Adjusted net income (loss) per share - Diluted
|
$
|
0.16
|
|
|
$
|
(0.02)
|
|
|
$
|
0.17
|
|
|
$
|
(0.24)
|
|
|
|
(1) For the three months ended September 30, 2019, tax effect of adjustments of $5.1 million (42%) is primarily related to the write-down of Silvertip inventory.
(2) For the nine months ended September 30, 2019, tax effect of adjustments of $14.8 million (42%) is primarily related to the write-down of Silvertip inventory.
EBITDA and Adjusted EBITDA
Management uses EBITDA to evaluate the Company’s operating performance, to plan and forecast its operations, and assess leverage levels and liquidity measures. The Company believes the use of EBITDA reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies. Adjusted EBITDA is a measure used in indenture governing the 2024 Senior Notes and the RCF to determine our ability to make certain payments and incur additional indebtedness. EBITDA and Adjusted EBITDA do not represent, and should not be considered an alternative to, Net income (Loss) or Cash Flow from Operations as determined under GAAP. Other companies may calculate Adjusted EBITDA differently and those calculations may not be comparable to our presentation. Adjusted EBITDA is reconciled to Net income (loss) in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
|
In thousands except per share amounts
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
Net income (loss)
|
$
|
26,856
|
|
|
$
|
(14,277)
|
|
|
$
|
13,747
|
|
|
$
|
(70,242)
|
|
|
|
|
(Income) loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,693)
|
|
|
|
|
Interest expense, net of capitalized interest
|
5,096
|
|
|
5,980
|
|
|
15,989
|
|
|
19,259
|
|
|
|
|
Income tax provision (benefit)
|
13,113
|
|
|
218
|
|
|
12,018
|
|
|
(13,986)
|
|
|
|
|
Amortization
|
32,216
|
|
|
45,678
|
|
|
96,254
|
|
|
130,758
|
|
|
|
|
EBITDA
|
77,281
|
|
|
37,599
|
|
|
138,008
|
|
|
60,096
|
|
|
|
|
Fair value adjustments, net
|
(2,243)
|
|
|
(4,377)
|
|
|
(3,491)
|
|
|
(8,201)
|
|
|
|
|
Foreign exchange (gain) loss
|
599
|
|
|
2,945
|
|
|
665
|
|
|
4,078
|
|
|
|
|
Asset retirement obligation accretion
|
2,968
|
|
|
3,080
|
|
|
8,724
|
|
|
9,030
|
|
|
|
|
Inventory adjustments and write-downs
|
(230)
|
|
|
5,371
|
|
|
1,038
|
|
|
6,386
|
|
|
|
|
(Gain) loss on sale of assets and securities
|
2,476
|
|
|
100
|
|
|
2,093
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silvertip inventory write-down
|
1,232
|
|
|
13,966
|
|
|
13,717
|
|
|
41,285
|
|
|
|
|
Silvertip temporary suspension costs
|
838
|
|
|
—
|
|
|
6,073
|
|
|
—
|
|
|
|
|
Silvertip lease modification
|
—
|
|
|
—
|
|
|
(4,051)
|
|
|
—
|
|
|
|
|
Silvertip gain on contingent consideration
|
—
|
|
|
—
|
|
|
(955)
|
|
|
—
|
|
|
|
|
COVID-19 costs
|
4,037
|
|
|
—
|
|
|
10,418
|
|
|
—
|
|
|
|
|
Novation
|
3,819
|
|
|
—
|
|
|
3,819
|
|
|
—
|
|
|
|
|
Wharf inventory write-down
|
—
|
|
|
—
|
|
|
3,323
|
|
|
—
|
|
|
|
|
Loss on debt extinguishment
|
—
|
|
|
1,282
|
|
|
—
|
|
|
1,282
|
|
|
|
|
Receivable write-down
|
—
|
|
|
1,040
|
|
|
—
|
|
|
1,040
|
|
|
|
|
Interest income on notes receivables
|
—
|
|
|
—
|
|
|
—
|
|
|
(198)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
$
|
90,777
|
|
|
$
|
61,006
|
|
|
$
|
179,381
|
|
|
$
|
114,918
|
|
|
|
Free Cash Flow
Management uses Free Cash Flow as a non-GAAP measure to analyze cash flows generated from operations. Free Cash Flow is Cash Provided By (used in) Operating Activities of Continuing Operations less Capital expenditures from continuing operations as presented on the Consolidated Statements of Cash Flows. The Company believes Free Cash Flow is also useful as one of the bases for comparing the Company’s performance with its competitors. Although Free Cash Flow and similar measures are frequently used as measures of cash flows generated from operations by other companies, the Company’s calculation of Free Cash Flow is not necessarily comparable to such other similarly titled captions of other companies.
The following table sets forth a reconciliation of Free Cash Flow, a non-GAAP financial measure, to Cash Provided By (used in) Operating Activities of Continuing Operations, which the Company believes to be the GAAP financial measure most directly comparable to Free Cash Flow.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
|
(Dollars in thousands)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
Cash flow from continuing operations
|
$
|
79,464
|
|
|
$
|
41,996
|
|
|
$
|
81,420
|
|
|
$
|
52,585
|
|
|
|
|
Capital expenditures from continuing operations
|
22,996
|
|
|
30,678
|
|
|
61,886
|
|
|
78,865
|
|
|
|
|
Free cash flow
|
$
|
56,468
|
|
|
$
|
11,318
|
|
|
$
|
19,534
|
|
|
(26,280)
|
|
|
|
Costs Applicable to Sales
Management uses CAS to evaluate the Company’s current operating performance and life of mine performance from discovery through reclamation. We believe these measures assist analysts, investors and other stakeholders in understanding the costs associated with producing gold, silver, zinc and lead, assessing our operating performance and ability to generate free cash flow from operations and sustaining production. These measures may not be indicative of operating profit or cash flow from operations as determined under GAAP. Management believes that allocating CAS to gold, silver, zinc and lead based on gold, silver, zinc and lead metal sales relative to total metal sales best allows management, analysts, investors and other stakeholders to evaluate the operating performance of the Company. Other companies may calculate CAS differently as a result of reflecting the benefit from selling non-silver metals as a by-product credit, converting to silver equivalent ounces, and differences in underlying accounting principles and accounting frameworks such as in International Financial Reporting Standards.
Three Months Ended September 30, 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)
|
$
|
46,163
|
|
|
$
|
22,382
|
|
|
$
|
43,053
|
|
|
$
|
31,887
|
|
|
$
|
1,185
|
|
|
$
|
144,670
|
|
|
Amortization
|
(11,912)
|
|
|
(3,278)
|
|
|
(11,523)
|
|
|
(4,000)
|
|
|
(1,185)
|
|
|
(31,898)
|
|
|
Costs applicable to sales
|
$
|
34,251
|
|
|
$
|
19,104
|
|
|
$
|
31,530
|
|
|
$
|
27,887
|
|
|
$
|
—
|
|
|
$
|
112,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold ounces
|
27,252
|
|
|
6,834
|
|
|
27,815
|
|
|
33,382
|
|
|
|
|
95,283
|
|
|
Silver ounces
|
1,765,371
|
|
|
785,887
|
|
|
|
|
40,521
|
|
|
—
|
|
|
2,591,779
|
|
|
Zinc pounds
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
Lead pounds
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold ($/oz)
|
$
|
603
|
|
|
$
|
1,118
|
|
|
$
|
1,134
|
|
|
$
|
805
|
|
|
|
|
|
|
Silver ($/oz)
|
$
|
10.09
|
|
|
$
|
14.58
|
|
|
|
|
|
|
$
|
—
|
|
|
|
|
Zinc ($/lb)
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
|
|
Lead ($/lb)
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold ($/oz)
|
$
|
663
|
|
|
$
|
1,487
|
|
|
$
|
833
|
|
|
$
|
887
|
|
|
|
|
|
|
Silver ($/oz)
|
$
|
8.99
|
|
|
$
|
17.21
|
|
|
|
|
|
|
$
|
32.92
|
|
|
|
|
Zinc ($/lb)
|
|
|
|
|
|
|
|
|
$
|
1.74
|
|
|
|
|
Lead ($/lb)
|
|
|
|
|
|
|
|
|
$
|
1.74
|
|
|
|
Nine Months Ended September 30, 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)
|
$
|
121,407
|
|
|
$
|
63,590
|
|
|
$
|
128,717
|
|
|
$
|
77,807
|
|
|
$
|
25,418
|
|
|
$
|
416,939
|
|
|
Amortization
|
(32,357)
|
|
|
(9,194)
|
|
|
(36,298)
|
|
|
(9,625)
|
|
|
(7,761)
|
|
|
(95,235)
|
|
|
Costs applicable to sales
|
$
|
89,050
|
|
|
$
|
54,396
|
|
|
$
|
92,419
|
|
|
$
|
68,182
|
|
|
$
|
17,657
|
|
|
$
|
321,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold ounces
|
75,463
|
|
|
17,585
|
|
|
92,963
|
|
|
72,840
|
|
|
|
|
258,851
|
|
|
Silver ounces
|
4,534,802
|
|
|
2,141,803
|
|
|
|
|
77,996
|
|
|
158,984
|
|
|
6,913,585
|
|
|
Zinc pounds
|
|
|
|
|
|
|
|
|
3,203,446
|
|
|
3,203,446
|
|
|
Lead pounds
|
|
|
|
|
|
|
|
|
2,453,485
|
|
|
2,453,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold ($/oz)
|
$
|
637
|
|
|
$
|
1,299
|
|
|
$
|
994
|
|
|
$
|
914
|
|
|
|
|
|
|
Silver ($/oz)
|
$
|
9.03
|
|
|
$
|
14.73
|
|
|
|
|
|
|
NM (1)
|
|
|
|
Zinc ($/lb)
|
|
|
|
|
|
|
|
|
NM (1)
|
|
|
|
Lead ($/lb)
|
|
|
|
|
|
|
|
|
NM (1)
|
|
|
(1) Due to the temporary suspension of mining and processing activities these amounts are not meaningful.
Nine 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)
|
$
|
151,717
|
|
|
$
|
87,146
|
|
|
$
|
128,657
|
|
|
$
|
63,149
|
|
|
$
|
103,306
|
|
|
$
|
533,975
|
|
|
Amortization
|
(44,580)
|
|
|
(12,250)
|
|
|
(37,816)
|
|
|
(8,207)
|
|
|
(26,572)
|
|
|
(129,425)
|
|
|
Costs applicable to sales
|
$
|
107,137
|
|
|
$
|
74,896
|
|
|
$
|
90,841
|
|
|
$
|
54,942
|
|
|
$
|
76,734
|
|
|
$
|
404,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold ounces
|
88,152
|
|
|
24,804
|
|
|
101,202
|
|
|
57,960
|
|
|
|
|
272,118
|
|
|
Silver ounces
|
4,862,065
|
|
|
2,913,130
|
|
|
|
|
43,028
|
|
|
869,972
|
|
|
8,688,195
|
|
|
Zinc pounds
|
|
|
|
|
|
|
|
|
14,101,967
|
|
|
14,101,967
|
|
|
Lead pounds
|
|
|
|
|
|
|
|
|
12,264,343
|
|
|
12,264,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold ($/oz)
|
$
|
705
|
|
|
$
|
1,268
|
|
|
$
|
898
|
|
|
$
|
936
|
|
|
|
|
|
|
Silver ($/oz)
|
$
|
9.25
|
|
|
$
|
14.91
|
|
|
|
|
|
|
$
|
29.09
|
|
|
|
|
Zinc ($/lb)
|
|
|
|
|
|
|
|
|
$
|
2.24
|
|
|
|
|
Lead ($/lb)
|
|
|
|
|
|
|
|
|
$
|
1.62
|
|
|
|
Reconciliation of Costs Applicable to Sales for 2020 Guidance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands except per ounce or per pound amounts
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
Costs applicable to sales, including amortization (U.S. GAAP)
|
$
|
179,529
|
|
|
$
|
102,554
|
|
|
$
|
175,424
|
|
|
$
|
94,989
|
|
|
Amortization
|
(44,409)
|
|
|
(14,561)
|
|
|
(52,201)
|
|
|
(11,600)
|
|
|
Costs applicable to sales
|
$
|
135,120
|
|
|
$
|
87,993
|
|
|
$
|
123,223
|
|
|
$
|
83,389
|
|
|
By-product credit
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,058)
|
|
|
Adjusted costs applicable to sales
|
$
|
135,120
|
|
|
$
|
87,993
|
|
|
$
|
123,223
|
|
|
$
|
81,331
|
|
|
|
|
|
|
|
|
|
|
|
Metal Sales
|
|
|
|
|
|
|
|
|
Gold ounces
|
106,500
|
|
|
31,400
|
|
|
126,700
|
|
|
89,500
|
|
|
Silver ounces
|
6,400,000
|
|
|
3,600,000
|
|
|
|
|
95,000
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Split
|
|
|
|
|
|
|
|
|
Gold
|
52
|
%
|
|
43
|
%
|
|
100
|
%
|
|
100
|
%
|
|
Silver
|
48
|
%
|
|
57
|
%
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
|
|
|
|
|
|
|
|
|
Gold ($/oz)
|
$650 - $750
|
|
$1,150 - $1,300
|
|
$900 - $1,000
|
|
$875 - $925
|
|
Silver ($/oz)
|
$9.50 - $10.50
|
|
$13.50 - $14.75
|
|
|
|
|
Reconciliation of Costs Applicable to Sales for Previous 2020 Guidance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands except per ounce or per pound amounts
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
Costs applicable to sales, including amortization (U.S. GAAP)
|
$
|
178,977
|
|
|
$
|
105,053
|
|
|
$
|
178,595
|
|
|
$
|
94,142
|
|
|
Amortization
|
(42,220)
|
|
|
(15,177)
|
|
|
(54,009)
|
|
|
(11,202)
|
|
|
Costs applicable to sales
|
$
|
136,757
|
|
|
$
|
89,876
|
|
|
$
|
124,586
|
|
|
$
|
82,940
|
|
|
By-product credit
|
—
|
|
|
—
|
|
|
—
|
|
|
(998)
|
|
|
Adjusted costs applicable to sales
|
$
|
136,757
|
|
|
$
|
89,876
|
|
|
$
|
124,586
|
|
|
$
|
81,942
|
|
|
|
|
|
|
|
|
|
|
|
Metal Sales
|
|
|
|
|
|
|
|
|
Gold ounces
|
97,800
|
|
|
32,000
|
|
|
132,800
|
|
|
84,900
|
|
|
Silver ounces
|
6,300,000
|
|
|
3,800,000
|
|
|
|
|
60,350
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Split
|
|
|
|
|
|
|
|
|
Gold
|
56
|
%
|
|
46
|
%
|
|
100
|
%
|
|
100
|
%
|
|
Silver
|
44
|
%
|
|
54
|
%
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
|
|
|
|
|
|
|
|
|
Gold ($/oz)
|
$785 - $885
|
|
$1,250 - $1,400
|
|
$900 - $1,000
|
|
$950 - $1,000
|
|
Silver ($/oz)
|
$9.50 - $10.50
|
|
$12.75 - $14.00
|
|
|
|
|
Cautionary Statement Concerning Forward-Looking Statements
This report contains numerous forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) relating to the Company’s gold, silver, zinc and lead mining business, including statements regarding anticipated production, costs and expenses, operations at the Company’s mines, exploration and development efforts, including the filing of an updated technical report for Rochester, COVID-19 planning, response and mitigation efforts, expectations regarding the Company's mines, hedging strategies, realization of deferred tax assets, expectations about the recovery of VAT in Mexico, timing of completion of obligations under the Amended Sales Contract at Kensington, staffing levels, liquidity management, financing plans, and risk management strategies. Such forward-looking statements are identified by the use of words such as “believes,” “intends,” “expects,” “hopes,” “may,” “should,” “plan,” “projected,” “contemplates,” “anticipates” or similar words. Actual results could differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ materially from those projected in the forward-looking statements include (i) the risk factors set forth in Part II, Item 1A of this report and in “Risk Factors” section of the 2019 10-K, the risk factors set forth in the report on Form 10-Q for the quarterly periods ended March 31, 2020 and June 30, 2020, and the risks set forth in this MD&A and Item 3 of this report, (ii) 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), (iii) changes in the market prices of gold, silver, zinc and lead and a sustained lower price or higher treatment and refining charge environment, (iv) the uncertainties inherent in the Company’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, (v) any future labor disputes or work stoppages (involving the Company and its subsidiaries or third parties), (vi) the uncertainties inherent in the estimation of mineral reserves and mineralized material, (vii) changes that could result from the Company’s future acquisition of new mining properties or businesses, (viii) the loss of access to any third-party smelter to whom the Company markets its production, (ix) 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, (x) the effects of environmental and other governmental regulations, (xi) the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries, and (xii) the Company’s ability to raise additional financing necessary to conduct its business, make payments or refinance its debt. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to various market risks as a part of its operations and engages in risk management strategies to mitigate these risks. The Company continually evaluates the potential benefits of engaging in these strategies based on current market conditions. The Company does not actively engage in the practice of trading derivative instruments for profit. Additional information about the Company’s derivative financial instruments may be found in Note 13 -- Derivative Financial Instruments in the notes to the Consolidated Financial Statements. This discussion of the Company’s market risk assessments contains “forward looking statements”. For additional information regarding forward-looking statements and risks and uncertainties that could impact the Company, please refer to Item 2 of this Report - Cautionary Statement Concerning Forward-Looking Statements. Actual results and actions could differ materially from those discussed below.
Gold, Silver, Zinc and Lead Prices
Gold, silver, zinc, and lead prices may fluctuate widely due to numerous factors, such as U.S. dollar strength or weakness, demand, investor sentiment, inflation or deflation, and global mine production. The Company’s profitability and cash flow may be significantly impacted by changes in the market price of gold, silver, zinc, and lead.
Gold, Silver, Zinc and Lead Hedging
To mitigate the risks associated with gold, silver, zinc and lead price fluctuations, the Company may enter into option contracts to hedge future production. The Company had outstanding Asian put and call option contracts in net-zero-cost collar contracts on 340,200 ounces of gold at September 30, 2020 that settle monthly through December 2022. The Company is targeting to hedge approximately 50% of expected gold production through 2021 and 2022. The weighted average strike prices on the put and call contracts are $1,589 and $1,924 per ounce of gold, respectively. The contracts are generally net cash settled and, if the price of gold at the time of the expiration is between the put and call prices, would expire at no cost to the Company. These Asian put and call option contracts expose us to (i) credit risk in the form of non-performance by counterparties for contracts in which the contract price exceeds the spot price of a commodity, (ii) price risk to the extent that the spot price exceeds the contract price for quantities of our production covered under contract positions; and (iii) liquidity risk to the extent counterparties exercise rights to cash collateral for out-of-money hedges under applicable instruments. To reduce counter-party
credit exposure, the Company enters into contracts with institutions management deems credit-worthy and limits credit exposure to each institution. The Company does not anticipate non-performance by any of its counterparties. For additional information, please see the section titled “Risk Factors” in the 2019 10-K, in the Forms 10-Q for the quarterly periods ended March 31, 2020 and June 30, 2020 and Part II, Item 1A of this report.
At September 30, 2020, the fair value of the put and call zero cost collars contracts was a liability of $33.9 million. For the quarter ended September 30, 2020 the Company recognized a loss of $4.5 million related to expired options in Revenue and the remaining outstanding options were included in accumulated other comprehensive income (loss). A 10% increase in the price of gold at September 30, 2020 would result in a loss of $53.2 million and 10% decrease would not have any positive or negative impact. As of September 30, 2020, the closing price of gold was $1,887 per ounce. As of October 27, 2020, the closing price of gold had increased further to $1,906 per ounce.
Provisional Gold, Silver, Zinc and Lead Sales
The Company enters into sales contracts with third-party smelters and refiners which, in some cases, provide for a provisional payment based upon preliminary assays and quoted metal prices. The provisionally priced sales contracts contain an embedded derivative that is required to be separated from the host contract. Depending on the difference between the price at the time of sale and the final settlement price, embedded derivatives are recorded as either a derivative asset or liability. The embedded derivatives do not qualify for hedge accounting and, as a result, are marked to the market gold, silver, zinc and lead price at the end of each period from the provisional sale date to the date of final settlement. The mark-to-market gains and losses are recorded in earnings. At September 30, 2020, the Company had outstanding provisionally priced sales of 8,504 ounces of gold at an average price of $1,928. Changes in gold prices resulted in provisional pricing mark-to-market gain of $0.3 million during the nine months ended September 30, 2020. A 10% change in realized gold prices would cause revenue to vary by $1.6 million.
Foreign Currency
The Company operates, or has mineral interests, in several foreign countries including Canada, Mexico, and New Zealand, which exposes it to foreign currency exchange rate risks. Foreign currency exchange rates are influenced by world market factors beyond the Company’s control such as supply and demand for U.S. and foreign currencies and related monetary and fiscal policies. Fluctuations in local currency exchange rates in relation to the U.S. dollar may significantly impact profitability and cash flow.
Foreign Exchange Hedging
To manage foreign currency risk, the Company may enter into foreign currency forward exchange contracts. At September 30, 2020, the Company entered into foreign currency forward contracts to manage this risk and designated these instruments as cash flow hedges of forecasted foreign denominated transactions. The Company had outstanding foreign currency forward exchange contracts to receive $1.9 billion Mexican Pesos at September 30, 2020 with an average exchange rate of 24.87 that settle monthly through December 2021. The Company had outstanding foreign currency forward exchange contracts to receive $10.8 million Canadian Dollars at September 30, 2020 with an average exchange rate of 1.44 that settle monthly through December 2020. At September 30, 2020, the fair value of the foreign currency forward exchange contracts was a net asset of $7.6 million. For the nine months ended September 30, 2020 the Company has recognized a gain of $1.7 million and $0.9 million related to expired options in Cost Applicable to Sales and Pre-development, Reclamation and Other, respectively, and a gain of $7.6 million related to outstanding options in AOCI. A 10% increase or decrease in the exchange rates at September 30, 2020 would result in a gain of $0.3 million or a gain of $15.3 million, respectively.
Interest Rates
Interest Rate Hedging
We may use financial instruments to manage exposures to changes in interest rates on loans, which exposes us to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, it does not pose credit risk. We seek to minimize the credit risk in derivative instruments by entering into transactions with what we believe are high-quality counterparties. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. The Company had no outstanding interest rate swaps at September 30, 2020.