Item 1. Financial Statements and Supplementary Data
COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
|
ASSETS
|
Notes
|
In thousands, except share data
|
|
CURRENT ASSETS
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
124,075
|
|
|
$
|
92,794
|
|
|
|
|
|
|
|
|
Receivables
|
4
|
22,867
|
|
|
23,484
|
|
|
Inventory
|
5
|
54,471
|
|
|
51,210
|
|
|
Ore on leach pads
|
5
|
81,773
|
|
|
74,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other
|
|
20,949
|
|
|
27,254
|
|
|
|
|
|
|
|
|
|
|
304,135
|
|
|
269,608
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
Property, plant and equipment, net
|
|
272,558
|
|
|
230,139
|
|
|
Mining properties, net
|
|
786,695
|
|
|
716,790
|
|
|
Ore on leach pads
|
5
|
73,487
|
|
|
81,963
|
|
|
Restricted assets
|
|
9,274
|
|
|
9,492
|
|
|
Equity securities
|
6
|
174,370
|
|
|
12,943
|
|
|
Receivables
|
4, 17
|
26,642
|
|
|
26,447
|
|
|
|
|
|
|
|
|
Other
|
|
60,847
|
|
|
56,595
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
1,708,008
|
|
|
$
|
1,403,977
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
Accounts payable
|
|
$
|
107,362
|
|
|
$
|
90,577
|
|
|
Accrued liabilities and other
|
18
|
89,311
|
|
|
119,158
|
|
|
Debt
|
8
|
28,876
|
|
|
22,074
|
|
|
|
|
|
|
|
|
Reclamation
|
9
|
2,299
|
|
|
2,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
227,848
|
|
|
234,108
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
Debt
|
8
|
385,370
|
|
|
253,427
|
|
|
|
|
|
|
|
|
Reclamation
|
9
|
140,936
|
|
|
136,975
|
|
|
Deferred tax liabilities
|
|
39,598
|
|
|
34,202
|
|
|
Other long-term liabilities
|
|
45,847
|
|
|
51,786
|
|
|
|
|
|
|
|
|
|
|
611,751
|
|
|
476,390
|
|
|
COMMITMENTS AND CONTINGENCIES
|
17
|
|
|
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
Common stock, par value $0.01 per share; authorized 300,000,000 shares, 257,046,847 issued and outstanding at June 30, 2021 and 243,751,283 at December 31, 2020
|
|
2,570
|
|
|
2,438
|
|
|
Additional paid-in capital
|
|
3,732,296
|
|
|
3,610,297
|
|
|
Accumulated other comprehensive income (loss)
|
|
7,457
|
|
|
(11,136)
|
|
|
Accumulated deficit
|
|
(2,873,914)
|
|
|
(2,908,120)
|
|
|
|
|
868,409
|
|
|
693,479
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
1,708,008
|
|
|
$
|
1,403,977
|
|
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)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
Notes
|
In thousands, except share data
|
|
Revenue
|
3
|
$
|
214,858
|
|
|
$
|
154,249
|
|
|
$
|
416,975
|
|
|
$
|
327,416
|
|
|
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales(1)
|
3
|
132,595
|
|
|
90,015
|
|
|
240,742
|
|
|
208,932
|
|
|
|
|
Amortization
|
|
31,973
|
|
|
27,876
|
|
|
61,910
|
|
|
64,038
|
|
|
|
|
General and administrative
|
|
10,467
|
|
|
8,616
|
|
|
22,021
|
|
|
17,536
|
|
|
|
|
Exploration
|
|
12,446
|
|
|
11,855
|
|
|
22,112
|
|
|
18,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-development, reclamation, and other
|
|
12,738
|
|
|
18,675
|
|
|
26,450
|
|
|
25,230
|
|
|
|
|
Total costs and expenses
|
|
200,219
|
|
|
157,037
|
|
|
373,235
|
|
|
333,977
|
|
|
|
|
OTHER INCOME (EXPENSE), NET
|
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment
|
8
|
—
|
|
|
—
|
|
|
(9,173)
|
|
|
—
|
|
|
|
|
Fair value adjustments, net
|
12
|
37,239
|
|
|
10,067
|
|
|
33,440
|
|
|
1,248
|
|
|
|
|
Interest expense, net of capitalized interest
|
8
|
(5,093)
|
|
|
(5,765)
|
|
|
(10,003)
|
|
|
(10,893)
|
|
|
|
|
Other, net
|
14
|
701
|
|
|
121
|
|
|
4,328
|
|
|
2,002
|
|
|
|
|
Total other income (expense), net
|
|
32,847
|
|
|
4,423
|
|
|
18,592
|
|
|
(7,643)
|
|
|
|
|
Income (loss) before income and mining taxes
|
|
47,486
|
|
|
1,635
|
|
|
62,332
|
|
|
(14,204)
|
|
|
|
|
Income and mining tax (expense) benefit
|
10
|
(15,340)
|
|
|
(2,844)
|
|
|
(28,126)
|
|
|
1,095
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$
|
32,146
|
|
|
$
|
(1,209)
|
|
|
$
|
34,206
|
|
|
$
|
(13,109)
|
|
|
|
|
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of derivative contracts designated as cash flow hedges
|
|
(2,982)
|
|
|
(7,097)
|
|
|
24,376
|
|
|
(6,891)
|
|
|
|
|
Reclassification adjustments for realized (gain) loss on cash flow hedges
|
|
(3,061)
|
|
|
(679)
|
|
|
(5,783)
|
|
|
(679)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
(6,043)
|
|
|
(7,776)
|
|
|
18,593
|
|
|
(7,570)
|
|
|
|
|
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
26,103
|
|
|
$
|
(8,985)
|
|
|
$
|
52,799
|
|
|
$
|
(20,679)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER SHARE
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.13
|
|
|
$
|
(0.01)
|
|
|
$
|
0.14
|
|
|
$
|
(0.05)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.13
|
|
|
$
|
(0.01)
|
|
|
$
|
0.14
|
|
|
$
|
(0.05)
|
|
|
|
(1) Excludes amortization.
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 June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
Notes
|
In thousands
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
32,146
|
|
|
$
|
(1,209)
|
|
|
$
|
34,206
|
|
|
$
|
(13,109)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
31,973
|
|
|
27,876
|
|
|
61,910
|
|
|
64,038
|
|
|
|
|
Accretion
|
|
2,965
|
|
|
2,908
|
|
|
5,870
|
|
|
5,755
|
|
|
|
|
Deferred taxes
|
|
5,100
|
|
|
(1,545)
|
|
|
5,224
|
|
|
(7,032)
|
|
|
|
|
Loss on debt extinguishment
|
8
|
—
|
|
|
—
|
|
|
9,173
|
|
|
—
|
|
|
|
|
Fair value adjustments, net
|
12
|
(37,239)
|
|
|
(10,067)
|
|
|
(33,440)
|
|
|
(1,248)
|
|
|
|
|
Stock-based compensation
|
11
|
3,256
|
|
|
2,287
|
|
|
7,512
|
|
|
4,300
|
|
|
|
|
Gain on modification of right of use lease
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,051)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-downs
|
|
—
|
|
|
5,208
|
|
|
—
|
|
|
15,589
|
|
|
|
|
Deferred revenue recognition
|
17
|
(7,255)
|
|
|
(8,134)
|
|
|
(15,601)
|
|
|
(15,682)
|
|
|
|
|
Other
|
|
496
|
|
|
(913)
|
|
|
(1,832)
|
|
|
(2,005)
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
961
|
|
|
(1,536)
|
|
|
1,960
|
|
|
(2,349)
|
|
|
|
|
Prepaid expenses and other current assets
|
|
1,328
|
|
|
1,081
|
|
|
673
|
|
|
735
|
|
|
|
|
Inventory and ore on leach pads
|
|
3,259
|
|
|
(8,056)
|
|
|
(14,227)
|
|
|
(29,981)
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
21,069
|
|
|
2,047
|
|
|
(7,728)
|
|
|
(13,004)
|
|
|
|
|
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|
58,059
|
|
|
9,947
|
|
|
53,700
|
|
|
1,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
(78,223)
|
|
|
(16,682)
|
|
|
(137,647)
|
|
|
(38,890)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from the sale of assets
|
|
968
|
|
|
9
|
|
|
5,556
|
|
|
4,515
|
|
|
|
|
Purchase of investments
|
|
(876)
|
|
|
—
|
|
|
(876)
|
|
|
—
|
|
|
|
|
Sale of investments
|
|
—
|
|
|
19,802
|
|
|
935
|
|
|
19,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
(13)
|
|
|
(183)
|
|
|
(30)
|
|
|
(200)
|
|
|
|
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
(78,144)
|
|
|
2,946
|
|
|
(132,062)
|
|
|
(14,773)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of notes and bank borrowings, net of issuance costs
|
8
|
—
|
|
|
100,000
|
|
|
367,493
|
|
|
150,000
|
|
|
|
|
Payments on debt, finance leases, and associated costs
|
7, 8
|
(9,611)
|
|
|
(95,713)
|
|
|
(253,578)
|
|
|
(101,614)
|
|
|
|
|
Silvertip contingent consideration
|
17
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,750)
|
|
|
|
|
Other
|
|
(233)
|
|
|
141
|
|
|
(4,158)
|
|
|
(1,832)
|
|
|
|
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
(9,844)
|
|
|
4,428
|
|
|
109,757
|
|
|
27,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(56)
|
|
|
929
|
|
|
(107)
|
|
|
303
|
|
|
|
|
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
|
(29,985)
|
|
|
18,250
|
|
|
31,288
|
|
|
15,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
|
155,443
|
|
|
54,058
|
|
|
94,170
|
|
|
57,018
|
|
|
|
|
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
125,458
|
|
|
$
|
72,308
|
|
|
$
|
125,458
|
|
|
$
|
72,308
|
|
|
|
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, 2020
|
243,752
|
|
|
$
|
2,438
|
|
|
$
|
3,610,297
|
|
|
$
|
(2,908,120)
|
|
|
$
|
(11,136)
|
|
|
$
|
693,479
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,060
|
|
|
—
|
|
|
2,060
|
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,636
|
|
|
24,636
|
|
|
Common stock issued/canceled under long-term incentive plans and director fees and options, net
|
(282)
|
|
|
(3)
|
|
|
334
|
|
|
—
|
|
|
—
|
|
|
331
|
|
|
Balances at March 31, 2021
|
243,470
|
|
|
$
|
2,435
|
|
|
$
|
3,610,631
|
|
|
$
|
(2,906,060)
|
|
|
$
|
13,500
|
|
|
$
|
720,506
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
32,146
|
|
|
—
|
|
|
32,146
|
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,043)
|
|
|
(6,043)
|
|
|
Common stock issued for investment
|
12,786
|
|
|
128
|
|
|
118,649
|
|
|
|
|
|
|
118,777
|
|
|
Common stock issued/canceled under long-term incentive plans and director fees and options, net
|
792
|
|
|
7
|
|
|
3,016
|
|
|
—
|
|
|
—
|
|
|
3,023
|
|
|
Balances at June 30, 2021
|
257,048
|
|
|
$
|
2,570
|
|
|
$
|
3,732,296
|
|
|
$
|
(2,873,914)
|
|
|
$
|
7,457
|
|
|
$
|
868,409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
Coeur Mining, Inc. and Subsidiaries
Notes to 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, 2021. The condensed consolidated December 31, 2020 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, 2020 (the “2020 10-K”).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant Accounting Policies
Please see Note 2 -- Summary of Significant Accounting Policies contained in the 2020 10-K.
Use of Estimates
The Company's Consolidated Financial Statements have been prepared in accordance with United States Generally Accepted Accounting Principles. The preparation of the Company's 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 more significant areas requiring the use of management estimates and assumptions relate to metal prices and mineral reserves that are the basis for future cash flow estimates utilized in impairment calculations and units-of production amortization calculations, environmental, reclamation and closure obligations, estimates of recoverable silver and gold in leach pad inventories, estimates of fair value for certain reporting units and asset impairments, valuation allowances for deferred tax assets, and the fair value and accounting treatment of financial instruments, equity securities, asset acquisitions, the allocation of fair value to assets and liabilities assumed in connection with business combinations, and derivative instruments. 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.
Ore on Leach Pads
The heap leach process extracts silver and gold by placing ore on an impermeable pad and applying a diluted cyanide solution that dissolves a portion of the contained silver and gold, which are then recovered in metallurgical processes.
The Company uses several integrated steps to scientifically measure the metal content of ore placed on the leach pads. As the ore body is drilled in preparation for the blasting process, samples are taken of the drill residue which are assayed to determine estimated quantities of contained metal. The Company then processes the ore through crushing facilities where the output is again weighed and sampled for assaying. A metallurgical reconciliation with the data collected from the mining operation is completed with appropriate adjustments made to previous estimates. The crushed ore is then transported to the leach pad for application of the leaching solution. As the leach solution is collected from the leach pads, it is continuously sampled for assaying. The quantity of leach solution is measured by flow meters throughout the leaching and precipitation process. After precipitation, the product is converted to doré at the Rochester mine and a form of gold concentrate at the Wharf mine, representing the final product produced by each mine. The inventory is stated at lower of cost or net realizable value, with cost being determined using a weighted average cost method.
The historical cost of metal expected to be extracted within 12 months is classified as current and the historical cost of metals contained within the broken ore expected to be extracted beyond 12 months is classified as non-current. Ore on leach pads is valued based on actual production costs incurred to produce and place ore on the leach pad, less costs allocated to minerals recovered through the leach process.
The estimate of both the ultimate recovery expected over time and the quantity of metal that may be extracted relative to the time the leach process occurs requires the use of estimates, which are inherently inaccurate due to the nature of the leaching process. The quantities of metal contained in the ore are based upon actual weights and assay analysis. The rate at which the leach process extracts gold and silver from the crushed ore is based upon laboratory testing and actual experience of more than 20 years of leach pad operations at the Rochester mine and 30 years of leach pad operations at the Wharf mine. The assumptions used by the Company to measure metal content during each stage of the inventory conversion process includes estimated recovery rates based on laboratory testing and assaying. The Company periodically reviews its estimates compared to actual experience and revises its estimates when appropriate. The ultimate recovery will not be known until leaching operations cease. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis. In June 2021, the Company updated the
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
recovery rate assumption on the Stage IV leach pad at Rochester, based on the historical performance of the leach pad since the third quarter of 2019. This change resulted in an adjustment to the ending ore on leach pads balance with the resulting non-cash charges allocated between Costs Applicable to Sales and Amortization in the amounts of $8.6 million and $2.2 million, respectively.
Revenue Recognition
The Company’s gold stream agreement with a subsidiary of Franco-Nevada Corporation (“Franco-Nevada”) provided for a $22.0 million 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 ratably recognize a portion of the deposit as revenue for each gold ounce delivered to Franco-Nevada. The remaining unamortized balance is included in Accrued liabilities and other and Other long-term liabilities on the Consolidated Balance Sheet. 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 June 30,
|
|
Six Months Ended June 30,
|
|
In thousands
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
Opening Balance
|
$
|
9,030
|
|
|
$
|
10,505
|
|
|
$
|
9,376
|
|
|
$
|
11,061
|
|
|
|
|
Revenue Recognized
|
(255)
|
|
|
(116)
|
|
|
(601)
|
|
|
(672)
|
|
|
|
|
Closing Balance
|
$
|
8,775
|
|
|
$
|
10,389
|
|
|
$
|
8,775
|
|
|
$
|
10,389
|
|
|
|
In December 2020, the Company received a $15.0 million prepayment (the “December 2020 Prepayment”) for deliveries of gold concentrate from the Kensington mine pursuant to the Amended Sales Contract (as defined in Note 17). In the first half of 2021, 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 July 2021, with an effective date as of June 28, 2021, 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 2021 (the “June 2021 Prepayment”). 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. The remaining contract liability is included in Accrued liabilities and other on the Consolidated Balance Sheet. See Note 17 -- Commitments and Contingencies for additional detail.
The following table presents a rollforward of the Amended Sales Contract liability balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
In thousands
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
Opening Balance
|
$
|
7,104
|
|
|
$
|
8,018
|
|
|
$
|
15,003
|
|
|
$
|
15,010
|
|
|
|
|
Additions
|
14,900
|
|
|
15,006
|
|
|
15,001
|
|
|
15,006
|
|
|
|
|
Revenue Recognized
|
(7,000)
|
|
|
(8,018)
|
|
|
(15,000)
|
|
|
(15,010)
|
|
|
|
|
Closing Balance
|
$
|
15,004
|
|
|
$
|
15,006
|
|
|
$
|
15,004
|
|
|
$
|
15,006
|
|
|
|
Recently Adopted 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 adoption of the new standard did not have a material impact on the Company’s consolidated net income, financial position or cash flows.
Coeur Mining, Inc. and Subsidiaries
Notes to 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.
In June 2021, Silvertip repurchased from Silvertip Resources Investment Cayman Ltd. for consideration of $7.0 million a net smelter returns royalty of 1.429% on the first 1,434,000 metric tonnes of mineralized material mined, and 1.00% thereafter.
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 Coeur’s business and operations and the Company expects costs associated with its COVID-19 mitigation and response efforts at each of its operations to continue.
Incremental costs associated with the Company’s COVID-19 health and safety protocols are recorded in Pre-development, reclamation, and other expenses in our 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 Coeur 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 June 30, 2021
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
Silvertip
|
|
Other
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold sales
|
$
|
41,232
|
|
|
$
|
14,026
|
|
|
$
|
48,807
|
|
|
$
|
42,093
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
146,158
|
|
|
Silver sales
|
43,802
|
|
|
24,059
|
|
|
—
|
|
|
839
|
|
|
—
|
|
|
—
|
|
|
68,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal sales
|
85,034
|
|
|
38,085
|
|
|
48,807
|
|
|
42,932
|
|
|
—
|
|
|
—
|
|
|
214,858
|
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales(1)
|
41,918
|
|
|
38,031
|
|
|
29,203
|
|
|
23,443
|
|
|
—
|
|
|
—
|
|
|
132,595
|
|
|
Amortization
|
8,271
|
|
|
6,506
|
|
|
12,710
|
|
|
2,994
|
|
|
1,185
|
|
|
307
|
|
|
31,973
|
|
|
Exploration
|
1,834
|
|
|
936
|
|
|
1,305
|
|
|
76
|
|
|
3,595
|
|
|
4,700
|
|
|
12,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses
|
1,453
|
|
|
1,444
|
|
|
2,273
|
|
|
525
|
|
|
5,964
|
|
|
11,546
|
|
|
23,205
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,239
|
|
|
37,239
|
|
|
Interest expense, net
|
(149)
|
|
|
(480)
|
|
|
(142)
|
|
|
(46)
|
|
|
181
|
|
|
(4,457)
|
|
|
(5,093)
|
|
|
Other, net
|
(371)
|
|
|
(92)
|
|
|
(42)
|
|
|
628
|
|
|
(237)
|
|
|
815
|
|
|
701
|
|
|
Income and mining tax (expense) benefit
|
(7,559)
|
|
|
(33)
|
|
|
(707)
|
|
|
(1,294)
|
|
|
—
|
|
|
(5,747)
|
|
|
(15,340)
|
|
|
Net Income (loss)
|
$
|
23,479
|
|
|
$
|
(9,437)
|
|
|
$
|
2,425
|
|
|
$
|
15,182
|
|
|
$
|
(10,800)
|
|
|
$
|
11,297
|
|
|
$
|
32,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets(2)
|
$
|
307,287
|
|
|
$
|
435,257
|
|
|
$
|
158,456
|
|
|
$
|
77,436
|
|
|
$
|
189,489
|
|
|
$
|
171,517
|
|
|
$
|
1,339,442
|
|
|
Capital expenditures
|
$
|
9,795
|
|
|
$
|
42,272
|
|
|
$
|
6,045
|
|
|
$
|
1,402
|
|
|
$
|
18,525
|
|
|
$
|
184
|
|
|
$
|
78,223
|
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2020
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
Silvertip
|
|
Other
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold sales
|
$
|
23,669
|
|
|
$
|
8,982
|
|
|
$
|
55,177
|
|
|
$
|
40,074
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
127,902
|
|
|
Silver sales
|
14,301
|
|
|
11,661
|
|
|
—
|
|
|
385
|
|
|
—
|
|
|
—
|
|
|
26,347
|
|
|
Zinc sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Lead sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Metal sales
|
37,970
|
|
|
20,643
|
|
|
55,177
|
|
|
40,459
|
|
|
—
|
|
|
—
|
|
|
154,249
|
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales(1)
|
18,825
|
|
|
18,336
|
|
|
30,382
|
|
|
22,472
|
|
|
—
|
|
|
—
|
|
|
90,015
|
|
|
Amortization
|
7,270
|
|
|
3,012
|
|
|
12,853
|
|
|
3,181
|
|
|
1,231
|
|
|
329
|
|
|
27,876
|
|
|
Exploration
|
903
|
|
|
1,844
|
|
|
2,577
|
|
|
101
|
|
|
2,902
|
|
|
3,528
|
|
|
11,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses
|
3,179
|
|
|
1,213
|
|
|
3,519
|
|
|
(118)
|
|
|
9,480
|
|
|
10,018
|
|
|
27,291
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,067
|
|
|
10,067
|
|
|
Interest expense, net
|
(311)
|
|
|
(300)
|
|
|
(214)
|
|
|
(50)
|
|
|
(220)
|
|
|
(4,670)
|
|
|
(5,765)
|
|
|
Other, net
|
(1,651)
|
|
|
(25)
|
|
|
(36)
|
|
|
(6)
|
|
|
424
|
|
|
1,415
|
|
|
121
|
|
|
Income and mining tax (expense) benefit
|
(3,384)
|
|
|
—
|
|
|
(474)
|
|
|
(1,701)
|
|
|
(255)
|
|
|
2,970
|
|
|
(2,844)
|
|
|
Income (loss) from continuing operations
|
$
|
2,447
|
|
|
$
|
(4,087)
|
|
|
$
|
5,122
|
|
|
$
|
13,066
|
|
|
$
|
(13,664)
|
|
|
$
|
(4,093)
|
|
|
$
|
(1,209)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets(2)
|
$
|
307,215
|
|
|
$
|
307,221
|
|
|
$
|
180,290
|
|
|
$
|
84,881
|
|
|
$
|
159,995
|
|
|
$
|
169,273
|
|
|
$
|
1,208,875
|
|
|
Capital expenditures
|
$
|
4,533
|
|
|
$
|
5,803
|
|
|
$
|
3,909
|
|
|
$
|
265
|
|
|
$
|
1,949
|
|
|
$
|
223
|
|
|
$
|
16,682
|
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2021
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
Silvertip
|
|
Other
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold sales
|
$
|
78,799
|
|
|
$
|
26,466
|
|
|
$
|
103,273
|
|
|
$
|
75,942
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
284,480
|
|
|
Silver sales
|
86,580
|
|
|
44,376
|
|
|
—
|
|
|
1,539
|
|
|
—
|
|
|
—
|
|
|
132,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal sales
|
165,379
|
|
|
70,842
|
|
|
103,273
|
|
|
77,481
|
|
|
—
|
|
|
—
|
|
|
416,975
|
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales(1)
|
75,906
|
|
|
62,064
|
|
|
60,597
|
|
|
42,175
|
|
|
—
|
|
|
—
|
|
|
240,742
|
|
|
Amortization
|
17,330
|
|
|
10,083
|
|
|
26,155
|
|
|
5,469
|
|
|
2,271
|
|
|
602
|
|
|
61,910
|
|
|
Exploration
|
3,527
|
|
|
1,408
|
|
|
2,414
|
|
|
143
|
|
|
6,527
|
|
|
8,093
|
|
|
22,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses
|
2,723
|
|
|
2,892
|
|
|
5,268
|
|
|
710
|
|
|
12,519
|
|
|
24,359
|
|
|
48,471
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,173)
|
|
|
(9,173)
|
|
|
Fair value adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,440
|
|
|
33,440
|
|
|
Interest expense, net
|
(336)
|
|
|
(702)
|
|
|
(374)
|
|
|
(83)
|
|
|
226
|
|
|
(8,734)
|
|
|
(10,003)
|
|
|
Other, net
|
(1,036)
|
|
|
(153)
|
|
|
(42)
|
|
|
652
|
|
|
(339)
|
|
|
5,246
|
|
|
4,328
|
|
|
Income and mining tax (expense) benefit
|
(18,899)
|
|
|
(171)
|
|
|
(1,041)
|
|
|
(2,423)
|
|
|
—
|
|
|
(5,592)
|
|
|
(28,126)
|
|
|
Net Income (loss)
|
$
|
45,622
|
|
|
$
|
(6,631)
|
|
|
$
|
7,382
|
|
|
$
|
27,130
|
|
|
$
|
(21,430)
|
|
|
$
|
(17,867)
|
|
|
$
|
34,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets(2)
|
$
|
307,287
|
|
|
$
|
435,257
|
|
|
$
|
158,456
|
|
|
$
|
77,436
|
|
|
$
|
189,489
|
|
|
$
|
171,517
|
|
|
$
|
1,339,442
|
|
|
Capital expenditures
|
$
|
19,778
|
|
|
$
|
72,449
|
|
|
$
|
13,247
|
|
|
$
|
2,883
|
|
|
$
|
28,912
|
|
|
$
|
378
|
|
|
$
|
137,647
|
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2020
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
Silvertip
|
|
Other
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold sales
|
$
|
65,316
|
|
|
$
|
17,648
|
|
|
$
|
106,843
|
|
|
$
|
65,700
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
255,507
|
|
|
Silver sales
|
46,993
|
|
|
22,400
|
|
|
—
|
|
|
633
|
|
|
1,230
|
|
|
$
|
—
|
|
|
71,256
|
|
|
Zinc sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(662)
|
|
|
—
|
|
|
(662)
|
|
|
Lead sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,315
|
|
|
—
|
|
|
1,315
|
|
|
Metal sales
|
112,309
|
|
|
40,048
|
|
|
106,843
|
|
|
66,333
|
|
|
1,883
|
|
|
—
|
|
|
327,416
|
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales(1)
|
54,799
|
|
|
35,292
|
|
|
60,889
|
|
|
40,295
|
|
|
17,657
|
|
|
—
|
|
|
208,932
|
|
|
Amortization
|
20,445
|
|
|
5,916
|
|
|
24,775
|
|
|
5,625
|
|
|
6,576
|
|
|
701
|
|
|
64,038
|
|
|
Exploration
|
2,395
|
|
|
2,064
|
|
|
4,349
|
|
|
105
|
|
|
3,153
|
|
|
6,175
|
|
|
18,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses
|
3,901
|
|
|
2,459
|
|
|
3,850
|
|
|
324
|
|
|
11,854
|
|
|
20,378
|
|
|
42,766
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,248
|
|
|
1,248
|
|
|
Interest expense, net
|
(466)
|
|
|
(568)
|
|
|
(523)
|
|
|
(101)
|
|
|
(479)
|
|
|
(8,756)
|
|
|
(10,893)
|
|
|
Other, net
|
(1,698)
|
|
|
(78)
|
|
|
35
|
|
|
(19)
|
|
|
1,554
|
|
|
2,208
|
|
|
2,002
|
|
|
Income and mining tax (expense) benefit
|
(1,097)
|
|
|
(43)
|
|
|
(474)
|
|
|
(2,176)
|
|
|
(255)
|
|
|
5,140
|
|
|
1,095
|
|
|
Net Income (loss)
|
$
|
27,508
|
|
|
$
|
(6,372)
|
|
|
$
|
12,018
|
|
|
$
|
17,688
|
|
|
$
|
(36,537)
|
|
|
$
|
(27,414)
|
|
|
$
|
(13,109)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets(2)
|
$
|
307,215
|
|
|
$
|
307,221
|
|
|
$
|
180,290
|
|
|
$
|
84,881
|
|
|
159,995
|
|
|
$
|
169,273
|
|
|
$
|
1,208,875
|
|
|
Capital expenditures
|
$
|
11,613
|
|
|
$
|
10,861
|
|
|
$
|
8,717
|
|
|
$
|
674
|
|
|
6,565
|
|
|
$
|
460
|
|
|
$
|
38,890
|
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
June 30, 2021
|
|
December 31, 2020
|
|
Total assets for reportable segments
|
$
|
1,339,442
|
|
|
$
|
1,232,153
|
|
|
Cash and cash equivalents
|
124,075
|
|
|
92,794
|
|
|
Other assets
|
244,491
|
|
|
79,030
|
|
|
Total consolidated assets
|
$
|
1,708,008
|
|
|
$
|
1,403,977
|
|
Geographic Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Lived Assets
|
June 30, 2021
|
|
December 31, 2020
|
|
United States
|
$
|
579,603
|
|
|
$
|
503,818
|
|
|
Mexico
|
297,390
|
|
|
293,436
|
|
|
Canada
|
182,133
|
|
|
149,018
|
|
|
Other
|
127
|
|
|
657
|
|
|
Total
|
$
|
1,059,253
|
|
|
$
|
946,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
United States
|
$
|
129,824
|
|
|
$
|
116,279
|
|
|
$
|
251,596
|
|
|
$
|
213,224
|
|
|
|
|
Mexico
|
85,034
|
|
|
37,970
|
|
|
165,379
|
|
|
112,309
|
|
|
|
|
Canada
|
—
|
|
|
—
|
|
|
—
|
|
|
1,883
|
|
|
|
|
Total
|
214,858
|
|
|
$
|
154,249
|
|
|
$
|
416,975
|
|
|
$
|
327,416
|
|
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 4 – RECEIVABLES
Receivables consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
June 30, 2021
|
|
December 31, 2020
|
|
Current receivables:
|
|
|
|
|
Trade receivables
|
$
|
5,882
|
|
|
$
|
3,293
|
|
|
Value added tax (“VAT”) receivable
|
15,395
|
|
|
17,080
|
|
|
Income tax receivable
|
646
|
|
|
530
|
|
|
|
|
|
|
|
Other
|
944
|
|
|
2,581
|
|
|
|
$
|
22,867
|
|
|
$
|
23,484
|
|
|
Non-current receivables:
|
|
|
|
|
VAT receivable(1)
|
$
|
26,642
|
|
|
$
|
26,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,642
|
|
|
26,447
|
|
|
Total receivables
|
$
|
49,509
|
|
|
$
|
49,931
|
|
(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 $0.2 million increase in the six months ended June 30, 2021 is attributable to a stronger Mexican Peso.
NOTE 5 – INVENTORY AND ORE ON LEACH PADS
Inventory consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
June 30, 2021
|
|
December 31, 2020
|
|
Inventory:
|
|
|
|
|
Concentrate
|
$
|
4,351
|
|
|
$
|
2,909
|
|
|
Precious metals
|
13,198
|
|
|
14,788
|
|
|
Supplies
|
36,922
|
|
|
33,513
|
|
|
|
54,471
|
|
|
51,210
|
|
|
Ore on Leach Pads:
|
|
|
|
|
Current
|
81,773
|
|
|
74,866
|
|
|
Non-current
|
73,487
|
|
|
81,963
|
|
|
|
155,260
|
|
|
156,829
|
|
|
|
|
|
|
|
Long-term Stockpile (included in Other)
|
$
|
14,523
|
|
|
$
|
5,664
|
|
|
|
|
|
|
|
Total Inventory and Ore on Leach Pads
|
$
|
224,254
|
|
|
$
|
213,703
|
|
NOTE 6 – INVESTMENTS
Equity Securities
The Company makes strategic investments in equity securities of silver and gold exploration, development and royalty and streaming companies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2021
|
|
In thousands
|
Cost
|
|
Gross
Unrealized
Losses
|
|
Gross
Unrealized
Gains
|
|
Estimated
Fair Value
|
|
Equity Securities
|
|
|
|
|
|
|
|
|
Victoria Gold Corp.
|
$
|
128,710
|
|
|
$
|
—
|
|
|
$
|
36,033
|
|
|
164,743
|
|
|
Integra Resources Corp.
|
8,376
|
|
|
—
|
|
|
1,249
|
|
|
9,625
|
|
|
Other
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
Equity securities
|
$
|
137,088
|
|
|
$
|
—
|
|
|
$
|
37,282
|
|
|
$
|
174,370
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2020
|
|
In thousands
|
Cost
|
|
Gross
Unrealized
Losses
|
|
Gross
Unrealized
Gains
|
|
Estimated
Fair Value
|
|
Equity Securities
|
|
|
|
|
|
|
|
|
Metalla Royalty & Streaming Ltd.
|
$
|
166
|
|
|
$
|
—
|
|
|
$
|
875
|
|
|
$
|
1,041
|
|
|
Integra Resources Corp.
|
7,500
|
|
|
—
|
|
|
4,401
|
|
|
11,901
|
|
|
Other
|
2
|
|
|
(1)
|
|
|
—
|
|
|
1
|
|
|
Equity securities
|
$
|
7,668
|
|
|
$
|
(1)
|
|
|
$
|
5,276
|
|
|
$
|
12,943
|
|
Changes in the fair value of the Company’s investment in equity securities are recognized each period in the Condensed Consolidated Statement of Comprehensive Income (Loss) in Fair value adjustments, net. See Note 12 -- Fair Value Measurements for additional details.
On January 4, 2021, the Company completed the sale of 83,556 shares of common stock of Metalla Royalty & Streaming Ltd. (“Metalla”) (“Metalla Common Shares”) at an average price (net of commission) of $11.19 per Metalla Common Share for net proceeds of $0.9 million, resulting in a realized gain of $0.8 million.
On May 10, 2021, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) with Orion Co-VI Ltd. (“Orion”). Pursuant to the Exchange Agreement, Orion sold 11,067,714 common shares of Victoria Gold Corp., a British Columbia company (“Victoria”) (representing approximately 17.8% of Victoria’s outstanding common shares) to the Company. As consideration for the purchase of Victoria shares, Coeur issued 12,785,485 shares of its common stock (approximately 4.9% of issued and outstanding shares) to Orion.
The Exchange Agreement provides that Orion may be entitled to additional Coeur shares in the event Coeur acquires Victoria in the future for a higher per share consideration, subject to the terms and conditions of the Exchange Agreement. The Company determined that the potential for additional share consideration pursuant to the terms of the Exchange Agreement represents an embedded derivative that requires bifurcation. The obligation to deliver additional Coeur shares pursuant to the Exchange Agreement expires on October 31, 2021. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the embedded derivative as of the inception date of the Exchange Agreement and adjust the fair value as of each subsequent balance sheet date. See Note 12 -- Fair Value Measurements and Note 13 -- Derivative Financial Instruments for additional details.
NOTE 7 – LEASES
Right of Use Assets and Liabilities
The following table summarizes quantitative information pertaining to the Company’s finance and operating leases.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
In thousands
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
Lease Cost
|
|
|
|
|
|
|
|
|
|
|
Operating lease cost
|
$
|
3,180
|
|
|
$
|
2,855
|
|
|
$
|
6,331
|
|
|
$
|
5,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term operating lease cost
|
$
|
2,054
|
|
|
$
|
2,310
|
|
|
$
|
5,099
|
|
|
$
|
3,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance Lease Cost:
|
|
|
|
|
|
|
|
|
|
|
Amortization of leased assets
|
$
|
5,039
|
|
|
$
|
6,424
|
|
|
$
|
10,927
|
|
|
$
|
12,937
|
|
|
|
|
Interest on lease liabilities
|
1,018
|
|
|
920
|
|
|
1,607
|
|
|
1,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total finance lease cost
|
$
|
6,057
|
|
|
$
|
7,344
|
|
|
$
|
12,534
|
|
|
$
|
14,862
|
|
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Supplemental cash flow information related to leases was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
In thousands
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
Other Information
|
|
|
|
|
|
|
|
|
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows from operating leases
|
$
|
5,234
|
|
|
$
|
5,480
|
|
|
$
|
11,635
|
|
|
$
|
10,351
|
|
|
|
|
Operating cash flows from finance leases
|
$
|
1,018
|
|
|
$
|
920
|
|
|
$
|
1,607
|
|
|
$
|
1,925
|
|
|
|
|
Financing cash flows from finance leases
|
$
|
9,365
|
|
|
$
|
5,713
|
|
|
$
|
15,028
|
|
|
$
|
11,614
|
|
|
|
Supplemental balance sheet information related to leases was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
June 30, 2021
|
|
December 31, 2020
|
|
Operating Leases
|
|
|
|
|
Other assets, non-current
|
$
|
35,436
|
|
|
$
|
40,511
|
|
|
|
|
|
|
|
Accrued liabilities and other
|
$
|
11,604
|
|
|
$
|
12,410
|
|
|
Other long-term liabilities
|
22,929
|
|
|
27,433
|
|
|
Total operating lease liabilities
|
$
|
34,533
|
|
|
$
|
39,843
|
|
|
|
|
|
|
|
Finance Leases
|
|
|
|
|
Property and equipment, gross
|
$
|
99,756
|
|
|
$
|
104,433
|
|
|
Accumulated depreciation
|
(53,290)
|
|
|
(60,272)
|
|
|
Property and equipment, net
|
$
|
46,466
|
|
|
$
|
44,161
|
|
|
|
|
|
|
|
Debt, current
|
$
|
28,876
|
|
|
$
|
22,074
|
|
|
Debt, non-current
|
17,566
|
|
|
25,837
|
|
|
Total finance lease liabilities
|
$
|
46,442
|
|
|
$
|
47,911
|
|
|
|
|
|
|
|
Weighted Average Remaining Lease Term
|
|
|
|
|
Weighted-average remaining lease term - finance leases
|
1.51
|
|
1.36
|
|
Weighted-average remaining lease term - operating leases
|
3.59
|
|
4.00
|
|
|
|
|
|
|
Weighted Average Discount Rate
|
|
|
|
|
Weighted-average discount rate - finance leases
|
5.33
|
%
|
|
5.37
|
%
|
|
Weighted-average discount rate - operating leases
|
5.19
|
%
|
|
5.18
|
%
|
Minimum future lease payments under finance and operating leases with terms longer than one year are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2021 (In thousands)
|
|
|
|
|
|
Operating leases
|
|
Finance leases
|
|
2021
|
$
|
6,284
|
|
|
$
|
12,024
|
|
|
2022
|
11,019
|
|
|
20,621
|
|
|
2023
|
10,432
|
|
|
11,115
|
|
|
2024
|
8,887
|
|
|
4,282
|
|
|
2025
|
213
|
|
|
2,732
|
|
|
Thereafter
|
1,165
|
|
|
696
|
|
|
Total
|
$
|
38,000
|
|
|
$
|
51,470
|
|
|
Less: imputed interest
|
(3,467)
|
|
|
(5,028)
|
|
|
Net lease obligation
|
$
|
34,533
|
|
|
$
|
46,442
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 8 – DEBT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
|
In thousands
|
Current
|
|
Non-Current
|
|
Current
|
|
Non-Current
|
|
2029 Senior Notes, net(1)
|
$
|
—
|
|
|
$
|
367,804
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2024 Senior Notes, net(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
227,590
|
|
|
Revolving Credit Facility(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Finance lease obligations
|
28,876
|
|
|
17,566
|
|
|
22,074
|
|
|
25,837
|
|
|
|
$
|
28,876
|
|
|
$
|
385,370
|
|
|
$
|
22,074
|
|
|
$
|
253,427
|
|
(1) Net of unamortized debt issuance costs of $7.2 million and $0.0 million at June 30, 2021 and December 31, 2020, respectively.
(2) Net of unamortized debt issuance costs of $0.0 million and $2.4 million at June 30, 2021 and December 31, 2020, respectively.
(3) Unamortized debt issuance costs of $2.7 million and $1.5 million at June 30, 2021 and December 31, 2020, respectively, included in Other Non-Current Assets.
2029 Senior Notes
In March 2021, the Company completed an offering of $375.0 million in aggregate principal amount of 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 $367.5 million (the “2029 Senior Notes”). The 2029 Senior Notes are governed by an Indenture dated as of March 1, 2021 (the “Indenture”), among the Company, as issuer, certain of the Company's subsidiaries named therein, as guarantors thereto (the “Guarantors”), and The Bank of New York Mellon, as trustee (the “Trustee”). The 2029 Senior Notes bear interest at a rate of 5.125% per year from the date of issuance. Interest on the 2029 Senior Notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2021. The 2029 Senior Notes will mature on February 15, 2029 and are fully and unconditionally guaranteed by the Guarantors.
At any time prior to February 15, 2024, the Company may redeem all or part of the 2029 Senior Notes upon not less than 30 nor more than 60 days’ prior notice at a redemption price equal to the sum of (i) 100% of the principal amount thereof, plus (ii) a make-whole premium as of the date of redemption, plus (iii) accrued and unpaid interest and additional interest, if any, thereon, to the date of redemption. In addition, the Company may redeem some or all of the 2029 Senior Notes on or after February 15, 2024, at redemption prices set forth in the Indenture, together with accrued and unpaid interest. At any time prior to February 15, 2024, the Company may use the proceeds of certain equity offerings to redeem up to 35% of the aggregate principal amount of the 2029 Senior Notes, including any permitted additional 2029 Senior Notes, at a redemption price equal to 105.125% of the principal amount.
The Indenture contains covenants that, among other things, limit the Company’s ability under certain circumstances to incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem capital stock, prepay, redeem or repurchase certain debt, make loans and investments, create liens, sell, transfer or otherwise dispose of assets, enter into transactions with affiliates, enter into agreements restricting the Company's subsidiaries' ability to pay dividends and impose conditions on the Company’s ability to engage in mergers, consolidations and sales of all or substantially all of its assets. The Indenture also contains certain “Events of Default” (as defined in the Indenture) customary for indentures of this type. If an Event of Default has occurred and is continuing, the Trustee or the holders of not less than 25% in aggregate principal amount of the 2029 Senior Notes then outstanding may, and the Trustee at the request of the holders of not less than 25% in aggregate principal amount of the 2029 Senior Notes then outstanding shall, declare all unpaid principal of, premium, if any, and accrued interest on all the 2029 Senior Notes to be due and payable.
2024 Senior Notes
Concurrent with the offering of the 2029 Senior Notes, the Company commenced a cash tender offer (the “Tender Offer”) to purchase the outstanding $230.0 million in aggregate principal amount of its 5.875% Senior Notes due 2024 (the “2024 Senior Notes”). The Tender Offer was made on the terms and subject to the conditions set forth in the Offer to Purchase dated February 22, 2021. The Tender Offer expired at 5:00 p.m., New York City time, on February 26, 2021 (the “Expiration Time”). Holders of the 2024 Senior Notes who tendered (and did not validly withdraw) their notes at or prior to the Expiration Time were entitled to receive in cash $1,029.38 per $1,000 principal amount of 2024 Senior Notes validly tendered (and not validly withdrawn) and accepted for purchase by the Company in the Tender Offer, plus accrued and unpaid interest on such 2024 Senior Notes. $102.8 million aggregate principal amount of the 2024 Senior Notes were validly tendered and purchased by the Company on March 1, 2021. In accordance with the terms of the indenture governing the 2024 Senior Notes, the remaining $127.2 million aggregate principal amount of the 2024 Senior Notes were redeemed on March 31, 2021 at the redemption price specified in the indenture governing the 2024 Senior Notes ($1,029.38 per $1,000 principal amount redeemed, plus accrued and unpaid interest). The Company recorded a loss of $9.2 million as a result of the extinguishment of the 2024 Senior Notes.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Revolving Credit Facility
On March 1, 2021, the Company entered into a fifth amendment (the “Amendment”) to its credit agreement, dated as of September 29, 2017 (as previously amended, the “Credit Agreement”), by and among the Company, as borrower, certain subsidiaries of the Company, as guarantors, Bank of America, N.A., as administrative agent and Bank of America, N.A., Royal Bank of Canada, Bank of Montreal, Chicago Branch, the Bank of Nova Scotia and ING Capital LLC, as lenders. The Amendment, among other things, (i) extended the maturity date of the senior secured revolving credit facility (“Revolving Credit Facility” or “RCF”) provided under the Credit Agreement to March 2025 and (ii) permits the Company to obtain one or more increases of the RCF, which is currently in the amount of $300.0 million, in an aggregate amount of up to $100.0 million in incremental loans and commitments, subject to certain conditions, including obtaining commitments from relevant lenders to provide such increase.
At June 30, 2021, the Company had no borrowings and $35.0 million in outstanding letters of credit under the RCF.
Finance Lease Obligations
From time-to-time, the Company acquires mining equipment and facilities under finance lease agreements. In the six months ended June 30, 2021, the Company entered into new lease financing arrangements primarily for mining equipment at Rochester and Kensington. Coeur secured a finance lease package for nearly $60 million during the quarter, a portion of which has been funded as of June 30, 2021. The package is earmarked for planned equipment purchases for the project in 2021 and 2022, and has an interest rate of 5.20%. All finance 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.
Interest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
In thousands
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
2024 Senior Notes
|
$
|
—
|
|
|
$
|
3,378
|
|
|
$
|
2,591
|
|
|
$
|
6,756
|
|
|
|
|
2029 Senior Notes
|
4,804
|
|
|
—
|
|
|
6,406
|
|
|
—
|
|
|
|
|
Revolving Credit Facility
|
450
|
|
|
1,204
|
|
|
930
|
|
|
1,753
|
|
|
|
|
Finance lease obligations
|
1,018
|
|
|
920
|
|
|
1,607
|
|
|
1,925
|
|
|
|
|
Amortization of debt issuance costs
|
487
|
|
|
390
|
|
|
891
|
|
|
771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other debt obligations
|
118
|
|
|
181
|
|
|
175
|
|
|
216
|
|
|
|
|
Capitalized interest
|
(1,784)
|
|
|
(308)
|
|
|
(2,597)
|
|
|
(528)
|
|
|
|
|
Total interest expense, net of capitalized interest
|
$
|
5,093
|
|
|
$
|
5,765
|
|
|
$
|
10,003
|
|
|
$
|
10,893
|
|
|
|
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 June 30,
|
|
Six Months Ended June 30,
|
|
In thousands
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Asset retirement obligation - Beginning
|
$
|
139,354
|
|
|
$
|
136,628
|
|
|
$
|
137,120
|
|
|
$
|
134,543
|
|
|
Accretion
|
2,922
|
|
|
2,863
|
|
|
5,785
|
|
|
5,667
|
|
|
|
|
|
|
|
|
|
|
|
Settlements
|
(1,071)
|
|
|
(587)
|
|
|
(1,700)
|
|
|
(1,306)
|
|
|
Asset retirement obligation - Ending
|
$
|
141,205
|
|
|
$
|
138,904
|
|
|
$
|
141,205
|
|
|
$
|
138,904
|
|
The Company accrued $2.0 million and $1.9 million at each of June 30, 2021 and June 30, 2020, respectively, for reclamation liabilities related to former mining activities, which are included in Reclamation.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 10 - INCOME AND MINING TAXES
The following table summarizes the components of Income and mining tax (expense) benefit for the three and six months ended June 30, 2021 and 2020 by significant jurisdiction:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
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
|
$
|
29,647
|
|
$
|
(7,228)
|
|
|
$
|
12,546
|
|
$
|
827
|
|
|
$
|
21,116
|
|
$
|
(8,853)
|
|
|
$
|
1,540
|
|
$
|
91
|
|
|
Canada
|
(12,979)
|
|
—
|
|
|
(15,621)
|
|
217
|
|
|
(25,763)
|
|
—
|
|
|
(41,650)
|
|
232
|
|
|
Mexico
|
30,827
|
|
(8,112)
|
|
|
4,805
|
|
(3,888)
|
|
|
63,741
|
|
(19,273)
|
|
|
26,163
|
|
743
|
|
|
Other jurisdictions
|
(9)
|
|
—
|
|
|
(95)
|
|
—
|
|
|
3,238
|
|
—
|
|
|
(257)
|
|
29
|
|
|
|
$
|
47,486
|
|
$
|
(15,340)
|
|
|
$
|
1,635
|
|
$
|
(2,844)
|
|
|
$
|
62,332
|
|
$
|
(28,126)
|
|
|
$
|
(14,204)
|
|
$
|
1,095
|
|
During the second quarter of 2021, the Company reported estimated income and mining tax expense of approximately $15.3 million, resulting in an effective tax rate of 32.3%. This compares to income tax expense of 2.8 million for an effective tax rate of 173.9% during the second quarter of 2020. 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) percentage depletion; (vi) the non-recognition of tax assets; and (vii) the impact of uncertain tax positions. 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 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 2020 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 June 30, 2021 and December 31, 2020, the Company had $0.3 million and $0.7 million of total gross unrecognized tax benefits, 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 June 30, 2021 and December 31, 2020, the amount of accrued income-tax-related interest and penalties was $0.4 million and $1.1 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 six months ended June 30, 2021 was $3.3 million and $7.5 million, respectively, compared to $2.3 million and $4.3 million in the three and six months ended June 30, 2020. At June 30, 2021, there was $15.6 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 six months ended June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant date
|
|
Restricted
stock
|
|
Grant date fair
value of
restricted stock
|
|
Performance
shares
|
|
Grant date fair
value of
performance
shares
|
|
February 24, 2021
|
|
5,000
|
|
|
$
|
10.40
|
|
|
—
|
|
|
$
|
—
|
|
|
May 12, 2021
|
|
893,329
|
|
|
$
|
9.40
|
|
|
593,577
|
|
|
$
|
10.19
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 12 – FAIR VALUE MEASUREMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
In thousands
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
Unrealized gain (loss) on equity securities
|
$
|
36,575
|
|
|
$
|
(2,273)
|
|
|
$
|
32,007
|
|
|
$
|
(11,092)
|
|
|
|
|
Realized gain (loss) on equity securities
|
—
|
|
|
12,340
|
|
|
769
|
|
|
12,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange agreement embedded derivative
|
664
|
|
|
—
|
|
|
664
|
|
|
—
|
|
|
|
|
Fair value adjustments, net
|
$
|
37,239
|
|
|
$
|
10,067
|
|
|
$
|
33,440
|
|
|
$
|
1,248
|
|
|
|
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).
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 June 30, 2021
|
|
In thousands
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
174,370
|
|
|
$
|
174,370
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward exchange contracts
|
7,535
|
|
|
—
|
|
|
7,535
|
|
|
—
|
|
|
Provisional metal sales contracts
|
137
|
|
|
—
|
|
|
137
|
|
|
—
|
|
|
|
$
|
182,042
|
|
|
$
|
174,370
|
|
|
$
|
7,672
|
|
|
$
|
—
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Gold zero cost collars
|
$
|
78
|
|
|
$
|
—
|
|
|
$
|
78
|
|
|
$
|
—
|
|
|
Exchange agreement embedded derivative
|
9,269
|
|
|
—
|
|
|
—
|
|
|
9,269
|
|
|
Provisional metal sales contracts
|
420
|
|
|
—
|
|
|
420
|
|
|
—
|
|
|
|
$
|
9,767
|
|
|
$
|
—
|
|
|
$
|
498
|
|
|
$
|
9,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at December 31, 2020
|
|
In thousands
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
Equity and debt securities
|
$
|
12,943
|
|
|
$
|
12,943
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Foreign currency forward exchange contracts
|
13,747
|
|
|
—
|
|
|
13,747
|
|
|
—
|
|
|
Provisional metal sales contracts
|
481
|
|
|
—
|
|
|
481
|
|
|
—
|
|
|
|
$
|
27,171
|
|
|
$
|
12,943
|
|
|
$
|
14,228
|
|
|
$
|
—
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Gold zero cost collars
|
$
|
24,883
|
|
|
$
|
—
|
|
|
$
|
24,883
|
|
|
$
|
—
|
|
|
Provisional metal sales contracts
|
67
|
|
|
—
|
|
|
67
|
|
|
—
|
|
|
|
$
|
24,950
|
|
|
$
|
—
|
|
|
$
|
24,950
|
|
|
$
|
—
|
|
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. 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. 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.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
As described in Note 6 - Investments, the Exchange Agreement provides that Orion may be entitled to additional Coeur shares in the event Coeur acquires Victoria in the future for a higher per share consideration, subject to the terms and conditions of the Exchange Agreement. The Company determined that the potential for additional share consideration in the Exchange Agreement represents an embedded derivative that requires bifurcation. The obligation to deliver additional Coeur shares pursuant to the Exchange Agreement expires on October 31, 2021. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the embedded derivative as of the inception date of the Exchange Agreement and adjust the fair value as of each subsequent balance sheet date. The fair value of the outstanding embedded derivatives was determined using a pricing model with inputs derived from observable market data, including stock prices, stock price volatility and risk-free rates and other unobservable inputs such as Monte Carlo simulations and probabilities of Coeur being contractually obligated to make a payment. As the model inputs are estimated based on observable and unobservable data, the Company classifies this embedded derivative in Level 3 of the fair value hierarchy, a change in these unobservable inputs may result in a significantly higher or lower fair value measurement.
No assets or liabilities were transferred between fair value levels in the six months ended June 30, 2021.
The following tables present the changes in the fair value of the Company's Level 3 financial assets and liabilities in the three and six months ended June 30, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2021
|
|
In thousands
|
Balance at the beginning of the period
|
|
|
|
Initial valuation
|
|
Revaluation
|
|
Settlements
|
|
Balance at the
end of the
period
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange agreement embedded derivative
|
$
|
—
|
|
|
|
|
$
|
9,933
|
|
|
$
|
(664)
|
|
|
$
|
—
|
|
|
$
|
9,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2021
|
|
In thousands
|
Balance at the beginning of the period
|
|
|
|
Initial valuation
|
|
Revaluation
|
|
Settlements
|
|
Balance at the
end of the
period
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange agreement embedded derivative
|
$
|
—
|
|
|
|
|
$
|
9,933
|
|
|
$
|
(664)
|
|
|
$
|
—
|
|
|
$
|
9,269
|
|
The fair value of financial assets and liabilities carried at book value in the financial statements at June 30, 2021 and December 31, 2020 is presented in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
In thousands
|
Book Value
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
2029 Senior Notes(1)
|
$
|
367,804
|
|
|
$
|
365,044
|
|
|
$
|
—
|
|
|
$
|
365,044
|
|
|
$
|
—
|
|
|
Revolving Credit Facility(2)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1) Net of unamortized debt issuance costs of $7.2 million
(2) Unamortized debt issuance costs of $2.7 million included in Other Non-Current Assets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
In thousands
|
Book Value
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
2024 Senior Notes(1)
|
$
|
227,590
|
|
|
$
|
229,874
|
|
|
$
|
—
|
|
|
$
|
229,874
|
|
|
$
|
—
|
|
|
Revolving Credit Facility(2)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1) Net of unamortized debt issuance costs of $2.4 million.
(2) Unamortized debt issuance costs of $1.5 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
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
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.
Exchange Agreement Embedded Derivative
The Exchange Agreement provides that Orion may be entitled to additional Coeur shares in the event Coeur acquires Victoria in the future for a higher per share consideration, subject to the terms and conditions of the Exchange Agreement. The Company determined that the potential for additional share consideration in the Exchange Agreement represents an embedded derivative that requires bifurcation. The obligation to deliver additional Coeur shares pursuant to the Exchange Agreement expires on October 31, 2021. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the embedded derivative as of the inception date of the Exchange Agreement and adjust the fair value as of each subsequent balance sheet date.
At June 30, 2021, the Company had the following derivative instruments that settle as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands except average prices and notional ounces
|
2021
|
|
2022 and Thereafter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisional gold sales contracts
|
$
|
26,614
|
|
|
$
|
—
|
|
|
Average gold price per ounce
|
$
|
1,858
|
|
|
$
|
—
|
|
|
Notional ounces
|
14,324
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following summarizes the classification of the fair value of the derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
|
|
|
|
|
|
In thousands
|
Prepaid expenses and other
|
|
Accrued liabilities and other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisional metal sales contracts
|
$
|
137
|
|
|
$
|
420
|
|
|
|
|
|
|
|
|
Exchange agreement embedded derivative
|
—
|
|
|
9,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
137
|
|
|
$
|
9,689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
In thousands
|
Prepaid expenses and other
|
|
Accrued liabilities and other
|
|
|
|
|
|
|
|
Provisional metal sales contracts
|
$
|
481
|
|
|
$
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following represent mark-to-market gains (losses) on derivative instruments in the three and six months ended June 30, 2021 and 2020, respectively (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
Financial statement line
|
Derivative
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
Revenue
|
Provisional metal sales contracts
|
$
|
(137)
|
|
|
$
|
713
|
|
|
$
|
(697)
|
|
|
$
|
1,213
|
|
|
|
|
Fair value adjustments, net
|
Exchange agreement embedded derivative
|
664
|
|
|
—
|
|
|
664
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
527
|
|
|
$
|
713
|
|
|
$
|
(33)
|
|
|
$
|
1,213
|
|
|
|
Derivatives Designated as Cash Flow Hedging Strategies
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
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. The Company has elected to designate these instruments as cash flow hedges of forecasted transactions at their inception.
At June 30, 2021, the Company had the following derivative cash flow hedge instruments that settle as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands except average prices and notional ounces
|
|
|
2021
|
|
2022 and Thereafter
|
|
|
|
Gold put options
|
|
|
|
|
|
|
|
|
Average gold strike price per ounce
|
|
|
$
|
1,600
|
|
|
$
|
1,630
|
|
|
|
|
Notional ounces
|
|
|
79,350
|
|
|
132,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold call options
|
|
|
|
|
|
|
|
|
Average gold strike price per ounce
|
|
|
$
|
1,882
|
|
|
$
|
2,038
|
|
|
|
|
Notional ounces
|
|
|
79,350
|
|
|
132,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward exchange contracts - Mexican Peso
|
|
|
|
|
|
|
|
|
Average Mexican Peso exchange rate
|
|
|
$
|
25.28
|
|
|
$
|
—
|
|
|
|
|
Notional US dollar
|
|
|
$
|
30,000
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Revenue in the same period as the related sale 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 or Pre-development, Reclamation and Other in the same period the related expenses are incurred.
At inception, the Company performed an assessment of the forecasted transactions and the hedging instruments and determined that the hedging relationships are considered perfectly effective. Future assessments are performed to verify that critical terms of the hedging instruments and the forecasted transactions continue to match, and the forecasted transactions remain probable, as well as an assessment of any adverse developments regarding the risk of the counterparties defaulting on their commitments. There have been no such changes in critical terms or adverse developments.
As of June 30, 2021, the Company had $7.5 million of net after-tax gain in AOCI related to losses from cash flow hedge transactions, of which $7.4 million of net after-tax gains is expected to be recognized in its 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
|
|
|
|
|
|
In thousands
|
Prepaid expenses and other
|
|
Accrued liabilities and other
|
|
|
|
|
|
|
|
Gold zero cost collars
|
$
|
—
|
|
|
$
|
78
|
|
|
|
|
|
|
|
|
Foreign currency forward exchange contracts
|
7,535
|
|
|
—
|
|
|
|
|
|
|
|
|
|
$
|
7,535
|
|
|
$
|
78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
|
|
|
|
|
|
In thousands
|
Prepaid expenses and other
|
|
Accrued liabilities and other
|
|
|
|
|
|
|
|
Gold zero cost collars
|
$
|
—
|
|
|
$
|
24,883
|
|
|
|
|
|
|
|
|
Foreign currency forward exchange contracts
|
13,747
|
|
|
—
|
|
|
|
|
|
|
|
|
|
$
|
13,747
|
|
|
$
|
24,883
|
|
|
|
|
|
|
|
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 Consolidated Statement of Comprehensive Income (Loss) for the three and six months ended June 30, 2021 and 2020, respectively (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
Amount of Gain (Loss) Recognized in AOCI
|
|
|
|
|
|
|
|
|
|
|
Gold zero cost collars
|
$
|
(4,571)
|
|
|
$
|
(14,490)
|
|
|
$
|
23,976
|
|
|
$
|
(14,349)
|
|
|
|
|
Foreign currency forward exchange contracts
|
1,589
|
|
|
7,393
|
|
|
400
|
|
|
7,458
|
|
|
|
|
|
$
|
(2,982)
|
|
|
$
|
(7,097)
|
|
|
$
|
24,376
|
|
|
$
|
(6,891)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of (Gain) Loss Reclassified From AOCI to Earnings
|
|
|
|
|
|
|
|
|
|
|
Gold zero cost collars
|
$
|
437
|
|
|
$
|
—
|
|
|
$
|
828
|
|
|
$
|
—
|
|
|
|
|
Foreign currency forward exchange contracts
|
(3,498)
|
|
|
(679)
|
|
|
(6,611)
|
|
|
(679)
|
|
|
|
|
|
$
|
(3,061)
|
|
|
$
|
(679)
|
|
|
$
|
(5,783)
|
|
|
$
|
(679)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 14 – ADDITIONAL COMPREHENSIVE INCOME (LOSS) DETAIL
Pre-development, reclamation, and other consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
In thousands
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
COVID-19
|
$
|
2,315
|
|
|
$
|
6,108
|
|
|
$
|
5,319
|
|
|
$
|
6,380
|
|
|
|
|
Silvertip ongoing carrying costs
|
6,447
|
|
|
5,183
|
|
|
13,368
|
|
|
7,792
|
|
|
|
|
Silvertip temporary suspension costs
|
—
|
|
|
3,829
|
|
|
—
|
|
|
7,338
|
|
|
|
|
Gain on modification of right of use lease
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,051)
|
|
|
|
|
Asset retirement accretion
|
2,965
|
|
|
2,908
|
|
|
5,870
|
|
|
5,755
|
|
|
|
|
Other
|
1,011
|
|
|
647
|
|
|
1,893
|
|
|
2,016
|
|
|
|
|
Pre-development, reclamation and other
|
$
|
12,738
|
|
|
$
|
18,675
|
|
|
$
|
26,450
|
|
|
$
|
25,230
|
|
|
|
Other, net consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
In thousands
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
Foreign exchange gain (loss)
|
$
|
(499)
|
|
|
$
|
10
|
|
|
$
|
(1,272)
|
|
|
$
|
(66)
|
|
|
|
|
Gain (loss) on sale of assets
|
621
|
|
|
9
|
|
|
4,674
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on sale of Manquiri NSR consideration
|
—
|
|
|
—
|
|
|
—
|
|
|
365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on Silvertip contingent consideration
|
—
|
|
|
—
|
|
|
—
|
|
|
955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
579
|
|
|
102
|
|
|
926
|
|
|
730
|
|
|
|
|
Other, net
|
$
|
701
|
|
|
$
|
121
|
|
|
$
|
4,328
|
|
|
$
|
2,002
|
|
|
|
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 six months ended June 30, 2021, there were 1,553,030 and 1,558,030 common stock equivalents, respectively, related to equity-based awards were not included in the diluted earnings per share calculation as the shares would be antidilutive. Similarly, 1,816,332 and 3,205,676 common stock equivalents were excluded in the diluted earnings per share calculation for the three and six months ended June 30, 2020, respectively.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
In thousands except per share amounts
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders
|
$
|
32,146
|
|
|
$
|
(1,209)
|
|
|
$
|
34,206
|
|
|
$
|
(13,109)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
249,066
|
|
|
240,945
|
|
|
245,253
|
|
|
240,600
|
|
|
|
|
Effect of stock-based compensation plans
|
3,066
|
|
|
—
|
|
|
3,240
|
|
|
—
|
|
|
|
|
Diluted
|
252,132
|
|
|
240,945
|
|
|
248,493
|
|
|
240,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.13
|
|
|
$
|
(0.01)
|
|
|
$
|
0.14
|
|
|
$
|
(0.05)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted(1)
|
$
|
0.13
|
|
|
$
|
(0.01)
|
|
|
$
|
0.14
|
|
|
$
|
(0.05)
|
|
|
|
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 June 30, 2021, the Company had not elected to sell any shares of its common stock under the ATM Program.
NOTE 16 - SUPPLEMENTAL GUARANTOR INFORMATION
The following summarized financial information is presented to satisfy disclosure requirements of Rule 13-01 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 2029 Senior Notes. The following schedules present summarized financial information of (a) Coeur, the parent company and (b) the Subsidiary Guarantors (collectively the “Obligor Group”). The summarized financial information of the Obligor Group is presented on a combined basis with intercompany balances and transactions between entities in the Obligor Group eliminated. The Obligor Group’s amounts due from, amounts due to and transactions with certain wholly-owned domestic and foreign subsidiaries of the Company have been presented in separate line items, if they are material. 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
SUMMARIZED BALANCE SHEET
JUNE 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
10,609
|
|
|
$
|
42,809
|
|
|
|
|
|
|
|
|
Receivables
|
371
|
|
|
6,337
|
|
|
|
|
|
|
|
|
Ore on leach pads
|
—
|
|
|
81,773
|
|
|
|
|
|
|
|
|
Inventory
|
—
|
|
|
30,214
|
|
|
|
|
|
|
|
|
Prepaid expenses and other
|
15,177
|
|
|
937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,157
|
|
|
162,070
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
2,011
|
|
|
168,054
|
|
|
|
|
|
|
|
|
Mining properties, net
|
—
|
|
|
410,124
|
|
|
|
|
|
|
|
|
Ore on leach pads
|
—
|
|
|
73,487
|
|
|
|
|
|
|
|
|
Restricted assets
|
1,489
|
|
|
206
|
|
|
|
|
|
|
|
|
Equity and debt securities
|
174,370
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment in subsidiaries
|
602,617
|
|
|
64,010
|
|
|
|
|
|
|
|
|
Other
|
201,420
|
|
|
54,738
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
$
|
1,008,064
|
|
|
$
|
932,689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
4,256
|
|
|
$
|
62,127
|
|
|
|
|
|
|
|
|
Other accrued liabilities
|
22,267
|
|
|
43,690
|
|
|
|
|
|
|
|
|
Debt
|
—
|
|
|
21,037
|
|
|
|
|
|
|
|
|
Reclamation
|
—
|
|
|
1,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,523
|
|
|
128,438
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Debt
|
367,804
|
|
|
36,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclamation
|
—
|
|
|
95,687
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
5,345
|
|
|
8,630
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
3,569
|
|
|
25,070
|
|
|
|
|
|
|
|
|
Intercompany payable (receivable)
|
(263,586)
|
|
|
240,016
|
|
|
|
|
|
|
|
|
|
113,132
|
|
|
405,970
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
2,570
|
|
|
19,356
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
3,732,296
|
|
|
340,700
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
(2,873,914)
|
|
|
38,225
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss)
|
7,457
|
|
|
—
|
|
|
|
|
|
|
|
|
|
868,409
|
|
|
398,281
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
1,008,064
|
|
|
$
|
932,689
|
|
|
|
|
|
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
SUMMARIZED BALANCE SHEET
DECEMBER 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
12,727
|
|
|
$
|
28,515
|
|
|
|
|
|
|
|
|
Receivables
|
381
|
|
|
3,631
|
|
|
|
|
|
|
|
|
Ore on leach pads
|
—
|
|
|
74,866
|
|
|
|
|
|
|
|
|
Inventory
|
—
|
|
|
27,223
|
|
|
|
|
|
|
|
|
Prepaid expenses and other
|
20,872
|
|
|
1,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,980
|
|
|
135,610
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
1,946
|
|
|
148,640
|
|
|
|
|
|
|
|
|
Mining properties, net
|
—
|
|
|
353,818
|
|
|
|
|
|
|
|
|
Ore on leach pads
|
—
|
|
|
81,963
|
|
|
|
|
|
|
|
|
Restricted assets
|
1,482
|
|
|
206
|
|
|
|
|
|
|
|
|
Equity and debt securities
|
12,943
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment in subsidiaries
|
514,705
|
|
|
72,785
|
|
|
|
|
|
|
|
|
Other
|
198,587
|
|
|
51,528
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
$
|
763,643
|
|
|
$
|
844,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
1,978
|
|
|
$
|
52,177
|
|
|
|
|
|
|
|
|
Other accrued liabilities
|
36,183
|
|
|
46,023
|
|
|
|
|
|
|
|
|
Debt
|
—
|
|
|
14,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclamation
|
—
|
|
|
1,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,161
|
|
|
114,290
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Debt
|
227,592
|
|
|
33,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclamation
|
—
|
|
|
93,349
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
100
|
|
|
8,457
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
3,629
|
|
|
29,916
|
|
|
|
|
|
|
|
|
Intercompany payable (receivable)
|
(199,318)
|
|
|
176,914
|
|
|
|
|
|
|
|
|
|
32,003
|
|
|
341,957
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
2,438
|
|
|
20,401
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
3,610,297
|
|
|
340,700
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
(2,908,120)
|
|
|
27,202
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss)
|
(11,136)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
693,479
|
|
|
388,303
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
763,643
|
|
|
$
|
844,550
|
|
|
|
|
|
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
SUMMARIZED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
|
|
|
|
|
|
Revenue
|
$
|
—
|
|
|
$
|
251,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (loss)
|
$
|
(313)
|
|
|
$
|
44,766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
$
|
34,206
|
|
|
$
|
9,976
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
|
34,206
|
|
|
$
|
9,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 17 – COMMITMENTS AND CONTINGENCIES
Mexico Litigation Matters
Included in non-current receivables as of June 30, 2021 are $26.6 million due from the Mexican government associated with VAT that was paid under Coeur Mexicana, S.A. de C.V.’s (“Coeur Mexicana’s”) prior royalty agreement with a subsidiary of Franco-Nevada Corporation, which was terminated in 2016. Under the royalty agreement, Coeur Mexicana 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 Coeur Mexicana’s VAT refunds based on the argument that VAT was not legally due on the royalty payments. Accordingly, Coeur Mexicana 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 as well as refiling VAT refund requests). Some of this litigation has been determined unfavorably to Coeur Mexicana 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. In the event Coeur Mexicana is unsuccessful with these appeals, Coeur Mexicana may elect to initiate an arbitration proceeding under Chapter 11 of the North American Free Trade Agreement, or NAFTA. While the Company believes that it remains legally entitled to be refunded the full amount of the VAT receivable, Coeur Mexicana 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 courts or NAFTA arbitration and the process for recovering funds even if there is a successful outcome in litigation or NAFTA arbitration can be lengthy and 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 condition.
In addition, ongoing litigation with the Mexican government associated with enforcement of water rights in Mexico, if unsuccessful, may impact Coeur Mexicana’s ability to access new sources of water to provide sufficient supply for its operations at Palmarejo and, if material, may have a material adverse impact on the Company’s operations and financial results.
Palmarejo Gold Stream
Coeur Mexicana 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 2016, 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 June 30, 2021 the remaining unamortized balance was $8.8 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”). From time to time, the Amended Sales Contract has been further amended to allow for additional prepayments, the latest occurring in July 2021, with an effective date as of June 28, 2021, to include options for Coeur to receive up to two additional prepayments of up to $15.0 million. In December 2020, Coeur exercised an option to receive the $15.0 million December 2020 Prepayment. In the first half of 2021, the Kensington mine delivered $15.0 million in satisfaction of the December 2020 Prepayment. In June 2021, Coeur exercised an option to receive the $15.0 million June 2021 Prepayment. The remaining deliveries of $15.0 million under the June 2021 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, 2021.
Silvertip Contingent Consideration
During the first half 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 a contingent consideration payment due in conjunction with the acquisition of the Company’s Silvertip property. For more details, please see Note 21 -- Commitments and Contingencies in the 2020 10-K.
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 June 30, 2021 and December 31, 2020, the Company had surety bonds totaling $312.3 million and $311.9 million, respectively, in place as
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
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 or letters of credit which reduce availability under its revolving credit facility, 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 – ADDITIONAL BALANCE SHEET DETAIL AND SUPPLEMENTAL CASH FLOW INFORMATION
Accrued liabilities and other consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
June 30, 2021
|
|
December 31, 2020
|
|
Accrued salaries and wages
|
$
|
21,473
|
|
|
$
|
30,457
|
|
|
|
|
|
|
|
Deferred revenue (1)
|
15,991
|
|
|
16,425
|
|
|
Income and mining taxes
|
11,407
|
|
|
26,118
|
|
|
Exchange agreement embedded derivative
|
9,269
|
|
|
—
|
|
|
Accrued operating costs
|
7,563
|
|
|
3,327
|
|
|
Unrealized losses on derivatives
|
498
|
|
|
24,950
|
|
|
Taxes other than income and mining
|
4,325
|
|
|
3,616
|
|
|
Accrued interest payable
|
7,181
|
|
|
1,855
|
|
|
Operating lease liabilities
|
11,604
|
|
|
12,410
|
|
|
Accrued liabilities and other
|
$
|
89,311
|
|
|
$
|
119,158
|
|
(1) See Note 17 -- Commitments and Contingencies for additional details on deferred revenue liabilities
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 six months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
|
|
|
June 30, 2021
|
|
June 30, 2020
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
124,075
|
|
|
$
|
70,924
|
|
|
Restricted cash equivalents
|
|
|
|
|
1,383
|
|
|
1,384
|
|
|
Total cash, cash equivalents and restricted cash shown in the statement of cash flows
|
|
|
|
|
$
|
125,458
|
|
|
$
|
72,308
|
|
Selected Financial and Operating Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
In thousands
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Financial Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold sales
|
$
|
146,158
|
|
|
$
|
127,902
|
|
|
$
|
284,480
|
|
|
$
|
255,507
|
|
|
|
|
|
|
|
|
Silver sales
|
$
|
68,700
|
|
|
$
|
26,347
|
|
|
$
|
132,495
|
|
|
$
|
71,256
|
|
|
|
|
|
|
|
|
Zinc sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(662)
|
|
|
|
|
|
|
|
|
Lead sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,315
|
|
|
|
|
|
|
|
|
Consolidated Revenue
|
$
|
214,858
|
|
|
$
|
154,249
|
|
|
$
|
416,975
|
|
|
$
|
327,416
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
|
32,146
|
|
|
$
|
(1,209)
|
|
|
$
|
34,206
|
|
|
$
|
(13,109)
|
|
|
|
|
|
|
|
|
Net income (loss) per share, diluted
|
$
|
0.13
|
|
|
$
|
(0.01)
|
|
|
$
|
0.14
|
|
|
$
|
(0.05)
|
|
|
|
|
|
|
|
|
Adjusted net income (loss)(1)
|
$
|
(840)
|
|
|
$
|
2,601
|
|
|
$
|
13,100
|
|
|
$
|
1,682
|
|
|
|
|
|
|
|
|
Adjusted net income (loss) per share, diluted(1)
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
$
|
0.05
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
EBITDA(1)
|
$
|
84,552
|
|
|
$
|
35,276
|
|
|
$
|
134,245
|
|
|
$
|
60,727
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1)
|
$
|
52,738
|
|
|
$
|
42,150
|
|
|
$
|
118,603
|
|
|
$
|
88,601
|
|
|
|
|
|
|
|
|
Total debt(2)
|
$
|
414,246
|
|
|
$
|
298,720
|
|
|
$
|
414,246
|
|
|
$
|
343,109
|
|
|
|
|
|
|
|
|
Operating Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold ounces produced
|
87,275
|
|
|
78,229
|
|
|
172,500
|
|
|
163,306
|
|
|
|
|
|
|
|
|
Silver ounces produced
|
2,587,393
|
|
|
1,620,410
|
|
|
4,990,536
|
|
|
4,296,828
|
|
|
|
|
|
|
|
|
Zinc pounds produced
|
—
|
|
|
—
|
|
|
—
|
|
|
2,459,756
|
|
|
|
|
|
|
|
|
Lead pounds produced
|
—
|
|
|
—
|
|
|
—
|
|
|
2,176,847
|
|
|
|
|
|
|
|
|
Gold ounces sold
|
88,501
|
|
|
77,933
|
|
|
171,613
|
|
|
163,568
|
|
|
|
|
|
|
|
|
Silver ounces sold
|
2,582,902
|
|
|
1,621,028
|
|
|
5,018,406
|
|
|
4,321,806
|
|
|
|
|
|
|
|
|
Zinc pounds sold
|
—
|
|
|
—
|
|
|
—
|
|
|
3,203,446
|
|
|
|
|
|
|
|
|
Lead pounds sold
|
—
|
|
|
—
|
|
|
—
|
|
|
2,453,485
|
|
|
|
|
|
|
|
|
Average realized price per gold ounce
|
$
|
1,651
|
|
|
$
|
1,641
|
|
|
$
|
1,658
|
|
|
$
|
1,562
|
|
|
|
|
|
|
|
|
Average realized price per silver ounce
|
$
|
26.60
|
|
|
$
|
16.25
|
|
|
$
|
26.40
|
|
|
$
|
16.49
|
|
|
|
|
|
|
|
|
Average realized price per zinc pound, gross(3)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
NM
|
|
|
|
|
|
|
|
Average realized price per lead pound, gross(3)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)See “Non-GAAP Financial Performance Measures.”
(2)Includes finance leases. Net of debt issuance costs and premium received.
(3)Due to the temporary suspension of mining and processing activities these amounts are not meaningful.
Consolidated Financial Results
Three Months Ended June 30, 2021 compared to Three Months Ended June 30, 2020
Revenue
Revenue increased by $60.6 million, or 39%, as a result of a 1% and 64% increase in average realized gold and silver prices, respectively and higher gold and silver ounces sold (14% and 59%, respectively). In 2020, production was impacted by the temporary suspension of active mining operations at Palmarejo due to a government decree in response to COVID-19. We sold 88,501 gold ounces and 2.6 million silver ounces, compared to 77,933 gold ounces and 1.6 million silver ounces in the prior year. Gold and silver accounted for 68% and 32% of second quarter 2021 sales revenue, respectively. This compares to gold and silver accounting for 83% and 17% of second quarter 2020 sales revenue, respectively.
The following table summarizes consolidated metal sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
Increase (Decrease)
|
|
Percentage Change
|
|
In thousands
|
2021
|
|
2020
|
|
|
|
Gold sales
|
$
|
146,158
|
|
|
$
|
127,902
|
|
|
$
|
18,256
|
|
|
14
|
%
|
|
Silver sales
|
68,700
|
|
|
26,347
|
|
|
42,353
|
|
|
161
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal sales
|
$
|
214,858
|
|
|
$
|
154,249
|
|
|
$
|
60,609
|
|
|
39
|
%
|
Costs Applicable to Sales
Costs applicable to sales increased $42.6 million, or 47%, primarily due to higher ounces sold resulting from the temporary suspension of active mining operations at Palmarejo in 2020 and a non-cash inventory charge of $8.6 million related to a change in the Company’s recovery rate assumption on the Stage IV leach pad, partially offset by the favorable impact of foreign currency hedges. For a complete discussion of costs applicable to sales, see Results of Operations below.
Amortization
Amortization increased $4.1 million, or 15%, primarily due higher ounces sold resulting from the temporary suspension of active mining operations at Palmarejo in 2020.
Expenses
General and administrative expenses increased $1.9 million, or 21%, primarily due to higher employee incentive compensation costs.
Exploration expense increased $0.6 million, or 5%, attributable to ramp up of drilling activity at Palmarejo and Crown as well as the continuation of expansion and infill programs across the rest of the Company’s portfolio. The Company completed 184,700 feet (56,300 meters) of expansion drilling and 135,900 feet (41,375 meters) of infill drilling in the second quarter of 2021 compared 160,680 feet (48,976 meters) of expansion drilling and 33,363 feet (10,169 meters) of infill drilling in the second quarter of 2020.
Pre-development, reclamation, and other expenses decreased $5.9 million, or 32%, stemming from lower costs incurred in connection with the Company’s COVID-19 health and safety protocols and one-time costs at Silvertip including a $2.1 million write down of obsolete supply inventory in 2020.
The following table summarizes pre-development, reclamation, and other expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
Increase (Decrease)
|
|
Percentage Change
|
|
In thousands
|
2021
|
|
2020
|
|
|
|
COVID-19
|
$
|
2,315
|
|
|
$
|
6,108
|
|
|
$
|
(3,793)
|
|
|
(62)
|
%
|
|
Silvertip ongoing carrying costs
|
6,447
|
|
|
5,183
|
|
|
1,264
|
|
|
24
|
%
|
|
Silvertip temporary suspension costs
|
—
|
|
|
3,829
|
|
|
(3,829)
|
|
|
(100)
|
%
|
|
|
|
|
|
|
|
|
|
|
Asset retirement accretion
|
2,965
|
|
|
2,908
|
|
|
57
|
|
|
2
|
%
|
|
Other
|
1,011
|
|
|
647
|
|
|
364
|
|
|
56
|
%
|
|
Pre-development, reclamation and other expense
|
$
|
12,738
|
|
|
$
|
18,675
|
|
|
$
|
(5,937)
|
|
|
(32)
|
%
|
Other Income and Expenses
Fair value adjustments, net, increased to a gain of $37.2 million compared to $10.1 million, as a result of favorable changes in value related to the Company’s recent investment in Victoria. The estimated fair values of the Company’s equity investments in Victoria and Integra were $164.7 million and $9.6 million, respectively, at June 30, 2021.
Interest expense (net of capitalized interest of $1.8 million) decreased to $5.1 million from $5.8 million due to higher capitalized interest associated with the POA 11 project at Rochester, and lower interest paid under the RCF, partially offset by higher interest paid under the 2029 Senior Notes compared to the 2024 Senior Notes.
Other, net increased to a gain of $0.7 million compared to $0.1 million due to an increase in gains on the sale of assets.
Income and Mining Taxes
During the second quarter of 2021, income and mining tax expense of approximately $15.3 million resulted in an effective tax rate of 32.3% for 2021. This compares to income tax expense of $2.8 million or effective tax rate of 173.9% for 2020. 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) percentage depletion; (vi) the non-recognition of tax assets; and (vii) the impact of uncertain tax positions. 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 June 30, 2021
|
|
|
|
|
|
|
2021
|
|
2020
|
|
In thousands
|
|
|
|
|
|
|
Income (loss) before tax
|
Tax (expense) benefit
|
|
Income (loss) before tax
|
Tax (expense) benefit
|
|
United States
|
|
|
|
|
|
|
$
|
29,647
|
|
$
|
(7,228)
|
|
|
$
|
12,546
|
|
$
|
827
|
|
|
Canada
|
|
|
|
|
|
|
(12,979)
|
|
—
|
|
|
(15,621)
|
|
217
|
|
|
Mexico
|
|
|
|
|
|
|
30,827
|
|
(8,112)
|
|
|
4,805
|
|
(3,888)
|
|
|
Other jurisdictions
|
|
|
|
|
|
|
(9)
|
|
—
|
|
|
(95)
|
|
—
|
|
|
|
|
|
|
|
|
|
$
|
47,486
|
|
$
|
(15,340)
|
|
|
$
|
1,635
|
|
$
|
(2,844)
|
|
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 2020 10-K.
Net Income (Loss)
Net income was $32.1 million, or $0.13 per diluted share, compared to net loss of $1.2 million, or $0.01 per share. The increase in net income was driven a 1% and 64% increase in average realized gold and silver prices, respectively, higher gold and silver ounces sold (14% and 59%, respectively), favorable changes in value related to the Company’s recent investment in Victoria and lower costs incurred in connection with the Company’s COVID-19 health and safety protocols. Also, in 2020, production was impacted by the temporary suspension of active mining operations at Palmarejo. This was partially offset by higher exploration and income and mining tax expense. Adjusted net loss was $0.8 million, or $0.00 per diluted share, compared to adjusted net income of $2.6 million, or $0.01 per share (see “Non-GAAP Financial Performance Measures”).
Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020
Revenue
Revenue increased by $89.6 million, or 27%, as a result of a 6% and 60% increase in average realized gold and silver prices, respectively, and higher gold and silver ounces sold (5% and 16%, respectively). In 2020, production was impacted by the temporary suspension of active mining operations at Palmarejo due to a government decree in response to COVID-19. We sold 171,613 gold ounces and 5.0 million silver ounces, compared to 163,568 gold ounces, 4.3 million silver ounces, 3.2 million zinc pounds and 2.5 million lead pounds in the prior year. Gold and silver accounted for 68% and 32% of 2021 sales revenue, respectively. This compares to gold and silver accounting for 78% and 21% of first quarter 2020 sales revenue, respectively, with zinc and lead accounting for the remaining 2020 sales revenue.
The following table summarizes consolidated metal sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
Increase (Decrease)
|
|
Percentage Change
|
|
In thousands
|
2021
|
|
2020
|
|
|
|
Gold sales
|
$
|
284,480
|
|
|
$
|
255,507
|
|
|
$
|
28,973
|
|
|
11
|
%
|
|
Silver sales
|
132,495
|
|
|
71,256
|
|
|
61,239
|
|
|
86
|
%
|
|
Zinc sales
|
—
|
|
|
(662)
|
|
|
662
|
|
|
(100)
|
%
|
|
Lead sales
|
—
|
|
|
1,315
|
|
|
(1,315)
|
|
|
(100)
|
%
|
|
Metal sales
|
$
|
416,975
|
|
|
$
|
327,416
|
|
|
$
|
89,559
|
|
|
27
|
%
|
Costs Applicable to Sales
Costs applicable to sales increased $31.8 million, or 15%, primarily due to higher ounces sold resulting from the 2020 temporary suspension of active mining operations at Palmarejo and Silvertip and a non-cash inventory charge of $8.6 million related to a change in the Company’s recovery rate assumption on the Stage IV leach pad, partially offset by the favorable impact from foreign currency hedges. For a complete discussion of costs applicable to sales, see Results of Operations below.
Amortization
Amortization decreased $2.1 million, or 3%, primarily due to the 2020 temporary suspension of active mining operations at Palmarejo and Silvertip and longer assumed mine life based on year-end 2020 mineral reserve growth at Palmarejo, partially offset by higher ounces sold.
Expenses
General and administrative expenses increased $4.5 million, or 26%, primarily due to higher employee incentive compensation costs.
Exploration expense increased $3.9 million, or 21%, as the Company maintained its commitment to a higher-level of exploration investment following the completion of the largest and most successful drilling campaign in Coeur’s history during 2020. The Company completed 313,300 feet (95,525 meters) of expansion drilling and 263,700 feet (80,350 meters) of infill drilling in the first half of 2021 compared 280,151 feet (85,391 meters) of expansion drilling and 83,572 feet (25,473 meters) of infill drilling in the first half of 2020.
Pre-development, reclamation, and other expenses increased $1.2 million, or 5%, stemming from full-year ongoing carrying costs at Silvertip, partially offset by a gain resulting from the modification of a right of use lease at Silvertip in 2020, lower costs incurred in connection with the Company’s COVID-19 health and safety protocols and one-time costs at Silvertip including a $2.1 million write down of obsolete supply inventory in 2020.
The following table summarizes pre-development, reclamation, and other expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
Increase (Decrease)
|
|
Percentage Change
|
|
In thousands
|
2021
|
|
2020
|
|
|
|
COVID-19
|
$
|
5,319
|
|
|
$
|
6,380
|
|
|
$
|
(1,061)
|
|
|
(17)
|
%
|
|
Silvertip ongoing carrying costs
|
13,368
|
|
|
7,792
|
|
|
5,576
|
|
|
72
|
%
|
|
Silvertip temporary suspension costs
|
—
|
|
|
7,338
|
|
|
(7,338)
|
|
|
(100)
|
%
|
|
Gain on modification of right of use lease
|
—
|
|
|
(4,051)
|
|
|
4,051
|
|
|
(100)
|
%
|
|
Asset retirement accretion
|
5,870
|
|
|
5,755
|
|
|
115
|
|
|
2
|
%
|
|
Other
|
1,893
|
|
|
2,016
|
|
|
(123)
|
|
|
(6)
|
%
|
|
Pre-development, reclamation and other expense
|
$
|
26,450
|
|
|
$
|
25,230
|
|
|
$
|
1,220
|
|
|
5
|
%
|
Other Income and Expenses
During the first half of 2021, the Company incurred a $9.2 million loss in connection with the tender and redemption of the 2024 Senior Notes concurrent with the completed offering of the 2029 Senior Notes.
Fair value adjustments, net, increased to a gain of $33.4 million compared to $1.2 million as a result of favorable changes in value related to the Company’s recent investment in Victoria. The estimated fair values of the Company’s equity investments in Victoria and Integra were $164.7 million and $9.6 million, respectively, at June 30, 2021.
Interest expense (net of capitalized interest of $2.6 million) decreased to $10.0 million from $10.9 million due to higher capitalized interest associated with the POA 11 project at Rochester, and lower interest paid under the RCF, partially offset by higher interest paid under the 2029 Senior Notes compared to the 2024 Senior Notes.
Other, net increased to a gain of $4.3 million compared to $2.0 million due to an increase in gains on the sale of assets.
Income and Mining Taxes
During the first half of 2021, income and mining tax expense of approximately $28.1 million resulted in an effective tax rate of 45.1% for 2021. This compares to income tax benefit of $1.1 million or effective tax rate of 7.7% for 2020. 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) percentage depletion; (vi) the non-recognition of tax assets; and (vii) the impact of uncertain tax positions. 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
|
|
|
2021
|
|
2020
|
|
In thousands
|
|
|
|
|
|
|
Income (loss) before tax
|
Tax (expense) benefit
|
|
Income (loss) before tax
|
Tax (expense) benefit
|
|
United States
|
|
|
|
|
|
|
$
|
21,116
|
|
$
|
(8,853)
|
|
|
$
|
1,540
|
|
$
|
91
|
|
|
Canada
|
|
|
|
|
|
|
(25,763)
|
|
—
|
|
|
(41,650)
|
|
232
|
|
|
Mexico
|
|
|
|
|
|
|
63,741
|
|
(19,273)
|
|
|
26,163
|
|
743
|
|
|
Other jurisdictions
|
|
|
|
|
|
|
3,238
|
|
—
|
|
|
(257)
|
|
29
|
|
|
|
|
|
|
|
|
|
$
|
62,332
|
|
$
|
(28,126)
|
|
|
$
|
(14,204)
|
|
$
|
1,095
|
|
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 2020 10-K.
Net Income (Loss)
Net income was $34.2 million, or $0.14 per diluted share, compared to net loss of $13.1 million, or $0.05 per share. The increase in net income was driven by a 6% and 60% increase in average realized gold and silver prices, respectively, higher sales of gold and silver (5% and 16%, respectively), favorable changes in value related to the Company’s recent investment in Victoria, and lower operating costs at Silvertip. This was partially offset by higher exploration expense, a $9.2 million loss on debt extinguishment, severance costs and a full-year of ongoing carrying costs at Silvertip and higher income and mining taxes. Adjusted net income was $13.1 million, or $0.05 per diluted share, compared to $1.7 million, or $0.01 per share (see “Non-GAAP Financial Performance Measures”).
Results of Operations
Palmarejo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
2021
|
|
2020
|
|
|
|
|
|
|
Tons milled
|
517,373
|
|
|
269,641
|
|
1,001,763
|
|
|
749,203
|
|
|
|
|
|
|
|
Average gold grade (oz/t)
|
0.058
|
|
|
0.066
|
|
0.060
|
|
|
0.070
|
|
|
|
|
|
|
|
Average silver grade (oz/t)
|
3.94
|
|
|
4.46
|
|
4.00
|
|
|
4.61
|
|
|
|
|
|
|
|
Average recovery rate – Au
|
92.4
|
%
|
|
86.0
|
%
|
94.0
|
%
|
|
89.7
|
%
|
|
|
|
|
|
|
Average recovery rate – Ag
|
81.9
|
%
|
|
72.2
|
%
|
81.6
|
%
|
|
78.3
|
%
|
|
|
|
|
|
|
Gold ounces produced
|
27,595
|
|
|
15,223
|
|
56,200
|
|
|
46,801
|
|
|
|
|
|
|
|
Silver ounces produced
|
1,666,545
|
|
|
867,134
|
|
3,269,819
|
|
|
2,702,025
|
|
|
|
|
|
|
|
Gold ounces sold
|
30,516
|
|
|
16,924
|
|
56,203
|
|
|
48,211
|
|
|
|
|
|
|
|
Silver ounces sold
|
1,639,620
|
|
|
874,642
|
|
3,277,315
|
|
|
2,769,431
|
|
|
|
|
|
|
|
Costs applicable to sales per gold ounce(1)
|
$
|
659
|
|
|
$
|
690
|
|
$
|
648
|
|
|
$
|
659
|
|
|
|
|
|
|
|
Costs applicable to sales per silver ounce(1)
|
$
|
13.29
|
|
|
$
|
8.18
|
|
$
|
12.04
|
|
|
$
|
8.31
|
|
|
|
|
|
|
(1)See Non-GAAP Financial Performance Measures.
Three Months Ended June 30, 2021 compared to Three Months Ended June 30, 2020
Gold and silver production increased 81% and 92%, respectively, as a result of the temporary suspension of active mining operations at Palmarejo in 2020 due to a government decree in response to COVID-19. Metal sales were $85.0 million, or 40% of Coeur’s metal sales, compared with $38.0 million, or 25% of Coeur’s metal sales. Revenue for the three months ended June 30, 2021 increased by $47.1 million or 124%, of which $38.8 million was the result of a higher volume of gold and silver sales and $8.3 million due to higher average realized gold and silver prices. Costs applicable to sales per gold ounce decreased 4% while costs applicable to sales per silver ounce increased 62% due to the mix of gold and silver sales, lower gold and silver grades, and higher consumable and maintenance costs, partially offset by the favorable impact of foreign currency hedges. Amortization increased to $8.3 million due to higher ounces sold. Capital expenditures increased to $9.8 million from $4.5 million due to the impact of the 2020 temporary suspension on underground development and infill drilling activities.
Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020
Gold and silver production increased 20% and 21%, respectively, as a result of the temporary suspension of active mining operations at Palmarejo in 2020 and higher recoveries, partially offset by lower gold and silver grades. Metal sales were $165.4 million, or 40% of Coeur’s metal sales, compared with $112.3 million, or 34% of Coeur’s metal sales. Revenue for the six months ended June 30, 2021 increased by $53.1 million or 47%, of which $28.5 million was the result of higher average realized gold and silver prices, and $24.6 million was due to a higher volume of gold and silver sales. Costs applicable to sales per gold ounce decreased 2% while costs applicable to sales per silver ounce increased 45% due to the mix of gold and silver sales, lower gold and silver grades, and higher consumable and maintenance costs, partially offset by the favorable impact from foreign currency hedges. Amortization decreased to $17.3 million due to a longer anticipated mine life based on year-end 2020 reserve growth, partially offset by higher ounces sold. Capital expenditures increased to $19.8 million from $11.6 million attributable to higher underground development at the La Nacion deposit and the impact of the 2020 temporary suspension on underground development and infill drilling activities.
Rochester
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
2021
|
|
2020
|
|
|
|
|
|
|
Tons placed
|
3,195,777
|
|
|
3,743,331
|
|
6,436,694
|
|
|
7,171,909
|
|
|
|
|
|
|
|
Average gold grade (oz/t)
|
0.003
|
|
|
0.002
|
0.003
|
|
|
0.002
|
|
|
|
|
|
|
Average silver grade (oz/t)
|
0.38
|
|
|
0.51
|
0.41
|
|
|
0.54
|
|
|
|
|
|
|
Gold ounces produced
|
7,232
|
|
|
5,159
|
|
14,136
|
|
|
11,095
|
|
|
|
|
|
|
|
Silver ounces produced
|
888,307
|
|
|
728,312
|
|
1,661,985
|
|
|
1,415,691
|
|
|
|
|
|
|
|
Gold ounces sold
|
7,818
|
|
|
5,278
|
|
14,752
|
|
|
10,751
|
|
|
|
|
|
|
|
Silver ounces sold
|
911,861
|
|
|
723,679
|
|
1,683,215
|
|
|
1,355,916
|
|
|
|
|
|
|
|
Costs applicable to sales per gold ounce(1)
|
$
|
1,800
|
|
|
$
|
1,529
|
|
$
|
1,557
|
|
|
$
|
1,444
|
|
|
|
|
|
|
|
Costs applicable to sales per silver ounce(1)
|
$
|
26.28
|
|
|
$
|
14.19
|
|
$
|
23.23
|
|
|
$
|
14.58
|
|
|
|
|
|
|
(1)See Non-GAAP Financial Performance Measures.
Three Months Ended June 30, 2021 compared to Three Months Ended June 30, 2020
Gold and silver production increased 40% and 22%, respectively, due to the timing of recoveries, higher gold grade and the restocking of leach pad inventory after the commissioning of the high-pressure grinding roll in 2019, which adversely impacted 2020 gold and silver production. Metal sales were $38.1 million, or 18% of Coeur’s metal sales, compared with $20.6 million, or 13% of Coeur’s metal sales. Revenue for the three months ended June 30, 2021 increased by $17.4 million or 84%, of which $9.4 million was the result of a higher volume of gold and silver sales and $8.0 million was due to higher average realized gold and silver prices. Costs applicable to sales per gold and silver ounce increased 18% and 85%, respectively, due to the mix of gold and silver sales, higher consumable costs and a non-cash inventory charge of $8.6 million related to a change in the Company’s recovery rate assumption on the Stage IV leach pad. Amortization increased to $6.5 million due to higher ounces sold. Capital expenditures increased to $42.3 million from $5.8 million due to the commencement of construction activities related to POA 11 in August 2020.
Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020
Gold and silver production increased 27% and 17%, respectively, due to the timing of recoveries, higher gold grade and the restocking of leach pad inventory after the commissioning of the high-pressure grinding roll in 2019, which adversely impacted 2020 gold and silver production. Metal sales were $70.8 million, or 17% of Coeur’s metal sales, compared with $40.0 million, or 12% of Coeur’s metal sales. Revenue for the six months ended June 30, 2021 increased by $30.8 million or 77%, of which $15.8 million was the result of a higher volume of gold and silver sales and $15.0 million was the result of higher average realized gold and silver prices. Costs applicable to sales per gold and silver ounce increased 8% and 59%, respectively, due to the mix of gold and silver sales, higher consumable and equipment maintenance costs, and a non-cash inventory charge of $8.6 million related to a change in the Company’s recovery rate assumption on the Stage IV leach pad. Amortization increased to $10.1 million due to higher ounces sold. Capital expenditures increased to $72.4 million from $10.9 million due to the commencement of construction activities related to POA 11 in August 2020.
Kensington
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
2021
|
|
2020
|
|
|
|
|
|
|
Tons milled
|
168,311
|
|
|
170,478
|
|
338,669
|
|
|
332,819
|
|
|
|
|
|
|
|
Average gold grade (oz/t)
|
0.18
|
|
|
0.21
|
|
0.19
|
|
|
0.21
|
|
|
|
|
|
|
|
Average recovery rate
|
92.7
|
%
|
|
92.0
|
%
|
92.9
|
%
|
|
92.7
|
%
|
|
|
|
|
|
|
Gold ounces produced
|
28,322
|
|
|
33,058
|
|
59,003
|
|
|
65,080
|
|
|
|
|
|
|
|
Gold ounces sold
|
26,796
|
|
|
32,367
|
|
58,391
|
|
|
65,148
|
|
|
|
|
|
|
|
Costs applicable to sales per gold ounce(1)
|
$
|
1,090
|
|
|
$
|
939
|
|
$
|
1,038
|
|
|
$
|
935
|
|
|
|
|
|
|
(1)See Non-GAAP Financial Performance Measures.
Three Months Ended June 30, 2021 compared to Three Months Ended June 30, 2020
Gold production decreased 14% as a result of lower grade and mill throughput. Metal sales were $48.8 million, or 23% of Coeur’s metal sales, compared to $55.2 million, or 36% of Coeur’s metal sales. Revenue for the three months ended June 30, 2021 decreased by $6.4 million or 12%, of which $10.1 million resulted from a lower volume of gold sales, partially offset by an increase of $3.7 million due to higher average realized gold prices. Costs applicable to sales per gold ounce increased 16% due to lower production and higher diesel and outside service costs. Amortization decreased slightly to $12.7 million due to lower ounces sold partially offset by higher Jualin production. Capital expenditures increased to $6.0 million from $3.9 million due to higher infill drilling and underground development.
Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020
Gold production decreased 9% as a result of lower grade, partially offset by higher mill throughput. Metal sales were $103.3 million, or 25% of Coeur’s metal sales, compared to $106.8 million, or 33% of Coeur’s metal sales. Revenue for the six months ended June 30, 2021 decreased by $3.6 million or 3%, of which $12.0 million resulted from lower volume of gold sales, partially offset by an increase of $8.4 million due to higher average realized gold prices. Costs applicable to sales per gold ounce increased 11% due to lower production and higher diesel, outside service and maintenance costs. Amortization increased to $26.2 million primarily due to higher Jualin production, partially offset by lower ounces sold. Capital expenditures increased to $13.2 million from $8.7 million due to higher infill drilling and underground development.
Wharf
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
2021
|
|
2020
|
|
|
|
|
|
|
Tons placed
|
1,025,481
|
|
|
1,401,237
|
|
2,139,524
|
|
|
2,347,686
|
|
|
|
|
|
|
|
Average gold grade (oz/t)
|
0.032
|
|
|
0.032
|
0.031
|
|
|
0.029
|
|
|
|
|
|
|
Gold ounces produced
|
24,126
|
|
|
24,789
|
|
43,161
|
|
|
40,330
|
|
|
|
|
|
|
|
Silver ounces produced
|
32,541
|
|
|
24,964
|
|
58,732
|
|
|
39,825
|
|
|
|
|
|
|
|
Gold ounces sold
|
23,371
|
|
|
23,364
|
|
42,267
|
|
|
39,458
|
|
|
|
|
|
|
|
Silver ounces sold
|
31,421
|
|
|
22,707
|
|
57,876
|
|
|
37,475
|
|
|
|
|
|
|
|
Costs applicable to sales per gold ounce(1)
|
$
|
967
|
|
|
$
|
945
|
|
$
|
961
|
|
|
$
|
1,005
|
|
|
|
|
|
|
(1)See Non-GAAP Financial Performance Measures.
Three Months Ended June 30, 2021 compared to Three Months Ended June 30, 2020
Gold production decreased 3% driven by lower placed tons. Metal sales were $42.9 million, or 20% of Coeur’s metal sales, compared to $40.5 million, or 26% of Coeur’s metal sales. Revenue for the three months ended June 30, 2021 increased by $2.5 million or 6%, of which $2.2 million resulted from higher average realized gold and silver prices and $0.3 million was due to a higher volume of gold and silver sales. Costs applicable to sales per gold ounce slightly increased 2% due to higher employee-related costs, partially offset by a $3.3 million inventory write-down related to lower expected recoveries from leach pads 4 and 5 in 2020. Amortization decreased slightly to $3.0 million due to a lower units-of-production depletion rate. Capital expenditures were $1.4 million.
Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020
Gold production increased 7% driven by higher grade and favorable weather conditions. Metal sales were $77.5 million, or 19% of Coeur’s metal sales, compared to $66.3 million, or 20% of Coeur’s metal sales. Revenue for the six months ended June 30, 2021 increased by $11.1 million or 17%, of which $5.6 million resulted from higher average realized gold and silver prices and $5.5 million was due to a higher volume of gold and silver sales. Costs applicable to sales per gold ounce decreased 4% due to higher production and a $3.3 million inventory write-down related to lower expected recoveries from leach pads 4 and 5 in 2020, partially offset by higher equipment rental and employee-related costs. Amortization remained decreased slightly to $5.5 million due to a lower units-of-production depletion rate. Capital expenditures were $2.9 million.
Silvertip
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three and Six Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver ounces produced
|
—
|
|
|
—
|
|
—
|
|
|
139,287
|
|
|
|
|
|
|
|
Zinc pounds produced
|
—
|
|
|
—
|
|
—
|
|
|
2,459,756
|
|
|
|
|
|
|
|
Lead pounds produced
|
—
|
|
|
—
|
|
—
|
|
|
2,176,847
|
|
|
|
|
|
|
|
Silver ounces sold
|
—
|
|
|
—
|
|
—
|
|
|
158,984
|
|
|
|
|
|
|
|
Zinc pounds sold
|
—
|
|
|
—
|
|
—
|
|
|
3,203,446
|
|
|
|
|
|
|
|
Lead pounds sold
|
—
|
|
|
—
|
|
—
|
|
|
2,453,485
|
|
|
|
|
|
|
|
Costs applicable to sales per silver ounce(2)
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
|
NM(1)
|
|
|
|
|
|
|
Costs applicable to sales per zinc pound(2)
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
|
NM(1)
|
|
|
|
|
|
|
Costs applicable to sales per lead ounce(2)
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
|
NM(1)
|
|
|
|
|
|
(1)Due to the temporary suspension of mining and processing activities these amounts are not meaningful.
(2)See Non-GAAP Financial Performance Measures.
Three and Six Months Ended June 30, 2021 compared to Three and Six Months Ended June 30, 2020
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. Ongoing carrying and temporary suspension costs are included in Pre-development, reclamation, and other.
The Company plans to release an updated mine plan and economic analysis for Silvertip at the end of the year, including additional exploration results, updated engineering and revised capital estimate as well as information regarding the anticipated benefits of the 1,750 tonnes per day flowsheet which will be reflected in a technical report that is expected to be filed in early 2022.
In June 2021, Silvertip repurchased from Silvertip Resources Investment Cayman Ltd. for $7.0 million a net smelter returns royalty of 1.429% on the first 1,434,000 metric tonnes of mineralized material mined, and 1.00% thereafter.
Liquidity and Capital Resources
At June 30, 2021, the Company had $125.5 million of cash, cash equivalents and restricted cash and $265.0 million available under its RCF. Cash and cash equivalents increased $31.3 million in the six months ended June 30, 2021, due to a 6% and 60% increase in average realized gold and silver prices, respectively, higher gold and silver ounces sold (5% and 16%, respectively), net proceeds of $367.5 million from the issuance of the 2029 Senior Notes, partially offset by the tender and redemption of the 2024 Senior Notes for $238.3 million, including premiums, and ongoing carrying costs at Silvertip. Since the start of the COVID-19 pandemic, 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 subsequent to the start of the COVID-19 pandemic. At June 30, 2021, the Company had no borrowings and $35.0 million in outstanding letters of credit under the RCF, which was amended in March 2021 to allow the Company to obtain one or more increases of the RCF in an aggregate amount of up to $100.0 million and extend the maturity to March 2025. Additionally, Coeur established a $100.0 million ATM Program in April 2020 as a means to proactively increase its financial flexibility in response to increased volatility and uncertainty associated with COVID-19. At the date of this filing, the Company has yet to issue any shares of its common stock under the ATM Program and intends to maintain the program during the POA 11 construction.
Cash Provided by Operating Activities
Net cash provided by operating activities for the three months ended June 30, 2021 was $58.1 million, compared to $9.9 million for the three months ended June 30, 2020. Net cash provided by operating activities for the six months ended June 30, 2021 was $53.7 million, compared to $2.0 million for the six months ended June 30, 2020. Adjusted EBITDA for the three months ended June 30, 2021 was $52.7 million, compared to $42.2 million for the three months ended June 30, 2020. Adjusted EBITDA for the six months ended June 30, 2021 was $118.6 million, compared to $88.6 million for the six months ended June 30, 2020 (see “Non-GAAP Financial Performance Measures”). Net cash provided by operating activities was impacted by the following key factors for the applicable periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
In thousands
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
Cash flow before changes in operating assets and liabilities
|
$
|
31,442
|
|
|
$
|
16,411
|
|
|
$
|
73,022
|
|
|
$
|
46,555
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
961
|
|
|
(1,536)
|
|
|
1,960
|
|
|
(2,349)
|
|
|
|
|
Prepaid expenses and other
|
1,328
|
|
|
1,081
|
|
|
673
|
|
|
735
|
|
|
|
|
Inventories
|
3,259
|
|
|
(8,056)
|
|
|
(14,227)
|
|
|
(29,981)
|
|
|
|
|
Accounts payable and accrued liabilities
|
21,069
|
|
|
2,047
|
|
|
(7,728)
|
|
|
(13,004)
|
|
|
|
|
Cash provided by (used in) operating activities
|
$
|
58,059
|
|
|
$
|
9,947
|
|
|
$
|
53,700
|
|
|
$
|
1,956
|
|
|
|
Net cash provided by operating activities increased $48.1 million for the three months ended June 30, 2021 compared to the three months ended June 30, 2020, primarily due to a 1% and 64% increase in average realized gold and silver prices, respectively, higher ounces sold of gold and silver (14% and 59%, respectively), improved recoveries at Rochester, and a reduction in accounts payable at Silvertip due the temporary suspension in 2020. Revenue for the three months ended June 30, 2021 increased by $60.6 million, of which $43.0 million was the result of the higher volume of gold and silver sales and $17.6 million was due to higher average realized gold and silver prices.
Net cash provided by operating activities increased $51.7 million for the six months ended June 30, 2021, primarily due to a 6% and 60% increase in average realized gold and silver prices, respectively, higher gold and silver ounces sold (5% and 16%, respectively), improved recoveries at Rochester, a reduction in accounts payable at Silvertip due the temporary suspension in 2020, partially offset by a payment of $4.0 million of interest related to the tender and redemption of the 2024 Senior Notes. Revenue for the six months ended June 30, 2021 increased by $89.6 million, of which $57.8 million was the result of higher average realized gold and silver prices and $31.7 million was due to the higher volume of gold and silver sales.
Cash Provided by (Used in) Investing Activities
Net cash used in investing activities in the three months ended June 30, 2021 was $78.1 million compared to net cash provided by investing activities $2.9 million in the three months ended June 30, 2020. Cash used in investing activities increased primarily due to construction activities related to POA 11 at Rochester in the current period and the impact of the net proceeds of $19.4 million from the sale of Metalla Common Shares in the comparable period of 2020. The Company incurred capital expenditures of $78.2 million in the three months ended June 30, 2021 compared with $16.7 million in the three months ended June 30, 2020. Capital expenditures in the three months ended June 30, 2021 were primarily related to POA 11 construction activities at Rochester, potential expansion expenditures at Silvertip and underground development at Palmarejo and Kensington. Capital expenditures in the three months ended June 30, 2020 were primarily related to underground development at Silvertip, Palmarejo, and Kensington and POA 11 capital expenditures at Rochester.
Net cash used in investing activities in the six months ended June 30, 2021 was $132.1 million compared to $14.8 million in the six months ended June 30, 2020. Cash used in investing activities increased primarily due to construction activities related to POA 11 at Rochester in the current period and the impact of the net proceeds of $19.4 million from the sale of Metalla Common Shares in the comparable period of 2020. The Company incurred capital expenditures of $137.6 million in the six months ended June 30, 2021 compared with $38.9 million in the six months ended June 30, 2020. Capital expenditures in the six months ended June 30, 2021 were primarily related to POA 11 construction activities at Rochester, potential expansion expenditures at Silvertip and underground development at Palmarejo and Kensington. Capital expenditures in the six months ended June 30, 2020 were primarily related to underground development at Silvertip, Palmarejo, and Kensington and POA 11 capital expenditures at Rochester.
Recently-signed construction contracts related to POA 11 have begun demonstrating signs of inflationary pressures, specifically with respect to building materials and fuel as well as overall tightness in the construction market.
Cash Provided by (Used in) Financing Activities
Net cash used in financing activities in the three months ended June 30, 2021 was $9.8 million compared to net cash provided by financing activities of $4.4 million in the three months ended June 30, 2020. During the three months ended June 30, 2021, the Company repaid $9.6 million of principal under outstanding finance leases. During the three months ended June 30, 2020, the Company borrowed $100.0 million and repaid $90.0 million under the RCF.
Net cash provided by financing activities in the six months ended June 30, 2021 was $109.8 million compared to $27.8 million in the six months ended June 30, 2020. During the six months ended June 30, 2021, the Company received net proceeds of $367.5 million from the issuance of the 2029 Senior Notes, partially offset by the tender and redemption of the 2024 Senior Notes for $238.3 million, including premiums. During the six months ended June 30, 2020, the Company drew $150.0 million from the RCF, partially offset by the repayment of $90.0 million under the RCF and the payment of contingent consideration of $18.8 million associated with the Silvertip acquisition.
The Company secured a finance lease package for nearly $60 million during the quarter, a portion of which has been funded as of June 30, 2021. The package is earmarked for planned equipment purchases for the project in 2021 and 2022, and has an interest rate of 5.20%.
Critical Accounting Policies and Accounting Developments
Please see Note 2 -- Summary of Significant Accounting Policies contained in the 2020 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 in the tables below. 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 June 30,
|
|
Six Months Ended June 30,
|
|
|
|
|
|
In thousands except per share amounts
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Net income (loss)
|
$
|
32,146
|
|
|
$
|
(1,209)
|
|
|
$
|
34,206
|
|
|
$
|
(13,109)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustments, net
|
(37,239)
|
|
|
(10,067)
|
|
|
(33,440)
|
|
|
(1,248)
|
|
|
|
|
|
|
|
|
Foreign exchange loss (gain)
|
1,503
|
|
|
626
|
|
|
1,461
|
|
|
(5,994)
|
|
|
|
|
|
|
|
|
(Gain) loss on sale of assets and securities
|
(621)
|
|
|
(9)
|
|
|
(4,674)
|
|
|
(383)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
9,172
|
|
|
—
|
|
|
|
|
|
|
|
|
Silvertip inventory write-down
|
—
|
|
|
2,104
|
|
|
—
|
|
|
12,485
|
|
|
|
|
|
|
|
|
Wharf inventory write-down
|
—
|
|
|
3,323
|
|
|
—
|
|
|
3,323
|
|
|
|
|
|
|
|
|
Silvertip temporary suspension costs
|
—
|
|
|
1,725
|
|
|
—
|
|
|
5,234
|
|
|
|
|
|
|
|
|
Silvertip lease modification
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,051)
|
|
|
|
|
|
|
|
|
Silvertip gain on contingent consideration
|
—
|
|
|
—
|
|
|
—
|
|
|
(955)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COVID-19 costs
|
2,315
|
|
|
6,108
|
|
|
5,319
|
|
|
6,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect of adjustments(1)
|
1,056
|
|
|
—
|
|
|
1,056
|
|
|
—
|
|
|
|
|
|
|
|
|
Adjusted net income (loss)
|
$
|
(840)
|
|
|
$
|
2,601
|
|
|
$
|
13,100
|
|
|
$
|
1,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income (loss) per share - Basic
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
$
|
0.05
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
Adjusted net income (loss) per share - Diluted
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
$
|
0.05
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
(1) For the three and six months ended June 30, 2021, tax effect of adjustments of $1.1 million (3%) and $1.1 million (4%) are primarily related to the fair value adjustments on the Company’s equity investments.
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 2029 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 June 30,
|
|
Six Months Ended June 30,
|
|
In thousands except per share amounts
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
Net income (loss)
|
$
|
32,146
|
|
|
$
|
(1,209)
|
|
|
$
|
34,206
|
|
|
$
|
(13,109)
|
|
|
|
|
(Income) loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Interest expense, net of capitalized interest
|
5,093
|
|
|
5,765
|
|
|
10,003
|
|
|
10,893
|
|
|
|
|
Income tax provision (benefit)
|
15,340
|
|
|
2,844
|
|
|
28,126
|
|
|
(1,095)
|
|
|
|
|
Amortization
|
31,973
|
|
|
27,876
|
|
|
61,910
|
|
|
64,038
|
|
|
|
|
EBITDA
|
84,552
|
|
|
35,276
|
|
|
134,245
|
|
|
60,727
|
|
|
|
|
Fair value adjustments, net
|
(37,239)
|
|
|
(10,067)
|
|
|
(33,440)
|
|
|
(1,248)
|
|
|
|
|
Foreign exchange (gain) loss
|
499
|
|
|
(11)
|
|
|
1,272
|
|
|
65
|
|
|
|
|
Asset retirement obligation accretion
|
2,965
|
|
|
2,908
|
|
|
5,870
|
|
|
5,755
|
|
|
|
|
Inventory adjustments and write-downs
|
267
|
|
|
793
|
|
|
839
|
|
|
1,269
|
|
|
|
|
(Gain) loss on sale of assets and securities
|
(621)
|
|
|
(9)
|
|
|
(4,674)
|
|
|
(383)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
9,172
|
|
|
—
|
|
|
|
|
Silvertip inventory write-down
|
—
|
|
|
2,104
|
|
|
—
|
|
|
12,485
|
|
|
|
|
Silvertip temporary suspension costs
|
—
|
|
|
1,725
|
|
|
—
|
|
|
5,234
|
|
|
|
|
Silvertip lease modification
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,051)
|
|
|
|
|
Silvertip gain on contingent consideration
|
—
|
|
|
—
|
|
|
—
|
|
|
(955)
|
|
|
|
|
COVID-19 costs
|
2,315
|
|
|
6,108
|
|
|
5,319
|
|
|
6,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wharf inventory write-down
|
—
|
|
|
3,323
|
|
|
—
|
|
|
3,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
$
|
52,738
|
|
|
$
|
42,150
|
|
|
$
|
118,603
|
|
|
$
|
88,601
|
|
|
|
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 less Capital expenditures 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, which the Company believes to be the GAAP financial measure most directly comparable to Free Cash Flow.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
|
|
(Dollars in thousands)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Cash flow from operations
|
$
|
58,059
|
|
|
$
|
9,947
|
|
|
$
|
53,700
|
|
|
$
|
1,956
|
|
|
|
|
|
|
|
|
Capital expenditures
|
78,223
|
|
|
16,682
|
|
|
137,647
|
|
|
38,890
|
|
|
|
|
|
|
|
|
Free cash flow
|
$
|
(20,164)
|
|
|
$
|
(6,735)
|
|
|
$
|
(83,947)
|
|
|
(36,934)
|
|
|
|
|
|
|
|
Operating Cash Flow Before Changes in Working Capital
Management uses Operating Cash Flow Before Changes in Working Capital as a non-GAAP measure to analyze cash flows generated from operations. Operating Cash Flow Before Changes in Working Capital is Cash Provided By (used in) Operating Activities excluding the change in Receivables, Prepaid expenses and other, Inventories and Accounts payable and accrued liabilities as presented on the Consolidated Statements of Cash Flows. The Company believes Operating Cash Flow Before Changes in Working Capital is also useful as one of the bases for comparing the Company’s performance with its competitors. Although Operating Cash Flow Before Changes in Working Capital and similar measures are frequently used as measures of cash flows generated from operations by other companies, the Company’s calculation of Operating Cash Flow Before Changes in Working Capital is not necessarily comparable to such other similarly titled captions of other companies.
The following table sets forth a reconciliation of Operating Cash Flow Before Changes in Working Capital, a non-GAAP financial measure, to Cash Provided By (used in) Operating Activities, which the Company believes to be the GAAP financial measure most directly comparable to Operating Cash Flow Before Changes in Working Capital.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
2021
|
|
2020
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in) operating activities
|
$
|
58,059
|
|
|
$
|
9,947
|
|
$
|
53,700
|
|
|
$
|
1,956
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
(961)
|
|
|
1,536
|
|
(1,960)
|
|
|
2,349
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other
|
(1,328)
|
|
|
(1,081)
|
|
(673)
|
|
|
(735)
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
(3,259)
|
|
|
8,056
|
|
14,227
|
|
|
29,981
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
(21,069)
|
|
|
(2,047)
|
|
7,728
|
|
|
13,004
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flow before changes in working capital
|
$
|
31,442
|
|
|
$
|
16,411
|
|
$
|
73,022
|
|
|
$
|
46,555
|
|
|
|
|
|
|
|
|
|
|
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 June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands (except metal sales, per ounce and per pound amounts)
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
Silvertip
|
|
Total
|
|
Costs applicable to sales, including amortization (U.S. GAAP)
|
$
|
50,189
|
|
|
$
|
44,537
|
|
|
$
|
41,913
|
|
|
$
|
26,437
|
|
|
$
|
1,185
|
|
|
$
|
164,261
|
|
|
Amortization
|
(8,271)
|
|
|
(6,506)
|
|
|
(12,710)
|
|
|
(2,994)
|
|
|
(1,185)
|
|
|
(31,666)
|
|
|
Costs applicable to sales
|
$
|
41,918
|
|
|
$
|
38,031
|
|
|
$
|
29,203
|
|
|
$
|
23,443
|
|
|
$
|
—
|
|
|
$
|
132,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold ounces
|
30,516
|
|
|
7,818
|
|
|
26,796
|
|
|
23,371
|
|
|
|
|
88,501
|
|
|
Silver ounces
|
1,639,620
|
|
|
911,861
|
|
|
|
|
31,421
|
|
|
—
|
|
|
2,582,902
|
|
|
Zinc pounds
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
Lead pounds
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold ($/oz)
|
$
|
659
|
|
|
$
|
1,800
|
|
|
$
|
1,090
|
|
|
$
|
967
|
|
|
|
|
|
|
Silver ($/oz)
|
$
|
13.29
|
|
|
$
|
26.28
|
|
|
|
|
|
|
$
|
—
|
|
|
|
|
Zinc ($/lb)
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
|
|
Lead ($/lb)
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
|
Three Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands (except metal sales, per ounce and per pound amounts)
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
Silvertip
|
|
Total
|
|
Costs applicable to sales, including amortization (U.S. GAAP)
|
$
|
26,095
|
|
|
$
|
21,348
|
|
|
$
|
43,235
|
|
|
$
|
25,653
|
|
|
$
|
1,231
|
|
|
$
|
117,562
|
|
|
Amortization
|
(7,270)
|
|
|
(3,012)
|
|
|
(12,853)
|
|
|
(3,181)
|
|
|
(1,231)
|
|
|
(27,547)
|
|
|
Costs applicable to sales
|
$
|
18,825
|
|
|
$
|
18,336
|
|
|
$
|
30,382
|
|
|
$
|
22,472
|
|
|
$
|
—
|
|
|
$
|
90,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold ounces
|
16,924
|
|
|
5,278
|
|
|
32,367
|
|
|
23,364
|
|
|
|
|
77,933
|
|
|
Silver ounces
|
874,642
|
|
|
723,679
|
|
|
|
|
22,707
|
|
|
—
|
|
|
1,621,028
|
|
|
Zinc pounds
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
Lead pounds
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold ($/oz)
|
$
|
690
|
|
|
$
|
1,529
|
|
|
$
|
939
|
|
|
$
|
945
|
|
|
|
|
|
|
Silver ($/oz)
|
$
|
8.18
|
|
|
$
|
14.19
|
|
|
|
|
|
|
$
|
—
|
|
|
|
|
Zinc ($/lb)
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
|
|
Lead ($/lb)
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
|
Six Months Ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands (except metal sales, per ounce and per pound amounts)
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
Silvertip
|
|
Total
|
|
Costs applicable to sales, including amortization (U.S. GAAP)
|
$
|
93,236
|
|
|
$
|
72,147
|
|
|
$
|
86,752
|
|
|
$
|
47,644
|
|
|
$
|
2,271
|
|
|
$
|
302,050
|
|
|
Amortization
|
(17,330)
|
|
|
(10,083)
|
|
|
(26,155)
|
|
|
(5,469)
|
|
|
(2,271)
|
|
|
(61,308)
|
|
|
Costs applicable to sales
|
$
|
75,906
|
|
|
$
|
62,064
|
|
|
$
|
60,597
|
|
|
$
|
42,175
|
|
|
$
|
—
|
|
|
$
|
240,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold ounces
|
56,203
|
|
|
14,752
|
|
|
58,391
|
|
|
42,267
|
|
|
|
|
171,613
|
|
|
Silver ounces
|
3,277,315
|
|
|
1,683,215
|
|
|
|
|
57,876
|
|
|
—
|
|
|
5,018,406
|
|
|
Zinc pounds
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
Lead pounds
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold ($/oz)
|
$
|
648
|
|
|
$
|
1,557
|
|
|
$
|
1,038
|
|
|
$
|
961
|
|
|
|
|
|
|
Silver ($/oz)
|
$
|
12.04
|
|
|
$
|
23.23
|
|
|
|
|
|
|
$
|
—
|
|
|
|
|
Zinc ($/lb)
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
|
|
Lead ($/lb)
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
|
Six Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands (except metal sales, per ounce and per pound amounts)
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
Silvertip
|
|
Total
|
|
Costs applicable to sales, including amortization (U.S. GAAP)
|
$
|
75,244
|
|
|
$
|
41,208
|
|
|
$
|
85,664
|
|
|
$
|
45,920
|
|
|
$
|
24,233
|
|
|
$
|
272,269
|
|
|
Amortization
|
(20,445)
|
|
|
(5,916)
|
|
|
(24,775)
|
|
|
(5,625)
|
|
|
(6,576)
|
|
|
(63,337)
|
|
|
Costs applicable to sales
|
$
|
54,799
|
|
|
$
|
35,292
|
|
|
$
|
60,889
|
|
|
$
|
40,295
|
|
|
$
|
17,657
|
|
|
$
|
208,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold ounces
|
48,211
|
|
|
10,751
|
|
|
65,148
|
|
|
39,458
|
|
|
|
|
163,568
|
|
|
Silver ounces
|
2,769,431
|
|
|
1,355,916
|
|
|
|
|
37,475
|
|
|
158,984
|
|
|
4,321,806
|
|
|
Zinc pounds
|
|
|
|
|
|
|
|
|
3,203,446
|
|
|
3,203,446
|
|
|
Lead pounds
|
|
|
|
|
|
|
|
|
2,453,485
|
|
|
2,453,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold ($/oz)
|
$
|
659
|
|
|
$
|
1,444
|
|
|
$
|
935
|
|
|
$
|
1,005
|
|
|
|
|
|
|
Silver ($/oz)
|
$
|
8.31
|
|
|
$
|
14.58
|
|
|
|
|
|
|
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.
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 operations at the Company’s mines, exploration and development efforts, strategies, expectations regarding the Rochester POA 11 expansion project, the Silvertip mine's planned restart, COVID-19 planning, response and mitigation efforts, 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, liquidity management, financing plans, risk management strategies, capital allocation and anticipated production, costs, and expenses. 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 2020 10-K, 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 211,350 ounces of gold at June 30, 2021 that settle monthly through December 2022. The Company is targeting to hedge up to 50% of expected gold production through 2021 and 2022 and may in the future layer on additional hedges as circumstances warrant. The weighted average strike prices on the put and call contracts are $1,618 and $1,979 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 2020 10-K and part II, Item 1A of this report.
At June 30, 2021, the fair value of the put and call zero cost collars contracts was a liability of $0.08 million. For the quarter ended June 30, 2021 the Company recognized a loss of $0.4 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 June 30, 2021 would result in a realized loss of $6.4 million and 10% decrease would result in a realized gain of $6.7 million. As of June 30, 2021, the closing price of gold was $1,763 per ounce. As of July 26, 2021, the closing price of gold was $1,800 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 June 30, 2021, the Company had outstanding provisionally priced sales of 14,324 ounces of gold at an average price of $1,858. Changes in gold prices resulted in provisional pricing mark-to-market loss of $0.7 million during the three months ended June 30, 2021. A 10% change in realized gold prices would cause revenue to vary by $2.7 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 June 30, 2021, 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 $0.8 billion Mexican Pesos at June 30, 2021 with an average exchange rate of 25.28 that settle monthly through December 2021. At June 30, 2021, the fair value of the foreign currency forward exchange contracts was a net asset of $7.5 million. For the three months ended June 30, 2021 the Company has recognized a gain of $3.5 million related to expired options in Cost Applicable to Sales and Pre-development, Reclamation and Other, respectively, and an unrealized gain of $7.5 million related to outstanding options in AOCI. A 10% increase or decrease in the exchange rates at June 30, 2021 would result in a realized gain of $4.1 million or $8.8 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 June 30, 2021.
Investment Risk
Equity Price Risk
We are exposed to changes in the fair value of our investments in equity securities. For the three months ended June 30, 2021, the Company recognized unrealized gains of $36.6 million in Fair value adjustments, net due to increases in the stock price of those equity securities. At June 30, 2021, the fair value of the equity securities was $174.4 million. A 10% change in realized equity prices would cause unrealized gains to vary by $17.4 million.