Reaffirms Production Guidance; Updates Cost and
Capital Expenditure Guidance
Coeur Mining, Inc. (“Coeur” or the “Company”) (NYSE: CDE) today
reported third quarter 2021 financial results, including revenue of
$208.0 million and cash flow from operating activities of $21.8
million. The Company reported GAAP net loss from continuing
operations of $54.8 million, or $0.21 per share, which included a
$26.0 million non-cash write-down of Mexican value-added tax
(“VAT”) refunds and non-cash unrealized losses of $35.7 million on
strategic equity investments, primarily related to Coeur’s 18%
equity ownership of Victoria Gold Corp. (“Victoria”) during the
quarter. On an adjusted basis1, Coeur reported EBITDA of $48.8
million, cash flow from operating activities before changes in
working capital of $34.8 million and net loss from continuing
operations of $2.6 million, or $0.01 per share.
Key Highlights
- Solid production results and stronger fourth quarter
expected to result in full-year production levels within 2021
guidance ranges – Third quarter gold and silver production
totaled 87,083 and 2.5 million ounces, respectively. Production
levels are expected to increase during the fourth quarter and
finish the year within the Company’s guidance range of 322,500 -
367,500 ounces of gold and 9.7 - 12.2 million ounces of silver
- Second consecutive quarterly exploration record – Coeur
achieved another quarterly exploration record by investing
approximately $20.0 million and drilling roughly 326,500 feet
(99,500 meters) from up to 27 drill rigs at six locations. The
Company continues to generate meaningful new discoveries and
identify future growth opportunities from the largest exploration
program in its history
- Strong quarterly results at Wharf – Wharf’s gold
production increased 17% quarter-over-quarter to 28,157 ounces,
leading to $24.9 million and $23.9 million of operating and free
cash flow1, respectively - the second highest quarterly cash flow
figures since Coeur’s acquisition of the operation in early 2015.
Cumulative operating and free cash flow1 since the acquisition for
approximately $99.5 million now totals $319.6 million and $290.7
million, respectively, implying a current internal rate of return
of approximately 43%
- Rochester expansion now 42% complete; seeking to mitigate
inflationary pressures on remaining unawarded work packages –
Coeur achieved several key milestones at its Rochester expansion
project during the quarter while also continuing to incorporate
learnings from ongoing test work and operating activities to
maximize future operating flexibility and de-risk the expansion.
The Company currently estimates a likely 10% - 15% increase in the
project’s overall total capital estimate due to the impact of
inflationary pressures on the four remaining unawarded
packages
- Re-adjusting timing and scale of Silvertip expansion due to
exploration success and current inflationary environment – The
Company has elected to assess the potential for a larger-scale
expansion of Silvertip given ongoing exploration success and the
potential benefits of a larger-scale operation. Additionally,
recently-received preliminary capital estimates targeting a
smaller, accelerated expansion and re-start were higher than
anticipated, reflecting current inflationary pressures, supply and
labor disruptions, and schedule constraints. A potentially
larger-scale expansion and restart is expected to follow the
completion of the ongoing Rochester expansion project
- Strategic sale of La Preciosa silver project to Avino Silver
& Gold – Coeur has entered into a definitive agreement (the
“Agreement”) with Avino Silver & Gold Mines Ltd. (“Avino”)
(TSX/NYSE American: ASM) to sell its La Preciosa silver project,
which is located near Avino’s existing operation in the State of
Durango, Mexico for fixed consideration of approximately $34.7
million and contingent consideration of up to an additional $58.8
million for total potential consideration of up to $93.4 million
plus two royalties that collectively cover the entire La Preciosa
land package. The combination of equity ownership, contingent
payments and royalties provides exposure to future upside
potential
- Maintaining balance sheet flexibility to support ongoing
investments – The Company ended the third quarter with total
liquidity of approximately $330.0 million, including $85.0 million
of cash and $245.0 million of available capacity under its $300.0
million revolving credit facility (“RCF”)2
“Our third quarter results reflect our strategy of elevated
near-term investment in our balanced platform of North American
assets to generate attractive returns and long-term, sustainable
free cash flow1, from lower cost, longer life precious metals
assets,” said Mitchell J. Krebs, President and Chief Executive
Officer. “During the quarter, Wharf was our standout performer by
delivering its second-highest quarterly cash flow figures since we
acquired it in early 2015. Additionally, Wharf recently celebrated
one year without a recordable safety incident. Mr. Krebs continued,
“With a strong expected fourth quarter underway, we remain on track
to achieve our 2021 production guidance at each of our
operations.”
“Our sector-leading level of investment in exploration continues
to focus on delivering resource and reserve growth to further
extend mine lives and generate new potential growth opportunities.
Our key near-term catalyst remains the Plan of Operations Amendment
11 (`POA 11') expansion at Rochester in northern Nevada, where we
continue to generate and apply key learnings from the existing
operation to best position the expanded operation for long-term
success once construction is completed. Despite the current
inflationary environment, we believe Rochester remains a
transformative, well-funded source of growth for the Company on
which we remain laser focused.”
“Preliminary capital estimates to expand and restart the
Silvertip operation in northern British Columbia were received
during the quarter and came in higher than we anticipated,
reflecting the current inflationary environment, supply and labor
disruptions, and schedule constraints. However, the extent of our
ongoing exploration success and commitment to our capital
allocation framework is leading us to investigate the possibility
of a larger expansion and restart to take advantage of a
potentially much larger resource than we had originally
contemplated when we acquired the high-grade Silvertip mine.
Although this will require additional time to assess while we carry
out further drilling, it will have the benefits of allowing us to
prioritize a successful completion of the Rochester expansion,
preserving balance sheet flexibility and potentially allowing for
many of these macroeconomic factors to stabilize.”
“Finally, we have signed an agreement to sell the La Preciosa
project in Mexico to Avino, which operates the nearby Avino mine.
We believe this transaction will accelerate value creation from
this asset by allowing the Avino team to incorporate La Preciosa
into its nearby Avino operation. Moreover, this transaction is
consistent with our capital allocation framework and allows us to
prioritize higher-return growth from our U.S. and Canadian
exploration and development projects while retaining upside to La
Preciosa through equity participation, the retention of royalties
and contingent payments,” concluded Mr. Krebs.
Financial and Operating Highlights (Unaudited)
(Amounts in millions, except per share
amounts, gold/silver ounces produced & sold, and per-ounce
metrics)
3Q 2021
2Q 2021
1Q 2021
4Q 2020
3Q 2020
Gold Sales
$
147.7
$
146.2
$
138.3
$
162.0
$
167.1
Silver Sales
$
60.2
$
68.7
$
63.8
$
66.4
$
62.6
Consolidated Revenue
$
208.0
$
214.9
$
202.1
$
228.3
$
229.7
Costs Applicable to Sales3
$
134.3
$
132.6
$
108.1
$
118.6
$
112.8
General and Administrative
Expenses
$
8.7
$
10.5
$
11.6
$
8.4
$
7.8
Net Income (Loss)
$
(54.8)
$
32.1
$
2.1
$
11.9
$
26.9
Net Income (Loss) Per Share
$
(0.21)
$
0.13
$
0.01
$
0.05
$
0.11
Adjusted Net Income (Loss)1
$
(2.6)
$
(0.8)
$
13.9
$
19.1
$
38.2
Adjusted Net Income (Loss)1 Per
Share
$
(0.01)
$
0.00
$
0.06
$
0.08
$
0.16
Weighted Average Shares
Outstanding
254.7
252.1
244.5
244.3
243.8
EBITDA1
$
(14.2)
$
84.6
$
49.7
$
76.7
$
77.3
Adjusted EBITDA1
$
48.8
$
52.7
$
65.9
$
84.0
$
90.8
Cash Flow from Operating
Activities
$
21.8
$
58.1
$
(4.4)
$
67.3
$
79.5
Capital Expenditures
$
71.3
$
78.2
$
59.4
$
37.4
$
23.0
Free Cash Flow1
$
(49.4)
$
(20.2)
$
(63.8)
$
29.8
$
56.5
Cash, Equivalents & Short-Term
Investments
$
85.0
$
124.1
$
154.1
$
92.8
$
77.1
Total Debt4
$
442.4
$
414.2
$
412.1
$
275.5
$
301.1
Average Realized Price Per Ounce –
Gold
$
1,645
$
1,651
$
1,664
$
1,663
$
1,754
Average Realized Price Per Ounce –
Silver
$
24.18
$
26.60
$
26.19
$
24.21
$
24.15
Gold Ounces Produced
87,083
87,275
85,225
96,377
95,995
Silver Ounces Produced
2.5
2.6
2.4
2.8
2.6
Gold Ounces Sold
89,804
88,501
83,112
97,400
95,283
Silver Ounces Sold
2.5
2.6
2.4
2.7
2.6
Financial Results
Third quarter 2021 revenue totaled $208.0 million compared to
$214.9 million in the prior period and $229.7 million in the third
quarter of 2020. The Company produced 87,083 and 2.5 million ounces
of gold and silver, respectively, during the quarter. Metal sales
totaled 89,804 ounces of gold and 2.5 million ounces of silver.
Average realized gold and silver prices for the quarter were $1,645
and $24.18 per ounce, respectively, compared to $1,651 and $26.60
per ounce in the prior period and $1,754 and $24.15 per ounce in
the third quarter of 2020.
Gold and silver sales accounted for 71% and 29% of quarterly
revenue, respectively. The Company’s U.S. operations accounted for
approximately 64% of third quarter revenue.
Costs applicable to sales3 remained relatively consistent
quarter-over-quarter at $134.3 million. General and administrative
expenses for the quarter totaled $8.7 million compared to $10.5
million in the prior period, primarily due to lower
employee-related costs.
Coeur invested approximately $20.0 million ($15.4 million
expensed and $4.6 million capitalized) in exploration during the
quarter, compared to roughly $18.6 million ($12.4 million expensed
and $6.2 million capitalized) in the prior period, reflecting an
increase in drilling activity at Kensington, Rochester and
Silvertip. Notably, the Company completed approximately 326,500
feet (99,500 meters) of expansion and infill drilling during the
period, establishing another new Company record. See the
“Operations” and “Exploration” sections for additional detail on
the Company’s exploration activities.
Operating costs related to COVID-19 mitigation and response
efforts declined to $0.6 million during the third quarter, compared
to $2.3 million in the prior period and $4.0 million in the third
quarter of 2020. These costs were primarily driven by
employee-related expenses at Kensington and Palmarejo, and are
included in “Pre-development, reclamation, and other expenses” on
the Company’s income statement. Coeur has maintained rigorous
health and safety protocols across its operations and in
surrounding communities aimed at limiting the exposure and
transmission of COVID-19 which has led to minimal business
interruptions.
The Company recorded an income tax expense of $6.4 million
during the third quarter. Cash income and mining taxes paid during
the period totaled approximately $8.0 million.
Quarterly operating cash flow totaled $21.8 million compared to
$58.1 million in the prior period, largely driven by lower metal
sales and changes in working capital. Changes in working capital
during the quarter were $(13.0) million, compared to $26.6 million
in the prior period, largely due to the buildup of leach pad
inventory at Rochester, timing of interest payments as well as a
cash outflow of $7.4 million associated with Coeur’s prepayment
agreement at Kensington. The Company expects the remaining $7.6
million cash outflow under the arrangement to occur in the fourth
quarter.
Capital expenditures during the third quarter were $71.3 million
compared to $78.2 million in the prior period. Expenditures related
to the POA 11 expansion project at Rochester totaled $39.0 million
during the quarter, compared to $33.2 million in the second
quarter. Sustaining and development capital expenditures accounted
for approximately 26% and 74%, respectively, of the Company’s total
capital investment during the quarter.
Capital Projects Update
Rochester Expansion
Overall progress under the current scope of the project was
approximately 42% complete at the end of the period. During the
third quarter, the Company completed crushing of over-liner
material for the new Stage VI leach pad and commenced foundation
work for the Merrill-Crowe process plant and crusher corridor.
As of September 30, 2021, the Company has committed
approximately $351 million of capital since the inception of the
expansion project in the third quarter of 2020, including 78
executed contracts valued at approximately $339 million. There are
a total of four packages yet to be awarded, including two
structural, mechanical, piping, electrical and instrumentation
(“SMPEI”) construction contracts for the Merrill-Crowe process
plant and crushing circuit, respectively.
As previously disclosed, Coeur began experiencing signs of
inflationary pressures on recent bids received for the remaining
uncommitted contracts. The Company is in the process of reassessing
its options to mitigate these pressures by (i) re-scoping and
combining these remaining contracts to capture potential cost
savings and efficiencies, and (ii) modifying its commercial
approach to awarding the remaining uncommitted contracts.
Coeur currently estimates that the overall impact of
inflationary pressures, including the two SMPEI contracts, could
potentially add up to 10% - 15% to the total construction capital
estimate for the expansion project. The total construction capital
estimate for POA 11 of approximately $453 million, as previously
disclosed, includes $35 million of 2020 budgeted expenditures, $397
million as reflected in Coeur’s Canadian National Instrument 43-101
Technical Report for Rochester dated December 16, 2020 and roughly
$20 million of project enhancements reported in the second quarter
of 2021.
Coeur has been using Rochester’s existing crusher system and the
Stage IV leach pad as a full-scale test bed to optimize performance
and further de-risk the POA 11 expansion project.
Through these efforts, the Company has identified a potential
opportunity to enhance future operating flexibility by
incorporating pre-screens into the flowsheet for the newly
constructed crushing circuit. While the Company completes detailed
engineering related to implementing pre-screens into the POA 11
expansion in the coming months, Coeur intends to install
pre-screens on the existing crusher system during the first half of
2022, which is expected to improve the performance of the existing
crushing system and Stage IV leach pad while providing additional
experience and knowledge that can potentially be applied to the new
crusher corridor as part of the POA 11 expansion. If the Company
determines that pre-screens are a value-accretive scope change to
the project, Coeur currently estimates that commissioning and
ramp-up of the new crushing circuit could be extended by three to
six months.
Silvertip Expansion and Restart
During the quarter, the Company received preliminary capital
estimates for an accelerated expansion and restart, which were
higher than originally anticipated and reflect overall inflationary
pressures as well as supply disruptions and labor market tightness
consistent with broader macroeconomic themes.
Coeur continues to generate positive results from its ongoing
exploration program at Silvertip. Assay results continue to
demonstrate the potential for significant resource growth with over
two miles (3.5 kilometers) of north-south strike length now
delineated, more than triple the original resource strike length.
As highlighted in the Company’s news release published on September
9, 2021, recent drilling has encountered flat-lying, manto-style
mineralization with meaningful thicknesses that connects to the
vertical massive sulfide feeder structures in both the Southern
Silver and Discovery South zones, demonstrating the potential to
grow resource tonnage with additional drilling. Recent drilling
south of the Southern Silver zone has cut 11 horizontal manto-style
massive sulfide horizons with greater than 10% sphalerite, further
suggesting the mineral system may grow to the south. Additionally,
ongoing metallurgical test work is validating the Company’s
assumptions on potential recovery rates and concentrate
qualities.
Given these drilling results, the enhanced understanding of the
Silvertip deposit and the potential to significantly expand the
size of the resource with continued drilling, Coeur is now
assessing the opportunity to significantly enhance the economics of
a potential expansion and restart by re-evaluating the overall
scope, including higher throughput, staging options, delivery
timeline and commercial approach to the project.
Coeur anticipates this ongoing review, current macroeconomic
conditions impacting capital estimates and continued exploration
investment will result in the Company sequencing a potential
Silvertip expansion and restart following the completion of the POA
11 expansion at Rochester. Coeur believes the benefits of this
sequencing includes (i) allowing for an acute focus on successful
completion of the Rochester expansion, and (ii) maximizing balance
sheet flexibility.
Liquidity Update
The Company ended the third quarter with total liquidity of
approximately $330.0 million, including $85.0 million of cash and
$245.0 million of available capacity under its $300.0 million RCF2.
The aggregate borrowing capacity under the RCF may be increased by
up to $100.0 million. Additionally, the Company had $139.7 million
of strategic investments in equity securities and the full $100.0
million available under its at-the-market common stock offering
program established in April 2020 (“ATM Program”).
Hedging Update
The Company did not execute any additional hedges during the
third quarter. Coeur previously completed its gold hedging program
for 2021 and continues to proactively monitor market conditions to
potentially layer in additional hedges on up to 50% of expected
gold production in 2022. The Company’s silver price exposure
remains unhedged. An overview of the hedges currently implemented
is outlined below:
4Q 2021
2022
Gold Ounces Hedged
39,675
132,000
Avg. Ceiling ($/oz)
$1,882
$2,038
Avg. Floor ($/oz)
$1,600
$1,630
Mexican VAT
Under the legacy royalty agreement between Coeur’s Mexican
subsidiary (Coeur Mexicana, S.A. de C.V., or “Coeur Mexicana”) and
a subsidiary of Franco-Nevada Corporation that was terminated in
2016, the Company was entitled to receive refunds of VAT paid on
each royalty payment from the tax administration in Mexico -
Servicio de Administración Tributaria (“SAT”).
Coeur applied for and initially received VAT refunds; however,
in 2011 SAT began denying the Company’s VAT refund requests based
on the argument that VAT was not legally due on the royalty
payments. Accordingly, Coeur began to request refunds of the VAT as
undue payments, which SAT 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).
While the Company believes that it remains legally entitled to
be refunded the full amount of the VAT receivable, based on the
continued failure to recover the VAT receivable from the Mexican
government and recent unfavorable Mexican court decisions which the
Company and its counsel believes are contrary to legal precedent,
conflicting and erroneous, Coeur wrote off the $26.0 million
carrying value of the VAT receivable as of September 30, 2021.
Notwithstanding the write-down, the Company intends to continue
vigorously pursuing the VAT refunds, including potentially pursuing
arbitration under the North American Free Trade Agreement.
Gold sales under Coeur Mexicana’s current stream agreement with
a subsidiary of Franco-Nevada Corporation, which took effect upon
termination of the legacy royalty agreement in 2016, are not
subject to VAT.
Mark-to-Market Adjustments
The Company values its strategic investments in equity
securities as of the end of each reporting period. The estimated
fair values of the Company’s equity investments in Victoria and
Integra Resources Corp. were $131.2 million and $8.5 million,
respectively, at September 30, 2021 compared to $164.7 million and
$9.6 million, respectively, at June 30, 2021, resulting in a
non-cash unrealized loss of $35.7 million during the third quarter
of 2021. This figure is included in “Fair value adjustments, net”
on the Company’s income statement.
Rochester LCM Adjustment
Coeur reports the carrying value of metal and leach pad
inventory at the lower of cost or net realizable value, with cost
being determined using a weighted average cost method. At the end
of the third quarter, the cost of ore on leach pads at Rochester
exceeded its net realizable value which resulted in an lower of
cost or market (“LCM”) adjustment of $6.0 million (approximately
$5.3 million in costs applicable to sales3 and $0.7 million of
amortization).
La Preciosa Transaction
Under the Agreement entered into on October 27, 2021, Coeur is
selling its La Preciosa project located in the State of Durango,
Mexico to Avino. The transaction consideration includes:
- Total fixed proceeds of $34.7 million, including:
- (i) $15.0 million upon closing of the transaction,
- (ii) $5.0 million promissory note that matures prior to the
first anniversary of the transaction closing, and
- (iii) Equity consideration of 14.0 million units, payable on
closing, each consisting of one share of Avino common stock and one
half of one common share purchase warrant of Avino common stock,
priced at a 25% premium to the 20-day volume weighted average price
prior to announcement. Coeur is expected to hold 12% and 16% of the
basic and fully diluted shares outstanding of Avino upon closing of
the transaction. The initial value of the equity consideration
using the closing price of Avino from the day prior to announcement
is approximately $14.7 million
- Total contingent consideration of up to $58.8 million,
including:
- (i) deferred cash consideration of approximately $8.8 million
to be paid no later than the first anniversary of initial
production from any portion of the La Preciosa project, and
- (ii) contingent payments of $0.25 per silver equivalent ounce
(subject to an inflationary adjustment) on any new mineral reserves
discovered and declared outside of the current resource area at the
La Preciosa project, up to a maximum payment of $50.0 million
- Two royalties covering the La Preciosa land package, including
(i) a 1.25% net smelter returns royalty on properties covering the
Gloria and Abundancia areas of the La Preciosa project and (ii) a
2.00% gross value royalty on all areas of the La Preciosa project
other than the Gloria and Abundancia areas, offset by the amount of
any new mineral reserve contingent payments made to Coeur
In connection with the transaction, Coeur and Avino will enter
into a governance agreement on closing pursuant to which, among
other rights, Coeur will be granted preemptive rights to maintain
its pro rata interest in Avino and the right to appoint one
director to Avino’s Board of Directors or a board observer so long
as Coeur maintains a minimum ownership of 10% in Avino. The
transaction is subject to customary closing conditions, including
required regulatory approvals and is expected to close in the first
quarter of 2022.
Operations
Third quarter 2021 highlights for each of the Company’s
operations are provided below.
Palmarejo, Mexico
(Dollars in millions, except per ounce
amounts)
3Q 2021
2Q 2021
1Q 2021
4Q 2020
3Q 2020
Tons milled
517,363
517,373
484,390
509,848
492,474
Average gold grade (oz/t)
0.050
0.058
0.062
0.076
0.065
Average silver grade (oz/t)
3.86
3.94
4.07
4.30
4.37
Average recovery rate – Au
93.7%
92.4%
95.7%
88.9%
91.3%
Average recovery rate – Ag
85.5%
81.9%
81.3%
81.3%
82.8%
Gold ounces produced
24,254
27,595
28,605
34,511
29,296
Silver ounces produced (000’s)
1,708
1,667
1,603
1,783
1,784
Gold ounces sold
24,897
30,516
25,687
35,359
27,252
Silver ounces sold (000’s)
1,715
1,640
1,638
1,767
1,765
Average realized price per gold
ounce
$1,335
$1,351
$1,462
$1,395
$1,446
Average realized price per silver
ounce
$24.15
$26.71
$26.12
$24.45
$23.98
Metal sales
$74.6
$85.0
$80.3
$92.5
$81.8
Costs applicable to sales3
$39.0
$41.9
$34.0
$36.1
$34.3
Adjusted CAS per AuOz1
$704
$662
$621
$542
$602
Adjusted CAS per AgOz1
$12.50
$13.34
$10.98
$9.61
$10.06
Exploration expense
$2.8
$1.8
$1.7
$2.6
$2.0
Cash flow from operating
activities
$23.2
$33.4
$13.2
$43.2
$49.7
Sustaining capital expenditures
(excludes capital lease payments)
$8.4
$9.8
$10.0
$9.0
$4.9
Development capital
expenditures
$0.1
$—
$—
$(0.1)
$0.1
Total capital expenditures
$8.5
$9.8
$10.0
$8.9
$5.0
Free cash flow1
$14.7
$23.6
$3.2
$34.3
$44.7
Operational
- Third quarter gold and silver production totaled 24,254 and 1.7
million ounces, respectively, compared to 27,595 and 1.7 million
ounces in the prior period and 29,296 and 1.8 million ounces in the
third quarter of 2020
- Production during the quarter continued to benefit from higher
mill throughput and increased recoveries, offset by lower average
gold and silver grades due to the processing of additional
development ore. Higher recoveries in the quarter reflect ongoing
blending optimization and business improvement initiatives as well
as a drawdown of in-circuit inventory
- The Company continues to accelerate development and
rehabilitation rates in active areas of the mine, advancing
development in future expansion areas to maintain header options
and flexibility to maintain its focus on driving higher production
rates while prioritizing the health and safety of its
workforce
Financial
- Third quarter adjusted CAS1 for gold and silver on a co-product
basis totaled $704 and $12.50 per ounce, respectively, compared to
$662 and $13.34 per ounce in the prior period, reflecting the
combination of metal sales and average realized prices which
impacts the allocation of costs on a co-product basis, lower
average grades as well as higher cement consumption related to
ongoing rehabilitation efforts
- Capital expenditures in the third quarter were $8.5 million
compared to $9.8 million in the second quarter, reflecting slightly
lower investment in business improvement projects, underground
development and infill drilling
- Free cash flow1 in the third quarter totaled $14.7 million
compared to $23.6 million in the prior period, largely driven by
lower gold sales quarter-over-quarter
Exploration
- Exploration investment for the third quarter totaled
approximately $4.2 million ($2.8 million expensed and $1.4 million
capitalized), compared to roughly $3.6 million ($1.8 million
expensed and $1.8 million capitalized) in the prior period
- Up to eight surface and underground core rigs were active
during the quarter. A total of approximately 65,000 feet (19,800
meters) were drilled during the period, including 38,400 feet
(11,700 meters) of expansion and 26,600 feet (8,100 meters) of
infill drilling
- Infill drilling focused on specific zones within the
Independencia and Guadalupe deposits. Surface rigs targeted areas
of the Northwest Independencia, Hidalgo (located within the
Independencia deposit) and La Patria (located within the Guadalupe
deposit) zones, while underground rigs focused on closing off
extensions of the southern portion of the Independencia zone
- Expansion drilling during the quarter continued to focus on the
Hidalgo and El Ojito (located in the northeastern portion of the
Independencia deposit) zones
- Expansion and greenfield target generation was focused mainly
in the Guazapares district (east of the Palmarejo district and
outside of the gold stream area of influence). Coeur is currently
in the process of obtaining surface agreements and environmental
permits for the La Carmela target (located within the Guazapares
district) and anticipates drilling this area by the end of the
year
- Coeur plans for eight drill rigs to be active at Palmarejo in
the fourth quarter and expects to maintain this pace throughout
2022
Other
- Approximately 47% (11,701 ounces) of Palmarejo’s gold sales in
the third quarter were sold under its gold stream agreement at a
price of $800 per ounce. The Company anticipates approximately 40%
- 45% of Palmarejo’s gold sales for 2021 will be sold under the
stream agreement
Guidance
- Full-year 2021 production guidance remains unchanged at 100,000
- 110,000 ounces of gold and 6.5 - 7.8 million ounces of
silver
- CAS1 guidance remains unchanged at $635 - $735 per gold ounce
and $11.75 - $12.75 per silver ounce
- Capital expenditures are expected to be slightly lower at
approximately $35 - $40 million (previously $40 - $45 million)
Rochester, Nevada
(Dollars in millions, except per ounce
amounts)
3Q 2021
2Q 2021
1Q 2021
4Q 2020
3Q 2020
Ore tons placed
3,427,078
3,195,777
3,240,917
4,000,889
4,523,767
Average silver grade (oz/t)
0.43
0.38
0.45
0.53
0.49
Average gold grade (oz/t)
0.002
0.003
0.003
0.002
0.002
Silver ounces produced (000’s)
739
888
774
1,020
740
Gold ounces produced
6,051
7,232
6,904
9,590
6,462
Silver ounces sold (000’s)
758
912
771
912
786
Gold ounces sold
5,559
7,818
6,934
8,672
6,834
Average realized price per silver
ounce
$24.27
$26.38
$26.34
$24.35
$24.49
Average realized price per gold
ounce
$1,785
$1,794
$1,794
$1,825
$1,882
Metal sales
$28.3
$38.1
$32.8
$38.2
$32.1
Costs applicable to sales3
$31.7
$38.0
$24.0
$31.7
$19.1
Adjusted CAS per AgOz1
$22.68
$26.09
$19.07
$20.18
$14.98
Adjusted CAS per AuOz1
$1,665
$1,787
$1,300
$1,537
$1,148
Exploration expense
$2.4
$0.9
$0.5
$0.8
$0.5
Cash flow from operating
activities
$(9.5)
$4.0
$(8.7)
$4.7
$2.1
Sustaining capital expenditures
(excludes capital lease payments)
$2.4
$7.3
$2.0
$2.9
$2.5
Development capital
expenditures
$37.7
$35.0
$28.2
$13.9
$7.3
Total capital expenditures
$40.1
$42.3
$30.2
$16.8
$9.8
Free cash flow1
$(49.6)
$(38.3)
$(38.9)
$(12.1)
$(7.7)
Operational
- Silver and gold production in the third quarter totaled 0.7
million and 6,051 ounces, respectively, compared to 0.9 million and
7,232 ounces in the prior period and 0.7 million and 6,462 ounces
in the third quarter of 2020
- Tons placed increased 7% quarter-over-quarter to 3.4 million,
largely due to operational improvements since successfully swapping
out the secondary crushing unit in April 2021. This helped Coeur
crush just under 1.3 million tons of over-liner material for the
Stage VI leach pad across 38.5 days during the period, completing
the nearly 1.8 million tons necessary for the POA 11 expansion
project
- Silver production during the quarter was affected primarily by
the crushing of over-liner material which impacted the Company’s
ability to stack and leach material on the Stage IV leach pad,
while gold production largely reflects a 56% decrease in
run-of-mine material placed quarter-over-quarter due to lower
allocated haul truck hours
- The execution of key projects has impacted Coeur’s ability to
place material on the Stage IV leach pad over approximately 72 days
since the beginning of the year, including (i) 54 days for the
crushing of over-liner material and (ii) 18 days for the swap-out
of the secondary crushing unit
Financial
- Third quarter adjusted CAS1 figures in the table above and
highlighted below exclude the impact of an LCM adjustment totaling
approximately $5.3 million related to the net realizable value of
metal and leach pad inventory. Second quarter adjusted CAS1 figures
in the table above and highlighted below include a non-cash
inventory charge of approximately $8.6 million related to a change
in Coeur’s recovery rate assumption on the Stage IV leach pad
- Third quarter adjusted CAS1 for silver and gold on a co-product
basis totaled $22.68 and $1,665 per ounce, respectively, compared
to $26.09 and $1,787 per ounce in the prior period, largely driven
by lower metal sales and the inclusion of a non-cash inventory
charge taken in the prior period
- Capital expenditures decreased slightly quarter-over-quarter to
$40.1 million, reflecting continued investment in the POA 11
expansion project and the completion of several sustaining projects
in the prior period
- Free cash flow1 in the third quarter totaled $(49.6) million
compared to $(38.3) million in the prior period
Exploration
- Quarterly exploration investment totaled approximately $3.5
million ($2.4 million expensed and $1.1 million capitalized),
compared to roughly $2.0 million ($0.9 million expensed and $1.1
million capitalized) in the prior period
- Two reverse circulation rigs and two core rigs were active
during the quarter. Expansion drilling tested Nevada Packard, North
and East Rochester, and Lincoln Hill, while infill drilling focused
within the Rochester pit. A total of approximately 40,400 feet
(12,300 meters) were drilled during the period, including 30,100
feet (9,175 meters) focused on expansion and 10,300 feet (3,125
meters) focused on infill drilling
- Coeur plans to have four drill rigs active at Rochester for the
remainder of the year. One core and two reverse circulation rigs
are expected to focus on expansion targets at North Rochester and
Plainview (located north of North Rochester)
- Additionally, the Company expects to move one core and one
reverse circulation rig to begin infill drilling at Lincoln Hill
and scout drilling at Gold Ridge during the fourth quarter,
respectively
- An aggressive district-wide greenfield, gold-focused
exploration program began in the third quarter and is scheduled to
continue into the fourth quarter, consisting of soil geochemistry
and ground geophysical work as well as the drilling mentioned
above. The geochemistry and geophysical surveys are expected to
cover Lincoln Hill, Independence Hill and Gold Ridge as well as
areas west of Rochester and northwest of Nevada Packard. The
combined data from this program, when integrated with historic data
over the area, is expected to identify new targets for drilling in
2022 and beyond
Guidance
- Full-year 2021 production guidance remains unchanged at 3.2 -
4.4 million ounces of silver and 22,500 - 32,500 ounces of
gold
- CAS1 in 2021 are expected to be slightly higher at $21.00 -
$23.00 per silver ounce (previously $20.00 - $22.00 per ounce) and
$1,450 - $1,550 per gold ounce (previously $1,350 - $1,500 per
ounce)
- Capital expenditures are expected to be slightly lower at
approximately $158 - $170 million (previously $155 - $200
million)
Kensington, Alaska
(Dollars in millions, except per ounce
amounts)
3Q 2021
2Q 2021
1Q 2021
4Q 2020
3Q 2020
Tons milled
160,596
168,311
170,358
179,636
163,276
Average gold grade (oz/t)
0.19
0.18
0.19
0.20
0.18
Average recovery rate
93.0%
92.7%
93.2%
93.0%
93.7%
Gold ounces produced
28,621
28,322
30,681
32,990
26,797
Gold ounces sold
29,902
26,796
31,595
31,830
27,815
Average realized price per gold ounce,
gross
$1,764
$1,851
$1,754
$1,837
$1,917
Treatment and refining charges per gold
ounce
$29
$30
$30
$37
$35
Average realized price per gold ounce,
net
$1,735
$1,821
$1,724
$1,800
$1,882
Metal sales
$51.9
$48.8
$54.5
$57.2
$52.4
Costs applicable to sales3
$34.6
$29.2
$31.4
$29.3
$31.5
Adjusted CAS per AuOz1
$1,150
$1,088
$989
$919
$1,128
Prepayment, working capital cash
flow
$(7.4)
$7.9
$(7.9)
$5.1
$(5.1)
Exploration expense
$2.7
$1.3
$1.1
$0.8
$3.4
Cash flow from operating
activities
$13.6
$19.4
$11.0
$31.0
$9.1
Sustaining capital expenditures
(excludes capital lease payments)
$6.3
$6.0
$7.2
$5.8
$5.3
Development capital
expenditures
$—
$—
$—
$—
$—
Total capital expenditures
$6.3
$6.0
$7.2
$5.8
$5.3
Free cash flow1
$7.3
$13.4
$3.8
$25.2
$3.8
Operational
- Gold production in the third quarter totaled 28,621 ounces
compared to 28,322 ounces in the prior period and 26,797 ounces in
the third quarter of 2020
- Consistent quarter-over-quarter production was driven by
slightly higher average gold grade, partially offset by lower mill
throughput driven by the availability of spare parts for stope
drills in the Kensington Main deposit
- Jualin accounted for approximately 13% of Kensington’s third
quarter production, lower than the prior period of roughly 20%,
largely due to stope sequencing
Financial
- Third quarter adjusted CAS1 totaled $1,150 per ounce compared
to $1,088 per ounce in the prior period, reflecting increased
employee-related expenses as well as higher maintenance and
consumable costs, partially offset by additional gold ounces
sold
- Capital expenditures remained relatively consistent
quarter-over-quarter at $6.3 million, primarily due to slightly
higher underground development and additional infill drilling
- Free cash flow1 in the third quarter totaled $7.3 million,
including cash outflow of approximately $7.4 million associated
with the Company’s prepayment agreement at Kensington. Excluding
the effect of the prepayment, free cash flow1 totaled approximately
$14.7 million in the third quarter
Exploration
- Exploration investment in the quarter totaled approximately
$4.1 million ($2.7 million expensed and $1.4 million capitalized),
compared to $1.9 million ($1.3 million expensed and $0.6 million
capitalized) in the prior period
- Three underground and two surface core rigs were active during
the quarter. A total of approximately 54,500 feet (16,625 meters)
were drilled during the period, including 29,800 feet (9,100
meters) of expansion and 24,700 feet (7,525 meters) of infill
drilling
- Three underground rigs focused on infill drilling at Elmira and
upper Kensington Zone 30 as well as expansion drilling at Elmira,
Johnson, Jualin and Raven. Additionally, two surface core rigs
completed scout drilling late in the period at the Big Lake, Gold
King and Comet targets
- For the fourth quarter, three underground drill rigs are
expected to focus on (i) infill and expansion drilling at Elmira,
(ii) infill drilling at upper Kensington Zone 30, and (iii)
expansion drilling at Johnson, upper Raven and Jennifer. One
surface rig is also scheduled to begin road-access scout drilling
on the Valentine-Fremming target
Guidance
- Production guidance in 2021 remains unchanged at 115,000 -
130,000 ounces of gold
- CAS1 in 2021 remains unchanged at $1,010 - $1,110 per gold
ounce
- Capital expenditures are expected to be slightly lower at
approximately $21 - $25 million (previously $23 - $30 million)
Wharf, South Dakota
(Dollars in millions, except per ounce
amounts)
3Q 2021
2Q 2021
1Q 2021
4Q 2020
3Q 2020
Ore tons placed
1,489,169
1,025,481
1,114,043
1,047,647
1,315,542
Average gold grade (oz/t)
0.025
0.032
0.030
0.024
0.025
Gold ounces produced
28,157
24,126
19,035
19,286
33,440
Silver ounces produced (000’s)
16
33
26
33
42
Gold ounces sold
29,446
23,371
18,896
21,539
33,382
Silver ounces sold (000’s)
18
31
26
35
41
Average realized price per gold
ounce
$1,789
$1,801
$1,791
$1,835
$1,872
Metal sales
$53.1
$42.9
$34.5
$40.3
$63.5
Costs applicable to sales3
$29.1
$23.4
$18.7
$21.4
$27.9
Adjusted CAS per AuOz1
$971
$963
$952
$954
$804
Exploration expense
$—
$0.1
$0.1
$0.3
$0.5
Cash flow from operating
activities
$24.9
$17.3
$7.8
$14.1
$39.1
Sustaining capital expenditures
(excludes capital lease payments)
$0.3
$0.3
$0.4
$1.2
$0.5
Development capital
expenditures
$0.7
$1.1
$1.1
$—
$—
Total capital expenditures
$1.0
$1.4
$1.5
$1.2
$0.5
Free cash flow1
$23.9
$15.9
$6.3
$12.9
$38.6
Operational
- Gold production increased 17% quarter-over-quarter to 28,157
ounces, largely driven by a significant improvement in placement
rates and the stacking of higher average grade material earlier in
the year. Year-over-year gold production decreased 16% as the third
quarter of 2020 was the highest quarterly production at Wharf since
Coeur’s acquisition
- Higher placement rates during the quarter were driven by
favorable crusher conditions as well as efficiencies gained through
improved maintenance and operating strategies
Financial
- Adjusted CAS1 on a by-product basis remained relatively
consistent quarter-over-quarter at $971 per ounce
- Capital expenditures decreased slightly quarter-over-quarter to
$1.0 million, reflecting a lower investment in infill drilling
during the period
- Free cash flow1 was $23.9 million in the third quarter compared
to $15.9 million in the prior period, largely driven by increased
metal sales
Exploration
- Exploration investment in the quarter totaled approximately
$0.8 million (substantially all capitalized), compared to $1.2
million (substantially all capitalized) in the prior period
- A total of approximately 21,400 feet (6,500 meters) were
drilled during the period using one reverse circulation rig,
focusing on infill targets at the Portland Ridge – Boston claim
group (located on the southern edge of the operation), Flossie
(located west of Portland Ridge), Sunshine (near Flossie) and Juno
(located north of the Portland pit) areas
- Following the successful summer drilling season, Coeur plans to
continue drilling with one reverse circulation rig through the rest
of 2021 and into 2022 in the Flossie, eastern Portland Ridge and
Juno areas
- After more than two years of data review and drilling, the
Company has made the decision not to proceed with its option
agreement to acquire the Richmond Hill project (located
approximately four miles north-northeast of Wharf)
Guidance
- Gold production in 2021 remains unchanged at 85,000 - 95,000
ounces
- CAS1 in 2021 remains unchanged at $960 - $1,060 per gold
ounce
- Capital expenditures are expected to be approximately $5 - $8
million
Silvertip, British Columbia
(Dollars in millions)
3Q 2021
2Q 2021
1Q 2021
4Q 2020
3Q 2020
Metal sales
$—
$—
$—
$—
$—
Costs applicable to sales3
$—
$—
$—
$—
$—
Exploration expense
$4.6
$3.6
$2.9
$5.1
$3.9
Cash flow from operating
activities
$(10.5)
$(9.6)
$(7.5)
$(8.2)
$(8.2)
Sustaining capital expenditures
(excludes capital lease payments)
$0.6
$6.0
$5.7
$(0.5)
$(1.8)
Development capital
expenditures
$14.5
$12.5
$4.7
$5.0
$3.9
Total capital expenditures
$15.1
$18.5
$10.4
$4.5
$2.1
Free cash flow1
$(25.6)
$(28.1)
$(17.9)
$(12.7)
$(10.3)
- Mining and processing activities were temporarily suspended at
Silvertip on February 19, 2020 (unrelated to COVID-19)
Operational
- The Company continues to generate positive results from ongoing
exploration and confirmatory metallurgical test work. Additionally,
Coeur is currently evaluating various opportunities to enhance the
economics of a potential expansion and restart of Silvertip
- Coeur plans to publish an updated mine plan and economic
analysis for Silvertip once it determines an optimized path forward
for the project which may result in a larger, more attractive
operation
Financial
- Ongoing carrying costs in the third quarter were $5.6 million,
compared to $6.4 million in the prior period
- Capital expenditures during the third quarter totaled $15.1
million compared to $18.5 million in the prior period, largely due
to efficiencies in executing early works projects and a transition
to focus more on expansion drilling. Mill decontamination remains
within budget and on schedule for completion during the fourth
quarter of 2021
Exploration
- Exploration investment in the third quarter totaled
approximately $4.6 million (substantially all expensed), compared
to roughly $5.2 million ($3.6 million expensed and $1.6 million
capitalized) in the prior period
- Up to six core rigs were active during the quarter (four on
surface and two underground) focused on expansion drilling at
southern portions and deeper extensions of the Southern Silver,
Discovery and Camp Creek zones. A total of approximately 95,000
feet (28,950 meters) were drilled during the period
- For the remainder of the year, underground drilling is
scheduled to continue focusing on expansion drilling at the
Southern Silver and Discovery South zones. Surface drilling is
expected to move to lower elevation platforms and focus on the
northern extensions of the Camp Creek and Discovery zones
Guidance
- Capital expenditures for 2021 are now expected to total $59 -
$65 million (previously $75 - $90 million). Early works have
progressed ahead of schedule and are expected to be completed for
less than anticipated, which partially reflects the Company’s plan
to prioritize a potentially larger expansion to enhance the
economics of a potential expansion and restart
Exploration
During the third quarter, the Company drilled a record of
roughly 326,500 feet (99,500 meters) at a total investment of
approximately $20.0 million ($15.4 million expensed and $4.6
million capitalized), compared to roughly 320,400 feet (97,675
meters) at a total investment of approximately $18.6 million ($12.4
million expensed and $6.2 million capitalized) in the prior period.
The increase in exploration activity was largely driven by a
ramp-up of drilling at Kensington, Rochester and Silvertip as well
as the continuation of expansion and infill programs across the
rest of the Company’s portfolio.
Three reverse circulation drill rigs were active at the Crown
exploration property in southern Nevada during the quarter,
primarily focused on the Daisy, Secret Pass and SNA deposits. The
Company drilled approximately 49,100 feet (14,950 meters) during
the quarter, compared to approximately 64,800 feet (19,750 meters)
in the prior period.
Coeur plans to continue the same pace of exploration at Crown
for the remainder of the year, with up to three reverse circulation
rigs scheduled to conduct resource expansion and scout drilling on
new targets within its 300-acre disturbance permit. The Company
also expects to receive an amended permit by the end of the year to
begin expanding the C-Horst discovery footprint. Additionally,
Coeur is working to secure two additional core rigs for infill and
metallurgical studies at C-Horst.
Given ongoing efficiencies in Coeur’s exploration programs at
Kensington and Wharf, the slower than anticipated ramp up of
drilling activity at Rochester and industry-wide constraints on
drill rig availability, the Company now expects to invest $65 - $75
million in exploration in 2021 (previously $70 - $80 million),
including $48 - $53 million (previously $52 - $57 million) and $17
- $22 million (previously $18 - $23 million) of expensed and
capitalized drilling, respectively.
2021 Production Guidance
Gold
Silver
(oz)
(K oz)
Palmarejo
100,000 - 110,000
6,500 - 7,750
Rochester
22,500 - 32,500
3,200 - 4,400
Kensington
115,000 - 130,000
—
Wharf
85,000 - 95,000
—
Total
322,500 - 367,500
9,700 - 12,150
2021 Costs Applicable to Sales Guidance
Previous
Updated
Gold
Silver
Gold
Silver
($/oz)
($/oz)
($/oz)
($/oz)
Palmarejo (co-product)
$635 - $735
$11.75 - $12.75
$635 - $735
$11.75 - $12.75
Rochester (co-product)
$1,350 - $1,500
$20.00 - $22.00
$1,450 - $1,550
$21.00 - $23.00
Kensington
$1,010 - $1,110
—
$1,010 - $1,110
—
Wharf (by-product)
$960 - $1,060
—
$960 - $1,060
—
2021 Capital, Exploration and G&A Guidance
Previous
Updated
($M)
($M)
Capital Expenditures,
Sustaining
$80 - $100
$85 - $90
Capital Expenditures,
Development
$220 - $275
$195 - $220
Exploration, Expensed
$52 - $57
$48 - $53
Exploration, Capitalized
$18 - $23
$17 - $22
General & Administrative
Expenses
$40 - $45
$40 - $45
Note: The Company’s guidance figures assume estimated prices of
$1,750/oz gold and $25.00/oz silver as well as CAD of 1.20 and MXN
of 20.50. Updated and previous guidance reflects realized prices
and hedge gains/losses through August 31, 2021 and May 31, 2021,
respectively.
Financial Results and Conference Call
Coeur will host a conference call to discuss its third quarter
2021 financial results on October 28, 2021 at 11:00 a.m. Eastern
Time.
Dial-In Numbers:
(855) 560-2581 (U.S.)
(855) 669-9657 (Canada)
(412) 542-4166 (International)
Conference ID:
Coeur Mining
Hosting the call will be Mitchell J. Krebs, President and Chief
Executive Officer of Coeur, who will be joined by Thomas S. Whelan,
Senior Vice President and Chief Financial Officer, Michael “Mick”
Routledge, Senior Vice President and Chief Operating Officer, and
other members of management. A replay of the call will be available
through November 4, 2021.
Replay numbers:
(877) 344-7529 (U.S.)
(855) 669-9658 (Canada)
(412) 317-0088 (International)
Conference ID:
101 60 418
About Coeur
Coeur Mining, Inc. is a U.S.-based, well-diversified, growing
precious metals producer with five wholly-owned operations: the
Palmarejo gold-silver complex in Mexico, the Rochester silver-gold
mine in Nevada, the Kensington gold mine in Alaska, the Wharf gold
mine in South Dakota, and the Silvertip silver-zinc-lead mine in
British Columbia. In addition, the Company has interests in several
precious metals exploration projects throughout North America.
Cautionary Statements
This news release contains forward-looking statements within the
meaning of securities legislation in the United States and Canada,
including statements regarding strategy, cash flow, capital
allocation and investment, returns, results, value, liquidity,
exploration and development efforts and plans, resource growth,
expectations regarding the potential expansion and restart at
Silvertip, expectations regarding the Rochester POA 11 expansion
project and anticipated timing, timing of closing the La Preciosa
transaction and value of consideration expected to be received,
hedging strategies, the impact of inflation, supply and labor
disruption, anticipated production, costs and expenses, COVID-19
mitigation efforts, and operations at Palmarejo, Rochester, Wharf,
Kensington and Silvertip. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may
cause Coeur’s actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. Such factors include, among others, the risk that
anticipated production, cost and expense levels are not attained,
the risks and hazards inherent in the mining business (including
risks inherent in developing large-scale mining projects,
environmental hazards, industrial accidents, weather or
geologically-related conditions), changes in the market prices of
gold, silver, zinc and lead and a sustained lower price or higher
treatment and refining charge environment, the uncertainties
inherent in Coeur’s production, exploratory and developmental
activities, including risks relating to permitting and regulatory
delays (including the impact of government shutdowns), ground
conditions and, grade variability, any future labor disputes or
work stoppages (involving the Company and its subsidiaries or third
parties), the uncertainties inherent in the estimation of mineral
reserves, changes that could result from Coeur’s future acquisition
of new mining properties or businesses, the loss of access or
insolvency of any third-party refiner or smelter to which Coeur
markets its production, the potential effects of the COVID-19
pandemic, including impacts to workforce, materials and equipment
availability, inflationary pressures, 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 and on the communities where we operate, the effects of
environmental and other governmental regulations and government
shut-downs, the risks inherent in the ownership or operation of or
investment in mining properties or businesses in foreign countries,
Coeur’s ability to raise additional financing necessary to conduct
its business, make payments or refinance its debt, as well as other
uncertainties and risk factors set out in filings made from time to
time with the United States Securities and Exchange Commission, and
the Canadian securities regulators, including, without limitation,
Coeur’s most recent reports on Form 10-K and Form 10-Q. Actual
results, developments and timetables could vary significantly from
the estimates presented. Readers are cautioned not to put undue
reliance on forward-looking statements. Coeur disclaims any intent
or obligation to update publicly such forward-looking statements,
whether as a result of new information, future events or otherwise.
Additionally, Coeur undertakes no obligation to comment on
analyses, expectations or statements made by third parties in
respect of Coeur, its financial or operating results or its
securities. This does not constitute an offer of any securities for
sale.
Christopher Pascoe, Coeur’s Director, Technical Services and a
qualified person under Canadian National Instrument 43-101,
approved the scientific and technical information concerning
Coeur’s mineral projects in this news release. For a description of
the key assumptions, parameters and methods used to estimate
mineral reserves and resources, as well as data verification
procedures and a general discussion of the extent to which the
estimates may be affected by any known environmental, permitting,
legal, title, taxation, socio-political, marketing or other
relevant factors, Canadian investors should refer to the Technical
Reports for each of Coeur’s properties, including the
recently-filed Technical Report for Rochester, as filed on SEDAR at
www.sedar.com.
Non-U.S. GAAP Measures
We supplement the reporting of our financial information
determined under United States generally accepted accounting
principles (U.S. GAAP) with certain non-U.S. GAAP financial
measures, including EBITDA, adjusted EBITDA, adjusted EBITDA
margin, free cash flow, adjusted net income (loss), operating cash
flow before changes in working capital and adjusted costs
applicable to sales per ounce (gold and silver) or pound (zinc or
lead). We believe that these adjusted measures provide meaningful
information to assist management, investors and analysts in
understanding our financial results and assessing our prospects for
future performance. We believe these adjusted financial measures
are important indicators of our recurring operations because they
exclude items that may not be indicative of, or are unrelated to
our core operating results, and provide a better baseline for
analyzing trends in our underlying businesses. We believe EBITDA,
adjusted EBITDA, adjusted EBITDA margin, free cash flow, adjusted
net income (loss) and adjusted costs applicable to sales per ounce
(gold and silver) and pound (zinc and lead) are important measures
in assessing the Company’s overall financial performance. For
additional explanation regarding our use of non-U.S. GAAP financial
measures, please refer to our Form 10-K for the year ended December
31, 2020 and our Form 10-Q for the quarter ended September 30,
2021.
Notes
1. EBITDA, adjusted EBITDA, adjusted EBITDA margin, free cash
flow, adjusted net income (loss), operating cash flow before
changes in working capital and adjusted costs applicable to sales
per ounce (gold and silver) or pound (lead and zinc) are non-GAAP
measures. Please see tables in the Appendix for the reconciliation
to U.S. GAAP. Free cash flow is defined as cash flow from operating
activities less capital expenditures. Please see table in Appendix
for the calculation of consolidated free cash flow.
2. As of September 30, 2021, Coeur had $35.0 million in
outstanding letters of credit and $20.0 million in borrowings under
its RCF.
3. Excludes amortization.
4. Includes capital leases. Net of debt issuance costs and
premium received.
Average Spot Prices
3Q 2021
2Q 2021
1Q 2021
4Q 2020
3Q 2020
Average Gold Spot Price Per Ounce
$
1,781
$
1,816
$
1,794
$
1,874
$
1,908
Average Silver Spot Price Per Ounce
$
23.65
$
26.69
$
26.26
$
24.39
$
24.26
Average Zinc Spot Price Per Pound
$
1.37
$
1.32
$
1.25
$
1.19
$
1.06
Average Lead Spot Price Per Pound
$
1.06
$
0.97
$
0.91
$
0.86
$
0.85
COEUR MINING, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
September 30, 2021
December 31, 2020
ASSETS
In thousands, except share
data
CURRENT ASSETS
Cash and cash equivalents
$
85,020
$
92,794
Receivables
22,956
23,484
Inventory
52,334
51,210
Ore on leach pads
74,803
74,866
Prepaid expenses and other
17,846
27,254
Assets held for sale
54,478
—
307,437
269,608
NON-CURRENT ASSETS
Property, plant and equipment, net
298,006
230,139
Mining properties, net
783,097
716,790
Ore on leach pads
78,302
81,963
Restricted assets
9,160
9,492
Equity securities
139,740
12,943
Receivables
—
26,447
Other
58,291
56,595
TOTAL ASSETS
$
1,674,033
$
1,403,977
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES
Accounts payable
$
119,583
$
90,577
Accrued liabilities and other
77,790
119,158
Debt
31,384
22,074
Reclamation
2,299
2,299
Liabilities held for sale
11,477
—
242,533
234,108
NON-CURRENT LIABILITIES
Debt
411,042
253,427
Reclamation
142,456
136,975
Deferred tax liabilities
22,280
34,202
Other long-term liabilities
41,983
51,786
617,761
476,390
COMMITMENTS AND CONTINGENCIES
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
2,569
2,438
Additional paid-in capital
3,734,948
3,610,297
Accumulated other comprehensive income
(loss)
4,904
(11,136
)
Accumulated deficit
(2,928,682
)
(2,908,120
)
813,739
693,479
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
1,674,033
$
1,403,977
COEUR MINING, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
In thousands, except share
data
Revenue
$
207,969
$
229,728
$
624,944
$
557,144
COSTS AND EXPENSES
Costs applicable to sales(1)
134,340
112,772
375,082
321,704
Amortization
30,962
32,216
92,872
96,254
General and administrative
8,743
7,757
30,764
25,293
Exploration
15,391
12,818
37,503
31,059
Pre-development, reclamation, and
other
10,506
15,031
36,956
40,261
Total costs and expenses
199,942
180,594
573,177
514,571
OTHER INCOME (EXPENSE), NET
Loss on debt extinguishment
—
—
(9,173
)
—
Fair value adjustments, net
(26,440
)
2,243
7,000
3,491
Interest expense, net of capitalized
interest
(3,237
)
(5,096
)
(13,240
)
(15,989
)
Other, net
(26,718
)
(6,312
)
(22,390
)
(4,310
)
Total other income (expense), net
(56,395
)
(9,165
)
(37,803
)
(16,808
)
Income (loss) before income and mining
taxes
(48,368
)
39,969
13,964
25,765
Income and mining tax (expense)
benefit
(6,400
)
(13,113
)
(34,526
)
(12,018
)
NET INCOME (LOSS)
$
(54,768
)
$
26,856
$
(20,562
)
$
13,747
OTHER COMPREHENSIVE INCOME (LOSS):
Change in fair value of derivative
contracts designated as cash flow hedges
1,349
(21,248
)
25,723
(28,139
)
Reclassification adjustments for realized
(gain) loss on cash flow hedges
(3,902
)
2,642
(9,683
)
1,963
Other comprehensive income (loss)
(2,553
)
(18,606
)
16,040
(26,176
)
COMPREHENSIVE INCOME (LOSS)
$
(57,321
)
$
8,250
$
(4,522
)
$
(12,429
)
NET INCOME (LOSS) PER SHARE
Basic
$
(0.21
)
$
0.11
$
(0.08
)
$
0.06
Diluted
$
(0.21
)
$
0.11
$
(0.08
)
$
0.06
(1) Excludes amortization.
COEUR MINING, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
In thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
(54,768
)
$
26,856
$
(20,562
)
$
13,747
Adjustments:
Amortization
30,962
32,216
92,872
96,254
Accretion
3,028
2,969
8,898
8,724
Deferred taxes
(5,964
)
(4,515
)
(740
)
(11,547
)
Loss on debt extinguishment
—
—
9,173
—
Fair value adjustments, net
26,440
(2,243
)
(7,000
)
(3,491
)
Stock-based compensation
2,671
1,969
10,183
6,269
Gain on modification of right of use
lease
—
—
—
(4,051
)
Write-downs
31,249
1,232
31,249
16,821
Deferred revenue recognition
(307
)
(5,485
)
(15,908
)
(21,167
)
Other
1,493
4,379
(339
)
2,374
Changes in operating assets and
liabilities:
Receivables
(944
)
(1,497
)
1,016
(3,846
)
Prepaid expenses and other current
assets
(80
)
(1,921
)
593
(1,186
)
Inventory and ore on leach pads
(3,820
)
(3,066
)
(18,047
)
(33,047
)
Accounts payable and accrued
liabilities
(8,114
)
28,570
(15,842
)
15,566
CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES
21,846
79,464
75,546
81,420
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(71,266
)
(22,996
)
(208,913
)
(61,886
)
Proceeds from the sale of assets
61
730
5,617
5,245
Purchase of investments
(1,079
)
(2,500
)
(1,955
)
(2,500
)
Sale of investments
—
—
935
19,802
Other
(12
)
(25
)
(42
)
(225
)
CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES
(72,296
)
(24,791
)
(204,358
)
(39,564
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of notes and bank borrowings, net
of issuance costs
20,000
—
387,493
150,000
Payments on debt, finance leases, and
associated costs
(7,944
)
(48,557
)
(261,522
)
(150,171
)
Silvertip contingent consideration
—
—
—
(18,750
)
Other
(20
)
114
(4,178
)
(1,718
)
CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES
12,036
(48,443
)
121,793
(20,639
)
Effect of exchange rate changes on cash
and cash equivalents
(253
)
(10
)
(360
)
293
INCREASE (DECREASE) IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH
(38,667
)
6,220
(7,379
)
21,510
Cash, cash equivalents and restricted cash
at beginning of period
125,458
72,308
94,170
57,018
Cash, cash equivalents and restricted cash
at end of period
$
86,791
$
78,528
$
86,791
$
78,528
Adjusted EBITDA
Reconciliation
(Dollars in thousands except per share
amounts)
LTM 3Q 2021
3Q 2021
2Q 2021
1Q 2021
4Q 2020
3Q 2020
Net income (loss)
$
(8,682
)
$
(54,768
)
$
32,146
$
2,060
$
11,880
$
26,856
Interest expense, net of capitalized
interest
17,959
3,237
5,093
4,910
4,719
5,096
Income tax provision (benefit)
59,553
6,400
15,340
12,786
25,027
13,113
Amortization
128,005
30,962
31,973
29,937
35,133
32,216
EBITDA
196,835
(14,169
)
84,552
49,693
76,759
77,281
Fair value adjustments, net
(11,110
)
26,440
(37,239
)
3,799
(4,110
)
(2,243
)
Foreign exchange (gain) loss
3,881
1,028
499
773
1,581
599
Asset retirement obligation accretion
11,928
3,027
2,965
2,905
3,031
2,968
Inventory adjustments and write-downs
6,464
5,519
267
572
105
(230
)
(Gain) loss on sale of assets and
securities
(4,191
)
92
(621
)
(4,053
)
391
2,476
Value-added tax write-off
25,982
25,982
—
—
—
—
Loss on debt extinguishment
9,172
—
—
9,172
—
—
Silvertip inventory write-down
271
271
—
—
—
1,232
Silvertip temporary suspension costs
1,092
—
—
—
1,092
838
COVID-19 costs
11,075
617
2,315
3,005
5,138
4,037
Novation
—
—
—
—
—
3,819
Adjusted EBITDA
$
251,399
$
48,807
$
52,738
$
65,866
$
83,987
$
90,777
Revenue
$
853,261
$
207,969
$
214,858
$
202,117
$
228,317
$
229,728
Adjusted EBITDA Margin
29
%
23
%
25
%
33
%
37
%
40
%
Adjusted Net Income (Loss)
Reconciliation
(Dollars in thousands except per share
amounts)
3Q 2021
2Q 2021
1Q 2021
4Q 2020
3Q 2020
Net income (loss)
$
(54,768
)
$
32,146
$
2,060
$
11,880
$
26,856
Fair value adjustments, net
26,440
(37,239
)
3,799
(4,110
)
(2,243
)
Foreign exchange loss (gain)
388
1,503
(43
)
4,692
1,233
(Gain) loss on sale of assets and
securities
92
(621
)
(4,053
)
391
2,476
Value-added tax write-off
25,982
—
—
—
—
Loss on debt extinguishment
—
—
9,172
—
—
Silvertip inventory write-down
271
—
—
—
1,232
Silvertip temporary suspension costs
—
—
—
1,092
838
COVID-19 costs
617
2,315
3,005
5,138
4,037
Novation
—
—
—
—
3,819
Tax effect of adjustments
(1,630
)
1,056
—
—
—
Adjusted net income (loss)
$
(2,608
)
$
(840
)
$
13,940
$
19,083
$
38,248
Adjusted net income (loss) per share -
Basic
$
(0.01
)
$
0.00
$
0.06
$
0.08
$
0.16
Adjusted net income (loss) per share -
Diluted
$
(0.01
)
$
0.00
$
0.06
$
0.08
$
0.16
Consolidated Free Cash Flow
Reconciliation
(Dollars in thousands)
3Q 2021
2Q 2021
1Q 2021
4Q 2020
3Q 2020
Cash flow from operations
$
21,846
$
58,059
$
(4,359
)
$
67,289
$
79,464
Capital expenditures
71,266
78,223
59,424
37,393
22,996
Free cash flow
$
(49,420
)
$
(20,164
)
$
(63,783
)
$
29,896
$
56,468
Consolidated Operating Cash
Flow
Before Changes in Working
Capital Reconciliation
(Dollars in thousands)
3Q 2021
2Q 2021
1Q 2021
4Q 2020
3Q 2020
Cash provided by (used in) operating
activities
$
21,846
$
58,059
$
(4,359
)
$
67,289
$
79,464
Changes in operating assets and
liabilities:
Receivables
944
(961
)
(999
)
5,617
1,497
Prepaid expenses and other
80
(1,328
)
655
1,435
1,921
Inventories
3,820
(3,259
)
17,486
1,491
3,066
Accounts payable and accrued
liabilities
8,114
(21,069
)
28,797
(17,331
)
(28,570
)
Operating cash flow before changes in
working capital
$
34,804
$
31,442
$
41,580
$
58,501
$
57,378
Reconciliation of Costs
Applicable to Sales
for Three Months Ended
September 30, 2021
In thousands (except metal sales, per
ounce or per pound amounts)
Palmarejo
Rochester
Kensington
Wharf
Silvertip
Total
Costs applicable to sales, including
amortization (U.S. GAAP)
$
47,763
$
36,340
$
47,362
$
32,237
$
1,258
$
164,960
Amortization
(8,747
)
(4,671
)
(12,786
)
(3,158
)
(1,258
)
(30,620
)
Costs applicable to sales
$
39,016
$
31,669
$
34,576
$
29,079
$
—
$
134,340
Inventory Adjustments
(57
)
(5,217
)
(186
)
(61
)
—
(5,521
)
By-product credit
—
—
—
(428
)
—
(428
)
Adjusted costs applicable to
sales
$
38,959
$
26,452
$
34,390
$
28,590
$
—
$
128,391
Metal Sales
Gold ounces
24,897
5,559
29,902
29,446
—
89,804
Silver ounces
1,714,617
758,214
—
18,172
—
2,491,003
Zinc pounds
—
—
Lead pounds
—
—
Revenue Split
Gold
45
%
35
%
100
%
100
%
Silver
55
%
65
%
—
%
Zinc
—
%
Lead
—
%
Adjusted costs applicable to
sales
Gold ($/oz)
$
704
$
1,665
$
1,150
$
971
Silver ($/oz)
$
12.50
$
22.68
$
—
Zinc ($/lb)
$
—
Lead ($/lb)
$
—
Reconciliation of Costs
Applicable to Sales
for Three Months Ended June
30, 2021
In thousands (except metal sales, per
ounce or 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
Inventory Adjustments
155
(272
)
(57
)
(91
)
—
(265
)
By-product credit
—
—
—
(839
)
—
(839
)
Adjusted costs applicable to
sales
$
42,073
$
37,759
$
29,146
$
22,513
$
—
$
131,491
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
—
—
Revenue Split
Gold
48
%
37
%
100
%
100
%
Silver
52
%
63
%
—
%
Zinc
—
%
Lead
—
%
Adjusted costs applicable to
sales
Gold ($/oz)
$
662
$
1,787
$
1,088
$
963
Silver ($/oz)
$
13.34
$
26.09
$
—
Zinc ($/lb)
$
—
Lead ($/lb)
$
—
Reconciliation of Costs
Applicable to Sales
for Three Months Ended March
31, 2021
In thousands (except metal sales, per
ounce or per pound amounts)
Palmarejo
Rochester
Kensington
Wharf
Silvertip
Total
Costs applicable to sales, including
amortization (U.S. GAAP)
$
43,047
$
27,610
$
44,839
$
21,207
$
1,086
$
137,789
Amortization
(9,059
)
(3,577
)
(13,445
)
(2,475
)
(1,086
)
(29,642
)
Costs applicable to sales
$
33,988
$
24,033
$
31,394
$
18,732
$
—
$
108,147
Inventory Adjustments
(57
)
(313
)
(151
)
(52
)
—
(573
)
By-product credit
—
—
—
(700
)
—
(700
)
Adjusted costs applicable to
sales
$
33,931
$
23,720
$
31,243
$
17,980
$
—
$
106,874
Metal Sales
Gold ounces
25,687
6,934
31,595
18,896
83,112
Silver ounces
1,637,695
771,354
—
26,455
—
2,435,504
Zinc pounds
—
—
Lead pounds
—
—
Revenue Split
Gold
47
%
38
%
100
%
100
%
Silver
53
%
62
%
—
%
Zinc
—
%
Lead
—
%
Adjusted costs applicable to
sales
Gold ($/oz)
$
621
$
1,300
$
989
$
952
Silver ($/oz)
$
10.98
$
19.07
$
—
Zinc ($/lb)
$
—
Lead ($/lb)
$
—
Reconciliation of Costs
Applicable to Sales
for Three Months Ended
December 31, 2020
In thousands (except metal sales, per
ounce or per pound amounts)
Palmarejo
Rochester
Kensington
Wharf
Silvertip
Total
Costs applicable to sales, including
amortization (U.S. GAAP)
$
48,672
$
36,828
$
42,486
$
24,300
$
—
$
152,286
Amortization
(12,516
)
(5,112
)
(13,179
)
(2,848
)
—
(33,655
)
Costs applicable to sales
$
36,156
$
31,716
$
29,307
$
21,452
$
—
$
118,631
Inventory Adjustments
(24
)
24
(56
)
(49
)
—
(105
)
By-product credit
—
—
—
(864
)
—
(864
)
Adjusted costs applicable to
sales
$
36,132
$
31,740
$
29,251
$
20,539
$
—
$
117,662
Metal Sales
Gold ounces
35,359
8,672
31,830
21,539
97,400
Silver ounces
1,766,714
912,335
35,794
—
2,714,843
Zinc pounds
—
—
Lead pounds
—
—
Revenue Split
Gold
53
%
42
%
100
%
100
%
Silver
47
%
58
%
—
%
Zinc
—
%
Lead
—
%
Adjusted costs applicable to
sales
Gold ($/oz)
$
542
$
1,537
$
919
$
954
Silver ($/oz)
$
9.61
$
20.18
$
—
Zinc ($/lb)
$
—
Lead ($/lb)
$
—
Reconciliation of Costs
Applicable to Sales
for Three Months Ended
September 30, 2020
In thousands (except metal sales, per
ounce or per pound amounts)
Palmarejo
Rochester
Kensington
Wharf
Silvertip
Total
Costs applicable to sales, including
amortization (U.S. GAAP)
$
46,163
$
22,382
$
43,053
$
31,887
$
1,185
$
144,670
Amortization
(11,912
)
(3,278
)
(11,523
)
(4,000
)
(1,185
)
(31,898
)
Costs applicable to sales
$
34,251
$
19,104
$
31,530
$
27,887
$
—
$
112,772
Inventory Adjustments
(100
)
517
(141
)
(46
)
—
230
By-product credit
—
—
—
(1,007
)
—
(1,007
)
Adjusted costs applicable to
sales
$
34,151
$
19,621
$
31,389
$
26,834
$
—
$
111,995
Metal Sales
Gold ounces
27,252
6,834
27,815
33,382
95,283
Silver ounces
1,765,371
785,887
40,521
—
2,591,779
Zinc pounds
—
—
Lead pounds
—
—
Revenue Split
Gold
48
%
40
%
100
%
100
%
Silver
52
%
60
%
—
%
Zinc
—
%
Lead
—
%
Adjusted costs applicable to
sales
Gold ($/oz)
$
602
$
1,148
$
1,128
$
804
Silver ($/oz)
$
10.06
$
14.98
$
—
Zinc ($/lb)
$
—
Lead ($/lb)
$
—
Reconciliation of Costs
Applicable to Sales for Updated 2021 Guidance
In thousands (except metal sales, per
ounce or per pound amounts)
Palmarejo
Rochester
Kensington
Wharf
Costs applicable to sales, including
amortization (U.S. GAAP)
$
195,983
$
133,836
$
181,100
$
106,710
Amortization
(36,400
)
(17,560
)
(55,930
)
(11,550
)
Costs applicable to sales
$
159,583
$
116,276
$
125,170
$
95,160
By-product credit
—
—
—
(2,635
)
Adjusted costs applicable to
sales
$
159,583
$
116,276
$
125,170
$
92,525
Metal Sales
Gold ounces
107,500
29,800
123,500
91,400
Silver ounces
6,765,200
3,260,600
102,100
Revenue Split
Gold
46
%
39
%
100
%
100
%
Silver
54
%
61
%
—
—
Adjusted costs applicable to
sales
Gold ($/oz)
$635 - $735
$1,450 - $1,550
$1,010 - $1,110
$960 - $1,060
Silver ($/oz)
$11.75 - $12.75
$21.00 - $23.00
Reconciliation of Costs
Applicable to Sales for Previous 2021 Guidance
In thousands (except metal sales, per
ounce or per pound amounts)
Palmarejo
Rochester
Kensington
Wharf
Costs applicable to sales, including
amortization (U.S. GAAP)
$
200,530
$
122,480
$
190,150
$
102,610
Amortization
(37,530
)
(14,930
)
(60,800
)
(10,910
)
Costs applicable to sales
$
163,000
$
107,550
$
129,350
$
91,700
By-product credit
—
—
—
(2,730
)
Adjusted costs applicable to
sales
$
163,000
$
107,550
$
129,350
$
88,970
Metal Sales
Gold ounces
110,000
29,110
127,500
89,200
Silver ounces
7,021,200
3,312,230
106,150
Revenue Split
Gold
46
%
38
%
100
%
100
%
Silver
54
%
62
%
—
—
Adjusted costs applicable to
sales
Gold ($/oz)
$635 - $735
$1,350 - $1,500
$1,010 - $1,110
$960 - $1,060
Silver ($/oz)
$11.75 - $12.75
$20.00 - $22.00
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211027006129/en/
Coeur Mining, Inc. 104 S. Michigan Avenue, Suite 900 Chicago, IL
60603 Attention: Paul DePartout, Director, Investor Relations
Phone: (312) 489-5800 www.coeur.com
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