Multi-Year High Financial Results Driven by
Increased Production and Higher Prices;
Provides Updated Full-Year 2020 Guidance
Coeur Mining, Inc. (“Coeur” or the “Company”) (NYSE: CDE) today
reported third quarter 2020 financial results, including revenue of
$229.7 million, cash flow from operating activities of $79.5
million and GAAP net income from continuing operations of $26.9
million, or $0.11 per share. On an adjusted basis1, the Company
reported EBITDA of $90.8 million, cash flow from operating
activities prior to changes in working capital of $57.4 million and
net income from continuing operations of $38.2 million, or $0.16
per share.
Key Highlights
- Highest quarterly financial results in nearly a decade -
Revenue increased 49% and adjusted EBITDA1 more than doubled
quarter-over-quarter. Operating cash flow was eight-times higher
and now totals $81.4 million through the first nine months of the
year. Free cash flow1 increased significantly to $56.5 million,
leading to year-to-date positive free cash flow1 of $19.5
million
- Strong quarter-over-quarter production growth - Gold
production increased 23% to 95,995 ounces driven by improved
operational performance at Palmarejo, Rochester and Wharf, while
silver production of 2.6 million ounces was 58% higher largely due
to positive results at Palmarejo
- Well-executed restart at Palmarejo following temporary
suspension - Palmarejo generated strong operational and
financial results after being temporarily suspended for
approximately 45 days in the prior period due to a COVID-19-related
government decree. Gold production nearly doubled while silver
production was more than two-times higher quarter-over-quarter,
helping to generate $49.7 million and $44.7 million in operating
and free cash flow1, respectively
- Successfully commenced construction on schedule for
Rochester expansion - The Company broke ground in early August
on the Plan of Operations Amendment 11 (“POA 11”) expansion project
at its Rochester mine. Coeur plans to file an updated technical
report in December, which will provide a detailed economic and
technical overview of the expansion project
- Record quarterly results at Wharf - Wharf produced
33,440 ounces of gold, which generated $39.1 million in operating
cash flow and $38.6 million free cash flow1 during the third
quarter - all new quarterly records since Coeur’s acquisition of
Wharf in early 2015 for approximately $99.5 million. Cumulative
operating and free cash flow1 since acquisition now totals $256.0
million and $232.4 million, respectively
- Continued execution of the Company’s largest exploration
program in its history2 - Building on the success from the
first half of the year, approximately 20 drill rigs continue to
operate across the Company, including at the new C-Horst discovery
located in the northernmost portion of the Crown Block in southern
Nevada. Results indicate potential for strong resource growth at
Palmarejo, Rochester, Kensington, Silvertip and C-Horst, while
infill drilling has demonstrated near-term upside potential for
reserve growth at Palmarejo and Rochester
- Bolstered balance sheet and financial flexibility - The
Company reduced total debt3 by $47.5 million, or 14%,
quarter-over-quarter while cash and cash equivalents increased 9%
to $77.1 million as of September 30, 2020
“Strong production growth and higher gold and silver prices
combined to generate multi-year high financial results during the
third quarter,” said Mitchell J. Krebs, President and Chief
Executive Officer. “A strong rebound from Palmarejo and a
record-breaking quarter at Wharf helped showcase the benefit of our
balanced portfolio of North American-based precious metals assets.
Quarterly revenue was the highest in nearly a decade, adjusted
EBITDA1 more than doubled and free cash flow1 now totals $19.5
million through the first nine months of the year after jumping to
$56.5 million in the third quarter.”
Mr. Krebs continued, “We achieved a major milestone by
commencing construction on schedule on the POA 11 expansion project
at Rochester and look forward to sharing the results of the updated
technical report in December. In addition to strong operational
execution at several sites, we significantly reduced debt while
increasing cash, leaving us well-positioned as we head into major
construction activities at Rochester next year. With strengthening
operational performance, successful execution of our near-term
organic growth opportunities and a sustained commitment to our
exploration investments, we remain on-track to fundamentally
reposition the Company and unlock meaningful long-term value for
our stockholders.”
Financial and Operating Highlights (Unaudited)
(Amounts in millions, except per share
amounts, gold ounces produced & sold, and per-ounce/pound
metrics)
3Q 2020
2Q 2020
1Q 2020
4Q 2019
3Q 2019
Gold Sales
$
167.1
$
127.9
$
127.6
$
134.3
$
141.9
Silver Sales
$
62.6
$
26.3
$
44.9
$
54.8
$
51.6
Consolidated Revenue
$
229.7
$
154.2
$
173.2
$
195.0
$
199.5
Costs Applicable to Sales4
$
112.8
$
90.0
$
118.9
$
146.6
$
141.0
General and Administrative
Expenses
$
7.8
$
8.6
$
8.9
$
7.6
$
9.6
Net Income (Loss)
$
26.9
$
(1.2)
$
(11.9)
$
(270.9)
$
(14.3)
Net Income (Loss) Per Share
$
0.11
$
(0.01)
$
(0.05)
$
(1.13)
$
(0.06)
Adjusted Net Income (Loss)1
$
38.2
$
2.6
$
(0.9)
$
(3.3)
$
(5.3)
Adjusted Net Income (Loss)1 Per
Share
$
0.16
$
0.01
$
—
$
(0.01)
$
(0.02)
Weighted Average Shares
Outstanding
243.8
240.9
240.3
238.7
225.9
EBITDA1
$
77.3
$
35.3
$
25.5
$
(214.5)
$
37.6
Adjusted EBITDA1
$
90.8
$
42.2
$
46.5
$
59.8
$
61.0
Cash Flow from Operating
Activities
$
79.5
$
9.9
$
(8.0)
$
39.3
$
42.0
Capital Expenditures
$
23.0
$
16.7
$
22.2
$
21.0
$
30.7
Free Cash Flow1
$
56.5
$
(6.7)
$
(30.2)
$
18.4
$
11.3
Cash, Equivalents & Short-Term
Investments
$
77.1
$
70.9
$
52.9
$
55.6
$
65.3
Total Debt3
$
301.1
$
348.6
$
343.1
$
295.5
$
298.7
Average Realized Price Per Ounce –
Gold
$
1,754
$
1,641
$
1,490
$
1,407
$
1,413
Average Realized Price Per Ounce –
Silver
$
24.15
$
16.25
$
16.63
$
16.99
$
17.17
Gold Ounces Produced
95,995
78,229
85,077
94,716
99,782
Silver Ounces Produced
2.6
1.6
2.7
3.1
3.0
Gold Ounces Sold
95,283
77,933
85,635
95,532
100,407
Silver Ounces Sold
2.6
1.6
2.7
3.3
3.0
Financial Results
Third quarter 2020 revenue increased 49% and 15%
quarter-over-quarter and year-over-year, respectively, to $229.7
million driven by higher production and favorable metals prices.
The Company’s gold and silver production increased 23% and 58%
quarter-over-quarter to 95,995 and 2.6 million ounces,
respectively. Gold and silver sales totaled 95,283 and 2.6 million
ounces, respectively, 22% and 60% higher than the prior period.
Average realized gold and silver prices for the quarter were $1,754
and $24.15 per ounce, respectively, or 7% and 49% higher
quarter-over-quarter.
Gold and silver sales accounted for 73% and 27% of third quarter
revenue, respectively. The Company’s U.S. operations accounted for
approximately 64% of third quarter revenue, down from approximately
75% in the prior period, primarily due to the ramp-up of Palmarejo
following the government-mandated temporary suspension in the prior
period.
Costs applicable to sales4 increased 25% quarter-over-quarter to
$112.8 million, largely due to the ramp-up of Palmarejo and higher
production at Wharf. Third quarter general and administrative
expenses decreased 9% to $7.8 million, primarily driven by lower
employee-related expenses and outside service fees.
Third quarter exploration expense totaled $12.8 million, 8%
higher quarter-over-quarter, reflecting a rebound in drilling
activity at Palmarejo, an acceleration of Silvertip’s exploration
program, and increased drilling expense at Kensington and Wharf.
See the “Operations” and “Exploration” sections for additional
detail on the Company’s exploration activities.
Operating costs related to COVID-19 mitigation and response
efforts totaled $4.0 million during the third quarter, compared to
$6.1 million in the prior period. These additional costs are
primarily driven by employee-related expenses at Palmarejo and
Kensington, and are included in “Pre-development, reclamation, and
other expenses” on the Company’s income statement.
Coeur recorded an income tax expense of $13.1 million during the
third quarter, primarily related to strong financial performance at
Palmarejo. Cash income and mining taxes paid during the quarter
totaled approximately $3.3 million, bringing the full-year figure
to $20.1 million. The Company expects to pay approximately $30.0 to
$35.0 million of cash income and mining taxes in 2020.
Quarterly operating cash flow improved to $79.5 million compared
to $9.9 million in the prior period, reflecting strong revenue
growth and margin expansion quarter-over-quarter. Changes in
working capital during the quarter totaled $22.1 million, compared
to $(6.5) million in the second quarter of 2020, largely driven by
the timing of tax payments in Mexico, payables related to the
ramp-up of Palmarejo and interest payments. Third quarter operating
cash flow includes a cash outflow of $5.1 million associated with
the Company’s prepayment agreement at Kensington. Coeur expects the
remaining $9.9 million cash outflow under the arrangement to occur
in the fourth quarter.
Third quarter capital expenditures were $23.0 million compared
to $16.7 million in the prior period, reflecting higher investment
across the Company’s operations as well as increased spending on
POA 11. Sustaining and development capital expenditures accounted
for approximately 51% and 49%, respectively, of the Company’s
capital expenditures during the quarter.
Liquidity Update
Coeur continued to prudently manage its balance sheet during the
third quarter of 2020 by repaying $47.5 million of total debt3,
including $40.0 million of outstanding indebtedness under its
senior secured revolving credit facility (“RCF”). The Company
intends to repay the remaining $20.0 million RCF balance by year
end from internally generated cash flow. At September 30, 2020,
cash and cash equivalents totaled $77.1 million (9% higher
quarter-over-quarter), while total debt3 outstanding was $301.1
million (14% lower quarter-over-quarter).
Hedging Update
The Company did not execute any additional zero-cost collar
(“ZCC”) hedges during the third quarter. Coeur’s hedging strategy
remains focused on supporting cash flow generation during the POA
11 expansion at Rochester, which the Company expects to fund with a
combination of cash on hand, internally generated cash flow and
existing debt capacity.
Coeur completed its gold hedging program for 2021 earlier this
year and will proactively monitor market conditions to potentially
layer in additional ZCC hedges on up to 50% of expected gold
production in 2022. The Company’s silver price exposure remains
unhedged. An overview of the hedges currently implemented is
outlined below:
4Q 2020
2021
2022
Gold Ounces Hedged
55,500
158,700
126,000
Avg. Ceiling ($/oz)
$1,823
$1,875
$2,030
Avg. Floor ($/oz)
$1,471
$1,600
$1,626
Rochester Expansion
Coeur commenced construction on the POA 11 expansion project on
schedule in early August 2020, advancing early-stage earthworks and
establishing infrastructure at site to support construction
activities. The expansion project includes the construction of a
new leach pad, a crushing facility equipped with two high-pressure
grinding roll (“HPGR”) units, a Merrill-Crowe process plant, and
related infrastructure to support the extension of Rochester’s mine
life.
Together with SNC-Lavalin, Coeur’s engineering, procurement and
project management contractor, the Company has completed over 75%
of detailed design for the expansion project. Major construction is
expected to begin in 2021 and be largely completed by late 2022.
The project remains on schedule with no changes to key elements of
the timeline (highlighted below).
Expected Start Date
Target Completion Date
Leach Pad (Incl. Ancillary Facilities)
2H 2020
Mid-2022
Merrill-Crowe Process Plant
1H 2021
YE 2022
Crushing Circuit
1H 2021
YE 2022
Supporting Infrastructure
2H 2020
Mid-2022
The Company expects to publish an updated technical report for
Rochester in December further outlining details of the expansion,
including estimated capital expenditures, an updated mine plan, and
detailed operational and financial information regarding the
expected impacts of HPGR technology.
Operations
Third quarter 2020 highlights for each of the Company’s
operations are provided below.
Palmarejo, Mexico
(Dollars in millions, except per ounce
amounts)
3Q 2020
2Q 2020
1Q 2020
4Q 2019
3Q 2019
Tons milled
492,474
269,641
479,562
486,779
442,464
Average gold grade (oz/t)
0.07
0.07
0.07
0.07
0.09
Average silver grade (oz/t)
4.37
4.46
4.69
5.11
4.88
Average recovery rate – Au
91.3%
86.0%
91.6%
84.9%
81.7%
Average recovery rate – Ag
82.8%
72.2%
81.5%
81.7%
79.6%
Gold ounces produced
29,296
15,223
31,578
28,702
31,779
Silver ounces produced (000’s)
1,784
867
1,835
2,029
1,720
Gold ounces sold
27,252
16,924
31,287
27,952
32,731
Silver ounces sold (000’s)
1,765
875
1,895
1,980
1,747
Average realized price per gold
ounce
$1,446
$1,399
$1,331
$1,238
$1,269
Average realized price per silver
ounce
$23.98
$16.35
$17.25
$17.28
$17.05
Metal sales
$81.8
$38.0
$74.3
$68.9
$71.3
Costs applicable to sales4
$34.3
$18.8
$36.0
$34.8
$37.4
Adjusted CAS per AuOz1
$602
$686
$645
$622
$660
Adjusted CAS per AgOz1
$10.06
$8.13
$8.37
$8.79
$8.95
Exploration expense
$2.0
$0.9
$1.5
$2.0
$1.6
Cash flow from operating
activities
$49.7
$(3.5)
$28.9
$41.4
$36.3
Sustaining capital expenditures
(excludes capital lease payments)
$4.9
$4.5
$7.1
$6.2
$4.7
Development capital
expenditures
$0.1
$—
$—
$2.4
$3.1
Total capital expenditures
$5.0
$4.5
$7.1
$8.6
$7.8
Free cash flow1
$44.7
$(8.0)
$21.8
$32.8
$28.5
Operational
- Operations steadily ramped back up during June and into the
third quarter following amended guidance from the Federal
Government of Mexico that precious metals mining is considered an
essential business activity
- Third quarter gold production increased 92% to 29,296 ounces
and silver production more than doubled to approximately 1.8
million ounces compared to the prior quarter
Financial
- Third quarter adjusted CAS1 for gold on a co-product basis
decreased 12% compared to the prior period to $602 per ounce, while
adjusted CAS1 for silver on a co-product basis increased 24% to
$10.06 per ounce. Co-product adjusted CAS1 for the quarter reflect
the ramp-up of operations following the temporary suspension and
comparatively higher silver sales
- Quarterly capital expenditures increased 11% to $5.0 million,
and focused on mine development and infrastructure projects
- Free cash flow1 in the third quarter totaled $44.7 million,
compared to $(8.0) million in the prior period
Exploration
- Exploration investment during the third quarter totaled
approximately $3.2 million ($2.0 million expensed and $1.2 million
capitalized), compared to approximately $1.5 million ($0.9 million
expensed and $0.6 million capitalized) in the prior quarter
- Coeur began the third quarter with four active rigs and ramped
up to seven surface and underground core rigs during the period. A
total of 18 expansion and 30 infill holes were drilled during the
quarter for a total of 68,554 feet (20,895 meters)
- Exploration activity focused on infill drilling within the two
mine complexes, Independencia and Guadalupe, and on resource
expansion north, southwest and southeast of both mine complexes.
New resource expansion holes were also drilled east, northwest and
north of Independencia
- Resource expansion results continue to be encouraging, cutting
multiple mineralized zones that extend south, northwest and north
of Independencia. Similarly, infill drilling has been successful
south and southwest of Guadalupe
- Coeur expects to continue with seven active rigs during the
fourth quarter, primarily focusing on resource expansion drilling
as well as infill drilling on select targets. Three expansion rigs
have recently been mobilized to focus on growing mineralized
material between Independencia and the mill
Other
- Workforce staffing levels gradually increased to near full
capacity during September, up from approximately 85% earlier in the
quarter due to government-imposed restrictions related to COVID-19.
The Company is maintaining its rigorous health and safety protocols
at Palmarejo aimed at limiting the exposure and transmission of
COVID-19
- Approximately 38% of Palmarejo’s gold sales in the third
quarter, or 10,348 ounces, were sold under its gold stream
agreement at a price of $800 per ounce
Guidance
- Full-year 2020 gold production is expected to be slightly
higher at 100,000 - 110,000 ounces (previously 95,000 - 105,000
ounces), while silver production is expected to be 6.0 - 7.0
million ounces (no change)
- With higher expected gold production and solid cost controls,
CAS1 for gold are expected to be $650 - $750 per ounce (previously
$785 - $885 per ounce), while CAS1 for silver are anticipated to be
$9.50 - $10.50 per ounce (no change)
- Capital expenditures are expected to be modestly lower at
approximately $27 - $30 million (previously $32 - $36 million)
Rochester, Nevada
(Dollars in millions, except per ounce
amounts)
3Q 2020
2Q 2020
1Q 2020
4Q 2019
3Q 2019
Ore tons placed
4,523,767
3,743,331
3,428,578
2,612,319
2,516,353
Average silver grade (oz/t)
0.49
0.51
0.57
0.47
0.43
Average gold grade (oz/t)
0.002
0.002
0.002
0.003
0.004
Silver ounces produced (000’s)
740
728
687
848
982
Gold ounces produced
6,462
5,159
5,936
10,634
7,901
Silver ounces sold (000’s)
786
724
632
932
951
Gold ounces sold
6,834
5,278
5,473
11,248
7,651
Average realized price per silver
ounce
$24.49
$16.11
$16.99
$17.22
$17.02
Average realized price per gold
ounce
$1,882
$1,702
$1,583
$1,484
$1,476
Metal sales
$32.1
$20.6
$19.4
$32.6
$27.5
Costs applicable to sales4
$19.1
$18.3
$17.0
$25.3
$27.7
Adjusted CAS per AgOz1
$14.98
$13.75
$14.38
$13.25
$14.24
Adjusted CAS per AuOz1
$1,148
$1,481
$1,359
$1,142
$1,230
Exploration expense
$0.5
$1.8
$0.2
$0.4
$0.1
Cash flow from operating
activities
$2.1
$(5.6)
$(9.3)
$6.9
$8.3
Sustaining capital expenditures
(excludes capital lease payments)
$2.5
$1.5
$0.1
$0.9
$(1.0)
Development capital
expenditures
$7.3
$4.3
$5.0
$4.1
$11.2
Total capital expenditures
$9.8
$5.8
$5.1
$5.0
$10.2
Free cash flow1
$(7.7)
$(11.4)
$(14.4)
$1.9
$(1.9)
Operational
- Silver production increased modestly quarter-over-quarter to
approximately 0.7 million ounces, while gold production was 25%
higher and totaled 6,462 ounces
- Improved production was driven by the placement of 4.5 million
tons during the quarter, a 21% increase compared to the prior
period and 80% higher than the third quarter of 2019. Just over
36,500 tons per day were processed through the upgraded crushing
circuit, consistent with the prior period and 142% higher
year-over-year. Placement rates were supplemented by stacking
roughly 1.2 million tons of run-of-mine material during the
quarter
- Upset conditions in the Merrill-Crowe process plant and
residual impacts of dilution from stacking HPGR-crushed material on
top of historical ore on the Stage IV leach pad earlier in the year
resulted in lower-than-anticipated production during the
quarter
- As a result of the upset conditions, approximately 0.1 million
ounces of silver and 1,250 ounces of gold were held as
work-in-process inventory at the end of the third quarter and are
expected to be recovered by the end of the year
- Late in the third quarter, Coeur expanded the scope of its
revised stacking plan by installing additional inter-lift liners to
maximize the placement of HPGR-crushed ore on shallower portions of
the Stage IV leach pad
Financial
- Third quarter adjusted CAS1 for silver on a co-product basis
increased 9% quarter-over-quarter to $14.98 per ounce, while
adjusted CAS1 for gold on a co-product basis decreased 22% to
$1,148 per ounce, reflecting comparatively higher costs and
increased gold production
- Third quarter capital expenditures totaled $9.8 million
compared to $5.8 million in the prior period, largely due to
increased investment in POA 11
- Free cash flow1 totaled $(7.7) million in the third quarter,
compared to $(11.4) million in the second quarter, primarily driven
by improved operating cash flow and partially offset by higher
capital expenditures
Exploration
- Exploration investment for the third quarter totaled
approximately $1.3 million ($0.5 million expensed and $0.9 million
capitalized), compared to approximately $2.2 million ($1.8 million
expensed and $0.4 million capitalized) in the prior period
- Following the success of prior drill programs, two core rigs
continued directional drilling at East Rochester to test areas of
potential mineralization under the Stage I and Stage II leach pads.
A total of four new expansion core holes were drilled during the
quarter (12 through the first nine months of 2020). The core rigs
were then moved to complete geotechnical holes in the existing open
pit
- One reverse circulation rig continued infill drilling within
the existing open pit. A total of 15 infill holes and five
expansion holes were drilled during the quarter
- Based on the results received to date, significant potential
exists for additional reserve and resource growth in the existing
open pit and at East Rochester. Additionally, target generation in
the district highlighted priorities for future drilling north of
East Rochester and East Packard as well as around the Lincoln Hill,
Gold Ridge and Independence Hill zones located immediately west of
Rochester
- Based on the drilling success at East Rochester, Coeur has
extended the expansion program through the winter with one reverse
circulation rig focused on testing the extension of the zone
northwards towards the Stage IV leach pad
Other
- Mining remains an essential business in Nevada. The Company
continues to maintain rigorous health and safety protocols aimed at
limiting the exposure and transmission of COVID-19 at Rochester and
in the surrounding communities
Guidance
- Full-year 2020 silver production is anticipated to be modestly
lower at 3.1 - 3.7 million ounces (previously 3.5 - 4.5 million
ounces) given greater-than-expected impacts from dilution, while
gold production guidance remains consistent at 27,000 - 33,000
ounces (no change)
- Given lower expected silver production, CAS1 for silver in 2020
are expected to be $13.50 - $14.75 per ounce (previously $12.75 -
$14.00 per ounce). Comparatively higher gold production is expected
to drive CAS1 to $1,150 - $1,300 per ounce of gold (previously
$1,250 - $1,400 per ounce)
- Capital expenditures are expected to remain relatively
unchanged at approximately $38 - $42 million (previously $38 - $43
million)
Kensington, Alaska
(Dollars in millions, except per ounce
amounts)
3Q 2020
2Q 2020
1Q 2020
4Q 2019
3Q 2019
Tons milled
163,276
170,478
162,341
167,061
166,475
Average gold grade (oz/t)
0.18
0.21
0.21
0.20
0.22
Average recovery rate
93.7%
92.0%
93.5%
87.2%
93.2%
Gold ounces produced
26,797
33,058
32,022
29,736
34,156
Gold ounces sold
27,815
32,367
32,781
29,293
35,452
Average realized price per gold ounce,
gross
$1,917
$1,762
$1,603
$1,493
$1,505
Treatment and refining charges per gold
ounce
$35
$57
$27
$24
$20
Average realized price per gold ounce,
net
$1,882
$1,705
$1,576
$1,469
$1,485
Metal sales
$52.4
$55.2
$51.7
$43.0
$52.6
Costs applicable to sales4
$31.5
$30.4
$30.5
$28.8
$29.5
Adjusted CAS per AuOz1
$1,128
$934
$928
$976
$822
Prepayment, working capital cash
flow
$(5.1)
$7.0
$(7.0)
$4.7
$(14.7)
Exploration expense
$3.4
$2.6
$1.8
$1.6
$1.5
Cash flow from operating
activities
$9.1
$27.8
$11.9
$19.9
$4.5
Sustaining capital expenditures
(excludes capital lease payments)
$5.3
$3.9
$4.8
$4.3
$4.9
Development capital
expenditures
$—
$—
$—
$—
$—
Total capital expenditures
$5.3
$3.9
$4.8
$4.3
$4.9
Free cash flow1
$3.8
$23.9
$7.1
$15.6
$(0.4)
Operational
- Gold production in the third quarter totaled 26,797 ounces
compared to 33,058 ounces in the prior period, reflecting the
impact of several positive COVID-19 cases isolated to the
underground mining workforce. The Company conducted comprehensive
testing, contact tracing and sanitization efforts, helping to
mitigate the threat of further transmission across the
operation
- Average gold grade decreased approximately 14% to 0.18 ounces
per ton, largely due to the processing of additional development
ore and surface stockpile material as a result of mine sequencing
and COVID-19 contact tracing, respectively
- Jualin accounted for approximately 18% of Kensington’s third
quarter production, increasing from approximately 16% in the prior
quarter. For the full year, Jualin is expected to account for
approximately 15-20% of Kensington’s total production
Financial
- Adjusted CAS1 totaled $1,128 per ounce compared to $934 per
ounce in the prior period, reflecting modestly higher costs and
lower production
- Capital expenditures increased 36% quarter-over-quarter to $5.3
million, largely due to the completion of certain capital projects
prior to the winter months
- Free cash flow1 totaled $3.8 million during the third quarter,
including cash outflow of approximately $5.1 million associated
with Coeur’s prepayment agreement at Kensington. Excluding the
effect of the prepayment, free cash flow1 totaled approximately
$8.9 million in the third quarter
Exploration
- Exploration investment increased 30% compared to the prior
quarter to approximately $3.5 million (substantially all
expensed)
- Three core rigs, two surface and one underground, were active
during the quarter and focused on resource expansion drilling. A
total of 52 resource expansion holes were drilled during the
quarter for a total of 45,138 feet (13,758 meters)
- The surface program accelerated to two helicopter-supported
rigs drilling on the upper Raven, Big Lake and upper Johnson veins,
while the underground program targeted the lower and mid levels of
the Elmira vein
- Significant intervals of mineralized core were observed from
the surface program at the upper Raven vein as well as at the
recently discovered Jennifer vein located near the Raven vein.
Drilling from the uppermost 2050 drift has also generated positive
visual mineralized core, specifically at the Kensington, Eureka,
upper Kensington Zone 30 and Northern Belle veins
- With surface drilling now complete, the three core rigs were
moved underground and are anticipated to maintain a similar pace
during the fourth quarter. Exploration activities are expected to
continue focusing on resource expansion drilling at the Eureka,
upper Kensington Zone 30 and Johnson veins, as well as infill
drilling at the Elmira vein
Other
- Mining continues to be considered an essential business in
Alaska. Rotational schedules remain extended from 14 days to 28
days in response to concerns related to COVID-19. All employees are
required to quarantine for 7 days and undergo viral COVID-19
testing prior to starting their 28-day rotation
Guidance
- Production in 2020 is expected to be slightly lower at 122,500
- 130,000 ounces of gold (previously 125,000 - 135,000 ounces)
- CAS1 in 2020 are expected to remain consistent at $900 - $1,000
per ounce (no change)
- Given investments made through the first three quarters of
2020, full-year capital expenditures are anticipated to be modestly
lower at $22 - $27 million ($28 - $33 million)
Wharf, South Dakota
(Dollars in millions, except per ounce
amounts)
3Q 2020
2Q 2020
1Q 2020
4Q 2019
3Q 2019
Ore tons placed
1,315,542
1,401,237
946,449
1,100,393
1,503,021
Average gold grade (oz/t)
0.025
0.032
0.025
0.023
0.027
Gold ounces produced
33,440
24,789
15,541
25,644
25,946
Silver ounces produced (000’s)
42
25
15
20
18
Gold ounces sold
33,382
23,364
16,094
27,039
24,573
Silver ounces sold (000’s)
41
23
15
21
17
Average realized price per gold
ounce
$1,872
$1,715
$1,592
$1,482
$1,481
Metal sales
$63.5
$40.5
$25.9
$40.5
$36.7
Costs applicable to sales4
$27.9
$22.5
$17.8
$25.7
$22.1
Adjusted CAS per AuOz1
$804
$804
$1,090
$802
$887
Exploration expense
$0.5
$0.1
$—
$0.2
$0.1
Cash flow from operating
activities
$39.1
$19.1
$2.6
$17.0
$17.6
Sustaining capital expenditures
(excludes capital lease payments)
$0.5
$0.3
$0.4
$0.8
$0.8
Development capital
expenditures
$—
$—
$—
$—
$—
Total capital expenditures
$0.5
$0.3
$0.4
$0.8
$0.8
Free cash flow1
$38.6
$18.8
$2.2
$16.2
$16.8
Operational
- Gold production increased 35% quarter-over-quarter driven by
higher placement rates and improved grades over the past two
quarters
Financial
- Adjusted CAS1 on a by-product basis remained consistent
quarter-over-quarter at $804 per ounce
- Third quarter capital expenditures totaled $0.5 million,
modestly higher than the prior period
- Free cash flow1 of $38.6 million was more than two-times higher
quarter-over-quarter. Coeur has now generated cumulative free cash
flow of more than double its original investment of approximately
$99.5 million in February 2015
Exploration
- Exploration investment in the third quarter totaled
approximately $0.5 million (substantially all expensed), compared
to approximately $0.1 million (substantially all expensed) in the
prior period. The exploration program is currently using one
reverse circulation rig and has completed approximately 20,880 feet
(6,364 meters) during the quarter
- Exploration activity focused on resource expansion drilling at
Richmond Hill, which is located approximately four miles
north-northeast of Wharf. Coeur has an exclusive option agreement
with two subsidiaries of Barrick Gold Corporation to acquire the
project that expires in September 2021
- Additionally, geologic mapping and geochemical sampling were
successfully completed over the claims contained within Richmond
Hill as well as outer zones that may be of interest to Coeur, with
most assays pending
Other
- South Dakota’s public order mandating the closure of all
public-facing businesses does not include Wharf. Coeur continues to
follow rigorous health and safety protocols aimed at limiting the
exposure and transmission of COVID-19 at Wharf and in the
surrounding communities
Guidance
- Given strong operating results during the first three quarters
of the year, gold production in 2020 is expected to be 85,000 -
95,000 ounces (previously 80,000 - 90,000 ounces)
- As a result of higher production, CAS1 are expected to be $875
- $925 per ounce (previously $950 - $1,000 per ounce)
- Full-year capital expenditures are expected to remain
consistent at approximately $2 - $3 million (no change)
Silvertip, British Columbia
(Dollars in millions, except per ounce
and per pound amounts)
3Q 2020
2Q 2020
1Q 2020
4Q 2019
3Q 2019
Metal sales
$—
$—
$1.9
$10.2
$11.3
Costs applicable to sales4
$—
$—
$17.7
$32.0
$24.2
Exploration expense
$3.9
$2.9
$0.3
$0.9
$0.8
Cash flow from operating
activities
$(8.2)
$(14.9)
$(27.1)
$(28.6)
$(15.3)
Sustaining capital expenditures
(excludes capital lease payments)
$(1.8)
$1.9
$4.6
$2.0
$6.4
Development capital
expenditures
$3.9
$—
$—
$—
$—
Total capital expenditures
$2.1
$1.9
$4.6
$2.0
$6.4
Free cash flow1
$(10.3)
$(16.8)
$(31.7)
$(30.6)
$(21.7)
- Mining and operating activities were temporarily suspended at
Silvertip on February 19, 2020 (unrelated to COVID-19)
Operational
- The internal pre-feasibility study to evaluate a potential
expansion and restart was substantially completed during the third
quarter. Results from the technical analysis and test work have
been positive and have largely addressed the key performance
challenges experienced prior to suspension
- Based on the positive results to date, the Company has
allocated an additional $6.0 million to continue with engineering
work, including detailed design of a potential mill expansion to
further de-risk the project and enhance the economics of a
potential restart
- To strengthen confidence in the results of the pre-feasibility
study, third-party technical reviews are expected to be conducted
during the fourth quarter
Financial
- Temporary suspension costs related to the ramp-down of active
mining and processing activities totaled $0.8 million in the third
quarter compared to $1.7 million in the prior period
- Ongoing carrying costs in the third quarter totaled $3.9
million, compared to $5.2 million in the prior period. Coeur
expects ongoing quarterly carrying costs to remain at similar
levels during the suspension
- Capital expenditures during the third quarter increased 6% to
approximately $2.1 million, reflecting additional work completed on
the pre-feasibility study
- Free cash flow1 for the quarter totaled $(10.3) million
Exploration
- Exploration investment in the third quarter totaled
approximately $3.9 million (substantially all expensed), compared
to approximately $2.9 million (substantially all expensed) in the
prior period
- The focus throughout 2020 has been on near-mine resource
expansion and larger step-out (“scout”) drilling to test the edges
of the mineralized system. Results demonstrate the potential for
resource growth with over two miles (3.5 kilometers) of north-south
strike length, more than triple the previous resource strike
length
- The Company had up to six active drill rigs during the period,
ending with five rigs at quarter end. A total of 83,047 feet
(25,313 meters) was drilled during the quarter in five zones,
including the last phases of scout drilling, completing the initial
2020 exploration program ahead of schedule and under budget
- Results from resource expansion drilling continue to be
encouraging, specifically east and south of the Discovery zone and
at the new Tour Ridge and Camp Creek zones, which are located in
the south and southwest extensions of the Silvertip area,
respectively. Additionally, the Silvertip resource zones continue
to remain open to the south as scout drilling tested the southern
limits of mineralization. New core drilling at the Tour Ridge,
Discovery South and Camp Creek zones have all returned significant
sulfide mineralization, suggesting the ore bodies are increasing in
thickness to the south
- Coeur has allocated approximately $1.0 million of additional
capital for underground development in the fourth quarter to
bolster exploration efforts and help facilitate follow-up drilling
of encouraging results received during the first nine months of the
year
- As winter approaches, the Company plans to transition its drill
rigs to lower-elevation drill pads and continue its near-mine
resource expansion program during the fourth quarter, ramping down
to three active rigs by early November
Other
- Mining continues to be considered an essential business in
British Columbia. Rotational schedules remain at 14 days
(previously extended to 21 days in early 2020). The Company
continues to maintain rigorous health and safety protocols at
Silvertip aimed at limiting the exposure and transmission of
COVID-19
Guidance
- With additional capital allocated to underground development
and ongoing work to further de-risk Silvertip, capital expenditures
are expected to be modestly higher at approximately $10 - $12
million (previously $8 - $10 million) in 2020
Exploration
During the third quarter, the Company drilled 256,882 feet
(78,299 meters) at a total investment of approximately $15.2
million ($12.8 million expensed and $2.3 million capitalized),
compared to 194,043 feet (59,145 meters) at a total investment of
roughly $13.0 million ($11.9 million expensed and $1.1 million
capitalized) in the prior period. Total feet drilled was
approximately 32% and 108% higher quarter-over-quarter and
year-over-year, respectively. The increase was primarily due to the
re-start of drilling activities at Palmarejo, acceleration of
Silvertip’s exploration program, and additional drilling at
Kensington and Wharf.
In addition to the Company’s mine sites, up to three drill rigs
were active at the Crown exploration property in southern Nevada
during the third quarter. The Company drilled a total of 23,465
feet (7,152 meters) in the quarter, compared to 23,680 feet (7,218
meters) in the prior period. Two reverse circulation rigs and one
core rig were active during the period.
One of the reverse circulation rigs initially began at Sterling,
before it was moved to Wharf to focus on expansion drilling at
Richmond Hill early in the quarter, while the other rig remained at
C-Horst. The core rig focused on drilling for metallurgical and
engineering studies, specifically testing the C-Horst, Daisy and
Secret Pass deposits. Drilling from the core rig is expected to be
completed during the fourth quarter.
The drilling at C-Horst continues to look encouraging with 36
holes now completed from four permitted drill pads. An amended
notice was approved in the beginning of October, providing Coeur
the opportunity to drill from six additional platforms. If
successful, these platforms have the potential to continue
expanding mineralization at C-Horst, which remains open south and
southwest of Coeur’s initial discovery.
For the remainder of the year, Coeur plans to utilize three
rigs, two reverse circulation and one core, to drill within its
recently received 300-acre disturbance permit at Crown as well as
from the newly permitted drill platforms at C-Horst.
The Company expects to invest $50 - $60 million (previously $44
- $54 million) in exploration in 2020, including $43 - $49 million
(previously $37 - $43 million) of expensed exploration and $7 - $11
million (no change) of capitalized exploration. Increased
investment in exploration is largely driven by higher planned
expansion drilling at Silvertip and Crown.
2020 Production Guidance
Previous
Updated
Gold
Silver
Gold
Silver
(oz)
(K oz)
(oz)
(K oz)
Palmarejo
95,000 - 105,000
6,000 - 7,000
100,000 - 110,000
6,000 - 7,000
Rochester
27,000 - 33,000
3,500 - 4,500
27,000 - 33,000
3,100 - 3,700
Kensington
125,000 - 135,000
—
122,500 - 130,000
—
Wharf
80,000 - 90,000
—
85,000 - 95,000
—
Total
327,000 - 363,000
9,500 - 11,500
334,500 - 368,000
9,100 - 10,700
2020 Costs Applicable to Sales
Guidance
Previous
Updated
Gold
Silver
Gold
Silver
($/oz)
($/oz)
($/oz)
($/oz)
Palmarejo (co-product)
$785 - $885
$9.50 - $10.50
$650 - $750
$9.50 - $10.50
Rochester (co-product)
$1,250 - $1,400
$12.75 - $14.00
$1,150 - $1,300
$13.50 - $14.75
Kensington
$900 - $1,000
—
$900 - $1,000
—
Wharf (by-product)
$950 - $1,000
—
$875 - $925
—
2020 Capital, Exploration and G&A
Guidance
Previous
Updated
($M)
($M)
Capital Expenditures,
Sustaining
$70 - $85
$55 - $60
Capital Expenditures,
Development
$40 - $45
$45 - $55
Exploration, Expensed
$37 - $43
$43 - $49
Exploration, Capitalized
$7 - $11
$7 - $11
General & Administrative
Expenses
$32 - $36
$32 - $36
Note: The Company’s previous guidance reflects realized prices
through the first half of 2020 and estimated prices of $1,650/oz
gold and $16.50/oz silver as well as CAD of 1.36 and MXN of 21.00
for the second half of the year. The Company’s updated guidance
reflects realized prices through September 30, 2020 and estimated
prices of $1,850/oz gold and $24.00/oz silver as well as CAD of
1.30 and MXN of 21.00 for the fourth quarter.
Financial Results and Conference Call
Coeur will host a conference call to discuss its third quarter
2020 financial results on October 29, 2020 at 11:00 a.m. Eastern
Time.
Dial-In Numbers:
(855) 560-2581 (U.S.)
(855) 669-9657 (Canada)
(412) 542-4166
(International)
Conference ID:
Coeur Mining
Hosting the call will be Mitchell J. Krebs, President and Chief
Executive Officer of Coeur, who will be joined by Thomas S. Whelan,
Senior Vice President and Chief Financial Officer, Michael “Mick”
Routledge, Senior Vice President and Chief Operating Officer, and
other members of management. A replay of the call will be available
through November 12, 2020.
Replay numbers:
(877) 344-7529 (U.S.)
(855) 669-9658 (Canada)
(412) 317-0088 (International)
Conference ID:
101 47 941
About Coeur
Coeur Mining, Inc. is a U.S.-based, well-diversified, growing
precious metals producer with five wholly-owned operations: the
Palmarejo gold-silver complex in Mexico, the Rochester silver-gold
mine in Nevada, the Kensington gold mine in Alaska, the Wharf gold
mine in South Dakota, and the Silvertip silver-zinc-lead mine in
British Columbia. In addition, the Company has interests in several
precious metals exploration projects throughout North America.
Cautionary Statements
This news release contains forward-looking statements within the
meaning of securities legislation in the United States and Canada,
including statements regarding exploration and development efforts
and plans, the pre-feasibility study regarding an expansion of the
mill at Silvertip, the impact of the new crushing circuit, POA 11
expansion project and technical report preparation at Rochester,
expected timing of completion of the Company’s obligations under
the prepayment agreement at Kensington, hedging strategies,
repositioning, value creation, liquidity management, cash flow,
debt repayment, catalysts, anticipated production, costs and
expenses, COVID-19 mitigation efforts, and operations at Palmarejo,
Rochester, Wharf, Kensington and Silvertip. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause Coeur’s actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. Such factors include, among others, the
risk that anticipated production, cost and expense levels are not
attained, the risks and hazards inherent in the mining business
(including risks inherent in developing large-scale mining
projects, environmental hazards, industrial accidents, weather or
geologically-related conditions), changes in the market prices of
gold, silver, zinc and lead and a sustained lower price or higher
treatment and refining charge environment, the uncertainties
inherent in Coeur’s production, exploratory and developmental
activities, including risks relating to permitting and regulatory
delays (including the impact of government shutdowns), ground
conditions and, grade variability, any future labor disputes or
work stoppages (involving the Company and its subsidiaries or third
parties), the uncertainties inherent in the estimation of mineral
reserves, changes that could result from Coeur’s future acquisition
of new mining properties or businesses, the loss of access or
insolvency of any third-party refiner or smelter to which Coeur
markets its production, the potential effects of the COVID-19
pandemic, including impacts to the availability of our workforce,
continued access to financing sources, government orders that may
require temporary suspension of operations at one or more of our
sites and effects on our suppliers or the refiners and smelters to
whom the Company markets its production, the effects of
environmental and other governmental regulations and government
shut-downs, the risks inherent in the ownership or operation of or
investment in mining properties or businesses in foreign countries,
Coeur’s ability to raise additional financing necessary to conduct
its business, make payments or refinance its debt, as well as other
uncertainties and risk factors set out in filings made from time to
time with the United States Securities and Exchange Commission, and
the Canadian securities regulators, including, without limitation,
Coeur’s most recent reports on Form 10-K and Form 10-Q. Actual
results, developments and timetables could vary significantly from
the estimates presented. Readers are cautioned not to put undue
reliance on forward-looking statements. Coeur disclaims any intent
or obligation to update publicly such forward-looking statements,
whether as a result of new information, future events or otherwise.
Additionally, Coeur undertakes no obligation to comment on
analyses, expectations or statements made by third parties in
respect of Coeur, its financial or operating results or its
securities. This does not constitute an offer of any securities for
sale.
Christopher Pascoe, Coeur’s Director, Technical Services and a
qualified person under Canadian National Instrument 43-101,
approved the scientific and technical information concerning
Coeur’s mineral projects in this news release. For a description of
the key assumptions, parameters and methods used to estimate
mineral reserves and resources, as well as data verification
procedures and a general discussion of the extent to which the
estimates may be affected by any known environmental, permitting,
legal, title, taxation, socio-political, marketing or other
relevant factors, Canadian investors should refer to the Technical
Reports for each of Coeur’s properties as filed on SEDAR at
www.sedar.com.
Non-U.S. GAAP Measures
We supplement the reporting of our financial information
determined under United States generally accepted accounting
principles (U.S. GAAP) with certain non-U.S. GAAP financial
measures, including EBITDA, adjusted EBITDA, adjusted EBITDA
margin, free cash flow, adjusted net income (loss), operating cash
flow excluding changes in working capital and adjusted costs
applicable to sales per ounce (gold and silver) or pound (zinc or
lead). We believe that these adjusted measures provide meaningful
information to assist management, investors and analysts in
understanding our financial results and assessing our prospects for
future performance. We believe these adjusted financial measures
are important indicators of our recurring operations because they
exclude items that may not be indicative of, or are unrelated to
our core operating results, and provide a better baseline for
analyzing trends in our underlying businesses. We believe EBITDA,
adjusted EBITDA, adjusted EBITDA margin, free cash flow, adjusted
net income (loss) and adjusted costs applicable to sales per ounce
(gold and silver) and pound (zinc and lead) are important measures
in assessing the Company’s overall financial performance. For
additional explanation regarding our use of non-U.S. GAAP financial
measures, please refer to our Form 10-K for the year ended December
31, 2019 and our Form 10-Q for the quarter ended September 30,
2020.
Notes
- EBITDA, adjusted EBITDA, adjusted EBITDA margin, free cash
flow, adjusted net income (loss), operating cash flow excluding
changes in working capital and adjusted costs applicable to sales
per ounce (gold and silver) or pound (lead and zinc) are non-GAAP
measures. Please see tables in the Appendix for the reconciliation
to U.S. GAAP. Free cash flow is defined as cash flow from operating
activities less capital expenditures and gold production royalty
payments. Please see table in Appendix for the calculation of
consolidated free cash flow.
- For additional information and complete tables of all drill
results published in 2020, please refer to the following links:
https://www.coeur.com/_resources/news/nr_20200811.pdf;
https://www.coeur.com/_resources/pdfs/2020-08-11_Exploration_Update_Appendix_-_Final.pdf.
- Includes capital leases. Net of debt issuance costs and premium
received.
- Excludes amortization.
Average Spot Prices
3Q 2020
2Q 2020
1Q 2020
4Q 2019
3Q 2019
Average Gold Spot Price Per Ounce
$
1,908
$
1,711
$
1,583
$
1,481
$
1,472
Average Silver Spot Price Per Ounce
$
24.26
$
16.38
$
16.90
$
17.32
$
16.98
Average Zinc Spot Price Per Pound
$
1.06
$
0.89
$
0.96
$
1.08
$
1.07
Average Lead Spot Price Per Pound
$
0.85
$
0.76
$
0.84
$
0.93
$
0.92
COEUR MINING, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
September 30, 2020
December 31, 2019
ASSETS
In thousands, except share
data
CURRENT ASSETS
Cash and cash equivalents
$
77,148
$
55,645
Receivables
22,490
18,666
Inventory
46,978
55,886
Ore on leach pads
72,326
66,192
Prepaid expenses and other
20,285
14,047
239,227
210,436
NON-CURRENT ASSETS
Property, plant and equipment, net
226,115
248,789
Mining properties, net
708,744
711,955
Ore on leach pads
87,420
71,539
Restricted assets
8,819
8,752
Equity and debt securities
19,862
35,646
Receivables
23,493
28,709
Other
57,466
62,810
TOTAL ASSETS
$
1,371,146
$
1,378,636
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES
Accounts payable
$
71,461
$
69,176
Accrued liabilities and other
107,990
95,616
Debt
23,265
22,746
Reclamation
3,094
3,114
205,810
190,652
NON-CURRENT LIABILITIES
Debt
277,873
272,751
Reclamation
139,608
133,417
Deferred tax liabilities
30,947
41,976
Other long-term liabilities
52,681
72,836
501,109
520,980
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Common stock, par value $0.01 per share;
authorized 300,000,000 shares, 243,744,601 issued and outstanding
at September 30, 2020 and 241,529,021 at December 31, 2019
2,437
2,415
Additional paid-in capital
3,608,102
3,598,472
Accumulated other comprehensive income
(loss)
(26,312)
(136)
Accumulated deficit
(2,920,000)
(2,933,747)
664,227
667,004
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
1,371,146
$
1,378,636
COEUR MINING, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
In thousands, except share
data
Revenue
$
229,728
$
199,469
$
557,144
$
516,462
COSTS AND EXPENSES
Costs applicable to sales(1)
112,772
140,952
321,704
404,550
Amortization
32,216
45,678
96,254
130,758
General and administrative
7,757
9,635
25,293
26,859
Exploration
12,818
5,893
31,059
15,326
Pre-development, reclamation, and
other
15,031
4,851
40,261
13,619
Total costs and expenses
180,594
207,009
514,571
591,112
OTHER INCOME (EXPENSE), NET
Loss on debt extinguishment
—
(1,282)
—
(1,282)
Fair value adjustments, net
2,243
4,377
3,491
8,201
Interest expense, net of capitalized
interest
(5,096)
(5,980)
(15,989)
(19,259)
Other, net
(6,312)
(3,634)
(4,310)
(2,931)
Total other income (expense), net
(9,165)
(6,519)
(16,808)
(15,271)
Income (loss) before income and mining
taxes
39,969
(14,059)
25,765
(89,921)
Income and mining tax (expense)
benefit
(13,113)
(218)
(12,018)
13,986
Income (loss) from continuing
operations
$
26,856
$
(14,277)
$
13,747
$
(75,935)
Income (loss) from discontinued
operations
—
—
—
5,693
NET INCOME (LOSS)
$
26,856
$
(14,277)
$
13,747
$
(70,242)
OTHER COMPREHENSIVE INCOME (LOSS):
Change in fair value of derivative
contracts designated as cash flow hedges, net of tax of $0 and $365
for the three and nine months ended September 30, 2020 and 2019
respectively.
(18,606)
1,132
(26,176)
1,132
Unrealized gain (loss) on debt and equity
securities
—
—
—
59
Other comprehensive income (loss)
(18,606)
1,132
(26,176)
1,191
COMPREHENSIVE INCOME (LOSS)
$
8,250
$
(13,145)
$
(12,429)
$
(69,051)
NET INCOME (LOSS) PER SHARE
Basic income (loss) per share:
Net income (loss) from continuing
operations
$
0.11
$
(0.06)
$
0.06
$
(0.36)
Net income (loss) from discontinued
operations
—
—
—
0.03
Basic(2)
$
0.11
$
(0.06)
$
0.06
$
(0.33)
Diluted income (loss) per share:
Net income (loss) from continuing
operations
$
0.11
$
(0.06)
$
0.06
$
(0.36)
Net income (loss) from discontinued
operations
—
—
—
0.03
Diluted(2)
$
0.11
$
(0.06)
$
0.06
$
(0.33)
(1)
Excludes amortization.
(2)
Due to rounding, the sum of net income per
share from continuing operations and discontinued operations may
not equal net income per share.
COEUR MINING, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
In thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
26,856
$
(14,277)
$
13,747
$
(70,242)
(Income) loss from discontinued
operations
—
—
—
(5,693)
Adjustments:
Amortization
32,216
45,678
96,254
130,758
Accretion
2,969
3,073
8,724
9,023
Deferred taxes
(4,515)
(10,545)
(11,547)
(27,962)
Loss on debt extinguishment
—
1,282
—
1,282
Fair value adjustments, net
(2,243)
(4,377)
(3,491)
(8,201)
Stock-based compensation
1,969
2,432
6,269
6,642
Gain on modification of right of use
lease
—
—
(4,051)
—
Write-downs
1,232
13,966
16,821
41,285
Deferred revenue recognition
(5,485)
(15,250)
(21,167)
(16,008)
Other
4,379
8,994
2,374
15,733
Changes in operating assets and
liabilities:
Receivables
(1,497)
(3,350)
(3,846)
(20,709)
Prepaid expenses and other current
assets
(1,921)
1,375
(1,186)
(2,143)
Inventory and ore on leach pads
(3,066)
(9,389)
(33,047)
(42,601)
Accounts payable and accrued
liabilities
28,570
22,384
15,566
41,421
CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES OF CONTINUING OPERATIONS
79,464
41,996
81,420
52,585
CASH PROVIDED BY (USED IN )OPERATING
ACTIVITIES OF DISCONTINUED OPERATIONS
—
—
—
—
CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES
79,464
41,996
81,420
52,585
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(22,996)
(30,678)
(61,886)
(78,865)
Proceeds from the sale of assets
730
26
5,245
930
Purchase of investments
(2,500)
—
(2,500)
—
Sale of investments
—
1,007
19,802
2,109
Proceeds from notes receivable
—
—
—
7,168
Other
(25)
(57)
(225)
1,961
CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES OF CONTINUING OPERATIONS
(24,791)
(29,702)
(39,564)
(66,697)
CASH USED IN INVESTING ACTIVITIES OF
DISCONTINUED OPERATIONS
—
—
—
—
CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES
(24,791)
(29,702)
(39,564)
(66,697)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock
—
73,781
—
122,668
Issuance of notes and bank borrowings, net
of issuance costs
—
30,000
150,000
45,000
Payments on debt, finance leases, and
associated costs
(48,557)
(87,778)
(150,171)
(201,051)
Silvertip contingent consideration
—
—
(18,750)
—
Other
114
301
(1,718)
(2,958)
CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES OF CONTINUING OPERATIONS
(48,443)
16,304
(20,639)
(36,341)
CASH USED IN FINANCING ACTIVITIES OF
DISCONTINUED OPERATIONS
—
—
—
—
CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES
(48,443)
16,304
(20,639)
(36,341)
Effect of exchange rate changes on cash
and cash equivalents
(10)
(192)
293
65
INCREASE (DECREASE) IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH
6,220
28,406
21,510
(50,388)
Less net cash used in discontinued
operations
—
—
—
—
6,220
28,406
21,510
(50,388)
Cash, cash equivalents and restricted cash
at beginning of period
72,308
39,275
57,018
118,069
Cash, cash equivalents and restricted cash
at end of period
$
78,528
$
67,681
$
78,528
$
67,681
Adjusted EBITDA
Reconciliation
(Dollars in thousands except per share
amounts)
LTM 3Q 2020
3Q 2020
2Q 2020
1Q 2020
4Q 2019
3Q 2019
Net income (loss)
$
(257,214)
$
26,856
$
(1,209)
$
(11,900)
$
(270,961)
$
(14,277)
Interest expense, net of capitalized
interest
21,501
5,096
5,765
5,128
5,512
5,980
Income tax provision (benefit)
14,875
13,113
2,844
(3,939)
2,857
218
Amortization
144,372
32,216
27,876
36,162
48,118
45,678
EBITDA
(76,466)
77,281
35,276
25,451
(214,474)
37,599
Fair value adjustments, net
(11,320)
(2,243)
(10,067)
8,819
(7,829)
(4,377)
Foreign exchange (gain) loss
932
599
(11)
76
268
2,945
Asset retirement obligation accretion
11,847
2,968
2,908
2,847
3,124
3,080
Inventory adjustments and write-downs
1,402
(230)
793
476
363
5,371
(Gain) loss on sale of assets and
securities
2,687
2,476
(9)
(374)
594
100
Impairment of long-lived assets
250,814
—
—
—
250,814
—
Silvertip inventory write-down
37,042
1,232
2,104
10,381
23,325
13,966
Silvertip temporary suspension costs
6,072
838
1,725
3,509
—
—
Silvertip lease modification
(4,051)
—
—
(4,051)
—
—
Silvertip gain on contingent
consideration
(955)
—
—
(955)
—
—
COVID-19 costs
10,417
4,037
6,108
272
—
—
Novation
3,819
3,819
—
—
—
—
Wharf inventory write-down
6,919
—
3,323
—
3,596
—
Loss on debt extinguishment
—
—
—
—
—
1,282
Receivable write-down
—
—
—
—
—
1,040
Adjusted EBITDA
$
239,159
$
90,777
$
42,150
$
46,451
$
59,781
$
61,006
Revenue
$
752,184
$
229,728
$
154,249
$
173,167
$
195,040
$
199,469
Adjusted EBITDA Margin
32
%
40
%
27
%
27
%
31
%
31
%
Adjusted Net Income (Loss)
Reconciliation
(Dollars in thousands except per share
amounts)
3Q 2020
2Q 2020
1Q 2020
4Q 2019
3Q 2019
Net income (loss)
$
26,856
$
(1,209)
$
(11,900)
$
(270,961)
$
(14,277)
Fair value adjustments, net
(2,243)
(10,067)
8,819
(7,829)
(4,377)
Foreign exchange loss (gain)
1,233
626
(6,620)
1,733
2,022
(Gain) loss on sale of assets and
securities
2,476
(9)
(374)
594
100
Impairment of long-lived assets
—
—
—
250,814
—
Silvertip inventory write-down
1,232
2,104
10,381
23,325
13,966
Silvertip temporary suspension costs
838
1,725
3,509
—
—
Silvertip lease modification
—
—
(4,051)
—
—
Silvertip gain on contingent
consideration
—
—
(955)
—
—
COVID-19 costs
4,037
6,108
272
—
—
Novation
3,819
—
—
—
—
Wharf inventory write-down
—
3,323
—
3,596
—
Loss on debt extinguishment
—
—
—
—
1,282
Receivable write-down
—
—
—
—
1,040
Tax effect of adjustments
—
—
—
(4,572)
(5,096)
Adjusted net income (loss)
$
38,248
$
2,601
$
(919)
$
(3,300)
$
(5,340)
Adjusted net income (loss) per share -
Basic
$
0.16
$
0.01
$
0.00
$
(0.01)
$
(0.02)
Adjusted net income (loss) per share -
Diluted
$
0.16
$
0.01
$
0.00
$
(0.01)
$
(0.02)
Consolidated Free Cash Flow
Reconciliation
(Dollars in thousands)
3Q 2020
2Q 2020
1Q 2020
4Q 2019
3Q 2019
Cash flow from continuing operations
$
79,464
$
9,947
$
(7,991)
$
39,295
$
41,996
Capital expenditures from continuing
operations
22,996
16,682
22,208
20,907
30,678
Free cash flow
$
56,468
$
(6,735)
$
(30,199)
$
18,388
$
11,318
Consolidated Operating Cash
Flow
Before Working Capital Changes
Reconciliation
(Dollars in thousands)
3Q 2020
2Q 2020
1Q 2020
4Q 2019
3Q 2019
Cash provided by (used in) continuing
operating activities
$
79,464
$
9,947
$
(7,991)
$
39,295
$
41,996
Changes in operating assets and
liabilities:
Receivables
1,497
1,536
813
(17,970)
3,350
Prepaid expenses and other
1,921
(1,081)
346
(2,423)
(1,375)
Inventories
3,066
8,056
21,925
20,397
9,389
Accounts payable and accrued
liabilities
(28,570)
(2,047)
15,051
18,318
(22,384)
Cash flow before changes in operating
assets and liabilities
$
57,378
$
16,411
$
30,144
$
57,617
$
30,976
Reconciliation of Costs
Applicable to Sales
for Three Months Ended
September 30, 2020
In thousands except per ounce or per
pound amounts
Palmarejo
Rochester
Kensington
Wharf
Silvertip
Total
Costs applicable to sales, including
amortization (U.S. GAAP)
$
46,163
$
22,382
$
43,053
$
31,887
$
1,185
$
144,670
Amortization
(11,912)
(3,278)
(11,523)
(4,000)
(1,185)
(31,898)
Costs applicable to sales
$
34,251
$
19,104
$
31,530
$
27,887
$
—
$
112,772
Inventory Adjustments
(100)
517
(141)
(46)
—
230
By-product credit
—
—
—
(1,007)
—
(1,007)
Adjusted costs applicable to
sales
$
34,151
$
19,621
$
31,389
$
26,834
$
—
$
111,995
Metal Sales
Gold ounces
27,252
6,834
27,815
33,382
95,283
Silver ounces
1,765,371
785,887
40,521
—
2,591,779
Zinc pounds
—
—
Lead pounds
—
—
Revenue Split
Gold
48
%
40
%
100
%
100
%
Silver
52
%
60
%
—
%
Zinc
—
%
Lead
—
%
Adjusted costs applicable to
sales
Gold ($/oz)
$
602
$
1,148
$
1,128
$
804
Silver ($/oz)
$
10.06
$
14.98
$
—
Zinc ($/lb)
$
—
Lead ($/lb)
$
—
Reconciliation of Costs
Applicable to Sales
for Three Months Ended June
30, 2020
In thousands except per ounce or per
pound amounts
Palmarejo
Rochester
Kensington
Wharf
Silvertip
Total
Costs applicable to sales, including
amortization (U.S. GAAP)
$
26,095
$
21,348
$
43,235
$
25,653
$
1,231
$
117,562
Amortization
(7,270)
(3,012)
(12,853)
(3,181)
(1,231)
(27,547)
Costs applicable to sales
$
18,825
$
18,336
$
30,382
$
22,472
$
—
$
90,015
Inventory Adjustments
(106)
(566)
(139)
(3,304)
—
(4,115)
By-product credit
—
—
—
(385)
—
(385)
Adjusted costs applicable to
sales
$
18,719
$
17,770
$
30,243
$
18,783
$
—
$
85,515
Metal Sales
Gold ounces
16,924
5,278
32,367
23,364
77,933
Silver ounces
874,642
723,679
22,707
—
1,621,028
Zinc pounds
—
—
Lead pounds
—
—
Revenue Split
Gold
62
%
44
%
100
%
100
%
Silver
38
%
56
%
—
%
Zinc
—
%
Lead
—
%
Adjusted costs applicable to
sales
Gold ($/oz)
$
686
$
1,481
$
934
$
804
Silver ($/oz)
$
8.13
$
13.75
$
—
Zinc ($/lb)
$
—
Lead ($/lb)
$
—
Reconciliation of Costs
Applicable to Sales
for Three Months Ended March
31, 2020
In thousands except per ounce or per
pound amounts
Palmarejo
Rochester
Kensington
Wharf
Silvertip
Total
Costs applicable to sales, including
amortization (U.S. GAAP)
$
49,149
$
19,860
$
42,429
$
20,267
$
23,002
$
154,707
Amortization
(13,175)
(2,904)
(11,922)
(2,444)
(5,345)
(35,790)
Costs applicable to sales
$
35,974
$
16,956
$
30,507
$
17,823
$
17,657
$
118,917
Inventory Adjustments
73
(422)
(101)
(25)
(10,381)
(10,856)
By-product credit
—
—
—
(248)
—
(248)
Adjusted costs applicable to
sales
$
36,047
$
16,534
$
30,406
$
17,550
$
7,276
$
107,813
Metal Sales
Gold ounces
31,287
5,473
32,781
16,094
85,635
Silver ounces
1,894,789
632,237
14,768
158,984
2,700,778
Zinc pounds
3,203,446
3,203,446
Lead pounds
2,453,485
2,453,485
Revenue Split
Gold
56
%
45
%
100
%
100
%
Silver
44
%
55
%
26
%
Zinc
48
%
Lead
26
%
Adjusted costs applicable to
sales
Gold ($/oz)
$
645
$
1,359
$
928
$
1,090
Silver ($/oz)
$
8.37
$
14.38
$
11.79
Zinc ($/lb)
$
1.12
Lead ($/lb)
$
0.74
Reconciliation of Costs
Applicable to Sales
for Three Months Ended
December 31, 2019
In thousands except per ounce or per
pound amounts
Palmarejo
Rochester
Kensington
Wharf
Silvertip
Total
Costs applicable to sales, including
amortization (U.S. GAAP)
$
49,590
$
31,100
$
41,537
$
29,818
$
42,189
$
194,234
Amortization
(14,799)
(5,791)
(12,776)
(4,072)
(10,166)
(47,604)
Costs applicable to sales
$
34,791
$
25,309
$
28,761
$
25,746
$
32,023
$
146,630
Inventory Adjustments
(11)
(116)
(176)
(3,677)
(23,325)
(27,305)
By-product credit
—
—
—
(373)
—
(373)
Adjusted costs applicable to
sales
$
34,780
$
25,193
$
28,585
$
21,696
$
8,698
$
118,952
Metal Sales
Gold ounces
27,953
11,248
29,293
27,039
—
95,533
Silver ounces
1,979,315
931,326
21,132
294,498
3,226,271
Zinc pounds
4,052,554
4,052,554
Lead pounds
4,223,504
4,223,504
Revenue Split
Gold
50
%
51
%
100
%
100
%
Silver
50
%
49
%
38
%
Zinc
32
%
Lead
30
%
Adjusted costs applicable to
sales
Gold ($/oz)
$
622
$
1,142
$
976
$
802
Silver ($/oz)
$
8.79
$
13.25
$
11.22
Zinc ($/lb)
$
0.69
Lead ($/lb)
$
0.62
Reconciliation of Costs
Applicable to Sales
for Three Months Ended
September 30, 2019
In thousands except per ounce or per
pound amounts
Palmarejo
Rochester
Kensington
Wharf
Silvertip
Total
Costs applicable to sales, including
amortization (U.S. GAAP)
$
53,237
$
31,999
$
43,085
$
25,385
$
32,457
$
186,163
Amortization
(15,840)
(4,250)
(13,552)
(3,301)
(8,268)
(45,211)
Costs applicable to sales
$
37,397
$
27,749
$
29,533
$
22,084
$
24,189
$
140,952
Inventory Adjustments
(175)
(4,799)
(405)
(7)
(13,966)
(19,352)
By-product credit
—
—
—
(293)
—
(293)
Adjusted costs applicable to
sales
$
37,222
$
22,950
$
29,128
$
21,784
$
10,223
$
121,307
Metal Sales
Gold ounces
32,731
7,651
35,452
24,573
100,407
Silver ounces
1,747,250
951,043
16,612
289,910
3,004,815
Zinc pounds
4,076,390
4,076,390
Lead pounds
4,330,862
4,330,862
Revenue Split
Gold
58
%
41
%
100
%
100
%
Silver
42
%
59
%
39
%
Zinc
29
%
Lead
32
%
Adjusted costs applicable to
sales
Gold ($/oz)
$
660
$
1,230
$
822
$
887
Silver ($/oz)
$
8.95
$
14.24
$
14.14
Zinc ($/lb)
$
0.75
Lead ($/lb)
$
0.71
Reconciliation of Costs
Applicable to Sales for Updated 2020 Guidance
In thousands except per ounce or per
pound amounts
Palmarejo
Rochester
Kensington
Wharf
Costs applicable to sales, including
amortization (U.S. GAAP)
$
179,529
$
102,554
$
175,424
$
94,989
Amortization
(44,409)
(14,561)
(52,201)
(11,600)
Costs applicable to sales
$
135,120
$
87,993
$
123,223
$
83,389
By-product credit
—
—
—
(2,058)
Adjusted costs applicable to
sales
$
135,120
$
87,993
$
123,223
$
81,331
Metal Sales
Gold ounces
106,500
31,400
126,700
89,500
Silver ounces
6,400,000
3,600,000
95,000
Revenue Split
Gold
52%
43%
100%
100%
Silver
48%
57%
—
—
Adjusted costs applicable to
sales
Gold ($/oz)
$650 - $750
$1,150 - $1,300
$900 - $1,000
$875 - $925
Silver ($/oz)
$9.50 - $10.50
$13.50 - $14.75
Reconciliation of Costs
Applicable to Sales for Previous 2020 Guidance
In thousands except per ounce or per
pound amounts
Palmarejo
Rochester
Kensington
Wharf
Costs applicable to sales, including
amortization (U.S. GAAP)
$
178,977
$
105,053
$
178,595
$
94,142
Amortization
(42,220
)
(15,177
)
(54,009
)
(11,202
)
Costs applicable to sales
$
136,757
$
89,876
$
124,586
$
82,940
By-product credit
—
—
—
(998
)
Adjusted costs applicable to
sales
$
136,757
$
89,876
$
124,586
$
81,942
Metal Sales
Gold ounces
97,800
32,000
132,800
84,900
Silver ounces
6,300,000
3,800,000
60,350
Revenue Split
Gold
56
%
46
%
100
%
100
%
Silver
44
%
54
%
—
—
Costs applicable to sales
Gold ($/oz)
$785 - $885
$1,250 - $1,400
$900 - $1,000
$950 - $1,000
Silver ($/oz)
$9.50 - $10.50
$12.75 - $14.00
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201028006061/en/
Paul DePartout, Director, Investor Relations Phone: (312)
489-5800 www.coeur.com
Coeur Mining (NYSE:CDE)
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