Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management Discussion and Analysis (“MD&A”) provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Coeur Mining, Inc. and its subsidiaries (collectively “the Company”, “our”, or “we”). We use certain non-GAAP financial performance measures in our MD&A. For a detailed description of non-GAAP measures, please see “Non-GAAP Financial Performance Measures” at the end of this item.
We provide certain operational and financial data on a silver equivalent basis, converting gold to silver at a 60:1 ratio of silver ounces to gold ounces unless otherwise noted. We also provide realized silver equivalent data determined by average spot silver and gold prices during the relevant period.
Overview
We are a gold and silver producer with mines located in the United States, Mexico, and Bolivia and exploration projects in the United States, Mexico and Argentina. The Palmarejo complex, Rochester, Kensington, Wharf, and San Bartolomé mines constitute our principal sources of revenue. The Company also owns Coeur Capital, which is primarily comprised of the Endeavor silver stream.
The Company's strategy is to discover, acquire, develop and operate low-cost silver and gold mines that produce long-term cash flow, provide opportunities for growth through continued exploration, and generate superior and sustainable returns for stockholders. Management focuses on maximizing net cash flow through identifying and implementing revenue enhancement opportunities, reducing operating and non-operating costs, exercising consistent capital discipline, and efficient working capital management.
2016 Highlights
|
|
•
|
Net income of
$55.4 million
(
$0.34
per share) and adjusted net income of
$47.8 million
(
$0.29
per share) (see “Non-GAAP Financial Performance Measures”)
|
|
|
•
|
Production of
36.3 million
silver equivalent ounces, consisting of
14.8 million
silver ounces and
358,170
gold ounces
|
|
|
•
|
Costs applicable to sales were
$11.87
per silver equivalent ounce (
$11.12
per average spot silver equivalent ounce) and
$705
per gold equivalent ounce (see “Non-GAAP Financial Performance Measures”)
|
|
|
•
|
All-in sustaining costs were
$16.08
per silver equivalent ounce (
$14.27
per average spot silver equivalent ounce) (see “Non-GAAP Financial Performance Measures”)
|
|
|
•
|
Operating cash flow of
$125.8 million
and adjusted EBITDA of
$215.2 million
(see “Non-GAAP Financial Performance Measures”)
|
|
|
•
|
Reduced debt by
57%
, primarily through the $99.0 million voluntary repayment of the Term Loan due 2020 (“Term Loan”) and the repurchase of
$200.8 million
aggregate principal of the 7.875% Senior Notes due 2021 (“Senior Notes”)
|
|
|
•
|
Satisfied minimum obligation under the Palmarejo royalty agreement; now operating under gold stream agreement with more favorable terms ($800 per ounce purchase price rather than $416 per ounce cost contribution under former royalty agreement) that are expected to significantly increase free cash flow at Palmarejo
|
|
|
•
|
Sale of non-core royalty assets completed for total consideration of $23.8 million, including $1.7 million in contingent consideration
|
|
|
•
|
Capital expenditures of
$101.0 million
, primarily for the development of the Jualin deposit at Kensington and the Guadalupe and Independencia mines at Palmarejo
|
|
|
•
|
Completed two “at the market” stock offerings, selling a combined
26.9 million
shares of common stock for net proceeds of
$269.6 million
|
|
|
•
|
Cash and cash equivalents of
$162.2 million
at
December 31, 2016
|
Selected Financial and Operating Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
Metal sales
|
$
|
662,497
|
|
|
639,236
|
|
|
632,526
|
|
Net income (loss)
|
$
|
55,352
|
|
|
(367,183
|
)
|
|
(1,186,874
|
)
|
Net income (loss) per share, diluted
|
$
|
0.34
|
|
|
(2.83
|
)
|
|
(11.59
|
)
|
Adjusted net income (loss)
(1)
|
$
|
47,783
|
|
|
(103,642
|
)
|
|
(175,442
|
)
|
Adjusted net income (loss) per share, diluted
(1)
|
$
|
0.29
|
|
|
(0.80
|
)
|
|
(1.71
|
)
|
EBITDA
(1)
|
$
|
161,194
|
|
|
(203,992
|
)
|
|
(1,405,146
|
)
|
Adjusted EBITDA
(1)
|
$
|
215,160
|
|
|
127,851
|
|
|
92,001
|
|
Silver ounces produced
|
14,828,342
|
|
|
15,900,614
|
|
|
17,188,425
|
|
Gold ounces produced
|
358,170
|
|
|
327,908
|
|
|
249,384
|
|
Silver equivalent ounces produced
|
36,318,542
|
|
|
35,575,094
|
|
|
32,151,465
|
|
Silver ounces sold
|
14,344,806
|
|
|
16,506,819
|
|
|
17,423,662
|
|
Gold ounces sold
|
338,131
|
|
|
335,882
|
|
|
242,655
|
|
Silver equivalent ounces sold
|
34,632,666
|
|
|
36,659,759
|
|
|
31,982,962
|
|
Average realized price per silver ounce
|
$
|
17.18
|
|
|
$
|
15.46
|
|
|
$
|
18.87
|
|
Average realized price per gold ounce
|
$
|
1,230
|
|
|
$
|
1,143
|
|
|
$
|
1,252
|
|
Costs applicable to sales per silver equivalent ounce
(1)
|
$
|
11.87
|
|
|
$
|
13.23
|
|
|
$
|
14.71
|
|
Costs applicable to sales per average spot silver equivalent ounce
(1)
|
$
|
11.12
|
|
|
$
|
12.31
|
|
|
$
|
14.24
|
|
Costs applicable to sales per gold equivalent ounce
(1)
|
$
|
705
|
|
|
$
|
768
|
|
|
$
|
951
|
|
All-in sustaining costs per silver equivalent ounce
(1)
|
$
|
16.08
|
|
|
$
|
16.50
|
|
|
$
|
19.72
|
|
All-in sustaining costs per average spot silver equivalent ounce
(1)
|
$
|
14.27
|
|
|
$
|
14.62
|
|
|
$
|
18.81
|
|
|
|
(1)
|
See
“
Non-GAAP Financial Performance Measures.
”
|
Consolidated Financial Results
2016 compared to 2015
Net Income (Loss)
Net
income
was
$55.4 million
(
$0.34
per share) compared to a
Net
loss
of
$367.2 million
(
$2.83
per share). The increase in
Net income
is primarily due to asset write-downs in 2015 and higher gold production, a reduction in deferred tax valuation allowances and other deferred tax benefits, higher average realized silver and gold prices, lower all-in sustaining costs per silver equivalent ounce, and lower interest expense, partially offset by lower silver production and unfavorable fair value adjustments.
Revenue
Metal sales
increased
due to an
11%
and
8%
increase
in average realized silver and gold prices, respectively, and higher gold ounces sold, partially offset by lower silver ounces sold. The Company sold
14.3 million
silver ounces and
338,131
gold ounces, compared to sales of
16.5 million
silver ounces and
335,882
gold ounces. Gold contributed
63%
of sales and silver contributed
37%
, compared to
60%
of sales from gold and
40%
from silver. Royalty revenue was lower due to the Company's divestiture of several non-core royalty assets in 2016.
Costs Applicable to Sales
Costs applicable to sales decreased due to lower silver and gold unit costs and lower silver ounces sold. For a complete discussion of costs applicable to sales, see
Results of Operations
below.
Amortization
Amortization
decreased
$20.6 million
, or
14%
, primarily due to lower silver equivalent ounces sold and lower amortizable mineral interest and mining equipment that resulted from the 2015 write-down.
Expenses
General and administrative expenses
decreased
11%
due to lower professional services and compensation costs.
Exploration expense
increased
$1.3 million
, due to the Company's expansion of drilling activities at Palmarejo, Kensington and Rochester as well as regional exploration with a focus on projects in Nevada and Chihuahua, Mexico.
Pre-development, reclamation, and other expenses
decreased
3%
to
$17.2 million
as a result of lower transaction related costs.
Write-downs were $4.4 million ($3.9 million net of tax) compared to $313.3 million ($276.5 million net of tax). The $4.4 million ($3.9 million net of tax) write-downs in 2016 were primarily related to the Company's silver stream on the Endeavor mine in Australia as a result of the decision by the mine operator to significantly curtail production due to low lead and zinc prices.
Other Income and Expenses
In 2016, the Company incurred a loss of
$21.4 million
on the extinguishment of debt in connection with the repayment of the Term Loan and a portion of its outstanding Senior Notes compared to a $15.9 million gain on the exchange of Senior Notes for common stock in 2015.
Non-cash fair value adjustments, net, were a
loss
of
$11.6 million
compared to a
gain
of
$5.2 million
,
primarily due to the impact of changes in future metal prices on the Palmarejo gold production royalty (termination effective in the third quarter of 2016) and the Rochester 3.4% NSR royalty obligation.
Interest expense (net of capitalized interest of
$1.2 million
)
decreased
to
$36.9 million
from
$45.7 million
, primarily due to the repayment of the Term Loan, the redemption of
$200.8 million
of Senior Notes and lower accretion of the terminated Palmarejo gold production royalty obligation.
Other, net
increased
by
$17.8 million
, primarily due to a $5.3 million pre-tax gain on the sale of Martha assets in Argentina, a $7.8 million pre-tax gain on the sale of non-core royalty assets, and gains from the sale of investments.
Income and Mining Taxes
The Company’s
Income and mining tax (expense) benefit
consisted of:
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
In thousands
|
2016
|
|
2015
|
Income and mining tax (expense) benefit at statutory rate
|
$
|
(390
|
)
|
|
$
|
137,706
|
|
State tax provision from continuing operations
|
336
|
|
|
(2,075
|
)
|
Change in valuation allowance
|
61,146
|
|
|
(101,027
|
)
|
Percentage depletion
|
983
|
|
|
—
|
|
Uncertain tax positions
|
(4,619
|
)
|
|
(1,947
|
)
|
U.S. and foreign non-deductible expenses
|
(5,764
|
)
|
|
1,365
|
|
Mineral interest related
|
—
|
|
|
(19,310
|
)
|
Foreign exchange rates
|
19,701
|
|
|
22,350
|
|
Foreign inflation and indexing
|
2,794
|
|
|
1,117
|
|
Foreign tax rate differences
|
413
|
|
|
(15,980
|
)
|
Foreign withholding and other taxes
|
(13,478
|
)
|
|
8,140
|
|
Foreign tax credits and other, net
|
102
|
|
|
(4,076
|
)
|
Legal entity reorganization
|
(6,985
|
)
|
|
—
|
|
Income and mining tax (expense) benefit
|
$
|
54,239
|
|
|
$
|
26,263
|
|
Income and mining tax
benefit
of approximately
$54.2 million
results in an effective tax rate of
4,873%
for 2016. This compares to income tax
benefit
of
$26.3 million
or effective tax rate of
6.7%
for 2015. The Company’s effective tax rate is impacted by multiple factors as illustrated above. The 2016 effective tax rate differs from 2015 primarily due to the completion of a legal entity reorganization to integrate recent acquisitions resulting in a valuation allowance release of
$40.8 million
, recording a
$15.0 million
deferred tax benefit related to unremitted earnings, changes in valuation allowances on deferred tax assets, including the impacts of mineral interest impairments, and lower foreign withholding taxes.
The Company’s effective tax rate is impacted by recurring items, such as foreign exchange rates on deferred tax balances, impacts of mineral interest impairments, full valuation allowance on the deferred tax assets relating to losses in the United States and certain foreign jurisdictions, mining tax expense and uncertain tax positions. In addition, the Company's consolidated effective income tax rate is a function of the combined effective tax rates and foreign exchange rates in the jurisdictions in which it operates.
Variations in the jurisdictional mix of income and loss and foreign exchange rates result in significant fluctuations in its consolidated effective tax rate. The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
In thousands
|
Income (loss) before tax
|
Tax (expense) benefit
|
|
Income (loss) before tax
|
Tax (expense) benefit
|
United States
|
$
|
(13,112
|
)
|
$
|
4,216
|
|
|
$
|
(43,924
|
)
|
$
|
(527
|
)
|
Argentina
|
3,099
|
|
124
|
|
|
(3,869
|
)
|
(482
|
)
|
Mexico
|
(5,268
|
)
|
45,801
|
|
|
(250,054
|
)
|
26,713
|
|
Bolivia
|
11,738
|
|
6,252
|
|
|
(76,739
|
)
|
(5,154
|
)
|
Other jurisdictions
|
4,656
|
|
(2,154
|
)
|
|
(18,860
|
)
|
5,713
|
|
|
$
|
1,113
|
|
$
|
54,239
|
|
|
$
|
(393,446
|
)
|
$
|
26,263
|
|
A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related 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 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 risk factors that could impact the Company’s ability to realize its deferred tax assets.
2015 compared to 2014
Net Income (Loss)
Net
loss
was
$367.2 million
(
$2.83
per share) compared to a
Net
loss
of
$1,186.9 million
(
$11.59
per share). The lower
Net loss
in 2015 is primarily due to lower write-downs, higher gold ounces sold, lower costs applicable to sales per silver and gold ounce, and lower general and administrative expenses, partially offset by lower average realized silver and gold prices and lower silver ounces sold.
Revenue
Metal sales
increased
2% due to higher gold ounces sold, partially offset by lower average realized silver and gold prices
and lower silver ounces sold. The Company realized average silver and gold prices of $15.46 per ounce and $1,143 per ounce, respectively, compared with average realized prices of $18.87 per ounce and $1,252 per ounce, respectively. The Company sold
16.5 million silver ounces and 335,882 gold ounces, compared to sales of 17.4 million silver ounces and 242,655 gold ounces. Gold contributed 60% of sales and silver contributed 40%, compared to 48% of sales from gold and 52% from silver. Royalty
revenue increased $3.6 million due to commencement of production at the Correnso mine, as well as higher production from Cerro Bayo and El Gallo mines (Coeur Capital held royalties on each of these mines).
Costs Applicable to Sales
Costs applicable to sales were lower due to lower unit costs at all mine sites and lower silver ounces sold, partially offset by higher gold ounces sold. For a complete discussion of costs applicable to sales, see
Results of Operations
below.
Amortization
Amortization decreased by $18.7 million, or 12%, primarily due to lower amortizable mineral interests and mining
equipment, partially offset by higher silver equivalent production.
Expenses
General and administrative expenses decreased $8.0 million, or 20%, primarily due to lower compensation and
professional services costs.
Exploration expense decreased $10.1 million, or 46%, due to decreased drilling activity at Palmarejo, Kensington, and
Rochester.
Pre-development, reclamation, and other expenses decreased 32% to $17.8 million, primarily due to the completion of
the La Preciosa feasibility study in 2014.
Write-downs were $313.3 million ($276.5 million net of tax) compared to $1,472.7 million ($1,021.8 million net of tax).
The non-cash impairment charges were largely driven by decreases in long-term metal price assumptions and revised mine plans in the fourth quarter. The 2015 write-down was primarily related to the Palmarejo complex, San Bartolomé, and Coeur Capital.
Other Income and Expenses
In 2015, the Company incurred a $15.9 million gain on the exchange of the Senior Notes for common stock.
Non-cash fair value adjustments, net, were a gain of $5.2 million compared to a gain of $3.6 million, primarily due to
the impact of changes in future metal prices on the Palmarejo gold production royalty and the Rochester 3.4% NSR royalty
obligation.
Interest expense (net of capitalized interest of $3.1 million) decreased to $45.7 million from $47.5 million primarily due
to the write-off of costs associated with the termination of a former revolving credit facility in 2014, lower accretion of the Palmarejo gold production royalty obligation, and higher capitalized interest, partially offset by interest expense associated with additional borrowings.
Other, net decreased by
$10.7 million
, primarily due to changes in foreign currency exchange rates.
Income and Mining Taxes
The Company’s
Income and mining tax (expense) benefit
consisted of:
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
In thousands
|
2015
|
|
2014
|
Income and mining tax (expense) benefit at statutory rate
|
$
|
137,706
|
|
|
$
|
565,295
|
|
State tax provision from continuing operations
|
(2,075
|
)
|
|
20,253
|
|
Change in valuation allowance
|
(101,027
|
)
|
|
(151,191
|
)
|
Uncertain tax positions
|
(1,947
|
)
|
|
(4,425
|
)
|
U.S. and foreign non-deductible expenses
|
1,365
|
|
|
(4,892
|
)
|
Mineral interest related
|
(19,310
|
)
|
|
—
|
|
Foreign exchange rates
|
22,350
|
|
|
23,672
|
|
Foreign inflation and indexing
|
1,117
|
|
|
3,765
|
|
Foreign tax rate differences
|
(15,980
|
)
|
|
(63,930
|
)
|
Foreign withholding and other taxes
|
8,140
|
|
|
82,884
|
|
Foreign tax credits and other, net
|
(4,076
|
)
|
|
(43,177
|
)
|
Income and mining tax (expense) benefit
|
$
|
26,263
|
|
|
$
|
428,254
|
|
Income and mining tax
benefit
of approximately
$26.3 million
results in an effective tax rate of
6.7%
for 2015. This compares to income tax
benefit
of
$428.3 million
or effective tax rate of
26.5%
for 2014. The Company’s effective tax rate is impacted by multiple factors as illustrated above. The 2015 effective tax rate differs from 2014 primarily due to changes in valuation allowances on deferred tax assets, including the impacts of mineral interest impairments, and lower foreign withholding taxes.
The Company’s effective tax rate is impacted by recurring items, such as foreign exchange rates on deferred tax balances, impacts of mineral interest impairments, full valuation allowance on the deferred tax assets relating to losses in the United States and certain foreign jurisdictions, mining tax expense and uncertain tax positions. In addition, the Company's consolidated effective income tax rate is a function of the combined effective tax rates and foreign exchange rates in the jurisdictions in which it operates. Variations in the jurisdictional mix of income and loss and foreign exchange rates result in significant fluctuations in its consolidated effective tax rate. The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2015
|
|
Year ended December 31, 2014
|
In thousands
|
Income (loss) before tax
|
Tax (expense) benefit
|
|
Income (loss) before tax
|
Tax (expense) benefit
|
United States
|
$
|
(43,924
|
)
|
$
|
(527
|
)
|
|
$
|
(213,883
|
)
|
$
|
(482
|
)
|
Argentina
|
(3,869
|
)
|
(482
|
)
|
|
(82,093
|
)
|
24,408
|
|
Mexico
|
(250,054
|
)
|
26,713
|
|
|
(1,204,983
|
)
|
384,099
|
|
Bolivia
|
(76,739
|
)
|
(5,154
|
)
|
|
(107,547
|
)
|
18,114
|
|
Other jurisdictions
|
(18,860
|
)
|
5,713
|
|
|
(6,622
|
)
|
2,115
|
|
|
$
|
(393,446
|
)
|
$
|
26,263
|
|
|
$
|
(1,615,128
|
)
|
$
|
428,254
|
|
A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related 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 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 risk factors that could impact the Company’s ability to realize its deferred tax assets.
2017 Outlook
In 2017, through our focus on operational excellence, cost reduction initiatives, and capital discipline, we expect to achieve the following:
|
|
•
|
A 9% increase in silver equivalent
1
production driven by the continued ramp-up of Palmarejo underground operations
|
|
|
•
|
AISC between $15.75 - $16.25 per AgEqOz
1
consistent with 2016 result of
$16.08
per AgEqOz
1
|
|
|
•
|
Higher capital investment driven by carry-over from 2016 and ongoing projects at Palmarejo, Rochester and Kensington
|
|
|
•
|
Higher exploration primarily due to step-out drilling at Palmarejo and definition drilling at La Preciosa
|
2017 Production Outlook
|
|
|
|
|
(silver and silver equivalent ounces in thousands)
|
Silver
|
Gold
|
Silver Equivalent
1
|
Palmarejo
|
6,500 - 7,000
|
110,000 - 120,000
|
13,100 - 14,200
|
Rochester
|
4,200 - 4,700
|
47,000 - 52,000
|
7,020 - 7,820
|
San Bartolomé
|
5,400 - 5,900
|
—
|
5,400 - 5,900
|
Endeavor
|
300 - 400
|
—
|
300 - 400
|
Kensington
|
—
|
120,000 - 125,000
|
7,200 - 7,500
|
Wharf
|
—
|
85,000 - 90,000
|
5,100 - 5,400
|
Total
|
16,400 - 18,000
|
362,000 - 387,000
|
38,120 - 41,220
|
2017 Cost Outlook
|
|
|
(dollars in millions, except per ounce amounts)
|
2017 Guidance
|
CAS per AgEqOz
1
–
Palmarejo
|
$10.00 - $10.50
|
CAS per AgEqOz
1
–
Rochester
|
$11.50 - $12.00
|
CAS per AgOz
1
–
San Bartolomé
|
$14.00 - $14.50
|
CAS per AuOz
1
–
Kensington
|
$800 - $850
|
CAS per AuEqOz
1
–
Wharf
|
$775 - $825
|
Capital Expenditures
|
$115 - $135
|
General and Administrative Expenses
|
$28 - $32
|
Exploration Expense
|
$23 - $25
|
AISC per AgEqOz
1
|
$15.75 - $16.25
|
|
|
(1)
|
See
“
Non-GAAP Financial Performance Measures.
”
|
Results of Operations
The Company produced
14.8 million
ounces of silver and
358,170
ounces of gold in the year ended
December 31, 2016
, compared to
15.9 million
ounces of silver and
327,908
ounces of gold in the year ended December 31, 2015. Silver production
decreased
6.7%
due to lower mill throughput at Palmarejo as the mine transitioned to a lower-tonnage, higher-grade, higher-margin underground operation, timing of leach pad recoveries at Rochester, and lower mining rates at Endeavor. Gold production
increased
9.2%
due to higher grade and recovery at Palmarejo, higher grade and tons placed at Wharf as well as a full-year of production at Wharf.
The Company produced
15.9 million
ounces of silver and
327,908
ounces of gold in the year ended
December 31, 2015
, compared to
17.2 million
ounces of silver and
249,384
ounces of gold in the year ended December 31, 2014. Silver production decreased due to lower throughput at Palmarejo and San Bartolomé, partially offset by higher grade and tons placed at Rochester. Gold production increased due to the acquisition of Wharf and higher throughput at Kensington.
Costs applicable to sales were
$11.87
per silver equivalent ounce (
$11.12
per average spot silver equivalent ounce) and
$705
per gold equivalent ounce in the year ended
December 31, 2016
compared to
$13.23
per silver equivalent ounce (
$12.31
per average spot silver equivalent ounce) and
$768
per gold equivalent ounce in the year ended
December 31, 2015
. Costs applicable to sales per silver equivalent ounce
decreased
10%
in 2016 due to lower unit costs at Palmarejo, Rochester, and San Bartolomé, partially offset by higher unit costs at Endeavor. Costs applicable to sales per gold equivalent ounce
decreased
8%
in 2016 due to lower unit costs at Wharf and Kensington.
Costs applicable to sales were
$13.23
per silver equivalent ounce (
$12.31
per average spot silver equivalent ounce) and
$768
per gold equivalent ounce in the year ended
December 31, 2015
compared to
$14.71
per silver equivalent ounce (
$14.24
per average spot silver equivalent ounce) and
$951
per gold equivalent ounce in the year ended December 31, 2014. Costs applicable to sales per silver equivalent ounce decreased in 2015 due to lower unit costs at Rochester and Palmarejo. Costs applicable to sales per gold equivalent ounce decreased in 2015 due to lower unit costs at Kensington and the addition of Wharf.
All-in sustaining costs
were
$16.08
per silver equivalent ounce (
$14.27
per average spot silver equivalent ounce) in the year ended
December 31, 2016
, compared to
$16.50
per silver equivalent ounce (
$14.62
per average spot silver equivalent ounce) in the year ended
December 31, 2015
. The
3%
decrease in all-in sustaining costs per silver equivalent ounce in 2016 was primarily due to lower costs applicable to sales per consolidated silver equivalent ounce and lower general and administrative costs, partially offset by higher sustaining capital expenditures and exploration expense.
All-in sustaining costs were
$16.50
per silver equivalent ounce (
$14.62
per average spot silver equivalent ounce) in the year ended
December 31, 2015
, compared to
$19.72
per silver equivalent ounce (
$18.81
per average spot silver equivalent ounce) in the year ended December 31, 2014. The
16%
reduction in all-in sustaining costs per silver equivalent ounce in the year ended
December 31, 2015
was primarily due to lower costs applicable to sales per consolidated silver equivalent ounce, lower sustaining capital expenditures, and lower general and administrative costs.
Palmarejo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
Tons milled
|
1,078,888
|
|
|
1,616,668
|
|
|
2,135,088
|
|
Silver ounces produced
|
4,442,164
|
|
|
5,148,612
|
|
|
6,558,091
|
|
Gold ounces produced
|
73,913
|
|
|
70,922
|
|
|
86,673
|
|
Silver equivalent ounces produced
|
8,876,944
|
|
|
9,403,932
|
|
|
11,758,471
|
|
Costs applicable to sales per silver equivalent oz
(1)
|
$
|
10.72
|
|
|
$
|
14.07
|
|
|
$
|
15.40
|
|
Costs applicable to sales per average spot silver equivalent oz
(1)
|
$
|
9.73
|
|
|
$
|
12.75
|
|
|
$
|
14.69
|
|
|
|
(1)
|
See Non-GAAP Financial Performance Measures.
|
2016
compared to 2015
During the third quarter of 2016, the minimum ounce obligation under the Palmarejo gold production royalty was satisfied and Palmarejo is now operating under a gold stream agreement with more favorable terms that are expected to significantly increase free cash flow.
Silver equivalent production
decreased
6%
due to planned lower mill throughput as the mine transitioned to lower-tonnage, higher-grade, higher-margin underground mines at Guadalupe and Independencia. Metal sales were
$141.3 million
, or
21%
of Coeur's metal sales, compared with
$169.1 million
, or
27%
of Coeur's metal sales. Costs applicable to sales per ounce
decreased
24%
as a result of lower waste tons mined, lower milling, diesel and consumables costs, and favorable currency exchange rates. Amortization increased to
$36.6 million
compared to
$32.4 million
, primarily due to production from Guadalupe and Independencia. Capital expenditures remained comparable at
$35.8 million
as the Company continues underground development at Guadalupe and Independencia.
2015
compared to 2014
Silver equivalent production
decreased
20%
due to planned lower mill throughput as the mine transitioned to a lower-tonnage, higher grade underground operation from a predominantly open pit operation. Metal sales were
$169.1 million
, or
27%
of Coeur's metal sales, compared with
$244.0 million
, or
39%
of Coeur's metal sales due to lower production and the addition of Wharf. Costs applicable to sales per ounce
decreased
as a result of lower waste tons mined, lower milling, diesel, and consumables costs, favorable currency exchange rates, and lower maintenance costs due to the wind-down of open pit mining. Amortization decreased to
$32.4 million
compared to
$69.4 million
due to lower production and amortizable mineral interests and mining equipment. Capital expenditures increased to
$36.0 million
compared to
$26.1 million
due to the underground development of the Guadalupe and Independencia deposits.
Rochester
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
Tons placed
|
19,555,998
|
|
|
16,414,302
|
|
|
14,739,808
|
|
Silver ounces produced
|
4,564,138
|
|
|
4,630,738
|
|
|
4,189,071
|
|
Gold ounces produced
|
50,751
|
|
|
52,588
|
|
|
44,888
|
|
Silver equivalent ounces produced
|
7,609,198
|
|
|
7,786,018
|
|
|
6,882,351
|
|
Costs applicable to sales per silver equivalent oz
(1)
|
$
|
11.90
|
|
|
$
|
12.41
|
|
|
$
|
14.49
|
|
Costs applicable to sales per average spot silver equivalent oz
(1)
|
$
|
10.97
|
|
|
$
|
11.32
|
|
|
$
|
13.94
|
|
|
|
(1)
|
See Non-GAAP Financial Performance Measures.
|
2016
compared to 2015
Silver equivalent production
decreased
2%
due to lower silver grades and timing of recoveries, partially offset by higher tons placed. Metal sales were
$139.9 million
, or
21%
of Coeur’s metal sales, compared with
$143.9 million
, or
23%
of Coeur's metal sales. Costs applicable to sales per silver equivalent ounce
decreased
4%
, primarily due to lower mining and processing costs. Amortization decreased to
$21.8 million
compared to
$23.9 million
due to lower silver and gold production. Capital expenditures decreased to
$16.4 million
compared to
$25.3 million
due to the completion of the in-pit crusher expansion and Stage III buttress construction in 2015.
2015
compared to 2014
Silver equivalent production
increased
13%
as a result of higher tons placed, higher silver grades, and timing of recoveries. Metal sales were
$143.9 million
, or
23%
of Coeur’s metal sales, compared with
$123.8 million
, or
20%
of Coeur's metal sales. Costs applicable to sales per silver equivalent ounce
decreased
due to higher production, lower diesel costs, and lower equipment rentals. Amortization was
$23.9 million
compared to
$20.8 million
due to higher production. Capital expenditures were
$25.3 million
compared to
$11.9 million
due to in-pit crusher expansion and Stage III buttress construction in 2015.
Kensington
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
Tons milled
|
620,209
|
|
|
660,464
|
|
|
635,960
|
|
Gold ounces produced
|
124,331
|
|
|
126,266
|
|
|
117,823
|
|
Costs applicable to sales/oz
(1)
|
$
|
795
|
|
|
$
|
803
|
|
|
$
|
951
|
|
|
|
(1)
|
See Non-GAAP Financial Performance Measures.
|
2016
compared to 2015
Gold production
decreased
2%
due to mill downtime caused by a blocked tailings line at the end of September, partially offset by higher grade. Metal sales were
$146.6 million
, or
22%
of Coeur's metal sales, compared to
$148.7 million
, or
23%
of Coeur’s metal sales. Costs applicable to sales per ounce were
1%
lower, primarily due to lower diesel costs. Amortization was
$34.8 million
compared to
$42.2 million
due to lower production. Capital expenditures were
$36.8 million
compared to
$23.8 million
, due to the continued development of the high-grade Jualin deposit.
2015 compared to 2014
Gold production
increased
7% due to higher grade and mill throughput. Metal sales were
$148.7 million
, or
23%
of Coeur's metal sales, compared to
$137.0 million
which represented
22%
of Coeur’s metal sales. Costs applicable to sales per ounce decreased due to higher production, lower diesel costs, and lower contract mining services. Amortization was
$42.2 million
compared to
$43.6 million
due to lower amortizable mineral interests and mining equipment, partially offset by higher production. Capital expenditures were
$23.8 million
compared to
$16.2 million
, due to the underground development of the high-grade Jualin deposit.
Wharf
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
2016
|
|
2015
(1)
|
|
2014
|
Tons placed
|
4,268,105
|
|
|
3,600,279
|
|
|
—
|
|
Gold ounces produced
|
109,175
|
|
|
78,132
|
|
|
|
Silver ounces produced
|
105,144
|
|
|
55,744
|
|
|
—
|
|
Gold equivalent ounces produced
(2)
|
110,927
|
|
|
79,061
|
|
|
—
|
|
Costs applicable to sales per gold equivalent oz
(2)
|
$
|
606
|
|
|
$
|
706
|
|
|
$
|
—
|
|
|
|
(1)
|
Amounts are post-acquisition (February 20, 2015).
|
|
|
(2)
|
See Non-GAAP Financial Performance Measures.
|
2016
compared to 2015
Gold equivalent production
increased
40%
due to higher grade and tons placed, higher plant recovery rates and a full-year of attributable production. Metal sales were
$136.7 million
, or
21%
of Coeur's metal sales, compared to
$84.1 million
, or
13%
of Coeur's metal sales. Costs applicable to sales per gold equivalent ounce
decreased
14%
, primarily due to lower mining and leaching costs, partially offset by a
$3.7 million
inventory write-down related to lower expected recoveries from leach pad 3. Amortization was
$20.6 million
compared to
$16.4 million
due to higher production. Capital expenditures were
$4.8 million
compared to
$3.2 million
due to the acquisition of additional equipment and capitalized drilling.
2015
compared to 2014
Gold production was
78,132
ounces in the post-acquisition period after February 20, 2015. Metal sales were
$84.1 million
, or
13%
of Coeur's metal sales. Costs applicable to sales per gold equivalent ounce were
$706
per ounce and amortization was
$16.4 million
. Capital expenditures were
$3.2 million
and primarily consisted of pad re-lining and capitalized drilling.
San Bartolomé
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
Tons milled
|
1,666,787
|
|
|
1,713,079
|
|
|
1,749,423
|
|
Silver ounces produced
|
5,468,898
|
|
|
5,436,353
|
|
|
5,851,678
|
|
Costs applicable to sales/oz
(1)
|
$
|
13.71
|
|
|
$
|
13.80
|
|
|
$
|
14.29
|
|
|
|
(1)
|
See Non-GAAP Financial Performance Measures.
|
2016
compared to 2015
Silver production
increased
1%
as higher levels of purchased ore offset lower mining rates despite a water shortage resulting from nationwide drought conditions. Silver sales were
$93.9 million
, or
14%
of Coeur's metal sales, compared with
$84.7 million
, or
13%
of Coeur's metal sales. Costs applicable to sales per ounce
decreased
due to lower consumables costs. Amortization was
$6.6 million
compared to
$17.8 million
due to lower amortizable mineral interest and mining equipment. Capital expenditures were
$6.6 million
compared to
$6.2 million
.
2015 compared to 2014
Silver production
decreased
7%
due to a three-week shutdown in July as a result of political protests and lower recoveries,
partially offset by higher grade supplemental ore purchases. Silver sales were
$84.7 million
, or
13%
of Coeur's metal sales, compared with
$117.7 million
, or
19%
of Coeur's metal sales. Costs applicable to sales per ounce was lower due to lower revenue-based royalty payments. Amortization was
$17.8 million
compared to
$19.4 million
due to lower production. Capital expenditures were
$6.2 million
compared to
$7.9 million
.
Coeur Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
Endeavor Silver Stream
|
2016
|
|
2015
|
|
2014
|
Tons milled
|
219,430
|
|
|
767,314
|
|
|
792,694
|
|
Silver ounces produced
|
247,998
|
|
|
629,167
|
|
|
589,585
|
|
Costs applicable to sales/oz
(1)
|
$
|
6.56
|
|
|
$
|
5.72
|
|
|
$
|
7.17
|
|
|
|
(1)
|
See Non-GAAP Financial Performance Measures.
|
2016
compared to 2015
Silver production at Endeavor
decreased
as a result of the mine operator's decision to significantly curtail production due to low lead and zinc prices. Costs applicable to sales per ounce
increased
due to the impact of higher silver prices on the Company's silver price sharing agreement with the Endeavor mine operator. Amortization was
$1.1 million
compared to
$9.0 million
due to lower production and lower amortizable mineral interest.
2015
compared to 2014
Silver production
increased
due to higher grade, partially offset by lower throughput. Costs applicable to sales per ounce
decreased
due to the impact of lower silver prices on the Company's silver price sharing agreement with the Endeavor mine operator. Royalty revenue was
$6.9 million
compared to
$3.2 million
due to commencement of production from the Correnso mine as well as higher production from the Cerro Bayo and El Gallo mines. Amortization was
$9.0 million
compared to
$7.0 million
due higher production.
Liquidity and Capital Resources
Cash Provided by Operating Activities
Net cash provided by operating activities for the
years ended December 31, 2016, 2015, and 2014
was
$125.8 million
,
$113.5 million
and
$53.5 million
, respectively, and was impacted by the following key factors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
Consolidated silver equivalent ounces sold
|
34,632,666
|
|
|
36,659,759
|
|
|
31,982,962
|
|
Average realized price per consolidated silver equivalent ounce
(1)
|
$
|
19.13
|
|
|
$
|
17.44
|
|
|
$
|
19.78
|
|
Costs applicable to sales per consolidated silver equivalent ounce
(1)
|
(11.83
|
)
|
|
(13.08
|
)
|
|
(14.94
|
)
|
Operating margin per consolidated silver equivalent ounce
|
$
|
7.30
|
|
|
$
|
4.36
|
|
|
$
|
4.84
|
|
|
|
(1)
|
See Non-GAAP Financial Performance Measures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
In thousands
|
2016
|
|
2015
|
|
2014
|
Cash flow before changes in operating assets and liabilities
|
$
|
164,154
|
|
|
$
|
70,019
|
|
|
$
|
31,046
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Receivables
|
9,011
|
|
|
17,560
|
|
|
(11,611
|
)
|
Prepaid expenses and other
|
(826
|
)
|
|
(3,063
|
)
|
|
5,635
|
|
Inventories
|
(35,591
|
)
|
|
19,573
|
|
|
12,971
|
|
Accounts payable and accrued liabilities
|
(10,931
|
)
|
|
9,453
|
|
|
15,507
|
|
CASH PROVIDED BY OPERATING ACTIVITIES
|
$
|
125,817
|
|
|
$
|
113,542
|
|
|
$
|
53,548
|
|
Cash provided by operating activities
increased
$12.3 million
in 2016 compared to 2015 due to higher average realized prices and lower costs applicable to sales per consolidated silver equivalent ounce, partially offset by lower silver ounces sold and unfavorable working capital adjustments. Metal sales for 2016
increased
$23.3 million
,
$57.7 million
due to higher average realized prices partially offset by
$34.4 million
from lower silver equivalent ounces sold. The
$38.3 million
working capital
increase
in 2016 was primarily due to higher precious metals inventory and ore on leach pads, compared to the $43.5 million working capital decrease in 2015 due to lower precious metals inventory and collection of accounts receivable.
Cash provided by operating activities
increased
$60.0 million
in 2015 compared to 2014 due to higher silver equivalent
ounces sold and lower costs applicable to sales per silver equivalent ounce, partially offset by lower average realized prices. Metal sales for 2015
increased
by
$92.4 million
due to higher silver equivalent ounces sold, mostly offset by a
$85.9 million
reduction due to lower average realized prices. The $43.5 million working capital decrease for 2015 was primarily due to a reduction of metal inventory and collection of accounts receivable, compared to the $22.5 million working capital decrease for 2014, which was primarily due to a reduction of inventory.
Cash Used in Investing Activities
Net cash
used in
investing activities in 2016 was
$83.4 million
compared to
$211.3 million
in 2015, primarily due to proceeds from the sales of non-core assets and the Wharf acquisition in 2015. The Company had capital expenditures of
$101.0 million
in 2016 compared with
$95.2 million
in 2015. Capital expenditures in both periods primarily related to underground development at Palmarejo and Kensington.
Net cash used in investing activities in 2015 was $211.3 million compared to $81.7 million in 2014, primarily due to the acquisition of the Wharf gold mine for $99.4 million and higher development capital expenditures in 2015, partially offset by purchases of short-term investments in 2014. The Company spent $95.2 million on capital expenditures in 2015 compared with $64.2 million in 2014. Capital expenditures in 2015 were primarily related to underground development of the Guadalupe and Independencia deposits at Palmarejo, crusher expansion and Stage III buttress construction at Rochester, and underground
development of the Jualin deposit at Kensington, compared to underground development at Palmarejo and Kensington in 2014.
Cash Provided by (Used in) Financing Activities
Net cash
used in
financing activities in 2016 was
$80.2 million
compared to a
$29.0 million
source in 2015. During 2016, the Company voluntarily repaid the Term Loan for
$103.4 million
and redeemed
$190 million
aggregate principal amount of its Senior Notes. The Company received net proceeds of
$269.6 million
from the sale of
26.9 million
shares of its common stock in connection with the $75.0 million and $200.0 million “at the market” stock offerings.
Net cash provided by financing activities in 2015 was $29.0 million compared to $93.0 million in 2014. During 2015, the Company entered into a $50 million short-term loan which was subsequently repaid upon entering into the $100 million Term Loan. In 2014, the Company completed a follow-on offering of $150 million of its Senior Notes.
Contractual Obligations
The following table summarizes the Company’s contractual obligations at December 31, 2016 and the effect such obligations are expected to have on its liquidity and cash flow in future periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
Contractual Obligations
|
|
Total
|
|
Less Than
1 Year
|
|
1-3 Years
|
|
4-5 Years
|
|
More Than
5 Years
|
Long-term debt obligations:
|
|
|
|
|
|
|
|
|
|
|
Senior Notes, net
|
|
$
|
177,997
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
177,997
|
|
|
$
|
—
|
|
Interest on debt
|
|
63,078
|
|
|
14,017
|
|
|
28,035
|
|
|
21,026
|
|
|
—
|
|
|
|
241,075
|
|
|
14,017
|
|
|
28,035
|
|
|
199,023
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital lease obligations
(1)
|
|
37,346
|
|
|
13,292
|
|
|
17,449
|
|
|
6,561
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease obligations:
|
|
|
|
|
|
|
|
|
|
|
Hyak mining lease
|
|
4,591
|
|
|
287
|
|
|
574
|
|
|
574
|
|
|
3,156
|
|
Operating leases
|
|
35,638
|
|
|
13,422
|
|
|
10,244
|
|
|
6,412
|
|
|
5,560
|
|
|
|
40,229
|
|
|
13,709
|
|
|
10,818
|
|
|
6,986
|
|
|
8,716
|
|
Other long-term obligations:
|
|
|
|
|
|
|
|
|
|
|
Reclamation and mine closure
(2)
|
|
300,077
|
|
|
3,522
|
|
|
6,325
|
|
|
17,702
|
|
|
272,528
|
|
Severance payments
(3)
|
|
8,653
|
|
|
3,049
|
|
|
—
|
|
|
—
|
|
|
5,604
|
|
Unrecognized tax benefits
(4)
|
|
23,410
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
332,140
|
|
|
6,571
|
|
|
6,325
|
|
|
17,702
|
|
|
278,132
|
|
Total
|
|
$
|
650,790
|
|
|
$
|
47,589
|
|
|
$
|
62,627
|
|
|
$
|
230,272
|
|
|
$
|
286,892
|
|
|
|
(1)
|
The Company has entered into various capital lease agreements for commitments primarily over the next two years.
|
|
|
(2)
|
Reclamation and mine closure amounts represent the Company’s estimate of the cash flows associated with its legal obligation to reclaim mining properties. This amount will decrease as reclamation work is completed. Amounts shown on the table are undiscounted.
|
|
|
(3)
|
Accrued government-mandated severance at the Palmarejo complex and San Bartolomé mine.
|
|
|
(4)
|
The Company is unable to reasonably estimate the timing of recognition of unrecognized tax benefits beyond 2016 due to uncertainties in the timing of the effective settlement of tax positions.
|
Environmental Compliance Expenditures
For the years ended December 31, 2016, 2015, and 2014, the Company spent $6.9 million, $6.8 million, and $5.6 million, respectively, in connection with routine environmental compliance activities at its operating properties. The Company estimates that environmental compliance expenditures during 2017 will be approximately $7.8 million. Future environmental compliance expenditures will be determined by governmental regulations and the overall scope of the Company’s operating and development activities.
Other Liquidity Matters
The Company reduced debt by
$279.5 million
, or
57%
during 2016. Together with higher adjusted EBITDA, the Company continues to significantly reduce its financial leverage. We believe that our liquidity and capital resources from U.S. operations 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 future cash interest payments, and/or amounts due at maturity or upon redemption, from time to time we may 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 regularly engage in conversations with our bondholders and 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 such transactions may occur at a substantial discount to the debt securities' face amount. For additional information, please see the section titled “Risk Factors” included
in Item 1A.
Critical Accounting Policies and Accounting Developments
Listed below are the accounting policies that we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates and assumptions involved and the magnitude of the asset, liability, revenue, and expense being reported. For a discussion of recent accounting pronouncements, see Note 2 -- Summary of Significant Accounting Policies in the notes to the consolidated financial statements.
Revenue Recognition
Revenue includes sales value received for the Company’s principal products, silver and gold, and royalty revenues received. Revenue is recognized when title to silver and gold passes to the buyer and when collectability is reasonably assured. Title passes to the buyer based on terms of the sales contract. Product pricing is determined at the point revenue is recognized by reference to active and freely traded commodity markets; for example, the London Bullion Market for both gold and silver.
Under the Company’s concentrate sales contracts with third-party smelters, final gold and silver prices are set on a specified future quotational period, typically one to three months, after the shipment date based on market prices. Revenues are recorded under these contracts at the time title passes to the buyer based on the forward price for the expected settlement period. The contracts, in general, provide for provisional payment based upon provisional assays and quoted metal prices. Final settlement is based on the average applicable price for the specified future quotational period and generally occurs from three to six months after shipment. Final sales are settled using smelter weights and settlement assays (average of assays exchanged and/or umpire assay results) and are priced as specified in the smelter contract. The Company’s 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 from the sale of concentrates at the forward price at the time of sale. The embedded derivative does not qualify for hedge accounting and is adjusted to fair value through revenue each period until the date of final gold and silver settlement.
Estimates
The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of its financial statements, the reported amounts of revenue and expenses during the reporting period, and mined reserves. There can be no assurance that actual results will not differ from those estimates. There are a number of uncertainties inherent in estimating quantities of reserves, including many factors beyond the Company’s control. Mineral reserve estimates are based upon engineering evaluations of samplings of drill holes and other openings. These estimates involve assumptions regarding future silver and gold prices, mine geology, mining methods and the related costs to develop and mine the reserves. Changes in these assumptions could result in material adjustments to the Company’s reserve estimates. The Company uses reserve estimates in determining the units-of-production amortization and evaluating mine assets for potential impairment.
Amortization
The Company amortizes its property, plant, and equipment, mining properties, and mine development using the units-of-production method over the estimated life of the ore body based on its proven and probable reserves or the straight-line method over the useful life, whichever is shorter. The accounting estimates related to amortization are critical accounting estimates because (1) the determination of reserves involves uncertainties with respect to the ultimate geology of its reserves and the assumptions used in determining the economic feasibility of mining those reserves and (2) changes in estimated proven and probable reserves and asset useful lives can have a material impact on net income.
Write-downs
We review and evaluate our long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Asset impairment is considered to exist if the total estimated undiscounted pretax future cash flows are less than the carrying amount of the asset. In estimating future cash flows, assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of future cash flows from other asset groups. An impairment loss is measured by discounted estimated future cash flows, and recorded by reducing the asset's carrying amount to fair value. Future cash flows are estimated based on estimated quantities of recoverable minerals, expected silver and gold prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans. During 2016, 2015, and 2014, we recorded impairments of
$4.4 million
,
$313.3 million
, and
$1,472.7 million
, respectively, to reduce the carrying value of mining properties and property, plant and equipment as part of
Write-downs.
See Note 4 -- Write-Downs for additional detail.
Existing proven and probable reserves and value beyond proven and probable reserves, including mineralization other than proven and probable reserves, are included when determining the fair value of mine site asset groups at acquisition and, subsequently, in determining whether the assets are impaired. The term “recoverable minerals” refers to the estimated amount of silver and gold that will be obtained after taking into account losses during ore processing and treatment. Estimates of recoverable minerals from exploration stage mineral interests are risk adjusted based on management’s relative confidence in such materials. The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those risk factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material could ultimately be mined economically. Assets classified as exploration potential have the highest level of risk that the carrying value of the asset can be ultimately realized, due to the still lower level of geological confidence and economic modeling.
Silver and gold prices are volatile and affected by many factors beyond the Company’s control, including prevailing interest rates and returns on other asset classes, expectations regarding inflation, speculation, currency values, governmental decisions regarding precious metals stockpiles, global and regional demand and production, political and economic conditions and other factors may affect the key assumptions used in the Company’s impairment testing. Various factors could impact our ability to achieve forecasted production levels from proven and probable reserves. Additionally, production, capital and reclamation costs could differ from the assumptions used in the cash flow models used to assess impairment. Actual results may vary from the Company’s estimates and result in additional
Write-downs
.
Ore on Leach Pads
The heap leach process is a process of extracting 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 estimates the quantity of ore by utilizing global positioning satellite survey techniques. 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, which is the final product produced by the mine. The inventory is stated at lower of cost or market, with cost being determined using a weighted average cost method.
The historical cost of the metal that is expected to be extracted within twelve months is classified as current. Ore on leach pad is valued based on actual production costs incurred to produce and place ore on the leach pads, 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 and relies upon laboratory testwork. Testwork consists of 60 day leach columns from which the Company projects metal recoveries up to five years in the future. The quantities of metal contained in the ore are estimated 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 column tests and actual experience occurring over more than twenty years of leach pad operations at the Rochester 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. Historically, our operating results have not been materially impacted by variations between the estimated and actual recoverable quantities of silver and gold on our leach pads.
Reclamation
The Company recognizes obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The fair value of a liability for an asset retirement obligation will be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. An accretion cost, representing the increase over time in the present value of the liability, is recorded each period in
Pre-development, Reclamation, and Other
. As reclamation work is performed or liabilities are otherwise settled, the recorded amount of the liability is reduced. Future remediation costs for inactive mines are accrued based on management’s best estimate at the end of each period of the discounted costs expected to be incurred at the site. Such cost estimates include, where applicable, ongoing care and maintenance and monitoring costs. Changes in estimates are reflected in earnings in the period an estimate is revised.
Derivatives
The Company recognizes all derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value. Changes in the value of derivative instruments are recorded each period in
Fair value adjustments, net
. Management applies judgment in estimating the fair value of instruments that are highly sensitive to assumptions regarding commodity prices, market volatilities, and foreign currency exchange rates.
Income and Mining Taxes
The Company accounts for income taxes in accordance with the guidance of ASC 740. The Company’s annual tax rate is based on income, statutory tax rates in effect and tax planning opportunities available to us in the various jurisdictions in which the Company operates. Significant judgment is required in determining the annual tax expense, current tax assets and liabilities, deferred tax assets and liabilities, and our future taxable income, both as a whole and in various tax jurisdictions, for purposes of assessing our ability to realize future benefit from our deferred tax assets. Actual income taxes could vary from these estimates due to future changes in income tax law, significant changes in the jurisdictions in which we operate or unpredicted results from the final determination of each year’s liability by taxing authorities.
The Company’s deferred income taxes reflect the impact of temporary differences between the reported amounts of assets and liabilities for financial reporting purposes and such amounts measured by tax laws and regulations. In evaluating the realizability of the deferred tax assets, management considers both positive and negative evidence that may exist, such as earnings history, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies in each tax jurisdiction. A valuation allowance may be established to reduce our deferred tax assets to the amount that is considered more likely than not to be realized through the generation of future taxable income and other tax planning strategies.
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. For the years 2016 and 2015, the Company had no unremitted earnings from these specific foreign operations. As a result, the Company does not record a U.S. deferred tax liability for the foreign earnings that meet the indefinite reversal criteria. Refer to Note 9 -- Income and Mining Taxes for further discussion on our assertion.
The Company’s operations may involve dealing with uncertainties and judgments in the application of complex tax regulations in multiple jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes arising from federal, state, and international tax audits. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due. The Company adjusts these reserves in light of changing facts and circumstances, such as the progress of a tax audit; however, due to the complexity of some of these uncertainties, the ultimate resolution could result in a payment that is materially different from our current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period which they are determined. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense.
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”). 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 are 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 table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
In thousands except per share amounts
|
2016
|
|
2015
|
|
2014
|
Net income (loss)
|
$
|
55,352
|
|
|
$
|
(367,183
|
)
|
|
$
|
(1,186,874
|
)
|
Fair value adjustments
|
11,581
|
|
|
(5,202
|
)
|
|
(3,618
|
)
|
Impairment of marketable securities
|
703
|
|
|
2,346
|
|
|
6,593
|
|
Write-downs
|
4,446
|
|
|
313,337
|
|
|
1,472,721
|
|
Inventory adjustment
|
3,689
|
|
|
—
|
|
|
—
|
|
(Gain) loss on sale of assets and securities
|
(11,334
|
)
|
|
352
|
|
|
530
|
|
(Gain) loss on debt extinguishments
|
21,365
|
|
|
(15,916
|
)
|
|
—
|
|
Loss on Revolving Credit Facility termination
|
—
|
|
|
—
|
|
|
3,035
|
|
Corporate reorganization costs
|
—
|
|
|
647
|
|
|
—
|
|
Transaction costs
|
1,199
|
|
|
2,112
|
|
|
—
|
|
Deferred tax on reorganization
|
(40,767
|
)
|
|
—
|
|
|
—
|
|
Foreign exchange (gain) loss
|
(1,034
|
)
|
|
1,599
|
|
|
(16,159
|
)
|
Tax effect of adjustments
(1)
|
2,583
|
|
|
(35,734
|
)
|
|
(451,670
|
)
|
Adjusted net income (loss)
|
$
|
47,783
|
|
|
$
|
(103,642
|
)
|
|
$
|
(175,442
|
)
|
|
|
|
|
|
|
Adjusted net income (loss) per share - Basic
|
$
|
0.30
|
|
|
$
|
(0.80
|
)
|
|
$
|
(1.71
|
)
|
Adjusted net income (loss) per share - Diluted
|
$
|
0.29
|
|
|
$
|
(0.80
|
)
|
|
$
|
(1.71
|
)
|
|
|
(1)
|
For the year ended December 31, 2016, tax effect of adjustments of
$2.6 million
(8%) is primarily related to a taxable gain on the sale of assets and the tax valuation allowance impact from an asset write-down, partially offset by tax benefit from fair value adjustments.
|
For the year ended December 31, 2015, tax effect of adjustments of
$(35.7) million
(-12%) is primarily related to the tax benefit from write-downs of the Palmarejo complex, San Bartolomé, and Coeur Capital.
For the year ended December 31, 2014, tax effect of adjustments of
$(451.7) million
(-30%) is primarily related to the tax benefit from write-downs of the Palmarejo complex and La Preciosa Project.
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 the Company's Senior Notes indenture 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 table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
In thousands except per share amounts
|
2016
|
|
2015
|
|
2014
|
Net income (loss)
|
$
|
55,352
|
|
|
$
|
(367,183
|
)
|
|
$
|
(1,186,874
|
)
|
Interest expense, net of capitalized interest
|
36,920
|
|
|
45,703
|
|
|
47,546
|
|
Income tax provision (benefit)
|
(54,239
|
)
|
|
(26,263
|
)
|
|
(428,254
|
)
|
Amortization
|
123,161
|
|
|
143,751
|
|
|
162,436
|
|
EBITDA
|
161,194
|
|
|
(203,992
|
)
|
|
(1,405,146
|
)
|
Fair value adjustments, net
|
11,581
|
|
|
(5,202
|
)
|
|
(3,618
|
)
|
Impairment of equity securities
|
703
|
|
|
2,346
|
|
|
6,593
|
|
Foreign exchange losses
|
10,720
|
|
|
15,769
|
|
|
(470
|
)
|
(Gain) loss on sale of assets and securities
|
(11,334
|
)
|
|
352
|
|
|
530
|
|
(Gain) loss on debt extinguishment
|
21,365
|
|
|
(15,916
|
)
|
|
—
|
|
Corporate reorganization costs
|
—
|
|
|
647
|
|
|
—
|
|
Transaction costs
|
1,199
|
|
|
2,112
|
|
|
—
|
|
Asset retirement obligation accretion
|
8,369
|
|
|
8,191
|
|
|
5,568
|
|
Inventory adjustments and write-downs
|
6,917
|
|
|
10,207
|
|
|
15,823
|
|
Write-downs
|
4,446
|
|
|
313,337
|
|
|
1,472,721
|
|
Adjusted EBITDA
|
$
|
215,160
|
|
|
$
|
127,851
|
|
|
$
|
92,001
|
|
Costs Applicable to Sales and All-in Sustaining Costs
Management uses
Costs applicable to sales
(“CAS”) and
All-in sustaining costs
(“AISC”) 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 silver and gold, 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 converting the benefit from selling gold into silver equivalent ounces best allows management, analysts, investors and other stakeholders to evaluate the operating performance of the Company. At December 31, 2016, the Company adjusted its realized silver equivalent ounce calculation to reflect average spot metal prices, rather than using the Company's average realized metal prices to enhance comparability among our peers. Other companies may calculate CAS and AISC differently as a result of reflecting the benefit from selling non-silver metals as a by-product credit rather than converting to silver equivalent ounces, differences in the determination of sustaining capital expenditures, and differences in underlying accounting principles and accounting frameworks such as in International Financial Reporting Standards.
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver
|
|
Gold
|
|
Total
|
In thousands except per ounce amounts
|
|
Palmarejo
|
|
Rochester
|
|
San Bartolomé
|
|
Endeavor
|
|
Total
|
|
Kensington
|
|
Wharf
|
|
Total
|
|
Costs applicable to sales, including amortization (U.S. GAAP)
|
|
$
|
117,419
|
|
|
$
|
111,564
|
|
|
$
|
80,799
|
|
|
$
|
2,363
|
|
|
$
|
312,145
|
|
|
$
|
131,518
|
|
|
$
|
87,000
|
|
|
$
|
218,518
|
|
|
$
|
530,663
|
|
Amortization
|
|
36,599
|
|
|
21,838
|
|
|
6,633
|
|
|
644
|
|
|
65,714
|
|
|
34,787
|
|
|
20,621
|
|
|
55,408
|
|
|
121,122
|
|
Costs applicable to sales
|
|
$
|
80,820
|
|
|
$
|
89,726
|
|
|
$
|
74,166
|
|
|
$
|
1,719
|
|
|
$
|
246,431
|
|
|
$
|
96,731
|
|
|
$
|
66,379
|
|
|
$
|
163,110
|
|
|
$
|
409,541
|
|
Silver equivalent ounces sold
|
|
7,538,311
|
|
|
7,542,740
|
|
|
5,411,057
|
|
|
262,078
|
|
|
20,754,186
|
|
|
|
|
|
|
|
|
34,632,666
|
|
Gold equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
121,688
|
|
|
109,620
|
|
|
231,308
|
|
|
|
Costs applicable to sales per ounce
|
|
$
|
10.72
|
|
|
$
|
11.90
|
|
|
$
|
13.71
|
|
|
$
|
6.56
|
|
|
$
|
11.87
|
|
|
$
|
795
|
|
|
$
|
606
|
|
|
$
|
705
|
|
|
$
|
11.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales per average spot ounce
|
|
$
|
9.73
|
|
|
$
|
10.97
|
|
|
|
|
|
|
$
|
11.12
|
|
|
|
|
|
|
|
|
$
|
10.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
409,541
|
|
Treatment and refining costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,307
|
|
Sustaining capital
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,841
|
|
General and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,376
|
|
Exploration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,930
|
|
Reclamation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,504
|
|
Project/pre-development costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,481
|
|
All-in sustaining costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
556,980
|
|
Silver equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,754,186
|
|
Kensington and Wharf silver equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,878,480
|
|
Consolidated silver equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,632,666
|
|
All-in sustaining costs per silver equivalent ounce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
16.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All-in sustaining costs per average spot silver equivalent ounce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
14.27
|
|
|
|
(1)
|
Excludes development capital for Jualin, Independencia, Guadalupe South Portal and Rochester expansion permitting.
|
Year Ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver
|
|
Gold
|
|
|
In thousands except per ounce amounts
|
|
Palmarejo
|
|
Rochester
|
|
San Bartolomé
|
|
Endeavor
|
|
Total
|
|
Kensington
|
|
Wharf
|
|
Total
|
|
Total
|
Costs applicable to sales, including amortization (U.S. GAAP)
|
|
$
|
170,899
|
|
|
$
|
127,900
|
|
|
$
|
93,625
|
|
|
$
|
9,059
|
|
|
$
|
401,483
|
|
|
$
|
147,880
|
|
|
$
|
68,575
|
|
|
$
|
216,455
|
|
|
$
|
617,938
|
|
Amortization
|
|
32,423
|
|
|
23,906
|
|
|
17,798
|
|
|
5,539
|
|
|
79,666
|
|
|
42,240
|
|
|
16,378
|
|
|
58,618
|
|
|
138,284
|
|
Costs applicable to sales
|
|
$
|
138,476
|
|
|
$
|
103,994
|
|
|
$
|
75,827
|
|
|
$
|
3,520
|
|
|
$
|
321,817
|
|
|
$
|
105,640
|
|
|
$
|
52,197
|
|
|
$
|
157,837
|
|
|
$
|
479,654
|
|
Silver equivalent ounces sold
|
|
9,840,705
|
|
|
8,377,823
|
|
|
5,495,369
|
|
|
615,022
|
|
|
24,328,919
|
|
|
|
|
|
|
|
|
36,659,759
|
|
Gold equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
131,553
|
|
|
73,961
|
|
|
205,514
|
|
|
|
Costs applicable to sales per ounce
|
|
$
|
14.07
|
|
|
$
|
12.41
|
|
|
$
|
13.80
|
|
|
$
|
5.72
|
|
|
$
|
13.23
|
|
|
$
|
803
|
|
|
$
|
706
|
|
|
$
|
768
|
|
|
$
|
13.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales per average spot ounce
|
|
$
|
12.75
|
|
|
$
|
11.32
|
|
|
|
|
|
|
$
|
12.31
|
|
|
|
|
|
|
|
|
$
|
11.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
479,654
|
|
Treatment and refining costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,801
|
|
Sustaining capital
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,362
|
|
General and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,834
|
|
Exploration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,647
|
|
Reclamation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,769
|
|
Project/pre-development costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,674
|
|
All-in sustaining costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
604,741
|
|
Silver equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,328,919
|
|
Kensington and Wharf silver equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,330,840
|
|
Consolidated silver equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,659,759
|
|
All-in sustaining costs per silver equivalent ounce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
16.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All-in sustaining costs per average spot silver equivalent ounce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
14.62
|
|
|
|
(1)
|
Excludes development capital for Jualin, Guadalupe, Independencia and Rochester crushing capacity expansion.
|
Year Ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver
|
|
Gold
|
|
Total
|
In thousands except per ounce amounts
|
|
Palmarejo
|
|
Rochester
|
|
San Bartolomé
|
|
Endeavor
|
|
Total
|
|
Kensington
|
|
Costs applicable to sales, including amortization (U.S. GAAP)
|
|
$
|
256,707
|
|
|
$
|
112,252
|
|
|
$
|
109,082
|
|
|
$
|
8,514
|
|
|
$
|
486,555
|
|
|
$
|
148,961
|
|
|
$
|
635,516
|
|
Amortization
|
|
69,431
|
|
|
20,790
|
|
|
19,423
|
|
|
4,308
|
|
|
113,952
|
|
|
43,619
|
|
|
157,571
|
|
Costs applicable to sales
|
|
$
|
187,276
|
|
|
$
|
91,462
|
|
|
$
|
89,659
|
|
|
$
|
4,206
|
|
|
$
|
372,603
|
|
|
$
|
105,342
|
|
|
$
|
477,945
|
|
Silver equivalent ounces sold
|
|
12,161,719
|
|
|
6,309,912
|
|
|
6,275,769
|
|
|
586,242
|
|
|
25,333,642
|
|
|
|
|
31,982,962
|
|
Gold equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
110,822
|
|
|
|
Costs applicable to sales per ounce
|
|
$
|
15.40
|
|
|
$
|
14.49
|
|
|
$
|
14.29
|
|
|
$
|
7.17
|
|
|
$
|
14.71
|
|
|
$
|
951
|
|
|
$
|
14.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales per average spot ounce
|
|
$
|
14.69
|
|
|
$
|
13.94
|
|
|
|
|
|
|
$
|
14.24
|
|
|
|
|
$
|
14.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
477,945
|
|
Treatment and refining costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,943
|
|
Sustaining capital
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,199
|
|
General and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,845
|
|
Exploration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,740
|
|
Reclamation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,468
|
|
Project/pre-development costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,588
|
|
All-in sustaining costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
630,728
|
|
Silver equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,333,642
|
|
Kensington silver equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
6,649,320
|
|
Consolidated silver equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
31,982,962
|
|
All-in sustaining costs per silver equivalent ounce
|
|
|
|
|
|
|
|
|
|
$
|
19.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All-in sustaining costs per average spot silver equivalent ounce
|
|
|
|
|
|
|
|
|
|
$
|
18.81
|
|
|
|
(1)
|
Excludes development capital for Guadalupe, Independencia and Rochester crushing capacity expansion and miscellaneous land purchases.
|
Reconciliation of All-in Sustaining Costs per Silver Equivalent Ounce for 2017 Guidance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver
|
Gold
|
|
In thousands except per ounce amounts
|
Palmarejo
|
Rochester
|
San Bartolomé
|
Endeavor
|
Total Silver
|
Kensington
|
Wharf
|
Total Gold
|
Total Combined
|
Costs applicable to sales, including amortization (U.S. GAAP)
|
$
|
211,000
|
|
$
|
108,380
|
|
$
|
102,000
|
|
$
|
3,750
|
|
$
|
425,130
|
|
$
|
130,500
|
|
$
|
83,800
|
|
$
|
214,300
|
|
$
|
639,430
|
|
Amortization
|
69,200
|
|
19,860
|
|
18,500
|
|
—
|
|
107,560
|
|
29,100
|
|
11,500
|
|
40,600
|
|
148,160
|
|
Costs applicable to sales
|
$
|
141,800
|
|
$
|
88,520
|
|
$
|
83,500
|
|
$
|
3,750
|
|
$
|
317,570
|
|
$
|
101,400
|
|
$
|
72,300
|
|
$
|
173,700
|
|
$
|
491,270
|
|
Silver equivalent ounces sold
|
14,000,000
|
|
7,680,000
|
|
5,900,000
|
|
380,000
|
|
27,960,000
|
|
|
|
|
40,800,000
|
|
Gold equivalent ounces sold
|
|
|
|
|
|
124,000
|
|
90,000
|
|
214,000
|
|
|
Costs applicable to sales per ounce guidance
|
$10.00 - $10.50
|
$11.50 - $12.00
|
$14.00 - $14.50
|
|
|
$800 - $850
|
$775 - $825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
|
|
|
|
|
|
|
|
|
$
|
491,270
|
|
Treatment and refining costs
|
|
|
|
|
|
|
|
|
4,300
|
|
Sustaining capital, including capital lease payments
|
|
|
|
|
|
|
88,000
|
|
General and administrative
|
|
|
|
|
|
|
|
|
30,000
|
|
Exploration
|
|
|
|
|
|
|
|
|
24,000
|
|
Reclamation
|
|
|
|
|
|
|
|
|
14,000
|
|
Project/pre-development costs
|
|
|
|
|
|
|
|
|
5,700
|
|
All-in sustaining costs
|
|
|
|
|
|
|
|
|
$
|
657,270
|
|
Silver equivalent ounces sold
|
|
|
|
|
|
|
|
|
27,960,000
|
|
Kensington and Wharf silver equivalent ounces sold
|
|
|
|
|
|
12,840,000
|
|
Consolidated silver equivalent ounces sold
|
|
|
|
|
|
|
|
40,800,000
|
|
All-in sustaining costs per silver equivalent ounce guidance
|
|
|
|
|
|
$15.75 - $16.25
|
Item 8.
Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Coeur Mining, Inc.
We have audited the accompanying consolidated balance sheet of Coeur Mining, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2016, and the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity, and cash flows for the year ended December 31, 2016. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Coeur Mining, Inc. and subsidiaries as of December 31, 2016, and the results of their operations and their cash flows for the year ended December 31, 2016 in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2016, based on criteria established in the 2013
Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated
February 8, 2017
expressed an unqualified opinion.
/s/ GRANT THORNTON LLP
Chicago, Illinois
February 8, 2017
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Coeur Mining, Inc.
We have audited the internal control over financial reporting of Coeur Mining, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2016, based on criteria established in the 2013
Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on criteria established in the 2013
Internal Control-Integrated Framework
issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of the Company as of and for the year ended December 31, 2016, and our report dated February 8, 2017 expressed an unqualified opinion on those consolidated financial statements.
/s/ GRANT THORNTON LLP
Chicago, Illinois
February 8, 2017
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Coeur Mining, Inc.:
We have audited the accompanying consolidated balance sheet of Coeur Mining, Inc. and subsidiaries (the Company) as of December 31, 2015, and the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the two‑year period ended December 31, 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Coeur Mining, Inc. and subsidiaries as of December 31, 2015, and the results of their operations and their cash flows for each of the years in the two‑year period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.
/s/ KPMG LLP
Chicago, Illinois
February 8, 2017
COEUR MINING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
|
Notes
|
In thousands, except share data
|
Revenue
|
3
|
$
|
665,777
|
|
|
$
|
646,086
|
|
|
$
|
635,742
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
Costs applicable to sales
(1)
|
3
|
409,541
|
|
|
479,654
|
|
|
477,945
|
|
Amortization
|
|
123,161
|
|
|
143,751
|
|
|
162,436
|
|
General and administrative
|
|
29,376
|
|
|
32,834
|
|
|
40,845
|
|
Exploration
|
|
12,930
|
|
|
11,647
|
|
|
21,740
|
|
Write-downs
|
|
4,446
|
|
|
313,337
|
|
|
1,472,721
|
|
Pre-development, reclamation, and other
|
|
17,219
|
|
|
17,793
|
|
|
26,037
|
|
Total costs and expenses
|
|
596,673
|
|
|
999,016
|
|
|
2,201,724
|
|
OTHER INCOME (EXPENSE), NET
|
|
|
|
|
|
|
Gain (loss) on debt extinguishment
|
|
(21,365
|
)
|
|
15,916
|
|
|
—
|
|
Fair value adjustments, net
|
11
|
(11,581
|
)
|
|
5,202
|
|
|
3,618
|
|
Interest expense, net of capitalized interest
|
19
|
(36,920
|
)
|
|
(45,703
|
)
|
|
(47,546
|
)
|
Other, net
|
8
|
1,875
|
|
|
(15,931
|
)
|
|
(5,218
|
)
|
Total other income (expense), net
|
|
(67,991
|
)
|
|
(40,516
|
)
|
|
(49,146
|
)
|
Income (loss) before income and mining taxes
|
|
1,113
|
|
|
(393,446
|
)
|
|
(1,615,128
|
)
|
Income and mining tax (expense) benefit
|
9
|
54,239
|
|
|
26,263
|
|
|
428,254
|
|
NET INCOME (LOSS)
|
|
$
|
55,352
|
|
|
$
|
(367,183
|
)
|
|
$
|
(1,186,874
|
)
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
|
|
|
|
|
|
|
Unrealized gain (loss) on equity securities, net of tax of $(767) and $1,446 for the years ended December 31, 2016, and 2014, respectively
|
|
3,222
|
|
|
(4,154
|
)
|
|
(2,290
|
)
|
Reclassification adjustments for impairment of equity securities, net of tax of $(2,552) for the year ended December 31, 2014
|
|
703
|
|
|
2,346
|
|
|
4,042
|
|
Reclassification adjustments for realized (gain) loss on sale of equity securities, net of tax of $(219) for the year ended December 31, 2014
|
|
(2,691
|
)
|
|
894
|
|
|
346
|
|
Other comprehensive income (loss)
|
|
1,234
|
|
|
(914
|
)
|
|
2,098
|
|
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
56,586
|
|
|
$
|
(368,097
|
)
|
|
$
|
(1,184,776
|
)
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER SHARE
|
10
|
|
|
|
|
|
Basic
|
|
$
|
0.35
|
|
|
$
|
(2.83
|
)
|
|
$
|
(11.59
|
)
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.34
|
|
|
$
|
(2.83
|
)
|
|
$
|
(11.59
|
)
|
(1) Excludes amortization.
The accompanying notes are an integral part of these consolidated financial statements.
COEUR MINING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
|
Notes
|
In thousands
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
55,352
|
|
|
(367,183
|
)
|
|
(1,186,874
|
)
|
Adjustments:
|
|
|
|
|
|
|
Amortization
|
|
123,161
|
|
|
143,751
|
|
|
162,436
|
|
Accretion
|
|
10,248
|
|
|
14,149
|
|
|
16,246
|
|
Deferred income taxes
|
|
(71,350
|
)
|
|
(40,838
|
)
|
|
(448,905
|
)
|
Loss on termination of revolving credit facility
|
|
—
|
|
|
—
|
|
|
3,035
|
|
(Gain) Loss on extinguishment of debt
|
|
21,365
|
|
|
(15,916
|
)
|
|
—
|
|
Fair value adjustments, net
|
11
|
11,581
|
|
|
(5,202
|
)
|
|
(3,618
|
)
|
Stock-based compensation
|
6
|
9,715
|
|
|
9,272
|
|
|
9,288
|
|
Impairment of equity securities
|
14
|
703
|
|
|
2,346
|
|
|
6,593
|
|
Write-downs
|
4
|
4,446
|
|
|
313,337
|
|
|
1,472,721
|
|
Other
|
|
(1,067
|
)
|
|
16,303
|
|
|
124
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Receivables
|
|
9,011
|
|
|
17,560
|
|
|
(11,611
|
)
|
Prepaid expenses and other current assets
|
|
(826
|
)
|
|
(3,063
|
)
|
|
5,635
|
|
Inventory and ore on leach pads
|
|
(35,591
|
)
|
|
19,573
|
|
|
12,971
|
|
Accounts payable and accrued liabilities
|
|
(10,931
|
)
|
|
9,453
|
|
|
15,507
|
|
CASH PROVIDED BY OPERATING ACTIVITIES
|
|
125,817
|
|
|
113,542
|
|
|
53,548
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Capital expenditures
|
|
(101,013
|
)
|
|
(95,193
|
)
|
|
(64,244
|
)
|
Acquisitions, net
|
13
|
(1,417
|
)
|
|
(110,846
|
)
|
|
(21,329
|
)
|
Proceeds from the sale of assets
|
|
16,296
|
|
|
607
|
|
|
329
|
|
Purchase of investments
|
|
(178
|
)
|
|
(1,880
|
)
|
|
(50,513
|
)
|
Sales and maturities of investments
|
|
7,077
|
|
|
605
|
|
|
54,344
|
|
Other
|
|
(4,208
|
)
|
|
(4,586
|
)
|
|
(321
|
)
|
CASH USED IN INVESTING ACTIVITIES
|
|
(83,443
|
)
|
|
(211,293
|
)
|
|
(81,734
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Issuance of common stock
|
|
269,556
|
|
|
—
|
|
|
—
|
|
Issuance of notes and bank borrowings
|
19
|
—
|
|
|
153,500
|
|
|
167,784
|
|
Payments on debt, capital leases, and associated costs
|
|
(322,801
|
)
|
|
(84,715
|
)
|
|
(25,902
|
)
|
Gold production royalty payments
|
|
(27,155
|
)
|
|
(39,235
|
)
|
|
(48,395
|
)
|
Other
|
|
172
|
|
|
(542
|
)
|
|
(509
|
)
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
(80,228
|
)
|
|
29,008
|
|
|
92,978
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(678
|
)
|
|
(1,404
|
)
|
|
(621
|
)
|
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
(38,532
|
)
|
|
(70,147
|
)
|
|
64,171
|
|
Cash and cash equivalents at beginning of period
|
|
200,714
|
|
|
270,861
|
|
|
206,690
|
|
Cash and cash equivalents at end of period
|
|
$
|
162,182
|
|
|
$
|
200,714
|
|
|
$
|
270,861
|
|
The accompanying notes are an integral part of these consolidated financial statements.
COEUR MINING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
ASSETS
|
Notes
|
In thousands, except share data
|
CURRENT ASSETS
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
162,182
|
|
|
$
|
200,714
|
|
Receivables
|
15
|
60,431
|
|
|
85,992
|
|
Inventory
|
16
|
106,026
|
|
|
81,711
|
|
Ore on leach pads
|
16
|
64,167
|
|
|
67,329
|
|
Prepaid expenses and other
|
|
17,981
|
|
|
10,942
|
|
|
|
410,787
|
|
|
446,688
|
|
NON-CURRENT ASSETS
|
|
|
|
|
Property, plant and equipment, net
|
17
|
216,796
|
|
|
195,999
|
|
Mining properties, net
|
18
|
558,455
|
|
|
589,219
|
|
Ore on leach pads
|
16
|
67,231
|
|
|
44,582
|
|
Restricted assets
|
|
17,597
|
|
|
11,633
|
|
Equity securities
|
14
|
4,488
|
|
|
2,766
|
|
Receivables
|
15
|
30,951
|
|
|
24,768
|
|
Deferred tax assets
|
|
191
|
|
|
1,942
|
|
Other
|
|
12,413
|
|
|
14,892
|
|
TOTAL ASSETS
|
|
$
|
1,318,909
|
|
|
$
|
1,332,489
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
Accounts payable
|
|
$
|
53,335
|
|
|
$
|
52,153
|
|
Accrued liabilities and other
|
|
42,743
|
|
|
50,532
|
|
Debt
|
19
|
12,039
|
|
|
10,431
|
|
Royalty obligations
|
11
|
4,995
|
|
|
24,893
|
|
Reclamation
|
5
|
3,522
|
|
|
2,071
|
|
|
|
116,634
|
|
|
140,080
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
Debt
|
19
|
198,857
|
|
|
479,979
|
|
Royalty obligations
|
11
|
4,292
|
|
|
4,864
|
|
Reclamation
|
5
|
95,804
|
|
|
83,197
|
|
Deferred tax liabilities
|
|
74,798
|
|
|
147,132
|
|
Other long-term liabilities
|
|
60,037
|
|
|
55,761
|
|
|
|
433,788
|
|
|
770,933
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
Common stock, par value $0.01 per share; authorized 300,000,000 shares, issued and outstanding 180,933,287 at December 31, 2016 and 151,339,136 at December 31, 2015
|
|
1,809
|
|
|
1,513
|
|
Additional paid-in capital
|
|
3,314,590
|
|
|
3,024,461
|
|
Accumulated other comprehensive income (loss)
|
|
(2,488
|
)
|
|
(3,722
|
)
|
Accumulated deficit
|
|
(2,545,424
|
)
|
|
(2,600,776
|
)
|
|
|
768,487
|
|
|
421,476
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
1,318,909
|
|
|
$
|
1,332,489
|
|
The accompanying notes are an integral part of these consolidated financial statements.
COEUR MINING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2013
|
102,843
|
|
|
$
|
1,028
|
|
|
$
|
2,781,164
|
|
|
$
|
(1,046,719
|
)
|
|
$
|
(4,906
|
)
|
|
$
|
1,730,567
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,186,874
|
)
|
|
—
|
|
|
(1,186,874
|
)
|
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,098
|
|
|
2,098
|
|
Common stock issued under long-term incentive plans, net
|
541
|
|
|
6
|
|
|
8,531
|
|
|
—
|
|
|
—
|
|
|
8,537
|
|
Balances at December 31, 2014
|
103,384
|
|
|
$
|
1,034
|
|
|
$
|
2,789,695
|
|
|
$
|
(2,233,593
|
)
|
|
$
|
(2,808
|
)
|
|
$
|
554,328
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(367,183
|
)
|
|
—
|
|
|
(367,183
|
)
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(914
|
)
|
|
(914
|
)
|
Common stock issued for the acquisition of Paramount Gold and Silver Corp.
|
32,667
|
|
|
327
|
|
|
188,490
|
|
|
—
|
|
|
—
|
|
|
188,817
|
|
Common stock issued for the extinguishment of Senior Notes
|
14,365
|
|
|
144
|
|
|
38,379
|
|
|
—
|
|
|
—
|
|
|
38,523
|
|
Common stock issued under stock-based compensation plans, net
|
923
|
|
|
8
|
|
|
7,897
|
|
|
—
|
|
|
—
|
|
|
7,905
|
|
Balances at December 31, 2015
|
151,339
|
|
|
$
|
1,513
|
|
|
$
|
3,024,461
|
|
|
$
|
(2,600,776
|
)
|
|
$
|
(3,722
|
)
|
|
$
|
421,476
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
55,352
|
|
|
—
|
|
|
55,352
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,234
|
|
|
1,234
|
|
Common stock issued for the extinguishment of Senior Notes
|
739
|
|
|
7
|
|
|
11,806
|
|
|
—
|
|
|
—
|
|
|
11,813
|
|
Issuance of common stock
|
26,944
|
|
|
270
|
|
|
269,286
|
|
|
—
|
|
|
—
|
|
|
269,556
|
|
Common stock issued under stock-based compensation plans, net
|
1,911
|
|
|
19
|
|
|
9,037
|
|
|
—
|
|
|
—
|
|
|
9,056
|
|
Balances at December 31, 2016
|
180,933
|
|
|
$
|
1,809
|
|
|
$
|
3,314,590
|
|
|
$
|
(2,545,424
|
)
|
|
$
|
(2,488
|
)
|
|
$
|
768,487
|
|
The accompanying notes are an integral part of these consolidated financial statements.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 1 - THE COMPANY
Coeur Mining, Inc. (“Coeur” or “the Company”) is a gold and silver producer with mines located in the United States,
Mexico, and Bolivia and exploration projects in Mexico and Argentina. The Company operates the Palmarejo complex, Kensington, Rochester, Wharf, and San Bartolomé mines, and owns Coeur Capital, which is primarily comprised of the Endeavor silver stream. The cash flow and profitability of the Company's operations are significantly impacted by the market price of gold and silver. The prices of gold and silver are affected by numerous factors beyond the Company's control.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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, 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.
Principles of Consolidation
The Consolidated Financial Statements include the wholly-owned subsidiaries of the Company, the most significant of
which are Coeur Mexicana S.A. de C.V., Coeur Rochester, Inc., Coeur Alaska, Inc., Wharf Resources (U.S.A.), Empresa Minera Manquiri S.A., and Coeur Capital, Inc. All intercompany balances and transactions have been eliminated. The Company's investments in entities in which it has less than 20% ownership interest are accounted for using the cost method.
Cash and Cash Equivalents
Cash and cash equivalents include all highly-liquid investments with an original maturity of three months or less. The Company minimizes its credit risk by investing its cash and cash equivalents with major U.S. and international banks and financial institutions located principally in the United States with a minimum credit rating of A1, as defined by Standard & Poor’s. The Company’s management believes that no concentration of credit risk exists with respect to the investment of its cash and cash equivalents.
Receivables
Trade receivables and other receivable balances are reported at outstanding principal amounts, net of an allowance for doubtful accounts, if deemed necessary. Management evaluates the collectability of receivable account balances to determine the allowance, if any. Management considers the other party's credit risk and financial condition, as well as current and projected economic and market conditions, in determining the amount of the allowance. Receivable balances are written off when management determines that the balance is uncollectible.
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 estimates the quantity of ore by utilizing global positioning satellite survey techniques. 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 market, with cost being determined using a weighted average cost method.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The historical cost of metal expected to be extracted within twelve months is classified as current and the historical cost of metals contained within the broken ore expected to be extracted beyond twelve 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 twenty years of leach pad operations at the Rochester mine and thirty 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. 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.
Metal and Other Inventory
Inventories include concentrate, doré, and operating materials and supplies. The classification of inventory is determined by the stage at which the ore is in the production process. All inventories are stated at the lower of cost or market, with cost being determined using a weighted average cost method. Concentrate and doré inventory includes product at the mine site and product held by refineries. Metal inventory costs include direct labor, materials, depreciation, depletion and amortization as well as overhead costs relating to mining activities.
Property, Plant, and Equipment
Expenditures for new facilities, assets acquired pursuant to capital leases, new assets or expenditures that extend the
useful lives of existing facilities are capitalized and depreciated using the straight-line method at rates sufficient to depreciate such costs over the shorter of estimated productive lives of such facilities, lease term, or the useful life of the individual assets. Productive lives range from 7 to 30 years for buildings and improvements and 3 to 10 years for machinery and equipment. Certain mining equipment is depreciated using the units-of-production method based upon estimated total proven and probable reserves.
Mining Properties and Mine Development
Capitalization of mine development costs begins once all operating permits have been secured, mineralization is classified as proven and probable reserves and a final feasibility study has been completed. Mine development costs include engineering and metallurgical studies, drilling and other related costs to delineate an ore body, the removal of overburden to initially expose an ore body at open pit surface mines and the building of access ways, shafts, lateral access, drifts, ramps and other infrastructure at underground mines. Costs incurred before mineralization are classified as proven and probable reserves are expensed and classified as exploration or pre-development expense. Mine development costs are amortized using the units of production method over the estimated life of the ore body based on recoverable ounces to be mined from proven and probable reserves. Interest expense allocable to the cost of developing mining properties and to construct new facilities is capitalized until assets are ready for their intended use.
Drilling and related costs incurred at the Company’s operating mines are expensed as incurred in
Exploration,
unless the Company can conclude with a high degree of confidence, prior to the commencement of a drilling program, that the drilling costs will result in the conversion of a mineral resource into proven and probable reserves. The Company’s assessment is based on the following factors: results from previous drill programs; results from geological models; results from a mine scoping study confirming economic viability of the resource; and preliminary estimates of mine inventory, ore grade, cash flow and mine life.
In addition, the Company must have all permitting and/or contractual requirements necessary to have the right to and/or control
of the future benefit from the targeted ore body. The costs of a drilling program that meet these criteria are capitalized as mine
development costs. Drilling and related costs of approximately
$12.9 million
and
$6.0 million
at December 31, 2016 and 2015, respectively, were capitalized.
The cost of removing overburden and waste materials to access the ore body at an open pit mine prior to the production phase are referred to as “pre-stripping costs.” Pre-stripping costs are capitalized during the development of an open pit mine. Stripping costs incurred during the production phase of a mine are variable production costs that are included as a component of inventory to be recognized in Costs applicable to sales in the same period as the revenue from the sale of inventory.
Mineral Interests
Significant payments related to the acquisition of land and mineral rights are capitalized. Prior to acquiring such land or mineral rights, the Company generally makes a preliminary evaluation to determine that the property has significant potential to develop an economic ore body. The time between initial acquisition and full evaluation of a property’s potential is variable and is determined by many factors including: location relative to existing infrastructure, the property’s stage of development, geological
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
controls and metal prices. If a mineable ore body is discovered, such costs are amortized when production begins using the units of- production method based on recoverable ounces to be mined from proven and probable reserves. If no mineable ore body is discovered, such costs are expensed in the period in which it is determined the property has no future economic value.
Write-downs
We review and evaluate our long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Asset impairment is considered to exist if the total estimated undiscounted pretax future cash flows are less than the carrying amount of the asset. In estimating future cash flows, assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of future cash flows from other asset groups. An impairment loss is measured by discounted estimated future cash flows, and recorded by reducing the asset's carrying amount to fair value. Future cash flows are estimated based on estimated quantities of recoverable minerals, expected silver and gold prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans. During 2016, 2015, and 2014, we recorded impairments of
$4.4 million
,
$313.3 million
, and
$1,472.7 million
, respectively, to reduce the carrying value of mining properties and property, plant and equipment as part of
Write-downs.
Existing proven and probable reserves and value beyond proven and probable reserves, including mineralization other than proven and probable reserves are included when determining the fair value of mine site asset groups at acquisition and, subsequently, in determining whether the assets are impaired. The term “recoverable minerals” refers to the estimated amount of silver and gold that will be obtained after taking into account losses during ore processing and treatment. Estimates of recoverable minerals from exploration stage mineral interests are risk adjusted based on management’s relative confidence in such materials. The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those risk factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material could ultimately be mined economically. Assets classified as exploration potential have the highest level of risk that the carrying value of the asset can be ultimately realized, due to the still lower level of geological confidence and economic modeling.
Silver and gold prices are volatile and affected by many factors beyond the Company’s control, including prevailing interest rates and returns on other asset classes, expectations regarding inflation, speculation, currency values, governmental decisions regarding precious metals stockpiles, global and regional demand and production, political and economic conditions and other factors may affect the key assumptions used in the Company’s impairment testing. Various factors could impact our ability to achieve forecasted production levels from proven and probable reserves. Additionally, production, capital and reclamation costs could differ from the assumptions used in the cash flow models used to assess impairment. Actual results may vary from the Company’s estimates and result in additional
Write-downs
.
Restricted Assets
The Company, under the terms of its self-insurance and bonding agreements with certain banks, lending institutions and regulatory agencies, is required to collateralize certain portions of its obligations. The Company has collateralized these obligations by assigning certificates of deposit that have maturity dates ranging from three months to a year, to the respective institutions or agencies. At December 31, 2016 and 2015, the Company held certificates of deposit and cash under these agreements of
$17.6 million
and
$11.6 million
, respectively. The ultimate timing of the release of the collateralized amounts is dependent on the timing and closure of each mine and repayment of the facility. In order to release the collateral, the Company must seek approval from certain government agencies responsible for monitoring the mine closure status. Collateral could also be released to the extent the Company is able to secure alternative financial assurance satisfactory to the regulatory agencies. The Company believes there is a reasonable probability that the collateral will remain in place beyond a twelve-month period and has therefore classified these
investments as long-term.
Reclamation
The Company recognizes obligations for the expected future retirement of tangible long-lived assets and other associated asset retirement costs. The fair value of a liability for an asset retirement obligation will be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. An accretion cost, representing the increase over time in the present value of the liability, is recorded each period in
Pre-development, reclamation, and other
. As reclamation work is performed or liabilities are otherwise settled, the recorded amount of the liability is reduced. Future remediation costs for inactive mines are accrued based on management’s best estimate at the end of each period of the discounted costs expected to be incurred at the site. Such cost estimates include, where applicable, ongoing care and maintenance and monitoring costs. Changes in estimates are reflected prospectively in the period an estimate is revised.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Revenue Recognition
Revenue is recognized, net of treatment and refining charges, when persuasive evidence of an arrangement exists, delivery
has occurred, the price is fixed or determinable, no obligations remain, and collection is probable.
Under the Company’s concentrate sales contracts with third-party smelters, gold and silver prices are set on a specified future quotational period, typically one to three months, after the shipment date based on market prices.
Revenue
and
Costs Applicable to Sales
are recorded on a gross basis under these contracts at the time title passes to the buyer based on the forward price for the expected settlement period. The contracts, in general, provide for provisional payment based upon provisional assays and forward metal prices. Final settlement is based on the average applicable price for the specified future quotational period and generally occurs from three to six months after shipment. The Company’s provisionally priced sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of concentrates measured at the forward price at the time of sale. The embedded derivative does not qualify for hedge accounting and is adjusted to fair value through revenue each period until the date of final gold and silver settlement.
Foreign Currency
The assets and liabilities of the Company’s foreign subsidiaries are measured using U.S. dollars as their functional currency. Revenues and expenses are translated at the average exchange rate for the period. Foreign currency gains and losses are included in the determination of net income or loss.
Derivative Financial Instruments
Company recognizes all derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value. Changes in the value of derivative instruments are recorded each period in the Consolidated Statement of Comprehensive Income (Loss) in
Fair value adjustments, net
. Management applies judgment in estimating the fair value of instruments that are highly sensitive to assumptions regarding commodity prices, market volatilities, and foreign currency exchange rates.
Stock-based Compensation
The Company estimates the fair value of stock options using the Black-Scholes option pricing model and stock appreciation rights (“SARs”) awards using market comparison. Stock options granted are accounted for as equity-based awards and SARs are accounted for as liability-based awards. The value of the SARs is remeasured at each reporting date. The Company estimates forfeitures of stock-based awards based on historical data and periodically adjusts the forfeiture rate. The adjustment of the forfeiture rate is recorded as a cumulative adjustment in the period the forfeiture estimate is changed. Compensation costs related to stock based compensation are included in
General and administrative expenses
,
Costs applicable to sales
, and
Property, plant, and equipment, net
as deemed appropriate.
The fair value of restricted stock based on the Company's stock price on the date of grant. The fair value of performance leverage stock units (“PSUs”) with market conditions is determined using a Monte Carlo simulation model. Stock based compensation expense related to awards with a market or performance condition is generally recognized over the vesting period of the award utilizing the graded vesting method, while all other awards are recognized on a straight-line basis. The Company's estimates may be impacted by certain variables including, but not limited to, stock price volatility, employee stock option exercise behaviors, additional stock option grants, estimates of forfeitures, the Company's performance, and related tax impacts.
Income and Mining Taxes
The Company uses an asset and liability approach which results in the recognition of deferred tax liabilities and assets for the expected future tax consequences or benefits of temporary differences between the financial reporting basis and the tax basis of assets and liabilities, as well as operating loss and tax credit carryforwards, using enacted tax rates in effect in the years in which the differences are expected to reverse.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some
portion or all of its deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities,
projected future taxable income and tax planning strategies in making this assessment. A valuation allowance has been provided
for the portion of the Company’s net deferred tax assets for which it is more likely than not that they will not be realized.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Recent Accounting Standards
In November 2016, the FASB issued ASU 2016-18, “
Statement of Cash Flows (Topic 230) - Restricted Cash,
” which will require entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. These changes become effective for the Company's fiscal year beginning January 1, 2018. The Company is currently evaluating the potential impact of implementing these changes on the Company's consolidated financial position, results of operations, and cash flows.
In August 2016, the FASB issued ASU 2016-15, “
Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments,
” which provides guidance on presentation and classification of certain cash receipts and payments in the statement of cash flows. These changes become effective for the Company's fiscal year beginning January 1, 2018. The Company is currently evaluating this standard and does not expect this ASU to materially impact the Company's consolidated net income, financial position or cash flows.
In March 2016, the FASB issued ASU 2016-09, “
Improvements to Employee Share-Based Payment Accounting,
” which amends several aspects of the accounting for share-based payment transaction, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. These changes become effective for the Company's fiscal year beginning January 1, 2017. The Company is currently evaluating this standard and does not expect this ASU to impact the Company's consolidated net income, financial position or cash flows.
In February 2016, the FASB issued ASU 2016-02, “
Leases,
” which will require lessees to recognize assets and liabilities for the rights and obligations created by most leases on the balance sheet. These changes become effective for the Company's fiscal year beginning January 1, 2019. Modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, is required with an option to use certain transition relief. The Company is currently evaluating the potential impact of implementing these changes on the Company's consolidated financial position, results of operations, and cash flows.
In November 2015, the FASB issued ASU 2015-17, “
Balance Sheet Classification of Deferred Taxes,
” which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as non-current. The updated guidance became effective upon early adoption January 1, 2015, and resulted in a reclassification of amounts from
Current deferred tax assets
to
Non-current deferred tax assets
and
Current deferred tax liabilities
to
Non-current deferred tax liabilities
in the current and prior periods.
In September 2015, the FASB issued ASU 2015-16, “
Simplifying the Accounting for Measurement-Period Adjustments,
” which eliminates the requirement for an acquirer to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. These changes were effective January 1, 2016. The Company's adoption had no impact on the Company's consolidated financial position, results of operations, and cash flows.
In May 2014, the FASB issued ASU 2014-09, “
Revenue from Contracts with Customers
”
,
which has subsequently been amended several times. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. These changes become effective for the Company's fiscal year beginning January 1, 2018. The Company has substantially completed its analysis of the new standard and reviewed potential impacts from timing of when control is transferred to customers, variable consideration on concentrate sales and classification of refining fees. The Company does not expect this ASU to materially impact the Company's consolidated net income, financial position or cash flows.
In July 2015, the FASB issued ASU 2015-11, “
Simplifying the Measurement of Inventory,
”
which provides a revised, simpler measurement for inventory to be measured at the lower of cost and net realizable value. These changes become effective for the Company's fiscal year beginning January 1, 2018. The Company is currently evaluating the potential impact of implementing these changes on the Company's consolidated financial position, results of operations, and cash flows.
In February 2015, the FASB issued ASU 2015-02, “
Amendments to the Consolidation Analysis,
”
which amends the consolidation requirements in ASC 810. These changes were effective January 1, 2016. The Company's adoption had no impact on the Company's consolidated financial position, results of operations, and cash flows.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 3 – SEGMENT REPORTING
The Company’s operating segments include Palmarejo, Rochester, Kensington, Wharf, San Bartolomé mines, and Coeur Capital. All operating segments are engaged in the discovery and mining of gold and silver and generate the majority of their revenues from the sale of these precious metals with the exception of Coeur Capital, which primarily holds the Endeavor silver stream. Other includes the La Preciosa project, Joaquin project, corporate office, elimination of intersegment transactions, and other items necessary to reconcile to consolidated amounts.
Financial information relating to the Company’s segments is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2016
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
San Bartolomé
|
|
Coeur Capital
|
|
Other
|
|
Total
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal sales
|
$
|
141,273
|
|
|
$
|
139,945
|
|
|
$
|
146,593
|
|
|
$
|
136,678
|
|
|
$
|
93,880
|
|
|
$
|
4,128
|
|
|
$
|
—
|
|
|
$
|
662,497
|
|
Royalties
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,280
|
|
|
—
|
|
|
3,280
|
|
|
141,273
|
|
|
139,945
|
|
|
146,593
|
|
|
136,678
|
|
|
93,880
|
|
|
7,408
|
|
|
—
|
|
|
665,777
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
(1)
|
80,820
|
|
|
89,726
|
|
|
96,731
|
|
|
66,379
|
|
|
74,166
|
|
|
1,719
|
|
|
—
|
|
|
409,541
|
|
Amortization
|
36,599
|
|
|
21,838
|
|
|
34,787
|
|
|
20,621
|
|
|
6,633
|
|
|
1,117
|
|
|
1,566
|
|
|
123,161
|
|
Exploration
|
5,063
|
|
|
841
|
|
|
3,487
|
|
|
2
|
|
|
—
|
|
|
1,797
|
|
|
1,740
|
|
|
12,930
|
|
Write-downs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,446
|
|
|
—
|
|
|
4,446
|
|
Other operating expenses
|
1,213
|
|
|
2,801
|
|
|
1,038
|
|
|
2,238
|
|
|
2,909
|
|
|
226
|
|
|
36,170
|
|
|
46,595
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) on debt extinguishments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,365
|
)
|
|
(21,365
|
)
|
Fair value adjustments, net
|
(5,814
|
)
|
|
(4,133
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,634
|
)
|
|
(11,581
|
)
|
Interest expense, net
|
(1,187
|
)
|
|
(664
|
)
|
|
(128
|
)
|
|
(69
|
)
|
|
(24
|
)
|
|
(34
|
)
|
|
(34,814
|
)
|
|
(36,920
|
)
|
Other, net
|
(12,125
|
)
|
|
(3,859
|
)
|
|
(25
|
)
|
|
17
|
|
|
1,590
|
|
|
6,014
|
|
|
10,263
|
|
|
1,875
|
|
Income and mining tax (expense) benefit
|
45,085
|
|
|
(2,785
|
)
|
|
—
|
|
|
(4,293
|
)
|
|
6,252
|
|
|
(2,504
|
)
|
|
12,484
|
|
|
54,239
|
|
Net income (loss)
|
$
|
43,537
|
|
|
$
|
13,298
|
|
|
$
|
10,397
|
|
|
$
|
43,093
|
|
|
$
|
17,990
|
|
|
$
|
1,579
|
|
|
$
|
(74,542
|
)
|
|
$
|
55,352
|
|
Segment assets
(2)
|
$
|
436,642
|
|
|
$
|
219,009
|
|
|
$
|
199,232
|
|
|
$
|
105,901
|
|
|
$
|
76,317
|
|
|
$
|
9,285
|
|
|
$
|
75,652
|
|
|
$
|
1,122,038
|
|
Capital expenditures
|
$
|
35,810
|
|
|
$
|
16,446
|
|
|
$
|
36,826
|
|
|
$
|
4,812
|
|
|
$
|
6,631
|
|
|
$
|
—
|
|
|
$
|
488
|
|
|
$
|
101,013
|
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interest
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2015
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
San Bartolomé
|
|
Coeur Capital
|
|
Other
|
|
Total
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal sales
|
$
|
169,133
|
|
|
$
|
143,930
|
|
|
$
|
148,710
|
|
|
$
|
84,052
|
|
|
$
|
84,679
|
|
|
$
|
8,732
|
|
|
$
|
—
|
|
|
$
|
639,236
|
|
Royalties
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,850
|
|
|
—
|
|
|
6,850
|
|
|
169,133
|
|
|
143,930
|
|
|
148,710
|
|
|
84,052
|
|
|
84,679
|
|
|
15,582
|
|
|
—
|
|
|
646,086
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
(1)
|
138,476
|
|
|
103,994
|
|
|
105,640
|
|
|
52,197
|
|
|
75,827
|
|
|
3,520
|
|
|
—
|
|
|
479,654
|
|
Amortization
|
32,423
|
|
|
23,906
|
|
|
42,240
|
|
|
16,378
|
|
|
17,798
|
|
|
9,010
|
|
|
1,996
|
|
|
143,751
|
|
Exploration
|
4,533
|
|
|
1,324
|
|
|
2,596
|
|
|
134
|
|
|
126
|
|
|
(124
|
)
|
|
3,058
|
|
|
11,647
|
|
Write-downs
|
224,507
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
66,712
|
|
|
22,118
|
|
|
—
|
|
|
313,337
|
|
Other operating expenses
|
1,293
|
|
|
2,948
|
|
|
1,301
|
|
|
1,717
|
|
|
1,787
|
|
|
33
|
|
|
41,548
|
|
|
50,627
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) on debt extinguishments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,916
|
|
|
15,916
|
|
Fair value adjustments, net
|
3,160
|
|
|
818
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,224
|
|
|
5,202
|
|
Interest expense, net
|
(4,269
|
)
|
|
(748
|
)
|
|
(218
|
)
|
|
—
|
|
|
(725
|
)
|
|
—
|
|
|
(39,743
|
)
|
|
(45,703
|
)
|
Other, net
|
(10,968
|
)
|
|
(13
|
)
|
|
7
|
|
|
143
|
|
|
1,557
|
|
|
(3,182
|
)
|
|
(3,475
|
)
|
|
(15,931
|
)
|
Income and mining tax (expense) benefit
|
37,597
|
|
|
(1,497
|
)
|
|
—
|
|
|
(857
|
)
|
|
(5,154
|
)
|
|
5,542
|
|
|
(9,368
|
)
|
|
26,263
|
|
Net income (loss)
|
$
|
(206,579
|
)
|
|
$
|
10,318
|
|
|
$
|
(3,278
|
)
|
|
$
|
12,912
|
|
|
$
|
(81,893
|
)
|
|
$
|
(16,615
|
)
|
|
$
|
(82,048
|
)
|
|
$
|
(367,183
|
)
|
Segment assets
(2)
|
$
|
406,648
|
|
|
$
|
190,714
|
|
|
$
|
197,873
|
|
|
$
|
113,305
|
|
|
$
|
91,141
|
|
|
$
|
27,892
|
|
|
$
|
75,737
|
|
|
$
|
1,103,310
|
|
Capital expenditures
|
$
|
35,991
|
|
|
$
|
25,330
|
|
|
$
|
23,834
|
|
|
$
|
3,211
|
|
|
$
|
6,220
|
|
|
$
|
—
|
|
|
$
|
607
|
|
|
$
|
95,193
|
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2014
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
San Bartolomé
|
|
Coeur Capital
|
|
Other
|
|
Total
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal sales
|
$
|
244,003
|
|
|
$
|
123,768
|
|
|
$
|
136,960
|
|
|
$
|
117,749
|
|
|
$
|
10,046
|
|
|
$
|
—
|
|
|
$
|
632,526
|
|
Royalties
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,216
|
|
|
—
|
|
|
3,216
|
|
|
244,003
|
|
|
123,768
|
|
|
136,960
|
|
|
117,749
|
|
|
13,262
|
|
|
—
|
|
|
635,742
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
(1)
|
187,276
|
|
|
91,462
|
|
|
105,342
|
|
|
89,659
|
|
|
4,206
|
|
|
—
|
|
|
477,945
|
|
Amortization
|
69,431
|
|
|
20,790
|
|
|
43,619
|
|
|
19,423
|
|
|
7,015
|
|
|
2,158
|
|
|
162,436
|
|
Exploration
|
6,671
|
|
|
2,636
|
|
|
8,005
|
|
|
120
|
|
|
515
|
|
|
3,793
|
|
|
21,740
|
|
Write-downs
|
784,038
|
|
|
—
|
|
|
107,832
|
|
|
118,754
|
|
|
6,202
|
|
|
455,895
|
|
|
1,472,721
|
|
Other operating expenses
|
620
|
|
|
2,813
|
|
|
796
|
|
|
(251
|
)
|
|
938
|
|
|
61,966
|
|
|
66,882
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustments, net
|
(1,847
|
)
|
|
3,653
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,812
|
|
|
3,618
|
|
Interest expense, net
|
(9,320
|
)
|
|
(679
|
)
|
|
(214
|
)
|
|
(52
|
)
|
|
(1
|
)
|
|
(37,280
|
)
|
|
(47,546
|
)
|
Other, net
|
131
|
|
|
105
|
|
|
(22
|
)
|
|
2,461
|
|
|
(7,141
|
)
|
|
(752
|
)
|
|
(5,218
|
)
|
Income and mining tax (expense) benefit
|
251,840
|
|
|
(2,224
|
)
|
|
—
|
|
|
18,114
|
|
|
2,067
|
|
|
158,457
|
|
|
428,254
|
|
Net income (loss)
|
$
|
(563,229
|
)
|
|
$
|
6,922
|
|
|
$
|
(128,870
|
)
|
|
$
|
(89,433
|
)
|
|
$
|
(10,689
|
)
|
|
$
|
(401,575
|
)
|
|
$
|
(1,186,874
|
)
|
Segment assets
(2)
|
$
|
332,369
|
|
|
$
|
196,765
|
|
|
$
|
215,973
|
|
|
$
|
188,616
|
|
|
$
|
59,848
|
|
|
$
|
81,688
|
|
|
$
|
1,075,259
|
|
Capital expenditures
|
$
|
26,084
|
|
|
$
|
11,898
|
|
|
$
|
16,220
|
|
|
$
|
7,937
|
|
|
$
|
—
|
|
|
$
|
2,105
|
|
|
$
|
64,244
|
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
|
|
|
|
|
|
|
|
|
Assets
|
December 31, 2016
|
|
December 31, 2015
|
Total assets for reportable segments
|
$
|
1,122,038
|
|
|
$
|
1,103,310
|
|
Cash and cash equivalents
|
162,182
|
|
|
200,714
|
|
Other assets
|
34,689
|
|
|
28,465
|
|
Total consolidated assets
|
$
|
1,318,909
|
|
|
$
|
1,332,489
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Geographic Information
|
|
|
|
|
|
|
|
|
Long-Lived Assets
|
December 31, 2016
|
|
December 31, 2015
|
Mexico
|
$
|
397,697
|
|
|
$
|
390,694
|
|
United States
|
338,897
|
|
|
336,210
|
|
Bolivia
|
31,539
|
|
|
35,201
|
|
Australia
|
2,983
|
|
|
5,952
|
|
Argentina
|
10,228
|
|
|
10,871
|
|
Other
|
5,564
|
|
|
9,058
|
|
Total
|
$
|
786,908
|
|
|
$
|
787,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
Year ended December 31,
|
2016
|
|
2015
|
|
2014
|
United States
|
$
|
423,216
|
|
|
$
|
376,692
|
|
|
$
|
260,728
|
|
Mexico
|
142,198
|
|
|
171,911
|
|
|
245,493
|
|
Bolivia
|
93,880
|
|
|
84,679
|
|
|
117,749
|
|
Australia
|
4,128
|
|
|
8,732
|
|
|
10,046
|
|
Other
|
2,355
|
|
|
4,072
|
|
|
1,726
|
|
Total
|
$
|
665,777
|
|
|
$
|
646,086
|
|
|
$
|
635,742
|
|
The Company's doré, as well as the concentrate produced by the Wharf mine, is refined into gold and silver bullion according to benchmark standards set by the LBMA, which regulates the acceptable requirements for bullion traded in the London precious metals markets. The Company sells its silver and gold bullion to multi-national banks, bullion trading houses, and refiners across the globe. The Company has
eleven
trading counterparties at December 31, 2016. The Company's sales of doré and concentrate product produced by the Wharf mine amounted to approximately
77%
,
74%
, and
63%
of total metal sales for the years ended December 31, 2016, 2015, and 2014, respectively. Generally, the loss of a single bullion trading counterparty would not adversely affect the Company due to the liquidity of the markets and availability of alternative trading counterparties.
The Company's concentrate produced by the Kensington mine is sold to smelters under purchase and sale agreements, and the smelters pay the Company for the gold and silver recovered from the concentrates. The concentrate was sold to
two
smelters at December 31, 2016. The Company's sales of concentrate produced by the Kensington mine amounted to approximately
23%
,
26%
, and
37%
of total metal sales for the years ended December 31, 2016, 2015, and 2014, respectively. While the loss of a smelter may have a material adverse effect if alternate smelters are not available or if the failure to engage a new smelter results in a delay in the sale or purchase of Kensington concentrate, the Company believes that there is sufficient global capacity available to address the loss of a smelter.
The following table indicates customers that represent 10% or more of total sales of metal for at least one of the years December 31, 2016, 2015, and 2014 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
Customer
|
|
2016
|
|
2015
|
|
2014
|
|
Segments reporting revenue
|
China National Gold
|
|
$
|
126.6
|
|
|
$
|
126.2
|
|
|
$
|
86.8
|
|
|
Kensington
|
Ohio Precious Metals
|
|
98.4
|
|
|
37.3
|
|
|
8.3
|
|
|
Palmarejo, San Bartolomé,
|
Republic Metal Corporation
|
|
93.3
|
|
|
47.7
|
|
|
4.0
|
|
|
Palmarejo, San Bartolomé, Wharf
|
INTL Commodities
|
|
76.7
|
|
|
33.1
|
|
|
22.4
|
|
|
Palmarejo, San Bartolomé, Rochester, Wharf
|
Asahi (formerly Johnson Matthey)
|
|
62.6
|
|
|
84.2
|
|
|
71.8
|
|
|
Wharf, Rochester, San Bartolomé
|
Standard Bank
|
|
29.0
|
|
|
34.7
|
|
|
87.5
|
|
|
Palmarejo, Rochester
|
TD Securities
|
|
15.5
|
|
|
81.3
|
|
|
106.7
|
|
|
Palmarejo, Rochester
|
Mitsui & Co.
|
|
—
|
|
|
137.7
|
|
|
133.8
|
|
|
Palmarejo, Rochester
|
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 4 – WRITE-DOWNS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Mining properties
|
|
|
|
|
|
|
Palmarejo
|
|
$
|
—
|
|
|
$
|
205,803
|
|
|
$
|
668,803
|
|
San Bartolomé
|
|
—
|
|
|
16,690
|
|
|
32,328
|
|
Kensington
|
|
—
|
|
|
—
|
|
|
67,671
|
|
La Preciosa
|
|
—
|
|
|
—
|
|
|
371,411
|
|
Joaquin
|
|
—
|
|
|
—
|
|
|
83,429
|
|
Coeur Capital
|
|
4,446
|
|
|
22,118
|
|
|
6,202
|
|
|
|
4,446
|
|
|
244,611
|
|
|
1,229,844
|
|
|
|
|
|
|
|
|
Property, plant, and equipment
|
|
|
|
|
|
|
Palmarejo
|
|
$
|
—
|
|
|
$
|
18,704
|
|
|
$
|
115,235
|
|
San Bartolomé
|
|
—
|
|
|
50,022
|
|
|
86,426
|
|
Kensington
|
|
—
|
|
|
—
|
|
|
40,161
|
|
La Preciosa
|
|
—
|
|
|
—
|
|
|
1,055
|
|
|
|
—
|
|
|
68,726
|
|
|
242,877
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,446
|
|
|
$
|
313,337
|
|
|
$
|
1,472,721
|
|
The 2016 write-down of
$4.4 million
(
$3.9 million
net of tax) was due to the impairment of Coeur Capital assets. The operator of the Endeavor mine in Australia, on which the Company holds a 100% silver stream, announced in early 2016 a significant curtailment of production due to low lead and zinc prices. As a result, Coeur recorded a
$2.5 million
write-down of the mineral interest associated with the Endeavor silver stream at March 31, 2016. In April 2016, Coeur sold its tiered NSR royalty on the El Gallo mine to the operator, a subsidiary of McEwen Mining Inc., for total consideration of approximately
$6.3 million
, including
$1 million
in contingent consideration. In anticipation of this sale, the Company recorded a
$1.9 million
write-down of the mineral interest at March 31, 2016.
The 2015 write-down of
$313.3 million
(
$276.5 million
net of tax) was due to a
$224.5 million
impairment of the Palmarejo
complex (
$193.5 million
net of tax), a
$66.7 million
impairment of the San Bartolomé mine, and a
$22.1 million
impairment
(
$16.3 million
net of tax) of certain Coeur Capital assets, including the Endeavor silver stream and other royalties. The non-cash
impairment charges were largely driven by significant decreases in long-term metal price assumptions and revised mine plans in
the fourth quarter. For purposes of this evaluation, estimates of future cash flows of the individual reporting units were used to
determine fair value. The estimated cash flows were derived from life-of-mine plans, developed using long-term pricing reflective
of the current price environment and management’s projections for operating costs.
The 2014 write-down of
$1,472.7 million
(
$1,021.8 million
net of tax) was primarily due to a
$784.0 million
impairment
of the Palmarejo complex (
$504.5 million
net of tax) and a
$372.5 million
impairment of the La Preciosa project (
$244.9 million
net of tax) due to a decrease in the Company's long-term silver and gold price assumptions reflective of the current silver and gold
price environment and revised mine plans.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 5 – 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 operating sites are as follows:
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
In thousands
|
2016
|
|
2015
|
Asset retirement obligation - Beginning
|
$
|
82,072
|
|
|
$
|
67,214
|
|
Accretion
|
8,136
|
|
|
7,738
|
|
Additions and changes in estimates
|
8,688
|
|
|
11,939
|
|
Settlements
|
(1,516
|
)
|
|
(4,819
|
)
|
Asset retirement obligation - Ending
|
$
|
97,380
|
|
|
$
|
82,072
|
|
The Company has accrued
$1.9 million
and
$3.2 million
at
December 31, 2016
and
December 31, 2015
, respectively, for reclamation liabilities related to former mining activities, which are included in
Reclamation.
NOTE 6 – STOCK-BASED COMPENSATION
The Company has stock incentive plans for executives and eligible employees. Stock awards include stock options, restricted stock, and performance shares. Stock-based compensation expense for the
years ended
December 31, 2016, 2015, and 2014
was
$9.7 million
,
$9.3 million
and
$9.3 million
, respectively. At
December 31, 2016
, there was
$6.3 million
of unrecognized stock-based compensation cost which is expected to be recognized over a weighted-average remaining vesting period of
1.4 years
.
Stock Options and Stock Appreciation Rights
Stock options and stock appreciation rights (SARs) granted under the Company’s incentive plans vest over three years and are exercisable over a period not to exceed ten years from the grant date. The exercise price of stock options is equal to the fair market value of the shares on the date of the grant. The value of each stock option award is estimated using the Black-Scholes option pricing model. Stock options are accounted for as equity awards and SARs are accounted for as liability awards and remeasured at each reporting date. SARs, when vested, provide the participant the right to receive cash equal to the excess of the market price of the shares over the exercise price when exercised.
The following table sets forth the weighted average fair value of stock options and the assumptions used to estimate the fair value of the stock options using the Black-Scholes option valuation model:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
Weighted average fair value of stock options granted
|
$
|
1.06
|
|
|
$
|
2.65
|
|
|
$
|
3.79
|
|
Volatility
|
61.75
|
%
|
|
55.71
|
%
|
|
50.93
|
%
|
Expected life in years
|
3.99
|
|
|
4.75
|
|
|
3.92
|
|
Risk-free interest rate
|
1.50
|
%
|
|
1.51
|
%
|
|
1.25
|
%
|
Dividend yield
|
—
|
|
|
—
|
|
|
—
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The following table summarizes stock option and SAR activity for the years ended December 31, 2016, 2015, and 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
SARs
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
Outstanding at December 31, 2013
|
415,570
|
|
|
$
|
27.36
|
|
|
50,209
|
|
|
$
|
14.15
|
|
Granted
|
415,172
|
|
|
9.45
|
|
|
—
|
|
|
—
|
|
Canceled/forfeited
|
(232,396
|
)
|
|
23.94
|
|
|
(3,637
|
)
|
|
15.40
|
|
Outstanding at December 31, 2014
|
598,346
|
|
|
16.26
|
|
|
46,572
|
|
|
14.06
|
|
Granted
|
310,028
|
|
|
5.57
|
|
|
—
|
|
|
—
|
|
Canceled/forfeited
|
(238,365
|
)
|
|
12.69
|
|
|
—
|
|
|
—
|
|
Outstanding at December 31, 2015
|
670,009
|
|
|
12.58
|
|
|
46,572
|
|
|
14.06
|
|
Granted
|
183,251
|
|
|
2.19
|
|
|
—
|
|
|
—
|
|
Exercised
|
(170,897
|
)
|
|
7.81
|
|
|
—
|
|
|
—
|
|
Canceled/forfeited
|
(25,752
|
)
|
|
16.76
|
|
|
(4,420
|
)
|
|
13.31
|
|
Outstanding at December 31, 2016
|
656,611
|
|
|
$
|
10.76
|
|
|
42,152
|
|
|
$
|
14.14
|
|
The following table summarizes outstanding stock options as of December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range of
Exercise Price
|
Number
Outstanding
|
|
Weighted Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
|
Aggregate Intrinsic Value (in thousands)
|
$ 0.00-$10.00
|
455,578
|
|
|
$
|
5.32
|
|
|
8.19
|
|
|
$10.00-$20.00
|
52,616
|
|
|
13.33
|
|
|
6.64
|
|
|
$20.00-$30.00
|
141,947
|
|
|
25.73
|
|
|
5.26
|
|
|
$30.00-$40.00
|
3,134
|
|
|
39.90
|
|
|
0.22
|
|
|
$40.00-$50.00
|
3,336
|
|
|
48.50
|
|
|
1.03
|
|
|
Outstanding
|
656,611
|
|
|
$
|
10.76
|
|
|
7.36
|
|
$
|
1,753
|
|
Vested and expected to vest
|
618,870
|
|
|
$
|
11.20
|
|
|
7.27
|
|
$
|
1,555
|
|
Exercisable
|
292,524
|
|
|
$
|
18.31
|
|
|
5.97
|
|
$
|
118
|
|
At December 31, 2016, there was
$0.2 million
of unrecognized compensation cost related to non-vested stock options to be recognized over a weighted average period of
1.1 years
.
The total intrinsic value of options exercised for the year ended December 31, 2016 was
$1.1 million
. Cash received from options exercised for the year ended December 31, 2016 was
$1.3 million
for which there was no related tax benefit.The grant date fair value for stock options vested during the years ended December 31, 2016, 2015 and 2014 was
$1.0 million
,
$1.4 million
and
$1.3 million
, respectively.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Restricted Stock
Restricted stock granted under the Company’s incentive plans are accounted for based on the market value of the underlying shares on the date of grant and vest in equal installments annually over three years. Restricted stock awards are accounted for as equity awards. Holders of restricted stock are entitled to vote the shares and to receive any dividends declared on the shares.
The following table summarizes restricted stock activity for the years ended December 31, 2016, 2015, and 2014:
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
Outstanding at December 31, 2013
|
613,086
|
|
|
$
|
16.68
|
|
Granted
|
695,897
|
|
|
9.83
|
|
Vested
|
(234,103
|
)
|
|
17.16
|
|
Cancelled/Forfeited
|
(172,881
|
)
|
|
11.87
|
|
Outstanding at December 31, 2014
|
901,999
|
|
|
12.19
|
|
Granted
|
1,180,384
|
|
|
5.49
|
|
Vested
|
(317,122
|
)
|
|
13.38
|
|
Cancelled/Forfeited
|
(257,849
|
)
|
|
7.59
|
|
Outstanding at December 31, 2015
|
1,507,412
|
|
|
7.49
|
|
Granted
|
1,768,746
|
|
|
3.72
|
|
Vested
|
(681,829
|
)
|
|
8.51
|
|
Cancelled/Forfeited
|
(160,414
|
)
|
|
7.16
|
|
Outstanding at December 31, 2016
|
2,433,915
|
|
|
$
|
4.48
|
|
At December 31, 2016, there was
$3.4 million
of unrecognized compensation cost related to restricted stock awards to be recognized over a weighted-average period of
1.4 years
.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Performance Shares
Performance shares granted under the Company’s incentive plans are accounted for at fair value using a Monte Carlo simulation valuation model on the date of grant. Performance share awards are accounted for as equity awards. The performance shares vest at the end of a three-year service period if relative stockholder return and internal performance metrics are met. The existence of a market condition requires recognition of compensation cost for the performance share awards over the requisite period regardless of whether the relative stockholder return metric is met.
The following table summarizes performance shares activity for the years ended December 31, 2016, 2015, and 2014:
|
|
|
|
|
|
|
|
|
Performance Shares
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
Outstanding at December 31, 2013
|
210,395
|
|
|
$
|
28.04
|
|
Granted
|
358,398
|
|
|
12.21
|
|
Vested
|
(34,611
|
)
|
|
27.18
|
|
Cancelled/Forfeited
|
(17,352
|
)
|
|
27.15
|
|
Outstanding at December 31, 2014
|
516,830
|
|
|
17.61
|
|
Granted
|
809,293
|
|
|
6.97
|
|
Cancelled/Forfeited
|
(190,988
|
)
|
|
15.62
|
|
Outstanding at December 31, 2015
|
1,135,135
|
|
|
10.35
|
|
Granted
|
1,437,077
|
|
|
1.79
|
|
Cancelled/Forfeited
|
(199,580
|
)
|
|
17.98
|
|
Outstanding at December 31, 2016
|
2,372,632
|
|
|
$
|
4.53
|
|
At December 31, 2016, there was
$2.8 million
of unrecognized compensation cost related to performance shares to be recognized over a weighted average period of
1.5 years
.
Supplemental Incentive Plan
In 2014, the Company adopted a supplemental incentive plan under which benefits were payable upon achievement of certain performance and market conditions. The maximum potential incentive payout under the plan was
$3.8 million
, of which
$3.0 million
was settled in cash in 2016. No additional amounts are payable under the plan.
NOTE 7 – RETIREMENT SAVINGS PLAN
The Company has a 401(k) retirement savings plan that covers all eligible U.S. employees. Eligible employees may elect to contribute up to
75%
of base salary, subject to ERISA limitations. In addition, the Company has a deferred compensation plan for employees whose benefits under the 401(k) plan are limited by federal regulations. The Company generally makes matching contributions equal to
100%
of the employee’s contribution up to
4%
of the employee's salary. The Company may also provide an additional contribution based on an eligible employee's salary. Total plan expenses recognized for the
years ended
December 31, 2016
, 2015, and 2014 were
$5.4 million
,
$2.9 million
, and
$2.6 million
, respectively.
NOTE 8 - OTHER, NET
Other, net
consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
In thousands
|
2016
|
|
2015
|
|
2014
|
Foreign exchange gain (loss)
|
$
|
(10,720
|
)
|
|
$
|
(15,769
|
)
|
|
$
|
470
|
|
Gain on sale of assets and investments
|
11,334
|
|
|
(352
|
)
|
|
(530
|
)
|
Impairment of equity securities
|
(703
|
)
|
|
(2,346
|
)
|
|
(6,593
|
)
|
Other
|
1,964
|
|
|
2,536
|
|
|
1,435
|
|
Other, net
|
$
|
1,875
|
|
|
$
|
(15,931
|
)
|
|
$
|
(5,218
|
)
|
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 9 – INCOME AND MINING TAXES
The components of
Income (loss) before income taxes
are below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
In thousands
|
2016
|
|
2015
|
|
2014
|
United States
|
$
|
(13,112
|
)
|
|
$
|
(43,924
|
)
|
|
$
|
(213,883
|
)
|
Foreign
|
14,225
|
|
|
(349,522
|
)
|
|
(1,401,245
|
)
|
Total
|
$
|
1,113
|
|
|
$
|
(393,446
|
)
|
|
$
|
(1,615,128
|
)
|
The components of the consolidated
Income and mining tax (expense) benefit
from continuing operations are below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
In thousands
|
2016
|
|
2015
|
|
2014
|
Current:
|
|
|
|
|
|
|
|
|
United States
|
$
|
—
|
|
|
$
|
49
|
|
|
$
|
904
|
|
United States — State mining taxes
|
(7,826
|
)
|
|
(4,305
|
)
|
|
(879
|
)
|
United States — Foreign withholding tax
|
(4,263
|
)
|
|
—
|
|
|
(6,250
|
)
|
Argentina
|
10
|
|
|
715
|
|
|
(71
|
)
|
Australia
|
14
|
|
|
130
|
|
|
—
|
|
Bolivia
|
6,252
|
|
|
(5,154
|
)
|
|
(4,008
|
)
|
Canada
|
(1,841
|
)
|
|
(516
|
)
|
|
(145
|
)
|
Mexico
|
(9,581
|
)
|
|
(476
|
)
|
|
(10,122
|
)
|
Deferred:
|
|
|
|
|
|
United States
|
15,556
|
|
|
1,778
|
|
|
5,743
|
|
United States — State mining taxes
|
748
|
|
|
1,952
|
|
|
—
|
|
Argentina
|
115
|
|
|
(1,197
|
)
|
|
24,478
|
|
Australia
|
(1,638
|
)
|
|
3,223
|
|
|
(401
|
)
|
Bolivia
|
—
|
|
|
—
|
|
|
22,122
|
|
Canada
|
1,338
|
|
|
2,875
|
|
|
2,662
|
|
Mexico
|
55,383
|
|
|
27,189
|
|
|
394,221
|
|
New Zealand
|
(28
|
)
|
|
—
|
|
|
—
|
|
Income tax (expense) benefit
|
$
|
54,239
|
|
|
$
|
26,263
|
|
|
$
|
428,254
|
|
The Company’s effective tax rate is impacted by recurring items, such as foreign exchange rates on deferred tax balances, uncertain tax positions, and the full valuation allowance on the deferred tax assets relating to losses in the United States and certain foreign jurisdictions. During the year ended December 31, 2016, the Company completed a legal entity reorganization to integrate recent acquisitions resulting in a valuation allowance release of
$40.8 million
and recorded a
$15.0 million
deferred tax benefit related to unremitted earnings. In addition, the Company's consolidated effective income and mining tax rate is a function of the combined effective tax rates and foreign exchange rates in the jurisdictions in which it operates. Variations in the jurisdictional mix of income and loss and foreign exchange rates result in significant fluctuations in our consolidated effective tax rate.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
A reconciliation of the Company’s effective tax rate with the federal statutory tax rate for the periods indicated is below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
In thousands
|
2016
|
|
2015
|
|
2014
|
Income and mining tax (expense) benefit at statutory rate
|
$
|
(390
|
)
|
|
$
|
137,706
|
|
|
$
|
565,295
|
|
State tax provision from continuing operations
|
336
|
|
|
(2,075
|
)
|
|
20,253
|
|
Change in valuation allowance
|
61,146
|
|
|
(101,027
|
)
|
|
(151,191
|
)
|
Percentage depletion
|
983
|
|
|
—
|
|
|
—
|
|
Uncertain tax positions
|
(4,619
|
)
|
|
(1,947
|
)
|
|
(4,425
|
)
|
U.S. and foreign non-deductible expenses
|
(5,764
|
)
|
|
1,365
|
|
|
(4,892
|
)
|
Mineral interest related
|
—
|
|
|
(19,310
|
)
|
|
—
|
|
Foreign exchange rates
|
19,701
|
|
|
22,350
|
|
|
23,672
|
|
Foreign inflation and indexing
|
2,794
|
|
|
1,117
|
|
|
3,765
|
|
Foreign tax rate differences
|
413
|
|
|
(15,980
|
)
|
|
(63,930
|
)
|
Foreign withholding and other taxes
|
(13,478
|
)
|
|
8,140
|
|
|
82,884
|
|
Foreign tax credits and other, net
|
102
|
|
|
(4,076
|
)
|
|
(43,177
|
)
|
Legal entity reorganization
|
(6,985
|
)
|
|
—
|
|
|
—
|
|
Income and mining tax (expense) benefit
|
$
|
54,239
|
|
|
$
|
26,263
|
|
|
$
|
428,254
|
|
At December 31, 2016 and 2015, the significant components of the Company’s deferred tax assets and liabilities are below:
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
In thousands
|
2016
|
|
2015
|
Deferred tax liabilities:
|
|
|
|
|
|
Mexican mining tax
|
$
|
—
|
|
|
$
|
15,451
|
|
Mineral properties
|
69,799
|
|
|
—
|
|
Foreign subsidiaries — unremitted earnings
|
1,302
|
|
|
12,999
|
|
Inventory
|
4,426
|
|
|
2,353
|
|
Royalty and other long-term debt
|
8,685
|
|
|
1,648
|
|
|
$
|
84,212
|
|
|
$
|
32,451
|
|
Deferred tax assets:
|
|
|
|
|
|
Net operating loss carryforwards
|
202,756
|
|
|
203,958
|
|
Mineral properties
|
—
|
|
|
34,966
|
|
Property, plant, and equipment
|
87,978
|
|
|
6,980
|
|
Mexico Mining Tax
|
6,359
|
|
|
—
|
|
Capital loss carryforwards
|
6,770
|
|
|
3,938
|
|
Asset retirement obligation
|
25,255
|
|
|
21,480
|
|
Unrealized foreign currency loss and other
|
7,413
|
|
|
8,424
|
|
Accrued expenses
|
17,713
|
|
|
17,905
|
|
Tax credit carryforwards
|
31,272
|
|
|
26,439
|
|
|
385,516
|
|
|
324,090
|
|
Valuation allowance
|
(375,911
|
)
|
|
(436,829
|
)
|
|
9,605
|
|
|
(112,739
|
)
|
Net deferred tax liabilities
|
$
|
74,607
|
|
|
$
|
145,190
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
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 the section titled “Risk Factors” included in Item 1A. Based upon this analysis, the Company has recorded valuation allowances as follows:
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
In thousands
|
2016
|
|
2015
|
U.S.
|
$
|
292,446
|
|
|
$
|
292,677
|
|
Argentina
|
6,197
|
|
|
8,376
|
|
Canada
|
1,296
|
|
|
1,718
|
|
Bolivia
|
37,372
|
|
|
45,177
|
|
Mexico
|
13,033
|
|
|
63,373
|
|
New Zealand
|
23,717
|
|
|
25,508
|
|
Other
|
1,850
|
|
|
—
|
|
|
$
|
375,911
|
|
|
$
|
436,829
|
|
The Company has the following tax attribute carryforwards at December 31, 2016, by jurisdiction:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
U.S.
|
|
Argentina
|
|
Bolivia
|
|
Canada
|
|
Mexico
|
|
New Zealand
|
|
Other
|
|
Total
|
Regular net operating losses
|
$
|
330,469
|
|
|
$
|
11,621
|
|
|
$
|
63,005
|
|
|
$
|
2,301
|
|
|
$
|
91,383
|
|
|
$
|
85,258
|
|
|
$
|
63
|
|
|
$
|
584,100
|
|
Alternative minimum tax net operating losses
|
184,386
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
184,386
|
|
Capital losses
|
19,315
|
|
|
—
|
|
|
—
|
|
|
79
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,394
|
|
Alternative minimum tax credits
|
3,173
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,173
|
|
Foreign tax credits
|
24,161
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,161
|
|
The U.S. net operating losses expire from 2019 through 2036; the Argentina net operating losses will expire from 2017 to 2021; the Bolivia net operating losses will expire from 2018 to 2020; the Canada net operating losses will expire from 2029 through 2036; and the Mexico net operating losses expire from 2017 to 2026. The remaining net operating losses from the foreign jurisdictions have an indefinite carryforward period. The majority of the U.S. capital losses will expire from 2020 and 2021. Alternative minimum tax credits do not expire and foreign tax credits expire if unused beginning in 2019.
The Company intends to indefinitely reinvest earnings from Mexican operations. For the years 2016 and 2015, the Company had no unremitted earnings from this jurisdiction.
A reconciliation of the beginning and ending amount related to unrecognized tax benefits is below (in thousands):
|
|
|
|
|
Unrecognized tax benefits at January 1, 2014
|
$
|
16,084
|
|
Gross increase to current period tax positions
|
1,030
|
|
Gross increase to prior period tax positions
|
810
|
|
Reductions in unrecognized tax benefits resulting from a lapse of the applicable statute of limitations
|
—
|
|
Unrecognized tax benefits at December 31, 2015
|
$
|
17,924
|
|
Gross increase to current period tax positions
|
1,336
|
|
Gross increase to prior period tax positions
|
4,854
|
|
Reductions in unrecognized tax benefits resulting from a lapse of the applicable statute of limitations
|
(704
|
)
|
Unrecognized tax benefits at December 31, 2016
|
$
|
23,410
|
|
At December 31, 2016, 2015, and 2014,
$19.6 million
,
$17.9 million
, and
$16.1 million
, respectively, of these gross unrecognized benefits would, if recognized, decrease the Company's effective tax rate.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The Company operates in numerous countries around the world and is subject to, and pays annual income taxes under, the various income tax regimes in the countries in which it operates. The Company has historically filed, and continues to file, all required income tax returns and paid the taxes reasonably determined to be due. The tax rules and regulations in many countries are highly complex and subject to interpretation. From time to time, the Company is subject to a review of its historic income tax filings and, in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain rules to the Company’s business conducted within the country involved.
The Company files income tax returns in various U.S. federal and state jurisdictions, in all identified foreign jurisdictions, and various others. The statute of limitations remains open from 2012 for the US federal jurisdiction and from 2008 for certain other foreign jurisdictions. During 2014, the U.S. Internal Revenue Service concluded its examination of the Company's 2009, 2010, and 2011 tax years. As a result of statutes of limitations that will begin to expire within the next 12 months in various jurisdictions and possible settlement of audit-related issues with taxing authorities in various jurisdictions with respect to which none of these issues are individually significant, the Company believes that it is reasonably possible that the total amount of its unrecognized income tax liability will decrease between
$1.5 million
and
$2.5 million
in the next 12 months.
The Company classifies interest and penalties associated with uncertain tax positions as a component of income tax expense and recognized interest and penalties of
$8.7 million
,
$9.2 million
, and
$6.9 million
at December 31, 2016, 2015, and 2014, respectively.
NOTE 10 – 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 common shares 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
years ended December 31, 2016, 2015, and 2014
,
386,771
,
3,239,425
, and
1,871,681
, respectively, of common stock equivalents related to equity-based awards were not included in the diluted per share calculation as the shares would be antidilutive.
The
3.25%
Convertible Senior Notes (“Convertible Notes”) were not included in the computation of diluted net income (loss) per share for the years ended December 31, 2015, and 2014 because there is no excess value upon conversion over the principal amount of the Convertible Notes. The outstanding Convertible Notes were redeemed in the third quarter of 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
In thousands except per share amounts
|
2016
|
|
2015
|
|
2014
|
Net income (loss) available to common stockholders
|
$
|
55,352
|
|
|
$
|
(367,183
|
)
|
|
$
|
(1,186,874
|
)
|
Weighted average shares:
|
|
|
|
|
|
Basic
|
159,853
|
|
|
129,639
|
|
|
102,441
|
|
Effect of stock-based compensation plans
|
3,606
|
|
|
—
|
|
|
—
|
|
Diluted
|
163,459
|
|
|
129,639
|
|
|
102,441
|
|
Income (loss) per share:
|
|
|
|
|
|
Basic
|
$
|
0.35
|
|
|
$
|
(2.83
|
)
|
|
$
|
(11.59
|
)
|
Diluted
|
$
|
0.34
|
|
|
$
|
(2.83
|
)
|
|
$
|
(11.59
|
)
|
During the second quarter 2016, the Company completed a
$75.0 million
“at the market” common stock offering (the “
$75.0 million
offering”). In connection with the
$75.0 million
offering, the Company sold
9,253,016
shares of its common stock. During the third and fourth quarter 2016, the Company completed a
$200.0 million
“at the market” common stock offering (the “
$200.0 million
offering”). In connection with the
$200.0 million
offering, the Company sold
17,691,094
shares of its common stock.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 11 – FAIR VALUE MEASUREMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
In thousands
|
2016
|
|
2015
|
|
2014
|
Palmarejo royalty obligation embedded derivative
|
$
|
(5,866
|
)
|
|
$
|
3,101
|
|
|
$
|
(2,001
|
)
|
Rochester net smelter returns (“NSR”) royalty obligation
|
(4,133
|
)
|
|
818
|
|
|
3,653
|
|
Silver and gold options
|
(1,582
|
)
|
|
1,283
|
|
|
1,058
|
|
Foreign exchange contracts
|
—
|
|
|
—
|
|
|
908
|
|
Fair value adjustments, net
|
$
|
(11,581
|
)
|
|
$
|
5,202
|
|
|
$
|
3,618
|
|
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 December 31, 2016
|
In thousands
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Assets:
|
|
|
|
|
|
|
|
Equity securities
|
$
|
4,488
|
|
|
$
|
4,209
|
|
|
$
|
—
|
|
|
$
|
279
|
|
Liabilities:
|
|
|
|
|
|
|
|
Rochester NSR royalty obligation
|
9,287
|
|
|
—
|
|
|
—
|
|
|
9,287
|
|
Other derivative instruments, net
|
762
|
|
|
—
|
|
|
762
|
|
|
—
|
|
|
$
|
10,049
|
|
|
$
|
—
|
|
|
$
|
762
|
|
|
$
|
9,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at December 31, 2015
|
In thousands
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Assets:
|
|
|
|
|
|
|
|
Equity securities
|
$
|
2,766
|
|
|
$
|
2,756
|
|
|
$
|
—
|
|
|
$
|
10
|
|
Liabilities:
|
|
|
|
|
|
|
|
Palmarejo royalty obligation embedded derivative
|
$
|
4,957
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,957
|
|
Rochester NSR royalty obligation
|
9,593
|
|
|
—
|
|
|
—
|
|
|
9,593
|
|
Other derivative instruments, net
|
508
|
|
|
—
|
|
|
508
|
|
|
—
|
|
|
$
|
15,058
|
|
|
$
|
—
|
|
|
$
|
508
|
|
|
$
|
14,550
|
|
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. Quoted market prices are not available for certain equity securities; these securities are valued using pricing models, which require the use of observable and unobservable inputs, and are classified within Level 3 of the fair value hierarchy.
The Company’s silver and gold options and other derivative instruments, net, which relate to concentrate and certain doré sales contracts and foreign exchange contracts, are valued using pricing models, which require inputs that are derived from observable market data, including contractual terms, forward market prices, yield curves, credit spreads, and other unobservable inputs. The model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.
The fair value of the Palmarejo royalty obligation embedded derivative and Rochester NSR royalty obligation were estimated based on observable market data including contractual terms, forward silver and gold prices, yield curves, and credit spreads, as well as the Company’s current mine plan which is considered a significant unobservable input. Therefore, the Company has classified these obligations as Level 3 financial liabilities. Based on current mine plans,
1.7
years was used to estimate the fair value of the Rochester NSR royalty obligation at
December 31, 2016
. At
December 31, 2016
, there was no Palmarejo royalty obligation or related embedded derivative as a result of the satisfaction of the minimum ounce obligation in the third quarter of 2016.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
No assets or liabilities were transferred between fair value levels in the
year ended December 31, 2016
.
The following tables present the changes in the fair value of the Company's Level 3 financial assets and liabilities for the years ended December 31, 2016, and 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2016
|
In thousands
|
Balance at the beginning of the period
|
|
Revaluation
|
|
Settlements
|
|
Balance at the
end of the
period
|
Assets:
|
|
|
|
|
|
|
|
Equity securities
|
$
|
10
|
|
|
$
|
272
|
|
|
$
|
(3
|
)
|
|
$
|
279
|
|
Liabilities:
|
|
|
|
|
|
|
|
Palmarejo royalty obligation embedded derivative
|
$
|
4,957
|
|
|
$
|
5,866
|
|
|
$
|
(10,823
|
)
|
|
$
|
—
|
|
Rochester NSR royalty obligation
|
$
|
9,593
|
|
|
$
|
4,133
|
|
|
$
|
(4,439
|
)
|
|
$
|
9,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2015
|
In thousands
|
Balance at the beginning of the period
|
|
Revaluation
|
|
Settlements
|
|
Balance at the
end of the
period
|
Assets:
|
|
|
|
|
|
|
|
Equity securities
|
$
|
1,379
|
|
|
$
|
(983
|
)
|
|
$
|
(386
|
)
|
|
$
|
10
|
|
Liabilities:
|
|
|
|
|
|
|
|
Palmarejo royalty obligation embedded derivative
|
$
|
21,912
|
|
|
$
|
(3,101
|
)
|
|
$
|
(13,854
|
)
|
|
$
|
4,957
|
|
Rochester NSR royalty obligation
|
$
|
15,370
|
|
|
$
|
(818
|
)
|
|
$
|
(4,959
|
)
|
|
$
|
9,593
|
|
During 2016, Coeur recorded write-downs related to
Mining properties
totaling
$4.4 million
(
$3.9 million
net of tax). The operator of the Endeavor mine in Australia, on which the Company has a 100% silver stream, announced in early 2016 a significant curtailment of production due to low lead and zinc prices. As a result, Coeur recorded a
$2.5 million
write-down of the mineral interest associated with the Endeavor silver stream within the Coeur Capital segment at March 31, 2016. In April 2016, Coeur sold its tiered NSR royalty on the El Gallo mine to the operator, a subsidiary of McEwen Mining Inc., for total consideration of approximately
$6.3 million
, including
$1 million
in contingent consideration. In anticipation of this sale, the Company recorded a
$1.9 million
write-down of the mineral interest within the Coeur Capital segment at March 31, 2016.
During 2015, Coeur recorded write-downs related to
Property, plant, and equipment
and
Mining properties
totaling
$313.3 million
(
$276.5 million
net of tax). The fair values of
Property, plant, and equipment
and
Mining properties
were estimated using a discounted cash flow approach. The discounted cash flow model used significant unobservable inputs and is therefore classified within Level 3 for the fair value hierarchy. The following table sets forth the quantitative and qualitative information related to the unobservable inputs used in the calculation of the Company's non-recurring Level 3 fair value measurements:
|
|
|
|
|
Description
|
Valuation technique
|
Unobservable input
|
Range / Weighted Average
|
Property, plant, and equipment
and
Mining properties
|
Discounted cash flow
|
Discount rate
|
7.50% - 11.00%
|
|
|
Long-term silver price
|
$17.50
|
|
|
Long-term gold price
|
$1,200
|
During 2014, Coeur recorded write-downs related to
Property, plant, and equipment
and
Mining properties
totaling
$1,472.7 million
(
$1,021.8 million
net of tax). The fair values of
Property, plant, and equipment
and
Mining properties
were estimated using a discounted cash flow approach. The discounted cash flow model used significant unobservable inputs and is therefore classified within Level 3 for the fair value hierarchy. The following table sets forth the quantitative and qualitative information related to the unobservable inputs used in the calculation of the Company's non-recurring Level 3 fair value measurements:
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
|
|
|
|
|
Description
|
Valuation technique
|
Unobservable input
|
Range / Weighted Average
|
Property, plant, and equipment
and
Mining properties
|
Discounted cash flow
|
Discount rate
|
8.00% - 10.75%
|
|
|
Long-term silver price
|
$19.00
|
|
|
Long-term gold price
|
$1,275
|
The fair value of financial assets and liabilities carried at book value in the financial statements at
December 31, 2016
and
December 31, 2015
is presented in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
In thousands
|
Book Value
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
7.875% Senior Notes due 2021
(1)
|
$
|
175,991
|
|
|
$
|
184,373
|
|
|
$
|
—
|
|
|
$
|
184,373
|
|
|
$
|
—
|
|
|
|
(1)
|
Net of unamortized debt issuance costs and premium received of
$2.0 million
.
|
The fair values of
7.875%
Senior Notes due 2021 (the “Senior Notes”) outstanding were estimated using quoted market prices.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
In thousands
|
Book Value
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
3.25% Convertible Senior Notes due 2028
|
$
|
712
|
|
|
$
|
693
|
|
|
$
|
—
|
|
|
$
|
693
|
|
|
$
|
—
|
|
Senior Notes
(1)
|
373,433
|
|
|
227,487
|
|
|
—
|
|
|
227,487
|
|
|
—
|
|
Term Loan due 2020
(2)
|
94,489
|
|
|
99,500
|
|
|
—
|
|
|
99,500
|
|
|
—
|
|
San Bartolomé Lines of Credit
|
4,571
|
|
|
4,571
|
|
|
—
|
|
|
4,571
|
|
|
—
|
|
Palmarejo gold production royalty obligation
|
15,207
|
|
|
15,580
|
|
|
—
|
|
|
—
|
|
|
15,580
|
|
|
|
(1)
|
Net of unamortized debt issuance costs and premium received of
$5.3 million
.
|
|
|
(2)
|
Net of unamortized debt issuance costs of
$5.0 million
.
|
The fair values of the Senior Notes outstanding were estimated using quoted market prices. The fair value of the Term Loan due 2020 (the “Term Loan”) approximates book value (excluding unamortized debt issuance costs) as the liability is secured, has a variable interest rate, and lacks significant credit concerns. The fair value of the San Bartolomé line of credit approximates book value due to the short-term nature of the liability and absence of significant interest rate or credit concerns. The fair value of the Palmarejo gold production royalty obligation is estimated based on observable market data including contractual terms, forward silver and gold prices, yield curves, and credit spreads, as well as the Company’s current mine plan which is considered a significant unobservable input.
NOTE 12 – DERIVATIVE FINANCIAL INSTRUMENTS
Palmarejo Gold Production Royalty
In January 2009, the Company's subsidiary, Coeur Mexicana, S.A. de C.V. (“Coeur Mexicana”), entered into a gold production royalty agreement with a subsidiary of Franco-Nevada Corporation. The royalty covered
50%
of the life of mine production from the Palmarejo mine and legacy adjacent properties, excluding production from the properties acquired in the 2015 Paramount Gold and Silver Corp. (“Paramount”) acquisition. The royalty transaction included a minimum obligation of
4,167
gold ounces per month and terminated effective as of the date payments on
400,000
gold ounces were made, which occurred in July 2016.
The price volatility associated with the minimum royalty obligation was considered an embedded derivative. The Company was required to recognize the change in fair value of the remaining minimum obligation due to changing gold prices. Unrealized gains were recognized in periods when the gold price decreased from the previous period and unrealized losses were recognized in periods when the gold price increases. The fair value of the embedded derivative was reflected net of the Company's current credit adjusted risk free rate, which was
19.9%
at
December 31, 2015
. The fair value of the embedded derivative at
December 31, 2015
was a liability of
$5.0 million
. For the
years ended December 31, 2016, 2015, and 2014
, the mark-to-market adjustments were losses of
$5.9 million
and gains of
$17.0 million
, and
$18.4 million
, respectively.
Payments on the royalty obligation decreased the carrying amount of the minimum obligation and the derivative liability. Each monthly payment was an amount equal to the greater of the minimum of
4,167
ounces of gold or
50%
of actual gold production
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
multiplied by the excess of the monthly average market price of gold above
$416
per ounce, subject to a
1%
annual inflation adjustment. For the
years ended December 31, 2016, 2015, and 2014
realized losses on settlement of the liabilities were
$10.8 million
,
$13.9 million
, and
$20.4 million
, respectively. The mark-to-market adjustments and realized losses are included in
Fair value adjustments, net
.
Provisional Silver and Gold 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 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. Changes in silver and gold prices resulted in provisional pricing mark-to-market losses of
$0.3 million
, gains of
$0.3 million
, and losses of
$0.1 million
in the
years ended December 31, 2016, 2015, and 2014
, respectively. At
December 31, 2016
, the Company had outstanding provisionally priced sales of
0.4 million
ounces of silver and
25,505
ounces of gold at prices of
$16.35
and
$1,208
, respectively.
At
December 31, 2016
, the Company had the following derivative instruments that settle as follows:
|
|
|
|
|
|
|
|
|
In thousands except average prices and notional ounces
|
2017
|
|
Thereafter
|
|
|
|
|
Provisional silver sales
|
$
|
5,801
|
|
|
$
|
—
|
|
Average silver price
|
$
|
16.35
|
|
|
$
|
—
|
|
Notional ounces
|
354,771
|
|
|
—
|
|
|
|
|
|
Provisional gold sales
|
$
|
30,810
|
|
|
$
|
—
|
|
Average gold price
|
$
|
1,208
|
|
|
$
|
—
|
|
Notional ounces
|
25,505
|
|
|
—
|
|
|
|
|
|
Silver and Gold Options
During the years ended December 31, 2016, 2015, and 2014 the Company had realized losses of
$1.6 million
, realized gains of
$1.3 million
, and realized losses of
$0.6 million
, respectively, from settled contracts. During the year ended December 31, 2014, the Company recorded unrealized gains of
$1.5 million
. During the years ended December 31, 2016, and 2015, the Company had
no
unrealized gains or losses related to outstanding options which were included in
Fair value adjustments, net.
At
December 31, 2016
, the Company had no outstanding gold and silver options contracts.
The following summarizes the classification of the fair value of the derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
In thousands
|
Prepaid expenses and other
|
|
Accrued liabilities and other
|
|
Current portion of royalty obligation
|
|
Non-current portion of royalty obligation
|
Provisional silver and gold sales contracts
|
$
|
—
|
|
|
$
|
762
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
In thousands
|
Prepaid expenses and other
|
|
Accrued liabilities and other
|
|
Current portion of royalty obligation
|
|
Non-current portion of royalty obligation
|
Palmarejo gold production royalty
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,957
|
|
|
$
|
—
|
|
Provisional silver and gold sales contracts
|
28
|
|
|
536
|
|
|
—
|
|
|
—
|
|
|
$
|
28
|
|
|
$
|
536
|
|
|
$
|
4,957
|
|
|
$
|
—
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The following represent mark-to-market gains (losses) on derivative instruments for the
years ended December 31, 2016, 2015, and 2014
and
2015
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
Financial statement line
|
Derivative
|
2016
|
|
2015
|
|
2014
|
Revenue
|
Provisional silver and gold sales contracts
|
$
|
(254
|
)
|
|
$
|
296
|
|
|
(123
|
)
|
Costs applicable to sales
|
Foreign exchange contracts
|
—
|
|
|
—
|
|
|
924
|
|
Fair value adjustments, net
|
Foreign exchange contracts
|
—
|
|
|
—
|
|
|
(16
|
)
|
Fair value adjustments, net
|
Palmarejo gold royalty
|
(5,866
|
)
|
|
3,101
|
|
|
(2,001
|
)
|
Fair value adjustments, net
|
Silver and gold options
|
(1,582
|
)
|
|
1,283
|
|
|
1,058
|
|
|
|
$
|
(7,702
|
)
|
|
$
|
4,680
|
|
|
$
|
(158
|
)
|
Credit Risk
The credit risk exposure related to any derivative instrument is limited to the unrealized gains, if any, on outstanding contracts based on current market prices. To reduce counter-party credit exposure, the Company enters into contracts with institutions management deems credit worthy and limits credit exposure to each institution. The Company does not anticipate non-performance by any of its counterparties.
NOTE 13 – ACQUISITIONS
In April 2015, the Company completed the acquisition of Paramount, which held mineral claims adjacent to the Company's Palmarejo mine, including a continuation of the Independencia deposit. Upon closing, Paramount became a wholly-owned subsidiary of the Company, and each issued and outstanding share of Paramount common stock was converted into
0.2016
shares of Coeur common stock, with cash paid in lieu of fractional shares. Immediately prior to completion of the acquisition, Paramount spun off to its existing stockholders a separate, publicly-traded company, Paramount Gold Nevada Corp. ("SpinCo"), which owns the Sleeper Gold Project and other assets in Nevada. SpinCo was capitalized with
$8.5 million
in cash contributed by Coeur, which amount has been included in the total consideration paid for the acquisition of Paramount. The Company also paid
$1.5 million
to acquire
4.9%
of the newly issued and outstanding shares of SpinCo.
The transaction was accounted for as an asset acquisition, as Paramount is an exploration stage project, which requires that the total purchase price be allocated to the assets acquired and liabilities assumed based on their relative fair values. The purchase price and acquired assets and liabilities were as follows (in thousands except share data):
|
|
|
|
|
Common shares issued (32,667,327 at $5.78)
|
$
|
188,817
|
|
Cash
|
8,530
|
|
Transaction advisory fees and other acquisition costs
|
4,020
|
|
Total purchase price
|
201,367
|
|
|
|
Total assets acquired
|
307,193
|
|
Total liabilities assumed
|
105,826
|
|
Net assets acquired
|
$
|
201,367
|
|
The assets acquired and liabilities assumed have been assigned to the Palmarejo reportable operating segment.
In February 2015, the Company completed its acquisition of the Wharf gold mine located near Lead, South Dakota, from a subsidiary of Goldcorp in exchange for
$99.4 million
in cash. The transaction was accounted for as a business combination which requires that assets acquired and liabilities assumed be recognized at their respective fair values at the acquisition date. The Company incurred
$2.1 million
of acquisition costs, which are included in
Pre-development, reclamation, and other
on the Consolidated Statements of Comprehensive Income (Loss).
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The purchase price allocation was based on the fair value of acquired assets and liabilities as follows (in thousands):
|
|
|
|
|
Total assets acquired
|
133,269
|
|
Total liabilities assumed
|
33,873
|
|
Net assets acquired
|
$
|
99,396
|
|
The following table presents the unaudited pro forma summary of the Company’s Consolidated Statements of Comprehensive Income (Loss) for the
years ended
December 31, 2016
,
2015
, and 2014 as if the acquisition had occurred on January 1, 2014. The following unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations as they would have been had the transaction occurred on the assumed date, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, potential synergies, and cost savings from operating efficiencies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
2016
|
|
2015 (Pro Forma)
|
|
2014 (Pro Forma)
|
Revenue
|
$
|
665,777
|
|
|
$
|
664,086
|
|
|
$
|
729,742
|
|
Income (loss) before income and mining taxes
|
1,113
|
|
|
(393,498
|
)
|
|
(1,587,128
|
)
|
Net income (loss)
|
55,352
|
|
|
(367,235
|
)
|
|
(1,158,874
|
)
|
NOTE 14 – INVESTMENTS
Equity Securities
The Company makes strategic investments in equity securities of silver and gold exploration and development companies. These investments are classified as available-for-sale and are measured at fair value in the financial statements with unrealized gains and losses recorded in
Other comprehensive income (loss)
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2016
|
In thousands
|
Cost
|
|
Gross
Unrealized
Losses
|
|
Gross
Unrealized
Gains
|
|
Estimated
Fair Value
|
Kootenay Silver, Inc.
|
$
|
2,645
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,645
|
|
Silver Bull Resources, Inc.
|
233
|
|
|
—
|
|
|
783
|
|
|
1,016
|
|
Other
|
229
|
|
|
—
|
|
|
598
|
|
|
827
|
|
Equity securities
|
$
|
3,107
|
|
|
$
|
—
|
|
|
$
|
1,381
|
|
|
$
|
4,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
In thousands
|
Cost
|
|
Gross
Unrealized
Losses
|
|
Gross
Unrealized
Gains
|
|
Estimated
Fair Value
|
Paramount Gold Nevada Corp.
|
$
|
1,470
|
|
|
$
|
(1,036
|
)
|
|
$
|
—
|
|
|
$
|
434
|
|
Northair Silver Corp.
|
725
|
|
|
—
|
|
|
9
|
|
|
734
|
|
Agnico-Eagle Mines Ltd.
|
420
|
|
|
—
|
|
|
518
|
|
|
938
|
|
Silver Bull Resources, Inc.
|
305
|
|
|
—
|
|
|
—
|
|
|
305
|
|
Other
|
466
|
|
|
(143
|
)
|
|
32
|
|
|
355
|
|
Equity securities
|
$
|
3,386
|
|
|
$
|
(1,179
|
)
|
|
$
|
559
|
|
|
$
|
2,766
|
|
The Company performs a quarterly assessment on each of its equity securities with unrealized losses to determine if the security is other than temporarily impaired. The Company recorded pre-tax other-than-temporary impairment losses of
$0.7 million
,
$2.3 million
, and
$6.6 million
in the years ended December 31, 2016, 2015, and 2014, respectively, in
Other, net
.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 15 – RECEIVABLES
Receivables consist of the following:
|
|
|
|
|
|
|
|
|
In thousands
|
December 31, 2016
|
|
December 31, 2015
|
Current receivables:
|
|
|
|
Trade receivables
|
$
|
10,669
|
|
|
$
|
17,878
|
|
Income tax receivable
|
1,038
|
|
|
13,678
|
|
Value added tax receivable
|
46,083
|
|
|
50,669
|
|
Other
|
2,641
|
|
|
3,767
|
|
|
$
|
60,431
|
|
|
$
|
85,992
|
|
Non-current receivables:
|
|
|
|
Value added tax receivable
|
$
|
19,293
|
|
|
$
|
24,768
|
|
Income tax receivable
|
11,658
|
|
|
—
|
|
|
30,951
|
|
|
24,768
|
|
Total receivables
|
$
|
91,382
|
|
|
$
|
110,760
|
|
NOTE 16 – INVENTORY AND ORE ON LEACH PADS
Inventory consists of the following:
|
|
|
|
|
|
|
|
|
In thousands
|
December 31, 2016
|
|
December 31, 2015
|
Inventory:
|
|
|
|
Concentrate
|
$
|
17,994
|
|
|
$
|
16,165
|
|
Precious metals
|
47,228
|
|
|
21,908
|
|
Supplies
|
40,804
|
|
|
43,638
|
|
|
$
|
106,026
|
|
|
$
|
81,711
|
|
Ore on leach pads:
|
|
|
|
Current
|
$
|
64,167
|
|
|
$
|
67,329
|
|
Non-current
|
67,231
|
|
|
44,582
|
|
|
$
|
131,398
|
|
|
$
|
111,911
|
|
Total inventory and ore on leach pads
|
$
|
237,424
|
|
|
$
|
193,622
|
|
NOTE 17 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
|
|
|
|
|
|
|
|
|
In thousands
|
December 31, 2016
|
|
December 31, 2015
|
Land
|
$
|
7,878
|
|
|
$
|
8,287
|
|
Facilities and equipment
|
650,480
|
|
|
654,585
|
|
Assets under capital leases
|
54,968
|
|
|
30,648
|
|
|
713,326
|
|
|
693,520
|
|
Accumulated amortization
|
(524,806
|
)
|
|
(514,509
|
)
|
|
188,520
|
|
|
179,011
|
|
Construction in progress
|
28,276
|
|
|
16,988
|
|
Property, plant and equipment, net
|
$
|
216,796
|
|
|
$
|
195,999
|
|
Rent expense for operating lease agreements was
$16.8 million
,
$14.3 million
, and
$11.2 million
for the years ended December 31, 2016, 2015, and 2014, respectively.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 18 – MINING PROPERTIES
Mining properties consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
San
Bartolomé
|
|
La Preciosa
|
|
Joaquin
|
|
Coeur Capital
|
|
Total
|
Mine development
|
$
|
174,890
|
|
|
$
|
165,230
|
|
|
$
|
271,175
|
|
|
$
|
37,485
|
|
|
$
|
39,184
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
687,964
|
|
Accumulated amortization
|
(134,995
|
)
|
|
(138,244
|
)
|
|
(154,744
|
)
|
|
(11,699
|
)
|
|
(32,192
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(471,874
|
)
|
|
39,895
|
|
|
26,986
|
|
|
116,431
|
|
|
25,786
|
|
|
6,992
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
216,090
|
|
Mineral interests
|
629,303
|
|
|
—
|
|
|
—
|
|
|
45,837
|
|
|
12,868
|
|
|
49,085
|
|
|
10,000
|
|
|
37,272
|
|
|
784,365
|
|
Accumulated amortization
|
(381,686
|
)
|
|
—
|
|
|
—
|
|
|
(19,249
|
)
|
|
(11,695
|
)
|
|
—
|
|
|
—
|
|
|
(29,370
|
)
|
|
(442,000
|
)
|
|
247,617
|
|
|
—
|
|
|
—
|
|
|
26,588
|
|
|
1,173
|
|
|
49,085
|
|
|
10,000
|
|
|
7,902
|
|
|
342,365
|
|
Mining properties, net
|
$
|
287,512
|
|
|
$
|
26,986
|
|
|
$
|
116,431
|
|
|
$
|
52,374
|
|
|
$
|
8,165
|
|
|
$
|
49,085
|
|
|
$
|
10,000
|
|
|
$
|
7,902
|
|
|
$
|
558,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
San
Bartolomé
|
|
La Preciosa
|
|
Joaquin
|
|
Coeur Capital
|
|
Total
|
Mine development
|
$
|
151,828
|
|
|
$
|
149,756
|
|
|
$
|
238,786
|
|
|
$
|
32,318
|
|
|
$
|
39,474
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
612,162
|
|
Accumulated amortization
|
(131,055
|
)
|
|
(126,242
|
)
|
|
(131,236
|
)
|
|
(5,784
|
)
|
|
(30,325
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(424,642
|
)
|
|
20,773
|
|
|
23,514
|
|
|
107,550
|
|
|
26,534
|
|
|
9,149
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
187,520
|
|
Mineral interests
|
629,303
|
|
|
—
|
|
|
—
|
|
|
45,837
|
|
|
12,868
|
|
|
49,085
|
|
|
10,000
|
|
|
59,343
|
|
|
806,436
|
|
Accumulated amortization
|
(348,268
|
)
|
|
—
|
|
|
—
|
|
|
(10,551
|
)
|
|
(11,400
|
)
|
|
—
|
|
|
—
|
|
|
(34,518
|
)
|
|
(404,737
|
)
|
|
281,035
|
|
|
—
|
|
|
—
|
|
|
35,286
|
|
|
1,468
|
|
|
49,085
|
|
|
10,000
|
|
|
24,825
|
|
|
401,699
|
|
Mining properties, net
|
$
|
301,808
|
|
|
$
|
23,514
|
|
|
$
|
107,550
|
|
|
$
|
61,820
|
|
|
$
|
10,617
|
|
|
$
|
49,085
|
|
|
$
|
10,000
|
|
|
$
|
24,825
|
|
|
$
|
589,219
|
|
Palmarejo is located in the State of Chihuahua in northern Mexico and consists of the Palmarejo mine and mill, the Guadalupe underground mine, the Independencia underground mine, and other deposits and exploration targets. Palmarejo commenced production in April 2009.
The Rochester silver and gold mine, located in northwestern Nevada has been operated by the Company since September 1986. The mine utilizes heap-leaching to extract both silver and gold from ore mined using open pit methods.
The Kensington mine is an underground gold mine and consists of the Kensington and adjacent Jualin properties located north-northwest of Juneau, Alaska. The Company commenced commercial production in July 2010.
The Wharf gold mine is an open pit gold mine located near the city of Lead, South Dakota. The Company acquired Wharf in February 2015.
The San Bartolomé mine is a silver mine located near the city of Potosi, Bolivia. The Company commenced commercial production at San Bartolomé in June 2008.
The La Preciosa silver-gold project is located in the State of Durango in northern Mexico. The Company completed a feasibility study in 2014 and has deferred construction activities until expected returns improve.
The Joaquin silver-gold project is located in the Santa Cruz province of southern Argentina. The Company commenced exploration of the property in November 2007. In January 2017, the Company entered into an agreement to sell the Joaquin silver-gold exploration project for total consideration of
$25.0 million
. The Company will also retain a 2.0% NSR royalty on the Joaquin project. The transaction is expected to close in the first quarter of 2017, subject to customary closing conditions.
The Company's mineral interests held by Coeur Capital primarily consist of the Endeavor silver stream, acquired by the Company in May 2005, under which the Company owns all silver production and reserves up to
20.0 million
ounces at the Endeavor mine in Australia, owned and operated by Cobar Operations Pty. Limited. The Company has received
6.0 million
ounces to-date and the current ore reserve contains
1.4 million
ounces. The operator of the Endeavor mine announced in early 2016 a significant curtailment of production due to low lead and zinc prices. As a result, Coeur recorded a
$2.5 million
write-down of the mineral interest associated with the Endeavor silver stream within the Coeur Capital segment at March 31, 2016.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Non-core Asset Sales
In March 2016, Coeur sold its
2.0%
NSR royalty on the Cerro Bayo mine to the operator, a subsidiary of Mandalay Resources Corporation (“Mandalay”), for total consideration of approximately
$5.7 million
, consisting of
$4.0 million
in cash and
2.5 million
Mandalay shares. The Company recognized a
$1.9 million
pre-tax gain on this sale. The mineral interest associated with the Cerro Bayo mine was included in the Coeur Capital segment.
In April 2016, Coeur sold its tiered NSR royalty on the El Gallo mine to the operator, a subsidiary of McEwen Mining Inc., for total consideration of approximately
$6.3 million
, including
$1 million
in contingent consideration. In anticipation of this sale, the Company recorded a
$1.9 million
write-down of the mineral interest within the Coeur Capital segment at March 31, 2016.
In April 2016, Coeur sold its
2.5%
NSR royalty on the La Cigarra project to Kootenay Silver Inc. for total consideration of approximately
$3.6 million
, consisting of
$0.5 million
in cash and
9.6 million
Kootenay shares. The Company recognized a
$1.2
pre-tax gain on this sale. The mineral interest associated with La Cigarra was included in the Coeur Capital segment.
In May 2016, Coeur sold its Martha assets and related liabilities in Argentina to Hunt Mining Corp. for total cash consideration of
$3.0 million
, including
$1.5 million
received at closing and
$1.5 million
receivable on the one-year anniversary of the closing. The Company recognized a
$5.3 million
pre-tax gain on this sale.
In July 2016, the Company sold its NSR royalty on the Correnso mine in New Zealand to the operator, a subsidiary of Oceana Gold Corporation, for total consideration of
$5.4 million
, including
$0.7 million
in contingent consideration. The Company recognized a
$4.7 million
pre-tax gain on this sale.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 19 – DEBT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
In thousands
|
Current
|
|
Non-Current
|
|
Current
|
|
Non-Current
|
Senior Notes, net
(1)
|
$
|
—
|
|
|
$
|
175,991
|
|
|
$
|
—
|
|
|
$
|
373,433
|
|
3.25% Convertible Senior Notes due 2028
|
—
|
|
|
—
|
|
|
—
|
|
|
712
|
|
Term Loan due 2020, net
(2)
|
—
|
|
|
—
|
|
|
1,000
|
|
|
93,489
|
|
San Bartolomé Lines of Credit
|
—
|
|
|
—
|
|
|
—
|
|
|
4,571
|
|
Capital lease obligations
|
12,039
|
|
|
22,866
|
|
|
9,431
|
|
|
7,774
|
|
|
$
|
12,039
|
|
|
$
|
198,857
|
|
|
$
|
10,431
|
|
|
$
|
479,979
|
|
(1)
Net of unamortized debt issuance costs and premium received of
$2.0 million
and
$5.3 million
at
December 31, 2016
and December 31, 2015, respectively.
(2)
Net of unamortized debt issuance costs of
$5.0 million
at December 31, 2015.
7.875% Senior Notes due 2021
In December 2016, the Company redeemed
$190.0 million
aggregate principal amount of its Senior Notes. The “make-whole premium” redemption price payment of
$9.0 million
was calculated in accordance with the terms and conditions of the Notes. The redemption of the Senior Notes resulted in a loss of
$11.3 million
.
In August 2016, the Company entered into
two
privately-negotiated agreements to exchange
$10.8 million
in aggregate principal amount of its Senior Notes for
0.7 million
shares of common stock. Based on the closing price of the Company's common stock on the date of the exchange, the exchange resulted in a loss of
$1.2 million
.
In November 2015, the Company entered into a privately-negotiated agreement to exchange
$54.2 million
in aggregate principal amount of its Senior Notes for
14.4 million
shares of common stock. Based on the closing price of the Company's common stock on the date of the exchange, the exchange resulted in a gain of
$15.9 million
. During 2015 and 2014, the Company repurchased
$71.3 million
in aggregate principal amount of the Senior Notes.
On or after February 1, 2017, the Company may redeem some or all of the Senior Notes at the applicable redemption prices set forth in the Indenture for the Senior Notes, together with accrued and unpaid interest.
In March 2014, the Company completed a follow-on offering of
$150 million
in aggregate principal amount of the Senior Notes (the “Additional Notes”) in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). The Additional Notes constitute a further issuance of the Original Notes (as defined below) and form a single series of debt securities with the Original Notes. Upon completion of Coeur’s offering of the Additional Notes, the aggregate principal amount of the outstanding Senior Notes was
$450.0 million
. The Company commenced an exchange offer for the Additional Notes on April 10, 2014 to exchange the Additional Notes for freely transferable notes containing substantially similar terms, in accordance with the registration rights granted to the holders of the Additional Notes when they were issued. The exchange offer was consummated on May 9, 2014.
3.25% Convertible Senior Notes due 2028
In July 2016, all outstanding Convertible Notes were redeemed for
$0.7 million
.
Term Loan due 2020
In July 2016, the Company voluntarily terminated and repaid the Term Loan for
$103.4 million
including the
$99.0 million
remaining principal balance and a
$4.4 million
prepayment premium. The termination of the Term Loan resulted in a loss of
$8.8 million
.
In July 2015, the Company and certain of its subsidiaries entered into a credit agreement for the Term Loan with Barclays Bank PLC, as administrative agent (the “Term Loan Credit Agreement”). The Term Loan Credit Agreement provided for a
five
year
$100.0 million
term loan to the Company, of which a portion of the proceeds were used to repay the Short-term Loan, and the remaining proceeds were used for general corporate purposes. The obligations under the Term Loan were secured by substantially all of the assets of the Company and its domestic subsidiaries, including the land, mineral rights and infrastructure at the Kensington, Rochester and Wharf mines, as well as a pledge of the shares of certain of the Company's subsidiaries.
Lines of Credit
At December 31, 2016, San Bartolomé had an available line of credit for
$12.0 million
that matures in June 30, 2018, bearing interest at
6.0%
per annum, which is secured with machinery and equipment. There was
no
outstanding balance at December 31, 2016.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
At December 31, 2015, San Bartolomé had two outstanding lines of credit. The first line of credit was for
$12.0 million
bearing interest at
6.0%
per annum, maturing June 30, 2018. The second line of credit was for
$15.0 million
bearing interest at
6.0%
per annum that matured on December 29, 2016. Both lines of credit were secured with machinery and equipment. There was an outstanding balance of
$4.6 million
on the second line of credit at December 31, 2015.
Short-term Loan
In March 2015, the Company entered into a credit agreement (the “Short-term Credit Agreement”) with The Bank of Nova Scotia. The Short-term Credit Agreement provided for a
$50.0 million
loan (the “Short-term Loan”) to the Company. On June 25, 2015, the Short-term Loan was repaid in full, the security for the Short-term Loan was released, and the Short-term Credit Agreement was terminated.
Capital Lease Obligations
From time to time, the Company acquires mining equipment under capital lease agreements. In 2016, the Company entered into new lease financing arrangements primarily for a larger haul truck fleet at its Rochester mine and mining equipment to support the continued underground mine expansion at the Palmarejo complex. All capital lease obligations are recorded, upon lease inception, at the present value of future minimum lease payments.
Minimum future lease payments under capital and operating leases with terms longer than one year are as follows:
|
|
|
|
|
|
|
|
At December 31, (
In thousands)
|
|
|
|
Operating leases
|
Capital leases
|
2017
|
$
|
13,709
|
|
$
|
13,292
|
|
2018
|
5,514
|
|
10,968
|
|
2019
|
5,304
|
|
6,481
|
|
2020
|
3,891
|
|
3,675
|
|
2021
|
3,095
|
|
2,886
|
|
Thereafter
|
8,716
|
|
44
|
|
Total
|
$
|
40,229
|
|
$
|
37,346
|
|
Less: imputed interest
|
—
|
|
(2,441
|
)
|
Net lease obligation
|
$
|
40,229
|
|
$
|
34,905
|
|
Interest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
In thousands
|
2016
|
|
2015
|
|
2014
|
7.875% Senior Notes due 2021
|
$
|
28,871
|
|
|
$
|
33,437
|
|
|
$
|
32,741
|
|
3.25% Convertible Senior Notes due 2028
|
13
|
|
|
54
|
|
|
173
|
|
Term Loan due 2020
|
4,939
|
|
|
4,719
|
|
|
—
|
|
Short-term Loan
|
—
|
|
|
326
|
|
|
—
|
|
San Bartolomé Lines of Credit
|
15
|
|
|
795
|
|
|
—
|
|
Revolving Credit Facility
|
—
|
|
|
—
|
|
|
179
|
|
Loss on Revolving Credit Facility
|
—
|
|
|
—
|
|
|
3,035
|
|
Capital lease obligations
|
1,437
|
|
|
1,035
|
|
|
972
|
|
Accretion of Palmarejo gold production royalty obligation
|
1,211
|
|
|
6,567
|
|
|
10,773
|
|
Amortization of debt issuance costs
|
1,933
|
|
|
2,257
|
|
|
1,740
|
|
Accretion of debt premium
|
(345
|
)
|
|
(409
|
)
|
|
(357
|
)
|
Other debt obligations
|
72
|
|
|
20
|
|
|
—
|
|
Capitalized interest
|
(1,226
|
)
|
|
(3,098
|
)
|
|
(1,710
|
)
|
Total interest expense, net of capitalized interest
|
$
|
36,920
|
|
|
$
|
45,703
|
|
|
$
|
47,546
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 20 - SUPPLEMENTAL GUARANTOR INFORMATION
The following Consolidating Financial Statements are presented to satisfy disclosure requirements of Rule 3-10 of Regulation S-X resulting from the guarantees by Coeur Alaska, Inc., Coeur Explorations, Inc., Coeur Rochester, Inc., Coeur South America Corp., Wharf Resources (U.S.A.), Inc. and its subsidiaries, and Coeur Capital, Inc. (collectively, the “Subsidiary Guarantors”) of the Senior Notes. The following schedules present Consolidating Financial Statements of (a) Coeur, the parent company; (b) the Subsidiary Guarantors; and (c) certain wholly-owned domestic and foreign subsidiaries of the Company (collectively, the “Non-Guarantor Subsidiaries”). Each of the Subsidiary Guarantors is 100% owned by Coeur and the guarantees are full and unconditional and joint and several obligations. There are no restrictions on the ability of Coeur to obtain funds from the Subsidiary Guarantors by dividend or loan.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
YEAR ENDED DECEMBER 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Revenue
|
|
$
|
—
|
|
|
$
|
423,488
|
|
|
$
|
242,289
|
|
|
$
|
—
|
|
|
$
|
665,777
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
(1)
|
|
—
|
|
|
252,836
|
|
|
156,705
|
|
|
—
|
|
|
409,541
|
|
Amortization
|
|
1,558
|
|
|
77,392
|
|
|
44,211
|
|
|
—
|
|
|
123,161
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
28,704
|
|
|
250
|
|
|
422
|
|
|
—
|
|
|
29,376
|
|
Exploration
|
|
1,596
|
|
|
6,127
|
|
|
5,207
|
|
|
—
|
|
|
12,930
|
|
Write-downs
|
|
—
|
|
|
—
|
|
|
4,446
|
|
|
—
|
|
|
4,446
|
|
Pre-development, reclamation, and other
|
|
2,044
|
|
|
5,839
|
|
|
9,336
|
|
|
—
|
|
|
17,219
|
|
Total costs and expenses
|
|
33,902
|
|
|
342,444
|
|
|
220,327
|
|
|
—
|
|
|
596,673
|
|
OTHER INCOME (EXPENSE), NET
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishments
|
|
(21,365
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,365
|
)
|
Fair value adjustments, net
|
|
(1,635
|
)
|
|
(4,133
|
)
|
|
(5,813
|
)
|
|
—
|
|
|
(11,581
|
)
|
Other, net
|
|
4,357
|
|
|
2,139
|
|
|
463
|
|
|
(5,084
|
)
|
|
1,875
|
|
Interest expense, net of capitalized interest
|
|
(35,158
|
)
|
|
(861
|
)
|
|
(5,985
|
)
|
|
5,084
|
|
|
(36,920
|
)
|
Total other income (expense), net
|
|
(53,801
|
)
|
|
(2,855
|
)
|
|
(11,335
|
)
|
|
—
|
|
|
(67,991
|
)
|
Loss before income and mining taxes
|
|
(87,703
|
)
|
|
78,189
|
|
|
10,627
|
|
|
—
|
|
|
1,113
|
|
Income and mining tax (expense) benefit
|
|
11,733
|
|
|
(7,517
|
)
|
|
50,023
|
|
|
—
|
|
|
54,239
|
|
Total loss after income and mining taxes
|
|
(75,970
|
)
|
|
70,672
|
|
|
60,650
|
|
|
—
|
|
|
55,352
|
|
Equity income (loss) in consolidated subsidiaries
|
|
131,322
|
|
|
(4,353
|
)
|
|
—
|
|
|
(126,969
|
)
|
|
—
|
|
NET INCOME (LOSS)
|
|
$
|
55,352
|
|
|
$
|
66,319
|
|
|
$
|
60,650
|
|
|
$
|
(126,969
|
)
|
|
$
|
55,352
|
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on marketable securities, net of tax
|
|
3,222
|
|
|
3,156
|
|
|
—
|
|
|
(3,156
|
)
|
|
3,222
|
|
Reclassification adjustments for impairment of equity securities, net of tax
|
|
703
|
|
|
703
|
|
|
—
|
|
|
(703
|
)
|
|
703
|
|
Reclassification adjustments for realized loss on sale of equity securities, net of tax
|
|
(2,691
|
)
|
|
(3,181
|
)
|
|
—
|
|
|
3,181
|
|
|
(2,691
|
)
|
Other comprehensive income (loss)
|
|
1,234
|
|
|
678
|
|
|
—
|
|
|
(678
|
)
|
|
1,234
|
|
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
56,586
|
|
|
$
|
66,997
|
|
|
$
|
60,650
|
|
|
$
|
(127,647
|
)
|
|
$
|
56,586
|
|
(1) Excludes amortization.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
YEAR ENDED DECEMBER 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Revenue
|
|
$
|
—
|
|
|
$
|
378,278
|
|
|
$
|
267,808
|
|
|
$
|
—
|
|
|
$
|
646,086
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
(1)
|
|
—
|
|
|
261,830
|
|
|
217,824
|
|
|
—
|
|
|
479,654
|
|
Amortization
|
|
1,991
|
|
|
83,325
|
|
|
58,435
|
|
|
—
|
|
|
143,751
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
32,405
|
|
|
35
|
|
|
394
|
|
|
—
|
|
|
32,834
|
|
Exploration
|
|
2,265
|
|
|
3,931
|
|
|
5,451
|
|
|
—
|
|
|
11,647
|
|
Write-downs
|
|
—
|
|
|
1,630
|
|
|
311,707
|
|
|
—
|
|
|
313,337
|
|
Pre-development, reclamation, and other
|
|
4,083
|
|
|
5,920
|
|
|
7,790
|
|
|
—
|
|
|
17,793
|
|
Total costs and expenses
|
|
40,744
|
|
|
356,671
|
|
|
601,601
|
|
|
—
|
|
|
999,016
|
|
OTHER INCOME (EXPENSE), NET
|
|
|
|
|
|
|
|
|
|
|
Gain on debt extinguishments
|
|
15,916
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,916
|
|
Fair value adjustments, net
|
|
1,224
|
|
|
818
|
|
|
3,160
|
|
|
—
|
|
|
5,202
|
|
Other, net
|
|
4,336
|
|
|
(3,106
|
)
|
|
(13,385
|
)
|
|
(3,776
|
)
|
|
(15,931
|
)
|
Interest expense, net of capitalized interest
|
|
(39,867
|
)
|
|
(966
|
)
|
|
(8,646
|
)
|
|
3,776
|
|
|
(45,703
|
)
|
Total other income (expense), net
|
|
(18,391
|
)
|
|
(3,254
|
)
|
|
(18,871
|
)
|
|
—
|
|
|
(40,516
|
)
|
Income (Loss) before income and mining taxes
|
|
(59,135
|
)
|
|
18,353
|
|
|
(352,664
|
)
|
|
—
|
|
|
(393,446
|
)
|
Income and mining tax (expense) benefit
|
|
1,827
|
|
|
(2,354
|
)
|
|
26,790
|
|
|
—
|
|
|
26,263
|
|
Income (Loss) after income and mining taxes
|
|
(57,308
|
)
|
|
15,999
|
|
|
(325,874
|
)
|
|
—
|
|
|
(367,183
|
)
|
Equity income (loss) in consolidated subsidiaries
|
|
(309,875
|
)
|
|
(14,814
|
)
|
|
—
|
|
|
324,689
|
|
|
—
|
|
NET INCOME (LOSS)
|
|
$
|
(367,183
|
)
|
|
$
|
1,185
|
|
|
$
|
(325,874
|
)
|
|
$
|
324,689
|
|
|
$
|
(367,183
|
)
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on equity securities, net of tax
|
|
(4,154
|
)
|
|
(3,118
|
)
|
|
—
|
|
|
3,118
|
|
|
(4,154
|
)
|
Reclassification adjustments for impairment of equity securities, net of tax
|
|
2,346
|
|
|
2,346
|
|
|
—
|
|
|
(2,346
|
)
|
|
2,346
|
|
Reclassification adjustments for realized loss on sale of equity securities, net of tax
|
|
894
|
|
|
894
|
|
|
—
|
|
|
(894
|
)
|
|
894
|
|
Other comprehensive income (loss)
|
|
(914
|
)
|
|
122
|
|
|
—
|
|
|
(122
|
)
|
|
(914
|
)
|
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
(368,097
|
)
|
|
$
|
1,307
|
|
|
$
|
(325,874
|
)
|
|
$
|
324,567
|
|
|
$
|
(368,097
|
)
|
(1) Excludes amortization.
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
YEAR ENDED DECEMBER 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Revenue
|
|
$
|
—
|
|
|
$
|
261,963
|
|
|
$
|
373,779
|
|
|
$
|
—
|
|
|
$
|
635,742
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
(1)
|
|
—
|
|
|
196,805
|
|
|
281,140
|
|
|
—
|
|
|
477,945
|
|
Amortization
|
|
1,805
|
|
|
65,100
|
|
|
95,531
|
|
|
—
|
|
|
162,436
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
39,976
|
|
|
6
|
|
|
863
|
|
|
—
|
|
|
40,845
|
|
Exploration
|
|
3,560
|
|
|
11,157
|
|
|
7,023
|
|
|
—
|
|
|
21,740
|
|
Write-downs
|
|
—
|
|
|
107,832
|
|
|
1,364,889
|
|
|
—
|
|
|
1,472,721
|
|
Pre-development, reclamation, and other
|
|
8,813
|
|
|
3,889
|
|
|
13,335
|
|
|
—
|
|
|
26,037
|
|
Total costs and expenses
|
|
54,154
|
|
|
384,789
|
|
|
1,762,781
|
|
|
—
|
|
|
2,201,724
|
|
OTHER INCOME (EXPENSE), NET
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustments, net
|
|
1,812
|
|
|
3,653
|
|
|
(1,847
|
)
|
|
—
|
|
|
3,618
|
|
Other, net
|
|
4,406
|
|
|
(7,023
|
)
|
|
227
|
|
|
(2,828
|
)
|
|
(5,218
|
)
|
Interest expense, net of capitalized interest
|
|
(38,389
|
)
|
|
(891
|
)
|
|
(11,094
|
)
|
|
2,828
|
|
|
(47,546
|
)
|
Total other income (expense), net
|
|
(32,171
|
)
|
|
(4,261
|
)
|
|
(12,714
|
)
|
|
—
|
|
|
(49,146
|
)
|
Income (Loss) before income and mining taxes
|
|
(86,325
|
)
|
|
(127,087
|
)
|
|
(1,401,716
|
)
|
|
—
|
|
|
(1,615,128
|
)
|
Income and mining tax (expense) benefit
|
|
1,742
|
|
|
(2,224
|
)
|
|
428,736
|
|
|
—
|
|
|
428,254
|
|
Income (Loss) after income and mining taxes
|
|
(84,583
|
)
|
|
(129,311
|
)
|
|
(972,980
|
)
|
|
—
|
|
|
(1,186,874
|
)
|
Equity income (loss) in consolidated subsidiaries
|
|
(1,102,291
|
)
|
|
(4,181
|
)
|
|
—
|
|
|
1,106,472
|
|
|
—
|
|
NET INCOME (LOSS)
|
|
$
|
(1,186,874
|
)
|
|
$
|
(133,492
|
)
|
|
$
|
(972,980
|
)
|
|
$
|
1,106,472
|
|
|
$
|
(1,186,874
|
)
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on equity securities, net of tax
|
|
(2,290
|
)
|
|
(2,272
|
)
|
|
—
|
|
|
2,272
|
|
|
(2,290
|
)
|
Reclassification adjustments for impairment of equity securities, net of tax
|
|
4,042
|
|
|
4,042
|
|
|
—
|
|
|
(4,042
|
)
|
|
4,042
|
|
Reclassification adjustments for realized loss on sale of equity securities, net of tax
|
|
346
|
|
|
328
|
|
|
—
|
|
|
(328
|
)
|
|
346
|
|
Other comprehensive income (loss)
|
|
2,098
|
|
|
2,098
|
|
|
—
|
|
|
(2,098
|
)
|
|
2,098
|
|
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
(1,184,776
|
)
|
|
$
|
(131,394
|
)
|
|
$
|
(972,980
|
)
|
|
$
|
1,104,374
|
|
|
$
|
(1,184,776
|
)
|
(1) Excludes amortization.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in) operating activities
|
|
$
|
62,207
|
|
|
$
|
134,892
|
|
|
$
|
55,687
|
|
|
$
|
(126,969
|
)
|
|
125,817
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
(246
|
)
|
|
(58,084
|
)
|
|
(42,683
|
)
|
|
—
|
|
|
(101,013
|
)
|
Proceeds from the sale of long-lived assets
|
|
—
|
|
|
4,800
|
|
|
11,496
|
|
|
—
|
|
|
16,296
|
|
Purchase of investments
|
|
(178
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(178
|
)
|
Sales and maturities of investments
|
|
501
|
|
|
6,576
|
|
|
—
|
|
|
—
|
|
|
7,077
|
|
Acquisitions, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(1,417
|
)
|
|
—
|
|
|
(1,417
|
)
|
Other
|
|
(4,396
|
)
|
|
368
|
|
|
(180
|
)
|
|
—
|
|
|
(4,208
|
)
|
Investments in consolidated subsidiaries
|
|
(107,855
|
)
|
|
25,047
|
|
|
—
|
|
|
82,808
|
|
|
—
|
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
(112,174
|
)
|
|
(21,293
|
)
|
|
(32,784
|
)
|
|
82,808
|
|
|
(83,443
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Payments on debt, capital leases, and associated costs
|
|
(303,686
|
)
|
|
(10,894
|
)
|
|
(8,221
|
)
|
|
—
|
|
|
(322,801
|
)
|
Gold production royalty payments
|
|
—
|
|
|
—
|
|
|
(27,155
|
)
|
|
—
|
|
|
(27,155
|
)
|
Net intercompany financing activity
|
|
45,850
|
|
|
(86,914
|
)
|
|
(3,097
|
)
|
|
44,161
|
|
|
—
|
|
Issuance of common stock
|
|
269,556
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
269,556
|
|
Other
|
|
172
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
172
|
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
11,892
|
|
|
(97,808
|
)
|
|
(38,473
|
)
|
|
44,161
|
|
|
(80,228
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
—
|
|
|
4
|
|
|
(682
|
)
|
|
—
|
|
|
(678
|
)
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
|
(38,075
|
)
|
|
15,795
|
|
|
(16,252
|
)
|
|
—
|
|
|
(38,532
|
)
|
Cash and cash equivalents at beginning of period
|
|
96,123
|
|
|
34,228
|
|
|
70,363
|
|
|
—
|
|
|
200,714
|
|
Cash and cash equivalents at end of period
|
|
$
|
58,048
|
|
|
$
|
50,023
|
|
|
$
|
54,111
|
|
|
$
|
—
|
|
|
$
|
162,182
|
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in) operating activities
|
|
$
|
(377,091
|
)
|
|
$
|
86,486
|
|
|
$
|
79,458
|
|
|
$
|
324,689
|
|
|
113,542
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
(514
|
)
|
|
(52,376
|
)
|
|
(42,303
|
)
|
|
—
|
|
|
(95,193
|
)
|
Proceeds from the sale of long-lived assets
|
|
—
|
|
|
289
|
|
|
318
|
|
|
—
|
|
|
607
|
|
Purchase of investments
|
|
(1,880
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,880
|
)
|
Sales and maturities of investments
|
|
2
|
|
|
532
|
|
|
71
|
|
|
—
|
|
|
605
|
|
Acquisitions, net of cash acquired
|
|
(110,846
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(110,846
|
)
|
Other
|
|
(4,710
|
)
|
|
234
|
|
|
(110
|
)
|
|
—
|
|
|
(4,586
|
)
|
Investments in consolidated subsidiaries
|
|
282,041
|
|
|
20,239
|
|
|
120
|
|
|
(302,400
|
)
|
|
—
|
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
164,093
|
|
|
(31,082
|
)
|
|
(41,904
|
)
|
|
(302,400
|
)
|
|
(211,293
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Issuance of notes and bank borrowings
|
|
150,000
|
|
|
—
|
|
|
3,500
|
|
|
—
|
|
|
153,500
|
|
Payments on debt, capital leases, and associated costs
|
|
(62,930
|
)
|
|
(7,428
|
)
|
|
(14,357
|
)
|
|
—
|
|
|
(84,715
|
)
|
Gold production royalty payments
|
|
—
|
|
|
—
|
|
|
(39,235
|
)
|
|
—
|
|
|
(39,235
|
)
|
Net intercompany financing activity
|
|
12,232
|
|
|
(19,518
|
)
|
|
29,575
|
|
|
(22,289
|
)
|
|
—
|
|
Other
|
|
(542
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(542
|
)
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
98,760
|
|
|
(26,946
|
)
|
|
(20,517
|
)
|
|
(22,289
|
)
|
|
29,008
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
—
|
|
|
(11
|
)
|
|
(1,393
|
)
|
|
—
|
|
|
(1,404
|
)
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
|
(114,238
|
)
|
|
28,447
|
|
|
15,644
|
|
|
—
|
|
|
(70,147
|
)
|
Cash and cash equivalents at beginning of period
|
|
210,361
|
|
|
5,781
|
|
|
54,719
|
|
|
—
|
|
|
270,861
|
|
Cash and cash equivalents at end of period
|
|
$
|
96,123
|
|
|
$
|
34,228
|
|
|
$
|
70,363
|
|
|
$
|
—
|
|
|
$
|
200,714
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in) operating activities
|
|
$
|
(1,175,464
|
)
|
|
$
|
41,292
|
|
|
$
|
81,248
|
|
|
$
|
1,106,472
|
|
|
53,548
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
(1,849
|
)
|
|
(28,118
|
)
|
|
(34,277
|
)
|
|
—
|
|
|
(64,244
|
)
|
Proceeds from the sale of long-lived assets
|
|
—
|
|
|
48
|
|
|
281
|
|
|
—
|
|
|
329
|
|
Purchase of investments
|
|
(50,013
|
)
|
|
(429
|
)
|
|
(71
|
)
|
|
—
|
|
|
(50,513
|
)
|
Sales and maturities of investments
|
|
49,069
|
|
|
5,261
|
|
|
14
|
|
|
—
|
|
|
54,344
|
|
Acquisitions, net of cash acquired
|
|
(12,079
|
)
|
|
(4,000
|
)
|
|
(5,250
|
)
|
|
—
|
|
|
(21,329
|
)
|
Other
|
|
—
|
|
|
—
|
|
|
(321
|
)
|
|
—
|
|
|
(321
|
)
|
Investments in consolidated subsidiaries
|
|
1,151,372
|
|
|
4,106
|
|
|
—
|
|
|
(1,155,478
|
)
|
|
—
|
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
1,136,500
|
|
|
(23,132
|
)
|
|
(39,624
|
)
|
|
(1,155,478
|
)
|
|
(81,734
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Issuance of notes and bank borrowings
|
|
153,000
|
|
|
—
|
|
|
14,784
|
|
|
—
|
|
|
167,784
|
|
Payments on debt, capital leases, and associated costs
|
|
(18,545
|
)
|
|
(6,114
|
)
|
|
(1,243
|
)
|
|
—
|
|
|
(25,902
|
)
|
Gold production royalty payments
|
|
—
|
|
|
—
|
|
|
(48,395
|
)
|
|
—
|
|
|
(48,395
|
)
|
Net intercompany financing activity
|
|
(21,697
|
)
|
|
(7,256
|
)
|
|
(20,053
|
)
|
|
49,006
|
|
|
—
|
|
Other
|
|
(509
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(509
|
)
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
112,249
|
|
|
(13,370
|
)
|
|
(54,907
|
)
|
|
49,006
|
|
|
92,978
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
—
|
|
|
—
|
|
|
(621
|
)
|
|
—
|
|
|
(621
|
)
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
|
73,285
|
|
|
4,790
|
|
|
(13,904
|
)
|
|
—
|
|
|
64,171
|
|
Cash and cash equivalents at beginning of period
|
|
137,076
|
|
|
991
|
|
|
68,623
|
|
|
—
|
|
|
206,690
|
|
Cash and cash equivalents at end of period
|
|
$
|
210,361
|
|
|
$
|
5,781
|
|
|
$
|
54,719
|
|
|
$
|
—
|
|
|
$
|
270,861
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
58,048
|
|
|
$
|
50,023
|
|
|
$
|
54,111
|
|
|
$
|
—
|
|
|
$
|
162,182
|
|
Receivables
|
|
12
|
|
|
6,865
|
|
|
53,554
|
|
|
—
|
|
|
60,431
|
|
Ore on leach pads
|
|
—
|
|
|
64,167
|
|
|
—
|
|
|
—
|
|
|
64,167
|
|
Inventory
|
|
—
|
|
|
49,393
|
|
|
56,633
|
|
|
—
|
|
|
106,026
|
|
Prepaid expenses and other
|
|
3,803
|
|
|
1,459
|
|
|
12,719
|
|
|
—
|
|
|
17,981
|
|
|
|
61,863
|
|
|
171,907
|
|
|
177,017
|
|
|
—
|
|
|
410,787
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
3,222
|
|
|
139,885
|
|
|
73,689
|
|
|
—
|
|
|
216,796
|
|
Mining properties, net
|
|
—
|
|
|
195,791
|
|
|
362,664
|
|
|
—
|
|
|
558,455
|
|
Ore on leach pads
|
|
—
|
|
|
67,231
|
|
|
—
|
|
|
—
|
|
|
67,231
|
|
Restricted assets
|
|
10,170
|
|
|
226
|
|
|
7,201
|
|
|
—
|
|
|
17,597
|
|
Equity securities
|
|
—
|
|
|
4,488
|
|
|
—
|
|
|
—
|
|
|
4,488
|
|
Receivables
|
|
—
|
|
|
—
|
|
|
30,951
|
|
|
—
|
|
|
30,951
|
|
Deferred tax assets
|
|
—
|
|
|
—
|
|
|
191
|
|
|
—
|
|
|
191
|
|
Net investment in subsidiaries
|
|
273,056
|
|
|
11,650
|
|
|
—
|
|
|
(284,706
|
)
|
|
—
|
|
Other
|
|
221,381
|
|
|
9,263
|
|
|
3,153
|
|
|
(221,384
|
)
|
|
12,413
|
|
TOTAL ASSETS
|
|
$
|
569,692
|
|
|
$
|
600,441
|
|
|
$
|
654,866
|
|
|
$
|
(506,090
|
)
|
|
$
|
1,318,909
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
2,153
|
|
|
$
|
24,921
|
|
|
$
|
26,261
|
|
|
$
|
—
|
|
|
$
|
53,335
|
|
Other accrued liabilities
|
|
12,881
|
|
|
13,664
|
|
|
16,198
|
|
|
—
|
|
|
42,743
|
|
Debt
|
|
—
|
|
|
6,516
|
|
|
5,523
|
|
|
—
|
|
|
12,039
|
|
Royalty obligations
|
|
—
|
|
|
4,995
|
|
|
—
|
|
|
—
|
|
|
4,995
|
|
Reclamation
|
|
—
|
|
|
2,672
|
|
|
850
|
|
|
—
|
|
|
3,522
|
|
|
|
15,034
|
|
|
52,768
|
|
|
48,832
|
|
|
—
|
|
|
116,634
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
175,991
|
|
|
15,214
|
|
|
229,036
|
|
|
(221,384
|
)
|
|
198,857
|
|
Royalty obligations
|
|
—
|
|
|
4,292
|
|
|
—
|
|
|
—
|
|
|
4,292
|
|
Reclamation
|
|
—
|
|
|
75,183
|
|
|
20,621
|
|
|
—
|
|
|
95,804
|
|
Deferred tax liabilities
|
|
13,810
|
|
|
6,179
|
|
|
54,809
|
|
|
—
|
|
|
74,798
|
|
Other long-term liabilities
|
|
1,993
|
|
|
4,750
|
|
|
53,294
|
|
|
—
|
|
|
60,037
|
|
Intercompany payable (receivable)
|
|
(405,623
|
)
|
|
336,813
|
|
|
68,810
|
|
|
—
|
|
|
—
|
|
|
|
(213,829
|
)
|
|
442,431
|
|
|
426,570
|
|
|
(221,384
|
)
|
|
433,788
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
1,809
|
|
|
250
|
|
|
197,913
|
|
|
(198,163
|
)
|
|
1,809
|
|
Additional paid-in capital
|
|
3,314,590
|
|
|
181,009
|
|
|
1,864,261
|
|
|
(2,045,270
|
)
|
|
3,314,590
|
|
Accumulated deficit
|
|
(2,545,424
|
)
|
|
(73,529
|
)
|
|
(1,882,710
|
)
|
|
1,956,239
|
|
|
(2,545,424
|
)
|
Accumulated other comprehensive income (loss)
|
|
(2,488
|
)
|
|
(2,488
|
)
|
|
—
|
|
|
2,488
|
|
|
(2,488
|
)
|
|
|
768,487
|
|
|
105,242
|
|
|
179,464
|
|
|
(284,706
|
)
|
|
768,487
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
569,692
|
|
|
$
|
600,441
|
|
|
$
|
654,866
|
|
|
$
|
(506,090
|
)
|
|
$
|
1,318,909
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
96,123
|
|
|
$
|
34,228
|
|
|
$
|
70,363
|
|
|
$
|
—
|
|
|
$
|
200,714
|
|
Receivables
|
|
11
|
|
|
12,773
|
|
|
73,208
|
|
|
—
|
|
|
85,992
|
|
Ore on leach pads
|
|
—
|
|
|
67,329
|
|
|
—
|
|
|
—
|
|
|
67,329
|
|
Inventory
|
|
—
|
|
|
45,491
|
|
|
36,220
|
|
|
—
|
|
|
81,711
|
|
Prepaid expenses and other
|
|
3,496
|
|
|
1,075
|
|
|
6,371
|
|
|
—
|
|
|
10,942
|
|
|
|
99,630
|
|
|
160,896
|
|
|
186,162
|
|
|
—
|
|
|
446,688
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
4,546
|
|
|
138,706
|
|
|
52,747
|
|
|
—
|
|
|
195,999
|
|
Mining properties, net
|
|
—
|
|
|
199,303
|
|
|
389,916
|
|
|
—
|
|
|
589,219
|
|
Ore on leach pads
|
|
—
|
|
|
44,582
|
|
|
—
|
|
|
—
|
|
|
44,582
|
|
Restricted assets
|
|
5,755
|
|
|
381
|
|
|
5,497
|
|
|
—
|
|
|
11,633
|
|
Equity securities
|
|
434
|
|
|
2,332
|
|
|
—
|
|
|
—
|
|
|
2,766
|
|
Receivables
|
|
—
|
|
|
—
|
|
|
24,768
|
|
|
—
|
|
|
24,768
|
|
Deferred tax assets
|
|
—
|
|
|
—
|
|
|
1,942
|
|
|
—
|
|
|
1,942
|
|
Net investment in subsidiaries
|
|
127,671
|
|
|
27,657
|
|
|
—
|
|
|
(155,328
|
)
|
|
—
|
|
Other
|
|
54,578
|
|
|
9,197
|
|
|
5,695
|
|
|
(54,578
|
)
|
|
14,892
|
|
TOTAL ASSETS
|
|
$
|
292,614
|
|
|
$
|
583,054
|
|
|
$
|
666,727
|
|
|
$
|
(209,906
|
)
|
|
$
|
1,332,489
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,743
|
|
|
$
|
21,956
|
|
|
$
|
28,454
|
|
|
$
|
—
|
|
|
$
|
52,153
|
|
Other accrued liabilities
|
|
20,555
|
|
|
11,177
|
|
|
18,800
|
|
|
—
|
|
|
50,532
|
|
Debt
|
|
1,000
|
|
|
8,120
|
|
|
1,311
|
|
|
—
|
|
|
10,431
|
|
Royalty obligations
|
|
—
|
|
|
4,729
|
|
|
20,164
|
|
|
—
|
|
|
24,893
|
|
Reclamation
|
|
—
|
|
|
1,401
|
|
|
1,821
|
|
|
(1,151
|
)
|
|
2,071
|
|
|
|
23,298
|
|
|
47,383
|
|
|
70,550
|
|
|
(1,151
|
)
|
|
140,080
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
467,634
|
|
|
4,947
|
|
|
61,976
|
|
|
(54,578
|
)
|
|
479,979
|
|
Royalty obligations
|
|
—
|
|
|
4,864
|
|
|
—
|
|
|
—
|
|
|
4,864
|
|
Reclamation
|
|
—
|
|
|
61,924
|
|
|
20,122
|
|
|
1,151
|
|
|
83,197
|
|
Deferred tax liabilities
|
|
28,600
|
|
|
6,927
|
|
|
111,605
|
|
|
—
|
|
|
147,132
|
|
Other long-term liabilities
|
|
2,171
|
|
|
3,838
|
|
|
49,752
|
|
|
—
|
|
|
55,761
|
|
Intercompany payable (receivable)
|
|
(650,565
|
)
|
|
411,103
|
|
|
239,462
|
|
|
—
|
|
|
—
|
|
|
|
(152,160
|
)
|
|
493,603
|
|
|
482,917
|
|
|
(53,427
|
)
|
|
770,933
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
1,513
|
|
|
250
|
|
|
130,885
|
|
|
(131,135
|
)
|
|
1,513
|
|
Additional paid-in capital
|
|
3,024,461
|
|
|
179,553
|
|
|
1,896,047
|
|
|
(2,075,600
|
)
|
|
3,024,461
|
|
Accumulated deficit
|
|
(2,600,776
|
)
|
|
(135,049
|
)
|
|
(1,913,672
|
)
|
|
2,048,721
|
|
|
(2,600,776
|
)
|
Accumulated other comprehensive income (loss)
|
|
(3,722
|
)
|
|
(2,686
|
)
|
|
—
|
|
|
2,686
|
|
|
(3,722
|
)
|
|
|
421,476
|
|
|
42,068
|
|
|
113,260
|
|
|
(155,328
|
)
|
|
421,476
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
292,614
|
|
|
$
|
583,054
|
|
|
$
|
666,727
|
|
|
$
|
(209,906
|
)
|
|
$
|
1,332,489
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 21 – COMMITMENTS AND CONTINGENCIES
Labor Union Contract
The Company maintains a labor agreement with Sindicato de Trabajadores Mineros de la Empresa Manquiri S.A. at the San Bartolomé mine in Bolivia. The San Bartolomé mine labor agreement, which became effective January 28, 2010, is currently active and does not have a fixed term. At
December 31, 2016
, approximately
11%
of the Company’s global labor force was covered by this collective bargaining agreement. The Company cannot predict whether this agreement will be renewed on similar terms or at all, whether future labor disruptions will occur or, if disruptions do occur, how long they will last.
Rochester Production Royalty
Commencing January 1, 2014, Coeur Rochester is obligated to pay a
3.4%
net smelter returns royalty on up to
39.4 million
silver equivalent ounces produced and sold from a portion of the Rochester mine, payable on a quarterly basis. For each calendar quarter, the royalty is payable on the actual sales prices received (exclusive of gains or losses associated with trading activities), less refining and related costs, of gold and silver produced and sold from the applicable portions of the Rochester mine. Changes in the Company's mine plan and silver and gold prices result in the recognition of mark-to-market gains or losses in
Fair value adjustments, net
. At
December 31, 2016
, a total of
18.0 million
silver equivalent ounces remain outstanding under the obligation.
Palmarejo Gold Production Royalty and Gold Stream
In January 2009, Coeur Mexicana entered into a gold production royalty agreement with a subsidiary of Franco-Nevada Corporation under which the subsidiary of Franco-Nevada Corporation purchased a royalty covering
50%
of the life of mine gold to be produced from its Palmarejo silver and gold mine in Mexico (excluding production from the recently acquired Paramount properties). The royalty agreement provided for a minimum obligation of
4,167
ounces per month over an initial eight-year period for a total of
400,000
ounces of gold. On October 2, 2014, Coeur Mexicana terminated the Palmarejo gold production royalty in exchange for a termination payment of
$2.0 million
. In July 2016, the remaining minimum obligation under the Palmarejo royalty agreement was satisfied and the termination of the Palmarejo royalty agreement became effective.
Coeur Mexicana is now subject to a gold stream agreement whereby Coeur Mexicana will sell
50%
of Palmarejo gold production (excluding production from the recently acquired Paramount properties) to a subsidiary of Franco-Nevada Corporation upon completion of the gold production royalty minimum ounce delivery requirement, for the lesser of
$800
or spot price per ounce. Under the gold stream agreement, Coeur Mexicana received a
$22.0 million
deposit toward future deliveries under the gold stream agreement.
Sites Related to Callahan Mining Corporation
In 1991, the Company acquired all of the outstanding common stock of Callahan Mining Corporation. The Company has received requests for information or notices of potential liability from state or federal agencies with regard to Callahan's operations at sites in Maine, Colorado and Washington. The Company did not make any decisions with respect to generation, transport or disposal of hazardous waste at these sites. Therefore, the Company believes that it is not liable for any potential cleanup costs either directly as an operator or indirectly as a parent. The Company anticipates that further agency interaction may occur with respect to these sites.
Callahan operated a mine and mill in Brooksville, Maine from 1968 until 1972 and subsequently disposed of the property. In 2000, the U.S. Environmental Protection Agency, or EPA, made a formal request to the Company for information regarding the site. The site was placed on the National Priorities List on September 5, 2002, and the Maine Department of Transportation, a partial owner of the property, signed a consent order in 2005. In January 2009, the EPA and the State of Maine made additional formal requests to the Company for information relating to the site, to which the Company responded. The first phase of cleanup at the site began in April 2011.
The Van Stone Mine in Stevens County, Washington consists of several parcels of land and was mined from 1926 until 1993 by multiple owners. Callahan sold its parcel in 1990. In February 2010, the State of Washington Department of Ecology notified Callahan that it, among others, is a potentially liable person (PLP) under Washington law.
Under lease and option agreements with several owners, Callahan was involved with the Akron Mine located in Gunnison County, Colorado from 1937-1960. The United States Forest Service (“USFS”) made formal requests for information to Callahan regarding the site in December 2003, February 2007, March 2013, and November 2013. Callahan timely responded to each request. In August 2014, Callahan received a notice of potential CERCLA liability from the USFS regarding environmental contamination at the Akron Mine.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Bolivian Temporary Restriction on Mining above
4,400
Meters
In October 2009, the Bolivian state-owned mining organization, COMIBOL, announced by resolution that it was temporarily suspending mining activities above the elevation of
4,400
meters above sea level while stability studies of Cerro Rico mountain are undertaken. The Company holds rights to mine above this elevation under valid contracts with COMIBOL. The stability studies have been completed and officially submitted to the Bolivian mining technical authorities. Accordingly, the COMIBOL suspension has expired in accordance with the terms of the resolution. The Company is not currently mining above the 4,400 meter level due to community relations concerns and the current political climate in Bolivia.
If COMIBOL decides to affirmatively adopt a new resolution to restrict access above the 4,400 meter level, the Company may need to further write down the carrying value of the asset. While a portion of the Company's proven and probable reserves relate to material above the 4,400 meter level at San Bartolomé, so long as operations remain suspended, there is a risk that silver may not be produced from this material at expected levels or at all, particularly given the remaining anticipated mine life of this asset. It is also uncertain if any new mining or investment policies or shifts in political attitude may affect mining in Bolivia.
NOTE 22 – SUPPLEMENTAL CASH FLOW INFORMATION
The following table presents non-cash financing and investing activities and other cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
Non-cash financing and investing activities:
|
2016
|
|
2015
|
|
2014
|
Capital lease obligations
|
$
|
32,243
|
|
|
$
|
4,123
|
|
|
$
|
24,879
|
|
Non-cash extinguishment of senior notes
|
10,616
|
|
|
53,373
|
|
|
—
|
|
Non-cash acquisitions and related deferred taxes
|
—
|
|
|
297,821
|
|
|
—
|
|
Other cash flow information:
|
|
|
|
|
|
Interest paid
|
$
|
41,976
|
|
|
$
|
42,264
|
|
|
$
|
30,691
|
|
Income taxes paid
|
17,181
|
|
|
1,937
|
|
|
20,198
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table sets forth a summary of the unaudited quarterly results of operations for the years ended December 31, 2016 and 2015 (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
148,387
|
|
|
$
|
182,007
|
|
|
$
|
176,247
|
|
|
$
|
159,136
|
|
Costs applicable to sales
|
101,555
|
|
|
100,465
|
|
|
105,408
|
|
|
102,113
|
|
Amortization
|
27,964
|
|
|
37,505
|
|
|
27,763
|
|
|
29,929
|
|
Exploration
|
1,731
|
|
|
2,233
|
|
|
3,706
|
|
|
5,260
|
|
Other operating expenses (General and administrative, Pre-development, reclamation, and other, and Write-downs)
|
16,926
|
|
|
11,764
|
|
|
11,604
|
|
|
10,747
|
|
Net income (loss)
|
(20,396
|
)
|
|
14,497
|
|
|
69,557
|
|
|
(8,306
|
)
|
Cash provided by (used in) operating activities
|
6,617
|
|
|
45,939
|
|
|
47,812
|
|
|
25,449
|
|
Capital expenditures
|
22,172
|
|
|
23,288
|
|
|
25,627
|
|
|
29,926
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share
|
$
|
(0.14
|
)
|
|
$
|
0.09
|
|
|
$
|
0.43
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share
|
$
|
(0.14
|
)
|
|
$
|
0.09
|
|
|
$
|
0.42
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
152,956
|
|
|
$
|
166,263
|
|
|
$
|
162,552
|
|
|
$
|
164,315
|
|
Costs applicable to sales
|
115,062
|
|
|
119,097
|
|
|
120,237
|
|
|
125,258
|
|
Amortization
|
33,090
|
|
|
38,974
|
|
|
35,497
|
|
|
36,190
|
|
Exploration
|
4,266
|
|
|
3,579
|
|
|
2,112
|
|
|
1,690
|
|
Other operating expenses (General and administrative, Pre-development, reclamation, and other, and Write-downs)
(1)
|
15,597
|
|
|
10,718
|
|
|
11,632
|
|
|
326,017
|
|
Net income (loss)
|
(33,287
|
)
|
|
(16,677
|
)
|
|
(14,219
|
)
|
|
(303,000
|
)
|
Cash provided by (used in) operating activities
|
(3,449
|
)
|
|
37,004
|
|
|
36,770
|
|
|
43,217
|
|
Capital expenditures
|
17,620
|
|
|
23,677
|
|
|
23,861
|
|
|
30,035
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share
|
$
|
(0.32
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(2.28
|
)
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share
|
$
|
(0.32
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(2.28
|
)
|
(1) The Company performed impairment testing of long-lived assets in the fourth quarter of 2015 and, based on the results of the impairment testing, recorded a write-down of $313.3 million to long-lived assets.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements