19
5.875% Senior Notes due 2024
In May 2017, the Company completed an offering of $250.0 million in aggregate principal amount of 2024 Senior Notes in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended for net proceeds of approximately $245.0 million. The 2024 Senior Notes are governed by an Indenture dated as of May 31, 2017 (the “Indenture”), among the Company, as issuer, certain of the Company's subsidiaries named therein, as guarantors thereto (the “Guarantors”), and the Bank of New York Mellon, as trustee. In connection with the sale of the 2024 Senior Notes, the Company entered into a Registration Rights Agreement. On August 4, 2017, the Company commenced an exchange offer of registered 2024 Senior Notes for privately-placed 2024 Senior Notes which was completed on September 12, 2017. The 2024 Senior Notes bear interest at a rate of 5.875% per year from the date of issuance. Interest on the 2024 Senior Notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2017. The 2024 Senior Notes will mature on June 1, 2024 and are fully and unconditionally guaranteed by the Guarantors. At any time prior to June 1, 2020, the Company may redeem all or part of the 2024 Senior Notes upon not less than 30 nor more than 60 days’ prior notice at a redemption price equal to the sum of (i) 100% of the principal amount thereof, plus (ii) a make-whole premium as of the date of redemption, plus (iii) accrued and unpaid interest and additional interest, if any, thereon, to the date of redemption. In addition, the Company may redeem some or all of the 2024 Senior Notes on or after June 1, 2020, at redemption prices set forth in the Indenture, together with accrued and unpaid interest. At any time prior to June 1, 2020, the Company may use the proceeds of certain equity offerings to redeem up to 35% of the aggregate principal amount of the 2024 Senior Notes, including any permitted additional 2024 Senior Notes, at a redemption price equal to 105.875% of the principal amount. The Indenture contains covenants that, among other things, limit the Company’s ability under certain circumstances to incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem capital stock, prepay, redeem or repurchase certain debt, make loans and investments, create liens, sell, transfer or otherwise dispose of assets, enter into transactions with affiliates, enter into agreements restricting the Company's subsidiaries' ability to pay dividends and impose conditions on the Company’s ability to engage in mergers, consolidations and sales of all or substantially all of its assets. The Indenture also contains certain “Events of Default” (as defined in the Indenture) customary for indentures of this type.
7.875% Senior Notes due 2021
Concurrent with the offering of the 2024 Senior Notes, the Company commenced a cash tender offer (the “Tender Offer”) to purchase the outstanding $178.0 million in aggregate principal amount of its 2021 Senior Notes. The Tender Offer was made on the terms and subject to the conditions set forth in the Offer to Purchase dated May 19, 2017. Holders of the 2021 Senior Notes who tendered their notes were entitled to receive $1,043.88 per $1,000 principal amount of the Notes, plus accrued and unpaid interest. $118.1 million aggregate principal amount of the Notes were tendered and purchased by the Company on May 31, 2017. In accordance with the terms of the indenture governing the 2021 Senior Notes, the remaining $59.9 million aggregate principal amount of the Notes were redeemed on June 30, 2017 at the redemption price of $1,039.38 per $1,000 principal amount, plus accrued and unpaid interest. The Company recorded a loss of $9.3 million as a result of the extinguishment of the 2021 Senior Notes.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
objectives and strategies for undertaking hedge transactions. This process includes linking all derivatives designated as hedges to either recognized assets or liabilities or forecasted transactions and assessing, both at inception and on an ongoing basis, the effectiveness of the hedging relationships.
LinesDerivatives Not Designated as Hedging Instruments
Provisional Metal Sales
The Company enters into sales contracts with third-party smelters, refiners and off-take customers which, in some cases, provide for a provisional payment based upon preliminary assays and quoted metal prices. The provisionally priced sales contracts contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable recorded at the forward price at the time of Creditsale. The embedded derivatives do not qualify for hedge accounting and are marked to market through earnings each period until final settlement.
At September 30, 2017,Zero Cost Collars
To protect the Company’s subsidiary that holds the San Bartolomé mine had an available line of credit for $12.0 million that maturesexposure to fluctuations in June 30, 2018, bearing interest at 6.0% per annum, which is secured by machinery and equipment. There was no outstanding balance at September 30, 2017.
Capital Lease Obligations
From time to time, the Company acquires mining equipment under capital lease agreements. In the nine months ended September 30, 2017,metal prices the Company entered into new lease financing arrangements primarily for diesel generators at KensingtonAsian (or average value) put and mining equipment at Palmarejo, Rochester,call option contracts in net-zero-cost collar arrangements. The contracts were net cash settled monthly and, Kensington. All capital lease obligations are recorded, upon lease inception,if the price of gold at the presenttime of expiration is between the put and call prices, would expire at no cost to the Company. If the price of gold at the time of expiration was lower than the put prices or higher than the call prices, it would result in a realized gain or loss, respectively. The Company elected to designate these instruments as cash flow hedges of forecasted transactions at their inception. In the first quarter of 2022, the Company voluntarily de-designated hedge accounting for the zero cost collars and subsequently terminated the arrangements. The cost to terminate the zero cost collars was $7.7 million, of which $3.1 million was recognized in earnings and the remaining $4.6 million, which represents the fair value of future minimum lease payments.the zero cost collars on the date of de-designation, was retained in accumulated other comprehensive income (loss) (“AOCI”) and will be recognized in earnings as the forecasted transactions occur. As of June 30, 2022, there was $2.8 million remaining to be recognized in earnings over the next six months.
Interest ExpenseAt June 30, 2022, the Company had the following derivative instruments that settle as follows:
| | | | | | | | | | | |
In thousands except average prices and notional ounces | 2022 | | 2023 and Thereafter |
Provisional gold sales contracts | $ | 20,019 | | | $ | — | |
Average gold price per ounce | $ | 1,846 | | | $ | — | |
Notional ounces | 10,842 | | | — | |
The following summarizes the classification of the fair value of the derivative instruments:
| | | | | | | | | | | | | | | | | |
| June 30, 2022 | | | | | | |
In thousands | Prepaid expenses and other | | Accrued liabilities and other | | | | | | |
Provisional metal sales contracts | $ | 7 | | | $ | 77 | | | | | | | |
| | | | | | | | | | | | | | | | | |
| December 31, 2021 |
In thousands | Prepaid expenses and other | | Accrued liabilities and other | | | | | | |
Provisional metal sales contracts | $ | 86 | | | $ | 162 | | | | | | | |
The following represent mark-to-market gains (losses) on derivative instruments in the three and six months ended June 30, 2022 and 2021, respectively (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
Financial statement line | Derivative | 2022 | | 2021 | | 2022 | | 2021 | | |
Revenue | Provisional metal sales contracts | $ | (486) | | | $ | (137) | | | $ | 6 | | | $ | (697) | | | |
Fair value adjustments, net | Exchange agreement embedded derivative | — | | | 664 | | | — | | | 664 | | | |
Fair value adjustments, net | Terminated zero cost collars | — | | | — | | | (3,139) | | | — | | | |
| | $ | (486) | | | $ | 527 | | | $ | (3,133) | | | $ | (33) | | | |
Derivatives Designated as Cash Flow Hedging Strategies
To protect the Company’s exposure to fluctuations in metal prices the Company enters into forward contracts. The contracts are net settled monthly and if the actual price of gold at the time of expiration is lower than the fixed price or higher
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
In thousands | 2017 | | 2016 | | 2017 | | 2016 |
2024 Senior Notes | $ | 3,672 |
| | $ | — |
| | $ | 4,937 |
| | $ | — |
|
2021 Senior Notes | — |
| | 7,337 |
| | 6,221 |
| | 22,250 |
|
Term Loan due 2020 | — |
| | 417 |
| | — |
| | 4,939 |
|
Capital lease obligations | 413 |
| | 399 |
| | 1,115 |
| | 1,079 |
|
Accretion of Palmarejo gold production royalty obligation | — |
| | 49 |
| | — |
| | 1,211 |
|
Amortization of debt issuance costs | 180 |
| | 388 |
| | 518 |
| | 1,650 |
|
Accretion of debt premium | — |
| | (90 | ) | | (71 | ) | | (272 | ) |
Other debt obligations | 13 |
|
| 40 |
|
| 30 |
|
| 95 |
|
Capitalized interest | (672 | ) | | (472 | ) | | (1,809 | ) | | (889 | ) |
Total interest expense, net of capitalized interest | $ | 3,606 |
| | $ | 8,068 |
| | $ | 10,941 |
| | $ | 30,063 |
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
than the fixed prices, it would result in a realized gain or loss, respectively. The Company has elected to designate these instruments as cash flow hedges of forecasted transactions at their inception.
At June 30, 2022, the Company had the following derivative cash flow hedge instruments that settle as follows:
| | | | | | | | | | | | | | | |
In thousands except average prices and notional ounces | | | 2022 | | 2023 and Thereafter | | |
Gold forwards | | | | | | | |
Average gold fixed price per ounce | | | $ | 1,965 | | | $ | 1,982 | | | |
Notional ounces | | | 108,500 | | | 112,500 | | | |
The effective portions of cash flow hedges are recorded in AOCI until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of metal sales revenue are recognized as a component of Revenue in the same period as the related sale is recognized.
At inception, the Company performed an assessment of the forecasted transactions and the hedging instruments and determined that the hedging relationships are considered perfectly effective. Future assessments are performed to verify that critical terms of the hedging instruments and the forecasted transactions continue to match, and the forecasted transactions remain probable, as well as an assessment of any adverse developments regarding the risk of the counterparties defaulting on their commitments. There have been no such changes in critical terms or adverse developments.
As of June 30, 2022, the Company had $29.3 million of net after-tax gain in AOCI related to gains from cash flow hedge transactions, of which $23.8 million of net after-tax gains is expected to be recognized in its Consolidated Statement of Comprehensive Income (Loss) during the next 12 months. Actual amounts ultimately reclassified to net income are dependent on the price of gold for metal contracts.
The following summarizes the classification of the fair value of the derivative instruments designated as cash flow hedges:
| | | | | | | | | | | | | | | | | |
| June 30, 2022 |
In thousands | Prepaid expenses and other | | Other assets | | Accrued liabilities and other |
Gold forwards | $ | 23,820 | | | $ | 5,482 | | | $ | — | |
| | | | | | | | | | | | | | | | | |
| December 31, 2021 |
In thousands | Prepaid expenses and other | | Other assets | | Accrued liabilities and other |
Gold zero cost collars | $ | — | | | $ | — | | | $ | 1,212 | |
The following table sets forth the pre-tax gains (losses) on derivatives designated as cash flow hedges that have been included in AOCI and the Consolidated Statement of Comprehensive Income (Loss) for the three and six months ended June 30, 2022 and 2021, respectively (in thousands).
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 | | |
Amount of Gain (Loss) Recognized in AOCI | | | | | | | | | |
Gold forwards | $ | 34,245 | | | $ | — | | | $ | 32,413 | | | $ | — | | | |
Gold zero cost collars | — | | | (4,571) | | | $ | (3,386) | | | $ | 23,976 | | | |
Foreign currency forward exchange contracts | — | | | 1,589 | | | — | | | 400 | | | |
| $ | 34,245 | | | $ | (2,982) | | | $ | 29,027 | | | $ | 24,376 | | | |
| | | | | | | | | |
Amount of (Gain) Loss Reclassified From AOCI to Earnings | | | | | | | | | |
Gold forwards | $ | (3,110) | | | $ | — | | | $ | (3,110) | | | $ | — | | | |
Gold zero cost collars | 1,379 | | | 437 | | | $ | 1,839 | | | $ | 828 | | | |
Foreign currency forward exchange contracts | — | | | (3,498) | | | — | | | (6,611) | | | |
| $ | (1,731) | | | $ | (3,061) | | | $ | (1,271) | | | $ | (5,783) | | | |
Credit Risk
The credit risk exposure related to any derivative instrument is limited to the unrealized gains, if any, on outstanding contracts based on current market prices. To reduce counter-party credit exposure, the Company enters into contracts with institutions management deems credit-worthy and limits credit exposure to each institution. The Company does not anticipate non-performance by any of its counterparties.
NOTE 14 – ADDITIONAL COMPREHENSIVE INCOME (LOSS) DETAIL
Pre-development, reclamation, and other consists of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
In thousands | 2022 | | 2021 | | 2022 | | 2021 | | |
COVID-19 | $ | 318 | | | $ | 972 | | | $ | 1,290 | | | $ | 5,319 | | | |
Silvertip ongoing carrying costs | 4,754 | | | 6,447 | | | 10,913 | | | 13,368 | | | |
| | | | | | | | | |
| | | | | | | | | |
Asset retirement accretion | 3,529 | | | 2,962 | | | 6,992 | | | 5,870 | | | |
Other | 577 | | | 2,357 | | | 1,395 | | | 1,893 | | | |
Pre-development, reclamation and other | $ | 9,178 | | | $ | 12,738 | | | $ | 20,590 | | | $ | 26,450 | | | |
Other, net consists of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
In thousands | 2022 | | 2021 | | 2022 | | 2021 | | |
Foreign exchange gain (loss) | $ | (506) | | | $ | (499) | | | $ | (1,065) | | | $ | (1,272) | | | |
Gain (loss) on sale of assets | 621 | | | 622 | | | 2,452 | | | 4,675 | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Other | 198 | | | 578 | | | 663 | | | 925 | | | |
Other, net | $ | 313 | | | $ | 701 | | | $ | 2,050 | | | $ | 4,328 | | | |
NOTE 15 – NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of the Company’s common stock outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.
For the three and six months ended June 30, 2022, there were 1,991,864 and 992,382 common stock equivalents, respectively, related to equity-based awards that were not included in the diluted earnings per share calculation as the shares would be antidilutive. Similarly, 1,553,030 and 1,558,030 common stock equivalents were excluded in the diluted earnings per share calculation for the three and six months ended June 30, 2021, respectively.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
In thousands except per share amounts | 2022 | | 2021 | | 2022 | | 2021 | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Net income (loss) available to common stockholders | $ | (77,434) | | | $ | 32,146 | | | $ | (69,752) | | | $ | 34,206 | | | |
| | | | | | | | | |
Weighted average shares: | | | | | | | | | |
Basic | 278,040 | | | 249,066 | | | 268,884 | | | 245,253 | | | |
Effect of stock-based compensation plans | — | | | 3,066 | | | — | | | 3,240 | | | |
Diluted | 278,040 | | | 252,132 | | | 268,884 | | | 248,493 | | | |
| | | | | | | | | |
Income (loss) per share: | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Basic | $ | (0.28) | | | $ | 0.13 | | | $ | (0.26) | | | $ | 0.14 | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Diluted | $ | (0.28) | | | $ | 0.13 | | | $ | (0.26) | | | $ | 0.14 | | | |
On March 18, 2022, the Company completed a $100.0 million “at the market” offering of its common stock, par value $0.01 per share (the “Equity Offering”). The Equity Offering was conducted pursuant to an ATM Equity Offering Sales Agreement (the “Sales Agreement”), entered into on April 23, 2020 between the Company and BofA Securities, Inc. and RBC Capital Markets, LLC as sales agents. The Company sold a total of 22,053,275 shares of its common stock in the Equity Offering at an average price of $4.53 per share, raising net proceeds (after sales commissions) of $98.0 million. Proceeds from the Equity Offering were used to repay outstanding amounts under the RCF.
NOTE 1816 - SUPPLEMENTAL GUARANTOR INFORMATION
The following Consolidating Financial Statements aresummarized financial information is presented to satisfy disclosure requirements of Rule 3-1013-01 of Regulation S-X resulting from the guarantees by Coeur Alaska, Inc., Coeur Explorations, Inc., Coeur Rochester, Inc., Coeur South America Corp., Wharf Resources (U.S.A.), Inc. and its subsidiaries, and Coeur Capital, Inc., Coeur Sterling, Inc., Sterling Intermediate Holdco, Inc., and Coeur Sterling Holdings LLC (collectively, the “Subsidiary Guarantors”) of the 20242029 Senior Notes. The following schedules present Consolidating Financial Statementssummarized financial information of (a) Coeur, the parent company;company and (b) the Subsidiary Guarantors;Guarantors (collectively the “Obligor Group”). The summarized financial information of the Obligor Group is presented on a combined basis with intercompany balances and (c)transactions between entities in the Obligor Group eliminated. The Obligor Group’s amounts due from, amounts due to and transactions with certain wholly-owned domestic and foreign subsidiaries of the Company (collectively, the “Non-Guarantor Subsidiaries”).have been presented in separate line items, if they are material. Each of the Subsidiary Guarantors is 100% owned by Coeur and the guarantees are full and unconditional and joint and several obligations. There are no restrictions on the ability of Coeur to obtain funds from the Subsidiary Guarantors by dividend or loan.
SUMMARIZED BALANCE SHEET
| | | | | | | | | | | | | | | | | | | | | | | |
| Coeur Mining, Inc. | | Guarantor Subsidiaries |
In thousands | June 30, 2022 | | December 31, 2021 | | June 30, 2022 | | December 31, 2021 |
Current assets | $ | 124,853 | | | $ | 11,143 | | | $ | 151,915 | | | $ | 128,630 | |
| | | | | | | |
Non-current assets(1) | $ | 361,197 | | | $ | 473,145 | | | $ | 947,241 | | | $ | 830,330 | |
| | | | | | | |
Non-guarantor intercompany assets | $ | 8,155 | | | $ | 19,803 | | | $ | — | | | $ | — | |
| | | | | | | |
Current liabilities | $ | 13,223 | | | $ | 18,353 | | | $ | 167,702 | | | $ | 130,307 | |
| | | | | | | |
Non-current liabilities | $ | 87,171 | | | $ | 139,223 | | | $ | 574,484 | | | $ | 461,904 | |
| | | | | | | |
Non-guarantor intercompany liabilities | $ | 34,397 | | | $ | 30,045 | | | $ | 1,715 | | | $ | 1,650 | |
(1) Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED SEPTEMBER 30, 2017 |
| | | | | | | | | | | | | | | | | | | | |
In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Revenue | | $ | — |
| | $ | 99,093 |
| | $ | 76,870 |
| | $ | — |
| | $ | 175,963 |
|
COSTS AND EXPENSES | | | | | | | | | | |
Costs applicable to sales(1) | | — |
| | 68,267 |
| | 50,657 |
| | — |
| | 118,924 |
|
Amortization | | 286 |
| | 15,678 |
| | 17,866 |
| | — |
| | 33,830 |
|
General and administrative | | 7,250 |
| | 6 |
| | 156 |
| | — |
| | 7,412 |
|
Exploration | | 466 |
| | 4,582 |
| | 4,766 |
| | — |
| | 9,814 |
|
Pre-development, reclamation, and other | | 1,030 |
| | 1,922 |
| | 5,009 |
| | — |
| | 7,961 |
|
Total costs and expenses | | 9,032 |
| | 90,455 |
| | 78,454 |
| | — |
| | 177,941 |
|
OTHER INCOME (EXPENSE), NET | | | | | | | | | | |
Loss on debt extinguishments | | — |
| | — |
| | — |
| | — |
| | — |
|
Fair value adjustments, net | | — |
| | — |
| | — |
| | — |
| | — |
|
Other, net | | 2,868 |
| | (4,603 | ) | | 6,312 |
| | (1,413 | ) | | 3,164 |
|
Interest expense, net of capitalized interest | | (3,220 | ) | | (264 | ) | | (1,535 | ) | | 1,413 |
| | (3,606 | ) |
Total other income (expense), net | | (352 | ) | | (4,867 | ) | | 4,777 |
| | — |
| | (442 | ) |
Loss before income and mining taxes | | (9,384 | ) | | 3,771 |
| | 3,193 |
| | — |
| | (2,420 | ) |
Income and mining tax (expense) benefit | | (8,091 | ) | | (574 | ) | | (5,567 | ) | | — |
| | (14,232 | ) |
Total loss after income and mining taxes | | (17,475 | ) | | 3,197 |
| | (2,374 | ) | | — |
| | (16,652 | ) |
Equity income (loss) in consolidated subsidiaries | | 823 |
| | (1,755 | ) | | (304 | ) | | 1,236 |
| | — |
|
NET INCOME (LOSS) | | $ | (16,652 | ) | | $ | 1,442 |
| | $ | (2,678 | ) | | $ | 1,236 |
| | $ | (16,652 | ) |
OTHER COMPREHENSIVE INCOME (LOSS), net of tax: | | | | | | | | | | |
Unrealized gain (loss) on marketable securities, net of tax | | 1,066 |
| | 1,504 |
| | — |
| | (1,504 | ) | | 1,066 |
|
Reclassification adjustments for impairment of equity securities, net of tax | | — |
| | (852 | ) | | — |
| | 852 |
| | — |
|
Reclassification adjustments for realized gain (loss) on sale of equity securities, net of tax | | 32 |
| | 1,112 |
| | — |
| | (1,112 | ) | | 32 |
|
Other comprehensive income (loss) | | 1,098 |
| | 1,764 |
| | — |
| | (1,764 | ) | | 1,098 |
|
COMPREHENSIVE INCOME (LOSS) | | $ | (15,554 | ) | | $ | 3,206 |
| | $ | (2,678 | ) | | $ | (528 | ) | | $ | (15,554 | ) |
(1) Excludes amortization.
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED SEPTEMBER 30, 2016’s non-current assets includes its investment in Guarantor Subsidiaries.
|
| | | | | | | | | | | | | | | | | | | | |
In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Revenue | | $ | — |
| | $ | 117,426 |
| | $ | 58,821 |
| | $ | — |
| | $ | 176,247 |
|
COSTS AND EXPENSES | | | | | | | | | | |
Costs applicable to sales(1) | | — |
| | 68,189 |
| | 37,219 |
| | — |
| | 105,408 |
|
Amortization | | 389 |
| | 19,750 |
| | 7,624 |
| | — |
| | 27,763 |
|
General and administrative | | 6,956 |
| | 16 |
| | 141 |
| | — |
| | 7,113 |
|
Exploration | | 989 |
| | 1,410 |
| | 1,307 |
| | — |
| | 3,706 |
|
Pre-development, reclamation, and other | | 388 |
| | 1,470 |
| | 2,633 |
| | — |
| | 4,491 |
|
Total costs and expenses | | 8,722 |
| | 90,835 |
| | 48,924 |
| | — |
| | 148,481 |
|
OTHER INCOME (EXPENSE), NET | | | | | | | | | | |
Loss on debt extinguishments | | (10,040 | ) | | — |
| | — |
| | — |
| | (10,040 | ) |
Fair value adjustments, net | | — |
| | (852 | ) | | (109 | ) | | — |
| | (961 | ) |
Other, net | | 1,666 |
| | 3,021 |
| | 3,178 |
| | (1,460 | ) | | 6,405 |
|
Interest expense, net of capitalized interest | | (7,852 | ) | | (209 | ) | | (1,467 | ) | | 1,460 |
| | (8,068 | ) |
Total other income (expense), net | | (16,226 | ) | | 1,960 |
| | 1,602 |
| | — |
| | (12,664 | ) |
Income (Loss) before income and mining taxes | | (24,948 | ) | | 28,551 |
| | 11,499 |
| | — |
| | 15,102 |
|
Income and mining tax (expense) benefit | | (29,312 | ) | | 41,807 |
| | 41,960 |
| | — |
| | 54,455 |
|
Income (Loss) after income and mining taxes | | (54,260 | ) | | 70,358 |
| | 53,459 |
| | — |
| | 69,557 |
|
Equity income (loss) in consolidated subsidiaries | | 123,818 |
| | 328 |
| | — |
| | (124,146 | ) | | — |
|
NET INCOME (LOSS) | | $ | 69,558 |
| | $ | 70,686 |
| | $ | 53,459 |
| | $ | (124,146 | ) | | $ | 69,557 |
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax: | | | | | | | | | | |
Unrealized gain (loss) on equity securities, net of tax | | 1,387 |
| | 1,387 |
| | — |
| | (1,387 | ) | | 1,387 |
|
Reclassification adjustments for impairment of equity securities, net of tax | | — |
| | — |
| | — |
| | — |
| | — |
|
Reclassification adjustments for realized loss on sale of equity securities, net of tax | | (2,965 | ) | | (2,485 | ) | | — |
| | 2,485 |
| | (2,965 | ) |
Other comprehensive income (loss) | | (1,578 | ) | | (1,098 | ) | | — |
| | 1,098 |
| | (1,578 | ) |
COMPREHENSIVE INCOME (LOSS) | | $ | 67,980 |
| | $ | 69,588 |
| | $ | 53,459 |
| | $ | (123,048 | ) | | $ | 67,979 |
|
(1) Excludes amortization.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENTSUMMARIZED STATEMENTS OF CASH FLOWSINCOME
THREESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172022
| | | | | | | | | | | | | | | | | |
In thousands | Coeur Mining, Inc. | | Guarantor Subsidiaries | | | | | | |
Revenue | $ | — | | | $ | 223,492 | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Gross profit (loss) | $ | (415) | | | $ | (504) | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Net income (loss) | $ | (69,753) | | | $ | (12,422) | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | |
In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | |
Cash provided by (used in) operating activities | | $ | (8,682 | ) | | $ | 27,407 |
| | $ | 9,471 |
| | $ | 1,236 |
| | 29,432 |
|
| | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | |
Capital expenditures | | (318 | ) | | (23,016 | ) | | (6,127 | ) | | — |
| | (29,461 | ) |
Proceeds from the sale of assets | | — |
| | 76 |
| | 1,007 |
| | — |
| | 1,083 |
|
Purchase of investments | | (3,594 | ) | | (1 | ) | | — |
| | — |
| | (3,595 | ) |
Sales of investments | | — |
| | 403 |
| | — |
| | — |
| | 403 |
|
Other | | (5,783 | ) | | — |
| | (67 | ) | | — |
| | (5,850 | ) |
Investments in consolidated subsidiaries | | 3,433 |
| | 7,144 |
| | (1,311 | ) | | (9,266 | ) | | — |
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | | (6,262 | ) |
| (15,394 | ) |
| (6,498 | ) | | (9,266 | ) | | (37,420 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | |
Issuance of notes and bank borrowings | | (2,257 | ) | | — |
| | — |
| | — |
| | (2,257 | ) |
Payments on debt, capital leases, and associated costs | | — |
| | (1,894 | ) | | (1,450 | ) | | — |
| | (3,344 | ) |
Net intercompany financing activity | | 9,266 |
| | (12,370 | ) | | (4,926 | ) | | 8,030 |
| | — |
|
Other | | (6 | ) | | — |
| | — |
| | — |
| | (6 | ) |
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | | 7,003 |
|
| (14,264 | ) |
| (6,376 | ) |
| 8,030 |
|
| (5,607 | ) |
Effect of exchange rate changes on cash and cash equivalents | | — |
| | 3 |
| | (225 | ) | | — |
| | (222 | ) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | | (7,941 | ) |
| (2,248 | ) |
| (3,628 | ) | | — |
| | (13,817 | ) |
Cash and cash equivalents at beginning of period | | 103,878 |
| | 47,912 |
| | 98,248 |
| | — |
| | 250,038 |
|
Cash and cash equivalents at end of period | | $ | 95,937 |
|
| $ | 45,664 |
|
| $ | 94,620 |
|
| $ | — |
|
| $ | 236,221 |
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 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 | | $ | 101,581 |
| | $ | 48,791 |
| | $ | 21,586 |
| | $ | (124,146 | ) | | 47,812 |
|
| | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | |
Capital expenditures | | (62 | ) | | (12,550 | ) | | (13,015 | ) | | — |
| | (25,627 | ) |
Acquisitions, net of cash acquired | | — |
| | — |
| | (1,427 | ) | | — |
| | (1,427 | ) |
Proceeds from the sale of assets | | 2 |
| | 560 |
| | 4,240 |
| | — |
| | 4,802 |
|
Purchase of investments | | (5 | ) | | (16 | ) | | — |
| | — |
| | (21 | ) |
Sales of investments | | 2 |
| | 5,430 |
| | — |
| | — |
| | 5,432 |
|
Other | | (1,245 | ) | | (7 | ) | | (47 | ) | | — |
| | (1,299 | ) |
Investments in consolidated subsidiaries | | (117,911 | ) | | 1,356 |
| | — |
| | 116,555 |
| | — |
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | | (119,219 | ) |
| (5,227 | ) |
| (10,249 | ) |
| 116,555 |
|
| (18,140 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | |
Issuance of common stock | | 49,513 |
| | — |
| | — |
| | — |
| | 49,513 |
|
Payments on debt, capital leases, and associated costs | | (104,165 | ) | | (2,498 | ) | | (1,205 | ) | | — |
| | (107,868 | ) |
Gold production royalty payments | | — |
| | — |
| | (7,563 | ) | | — |
| | (7,563 | ) |
Net intercompany financing activity | | 39,297 |
| | (42,679 | ) | | (4,209 | ) | | 7,591 |
| | — |
|
Other | | 1,051 |
| | — |
| | — |
| | — |
| | 1,051 |
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | | (14,304 | ) |
| (45,177 | ) |
| (12,977 | ) |
| 7,591 |
|
| (64,867 | ) |
Effect of exchange rate changes on cash and cash equivalents | | — |
| | — |
| | 121 |
| | — |
| | 121 |
|
NET CHANGE IN CASH AND CASH EQUIVALENTS | | (31,942 | ) |
| (1,613 | ) |
| (1,519 | ) |
| — |
|
| (35,074 | ) |
Cash and cash equivalents at beginning of period | | 127,803 |
| | 53,548 |
| | 76,240 |
| | — |
| | 257,591 |
|
Cash and cash equivalents at end of period | | $ | 95,861 |
|
| $ | 51,935 |
|
| $ | 74,721 |
|
| $ | — |
|
| $ | 222,517 |
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
NINE MONTHS ENDED SEPTEMBER 30, 2017 |
| | | | | | | | | | | | | | | | | | | | |
In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Revenue | | $ | — |
| | $ | 301,658 |
| | $ | 253,797 |
| | $ | — |
| | $ | 555,455 |
|
COSTS AND EXPENSES | | | | | | | | | | |
Costs applicable to sales(1) | | — |
| | 207,385 |
| | 169,872 |
| | — |
| | 377,257 |
|
Amortization | | 908 |
| | 49,617 |
| | 56,355 |
| | — |
| | 106,880 |
|
General and administrative | | 24,316 |
| | 26 |
| | 245 |
| | — |
| | 24,587 |
|
Exploration | | 1,197 |
| | 9,526 |
| | 12,156 |
| | — |
| | 22,879 |
|
Pre-development, reclamation, and other | | 1,803 |
| | 5,593 |
| | 9,512 |
| | — |
| | 16,908 |
|
Total costs and expenses | | 28,224 |
| | 272,147 |
| | 248,140 |
| | — |
| | 548,511 |
|
OTHER INCOME (EXPENSE), NET | | | | | | | | | | |
Loss on debt extinguishments | | (9,342 | ) | | — |
| | — |
| | — |
| | (9,342 | ) |
Fair value adjustments, net | | — |
| | (864 | ) | | — |
| | — |
| | (864 | ) |
Other, net | | 20,090 |
| | 3,332 |
| | 9,256 |
| | (4,239 | ) | | 28,439 |
|
Interest expense, net of capitalized interest | | (9,876 | ) | | (703 | ) | | (4,601 | ) | | 4,239 |
| | (10,941 | ) |
Total other income (expense), net | | 872 |
| | 1,765 |
| | 4,655 |
| | — |
| | 7,292 |
|
Loss before income and mining taxes | | (27,352 | ) | | 31,276 |
| | 10,312 |
| | — |
| | 14,236 |
|
Income and mining tax (expense) benefit | | (3,108 | ) | | (3,946 | ) | | (16,126 | ) | | — |
| | (23,180 | ) |
Total loss after income and mining taxes | | (30,460 | ) | | 27,330 |
| | (5,814 | ) | | — |
| | (8,944 | ) |
Equity income (loss) in consolidated subsidiaries | | 21,516 |
| | (546 | ) | | (609 | ) | | (20,361 | ) | | — |
|
NET INCOME (LOSS) | | $ | (8,944 | ) | | $ | 26,784 |
| | $ | (6,423 | ) | | $ | (20,361 | ) | | $ | (8,944 | ) |
OTHER COMPREHENSIVE INCOME (LOSS), net of tax: | | | | | | | | | | |
Unrealized gain (loss) on marketable securities, net of tax | | (1,134 | ) | | 756 |
| | — |
| | (756 | ) | | (1,134 | ) |
Reclassification adjustments for impairment of equity securities, net of tax | | 426 |
| | (426 | ) | | — |
| | 426 |
| | 426 |
|
Reclassification adjustments for realized gain (loss) on sale of equity securities, net of tax | | 1,300 |
| | 540 |
| | — |
| | (540 | ) | | 1,300 |
|
Other comprehensive income (loss) | | 592 |
| | 870 |
| | — |
| | (870 | ) | | 592 |
|
COMPREHENSIVE INCOME (LOSS) | | $ | (8,352 | ) | | $ | 27,654 |
| | $ | (6,423 | ) | | $ | (21,231 | ) | | $ | (8,352 | ) |
(1) Excludes amortization.
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
NINE MONTHS ENDED SEPTEMBER 30, 2016 |
| | | | | | | | | | | | | | | | | | | | |
In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Revenue | | $ | — |
| | $ | 317,587 |
| | $ | 189,054 |
| | $ | — |
| | $ | 506,641 |
|
COSTS AND EXPENSES | | | | | | | | | | |
Costs applicable to sales(1) | | — |
| | 189,227 |
| | 118,201 |
| | — |
| | 307,428 |
|
Amortization | | 1,225 |
| | 57,983 |
| | 34,024 |
| | — |
| | 93,232 |
|
General and administrative | | 22,132 |
| | 237 |
| | 420 |
| | — |
| | 22,789 |
|
Exploration | | 2,091 |
| | 2,843 |
| | 2,735 |
| | — |
| | 7,669 |
|
Write-downs | | — |
| | — |
| | 4,446 |
| | — |
| | 4,446 |
|
Pre-development, reclamation, and other | | 1,774 |
| | 4,332 |
| | 6,953 |
| | — |
| | 13,059 |
|
Total costs and expenses | | 27,222 |
| | 254,622 |
| | 166,779 |
| | — |
| | 448,623 |
|
OTHER INCOME (EXPENSE), NET | | | | | | | | | | |
Loss on debt extinguishments | | (10,040 | ) | | — |
| | — |
| | — |
| | (10,040 | ) |
Fair value adjustments, net | | (1,635 | ) | | (5,787 | ) | | (5,813 | ) | | — |
| | (13,235 | ) |
Other, net | | 3,345 |
| | 3,082 |
| | 3,068 |
| | (3,633 | ) | | 5,862 |
|
Interest expense, net of capitalized interest | | (28,348 | ) | | (665 | ) | | (4,683 | ) | | 3,633 |
| | (30,063 | ) |
Total other income (expense), net | | (36,678 | ) | | (3,370 | ) | | (7,428 | ) | | — |
| | (47,476 | ) |
Income (Loss) before income and mining taxes | | (63,900 | ) | | 59,595 |
| | 14,847 |
| | — |
| | 10,542 |
|
Income and mining tax (expense) benefit | | (29,768 | ) | | 39,905 |
| | 42,981 |
| | — |
| | 53,118 |
|
Income (Loss) after income and mining taxes | | (93,668 | ) | | 99,500 |
| | 57,828 |
| | — |
| | 63,660 |
|
Equity income (loss) in consolidated subsidiaries | | 157,328 |
| | (4,825 | ) | | — |
| | (152,503 | ) | | — |
|
NET INCOME (LOSS) | | $ | 63,660 |
| | $ | 94,675 |
| | $ | 57,828 |
| | $ | (152,503 | ) | | $ | 63,660 |
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax: | | | | | | | | | | |
Unrealized gain (loss) on equity securities, net of tax | | 4,533 |
| | 4,466 |
| | — |
| | (4,466 | ) | | 4,533 |
|
Reclassification adjustments for impairment of equity securities, net of tax | | 20 |
| | 20 |
| | — |
| | (20 | ) | | 20 |
|
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) | | 1,862 |
| | 1,305 |
| | — |
| | (1,305 | ) | | 1,862 |
|
COMPREHENSIVE INCOME (LOSS) | | $ | 65,522 |
| | $ | 95,980 |
| | $ | 57,828 |
| | $ | (153,808 | ) | | $ | 65,522 |
|
(1) Excludes amortization.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2017
|
| | | | | | | | | | | | | | | | | | | | | |
In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | |
Cash provided by (used in) operating activities | | $ | (18,502 | ) | | $ | 59,434 |
| 52,577 |
| $ | 93,411 |
| | $ | (20,361 | ) | | 113,982 |
|
| | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | |
Capital expenditures | | (1,626 | ) | | (63,928 | ) | 52,577 |
| (25,368 | ) | | — |
| | (90,922 | ) |
Proceeds from the sale of assets | | 8,917 |
| | 6,670 |
| 52,577 |
| 951 |
| | — |
| | 16,538 |
|
Purchase of investments | | (13,558 | ) | | (1 | ) | 52,577 |
| — |
| | — |
| | (13,559 | ) |
Sales of investments | | 9,157 |
| | 2,164 |
| 52,577 |
| — |
| | — |
| | 11,321 |
|
Other | | (7,269 | ) | | — |
| 52,577 |
| (188 | ) | | — |
| | (7,457 | ) |
Investments in consolidated subsidiaries | | (9,571 | ) | | 7,897 |
| 52,577 |
| (1,004 | ) | | 2,678 |
| | — |
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | | (13,950 | ) | | (47,198 | ) | | (25,609 | ) | | 2,678 |
| | (84,079 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | |
Issuance of notes and bank borrowings | | 242,701 |
| | — |
| 52,577 |
| — |
| | — |
| | 242,701 |
|
Payments on debt, capital leases, and associated costs | | (185,538 | ) | | (5,789 | ) | 52,577 |
| (4,174 | ) | | — |
| | (195,501 | ) |
Net intercompany financing activity | | 16,904 |
| | (10,809 | ) | 52,577 |
| (23,778 | ) | | 17,683 |
| | — |
|
Other | | (3,726 | ) | | — |
| 52,577 |
| — |
| | — |
| | (3,726 | ) |
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | | 70,341 |
| | (16,598 | ) | | (27,952 | ) | | 17,683 |
| | 43,474 |
|
Effect of exchange rate changes on cash and cash equivalents | | — |
| | 3 |
| | 659 |
| | — |
| | 662 |
|
NET CHANGE IN CASH AND CASH EQUIVALENTS | | 37,889 |
| | (4,359 | ) | | 40,509 |
| | — |
| | 74,039 |
|
Cash and cash equivalents at beginning of period | | 58,048 |
| | 50,023 |
| | 54,111 |
| | — |
| | 162,182 |
|
Cash and cash equivalents at end of period | | $ | 95,937 |
| | $ | 45,664 |
| | $ | 94,620 |
| | $ | — |
| | $ | 236,221 |
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 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 | | $ | 98,323 |
| | $ | 101,368 |
| | $ | 53,180 |
| | $ | (152,503 | ) | | 100,368 |
|
| | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | |
Capital expenditures | | (196 | ) | | (38,272 | ) | | (32,619 | ) | | — |
| | (71,087 | ) |
Acquisitions, net of cash acquired | | — |
| | — |
| | (1,427 | ) | | — |
| | (1,427 | ) |
Proceeds from the sale of assets | | 2 |
| | 4,601 |
| | 11,501 |
| | — |
| | 16,104 |
|
Purchase of investments | | (104 | ) | | (16 | ) | | — |
| | — |
| | (120 | ) |
Sales of investments | | 501 |
| | 6,576 |
| | — |
| | — |
| | 7,077 |
|
Other | | (4,383 | ) | | 294 |
| | (129 | ) | | — |
| | (4,218 | ) |
Investments in consolidated subsidiaries | | (138,843 | ) | | 25,516 |
| | — |
| | 113,327 |
| | — |
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | | (143,023 | ) | | (1,301 | ) | | (22,674 | ) | | 113,327 |
| | (53,671 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | |
Issuance of common stock | | 122,584 |
| | — |
| | — |
| | — |
| | 122,584 |
|
Payments on debt, capital leases, and associated costs | | (104,665 | ) | | (9,001 | ) | | (6,885 | ) | | — |
| | (120,551 | ) |
Gold production royalty payments | | — |
| | — |
| | (27,155 | ) | | — |
| | (27,155 | ) |
Net intercompany financing activity | | 26,196 |
| | (73,364 | ) | | 7,992 |
| | 39,176 |
| | — |
|
Other | | 323 |
| | — |
| | — |
| | — |
| | 323 |
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | | 44,438 |
|
| (82,365 | ) |
| (26,048 | ) |
| 39,176 |
|
| (24,799 | ) |
Effect of exchange rate changes on cash and cash equivalents | | — |
| | 5 |
| | (100 | ) | | — |
| | (95 | ) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | | (262 | ) | | 17,707 |
| | 4,358 |
| | — |
| | 21,803 |
|
Cash and cash equivalents at beginning of period | | 96,123 |
| | 34,228 |
| | 70,363 |
| | — |
| | 200,714 |
|
Cash and cash equivalents at end of period | | $ | 95,861 |
| | $ | 51,935 |
| | $ | 74,721 |
| | $ | — |
| | $ | 222,517 |
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2017
|
| | | | | | | | | | | | | | | | | | | | |
In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
ASSETS | | | | | | | | |
CURRENT ASSETS | | | | | | | | | | |
Cash and cash equivalents | | $ | 95,937 |
| | $ | 45,664 |
| | $ | 94,620 |
| | $ | — |
| | $ | 236,221 |
|
Receivables | | 18 |
| | 11,085 |
| | 55,312 |
| | — |
| | 66,415 |
|
Ore on leach pads | | — |
| | 78,801 |
| | — |
| | — |
| | 78,801 |
|
Inventory | | — |
| | 35,371 |
| | 36,958 |
| | — |
| | 72,329 |
|
Prepaid expenses and other | | 7,688 |
| | 2,985 |
| | 9,687 |
| | — |
| | 20,360 |
|
| | 103,643 |
| | 173,906 |
| | 196,577 |
| | — |
| | 474,126 |
|
NON-CURRENT ASSETS | | | | | | | | | | |
Property, plant and equipment, net | | 3,940 |
| | 151,765 |
| | 79,353 |
| | — |
| | 235,058 |
|
Mining properties, net | | — |
| | 220,022 |
| | 316,179 |
| | — |
| | 536,201 |
|
Ore on leach pads | | — |
| | 69,805 |
| | — |
| | — |
| | 69,805 |
|
Restricted assets | | 13,242 |
| | 227 |
| | 7,484 |
| | — |
| | 20,953 |
|
Equity and debt securities | | 27,558 |
| | 1,567 |
| | — |
| | — |
| | 29,125 |
|
Receivables | | — |
| | — |
| | 13,461 |
| | — |
| | 13,461 |
|
Deferred tax assets | | — |
| | — |
| | — |
| | — |
| | — |
|
Net investment in subsidiaries | | 259,259 |
| | 407 |
| | (1,166 | ) | | (258,500 | ) | | — |
|
Other | | 214,047 |
| | 10,531 |
| | 5,168 |
| | (206,383 | ) | | 23,363 |
|
TOTAL ASSETS | | $ | 621,689 |
| | $ | 628,230 |
| | $ | 617,056 |
| | $ | (464,883 | ) | | $ | 1,402,092 |
|
| | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | |
CURRENT LIABILITIES | | | | | | | | | | |
Accounts payable | | $ | 2,492 |
| | $ | 25,975 |
| | $ | 31,721 |
| | $ | — |
| | $ | 60,188 |
|
Other accrued liabilities | | 9,381 |
| | 14,087 |
| | 27,125 |
| | — |
| | 50,593 |
|
Debt | | — |
| | 7,885 |
| | 6,490 |
| | — |
| | 14,375 |
|
Reclamation | | — |
| | 2,754 |
| | 850 |
| | — |
| | 3,604 |
|
| | 11,873 |
| | 50,701 |
| | 66,186 |
| | — |
| | 128,760 |
|
NON-CURRENT LIABILITIES | | | | | | | | | | |
Debt | | 244,920 |
| | 22,838 |
| | 213,148 |
| | (206,383 | ) | | 274,523 |
|
Reclamation | | — |
| | 82,043 |
| | 22,462 |
| | — |
| | 104,505 |
|
Deferred tax liabilities | | 14,978 |
| | 6,137 |
| | 56,075 |
| | — |
| | 77,190 |
|
Other long-term liabilities | | 2,328 |
| | 4,061 |
| | 46,188 |
| | — |
| | 52,577 |
|
Intercompany payable (receivable) | | (416,947 | ) | | 341,431 |
| | 75,516 |
| | — |
| | — |
|
| | (154,721 | ) | | 456,510 |
| | 413,389 |
| | (206,383 | ) | | 508,795 |
|
STOCKHOLDERS’ EQUITY | | | | | | | | | | |
Common stock | | 1,814 |
| | 250 |
| | 172,599 |
| | (172,849 | ) | | 1,814 |
|
Additional paid-in capital | | 3,318,987 |
| | 174,111 |
| | 1,803,807 |
| | (1,977,918 | ) | | 3,318,987 |
|
Accumulated deficit | | (2,554,368 | ) | | (49,984 | ) | | (1,838,925 | ) | | 1,888,909 |
| | (2,554,368 | ) |
Accumulated other comprehensive income (loss) | | (1,896 | ) | | (3,358 | ) | | — |
| | 3,358 |
| | (1,896 | ) |
| | 764,537 |
| | 121,019 |
| | 137,481 |
| | (258,500 | ) | | 764,537 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 621,689 |
| | $ | 628,230 |
| | $ | 617,056 |
| | $ | (464,883 | ) | | $ | 1,402,092 |
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed 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 and debt securities | | — |
| | 4,488 |
| | — |
| | — |
| | 4,488 |
|
Receivables | | — |
| | — |
| | 30,951 |
| | — |
| | 30,951 |
|
Net investment in subsidiaries | | 273,056 |
| | 11,650 |
| | — |
| | (284,706 | ) | | — |
|
Other | | 221,381 |
| | 9,263 |
| | 3,344 |
| | (221,384 | ) | | 12,604 |
|
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 Condensed Consolidated Financial Statements
NOTE 1917 – COMMITMENTS AND CONTINGENCIES
Labor Union ContractMexico Litigation Matters
As of June 30, 2022, $26.0 million in principal amount is due from the Mexican government associated with VAT that was paid under Coeur Mexicana, S.A. de C.V.’s (“Coeur Mexicana’s”) prior royalty agreement with a subsidiary of Franco-Nevada Corporation, which was terminated in 2016. Coeur Mexicana applied for and initially received VAT refunds associated with the royalty payments in the normal course; however, in 2011 the Mexican tax authorities began denying Coeur Mexicana’s VAT refunds based on the argument that VAT was not legally due on the royalty payments. Accordingly, Coeur Mexicana began to request refunds of the VAT as undue payments, which the Mexican tax authorities also denied. The Company maintainshas since been engaged in ongoing efforts to recover the VAT from the Mexican government (including through litigation and potential arbitration as well as refiling VAT refund requests). Despite a labor agreement with Sindicato de Trabajadores Mineros de la Empresa Manquiri S.A.favorable ruling from Mexican tax courts in this matter in 2018, litigation has continued at the San Bartolomé mineadministrative, appeals court and supreme court levels, most of which has been determined unfavorably to Coeur based on interpretations of applicable law and prior court decisions which the Company and its counsel believe are contrary to legal precedent, conflicting and erroneous. While the Company believes that it remains legally entitled to be refunded the full amount of the VAT receivable and intends to rigorously continue its VAT recovery efforts, based on the continued failure to recover the VAT receivable and recent unfavorable Mexican court decisions, the Company determined to write down the carrying value of the VAT receivable at September 30, 2021. In March 2022, Coeur Mexicana filed an updated notice of intent to initiate an arbitration proceeding under Chapter 11 of the North American Free Trade Agreement, or NAFTA, in Bolivia. The San Bartolomé mine labor agreement, which became effective January 28, 2010,connection with this dispute and may elect to formally proceed with arbitration under NAFTA. Outcomes in NAFTA arbitration and the process for recovering funds even if there is currently activea successful outcome in NAFTA arbitration can be lengthy and does notunpredictable.
In addition, ongoing litigation with the Mexican government associated with enforcement of water rights in Mexico, if unsuccessful, may impact Coeur Mexicana’s ability to access new sources of water to provide sufficient supply for its operations at Palmarejo and, if material, may have a fixed term. At September 30, 2017, approximately 11% ofmaterial adverse impact on 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.operations and financial results.
Palmarejo Gold Stream
Effective August 2016, Coeur Mexicana sells 50% of Palmarejo gold production (excluding production from the Paramountcertain properties acquired in 2015) to a subsidiary of Franco-Nevada Corporation (“Franco-Nevada”) under a gold stream agreement for the lesser of $800 or spot price per ounce. In 2015,2016, Coeur Mexicana received a $22.0 million deposit toward future deliveries under the gold stream agreement. In accordance with generally accepted accounting principles, although Coeur Mexicana has satisfied its contractual obligation to repay the deposit to Franco-Nevada, the deposit is accounted for as deferred revenue and is recognized as revenue on a units-of-production basis as ounces are sold to Franco-Nevada. At June 30, 2022 the remaining unamortized balance was $7.7 million, which is included in Accrued liabilities and other and Other long-term liabilities on the Consolidated Balance Sheet.
Kensington Prepayment
NOTE 20 – SUBSEQUENT EVENTS
On September 10, 2017,In June 2019, Coeur amended its existing sales and purchase contract with a metal sales counterparty for gold concentrate from its Kensington mine (the “Amended Sales Contract”). From time to time thereafter, the Company entered into an Arrangement Agreement (the “Arrangement Agreement”) among the Company, an indirect wholly-owned subsidiary of the Company, JDS Silver Holdings, Ltd. (“JDS Silver”) and Silvertip Resources Investment LLC as representative of the shareholders of JDS Silver. The Arrangement Agreement providesAmended Sales Contract has been further amended to allow for the implementation of a Plan of Arrangement (the “Plan of Arrangement”), pursuantadditional prepayments, including in June 2021, to which the Company would acquire all of the issued and outstanding common shares of JDS Silver (the “Acquisition”), the owner of the high-grade silver-zinc-lead Silvertip Mine located in northern British Columbia, Canada. On October 16, 2017, the Supreme Court of British Columbia approved the Plan of Arrangement, and the Company completed the Acquisition on October 17, 2017. Total initial considerationprovide options for the Acquisition was $200.0 million, consisting of (i) payments by the Company of approximately $147.5 million in cash and approximately $37.5 million in shares of common stock of the Company, and (ii) the assumption of approximately $15.0 million in existing debt. Additional contingent considerationCoeur to receive up to two additional prepayments of up to $50.0$15.0 million may become payable uponeach. In June 2021 and December 2021, the achievementCompany exercised these options and received the $15.0 million June 2021 Prepayment and the $15.0 million December 2021 Prepayment. The June 2021 Prepayment was paid back in full before the December 2021 Prepayment was received. In March 2022, the Amended Sales Contract was further amended to allow for an additional $10.0 million prepayment. The additional $10.0 million prepayment was made in March 2022 (the “March 2022 Prepayment”). The Amended Sales Contract was further amended in June 2022 to consolidate the remaining deliveries of certain permitting$15.0 million and exploration milestones$10.0 million under the December 2021 Prepayment and March 2022 Prepayment (the “June 2022 Consolidated Prepayment”), to extend the repayment period for the June 2022 Consolidated Prepayment, and to provide for future prepayments of up to $25.0 million on a semi-annual basis
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
through the end of 2024, provided all prior outstanding prepayment amounts are paid before such future prepayments are made. The remaining deliveries of the June 2022 Consolidated Prepayment are recognized as a deferred revenue liability and are presented in Accrued liabilities and other on the Consolidated Balance Sheet. Under the relevant terms of the Amended Sales Contract, Coeur maintains its exposure to the price of gold and expects to recognize the remaining value of the accrued liability by December 31, 2019.2022.
In connectionPOA 11 Expansion Project
As of June 30, 2022, the total estimated project capital cost remained approximately $600 million. With the commencement of structural, mechanical, piping, electrical and instrumentation construction work, completion of final major high-voltage electrical contracts and initial commitments for the pre-screen addition to the expanded crusher circuit, the Company has committed approximately $523 million and incurred $350 million of the total estimated project cost through June 30, 2022.
The expansion consists of three major components: (i) a new 300-million-ton leach pad, for which civil work is essentially complete and piping work is near completion; (ii) a Merrill-Crowe process plant with construction completion scheduled for the first half of 2023; and (iii) a new three-stage crushing circuit with construction completion scheduled for mid-2023. These scheduled construction completion dates for the project remain unchanged.
Construction of the Merrill-Crowe process plant ramped up during the second quarter, including completion of concrete work, continuation of equipment setting, and the commencement of building and process plant steel pipe rack erection, as well as piping and cable tray installation.
Work on the crusher corridor included (i) continued civil construction in the primary crusher area, (ii) the completion of concrete work, start of steel construction, and setting of conveyor and equipment in the secondary crusher area, (iii) continued advancement of concrete work and start of steel erection in the secondary stock pile reclaim area, (iv) completion of concrete in the tertiary crusher area, and (v) continuation of concrete in the tertiary reclaim and final product load-out areas. Deliveries of equipment and materials for the project continue to support the overall construction schedule.
The Company also recently advanced detailed engineering on the pre-screens. Equipment procurement and construction contract development is well underway as Coeur continues working to align construction of the pre-screens with the completion of the Acquisition,new crusher. Final cost estimates related to pre-screens are expected in the third quarter.
The Company began installation of pre-screens on October 12, 2017the existing crusher corridor on June 23 and commenced commissioning on July 22. Ramp-up of the pilot system as well as optimization of the product size placed under leach is scheduled to take place during the month of August. The experience and knowledge gained from utilizing pre-screens is expected to facilitate the integration of pre-screen technology into the new crusher system flowsheet for POA 11.
Other Commitments and Contingencies
As part of its ongoing business and operations, the Company borrowed $100.0and its affiliates are required to provide surety bonds, bank letters of credit, bank guarantees and, in some cases, cash as financial support for various purposes, including environmental remediation, reclamation, collateral for gold hedges and other general corporate purposes. As of June 30, 2022 and December 31, 2021, the Company had surety bonds totaling $315.0 million and $315.1 million, respectively, in place as financial support for future reclamation and closure costs. The obligations associated with these instruments are generally related to performance requirements that the Company addresses through its ongoing operations and from time-to-time, the Company may be required to post collateral, including cash or letters of credit which reduce availability under its revolving credit facility, to support these instruments. As the specific requirements are met, the beneficiary of the associated instrument cancels and/or returns the instrument to the issuing entity. Certain of these instruments are associated with operating sites with long-lived assets and will remain outstanding until closure. The Company believes it is in compliance with all applicable bonding obligations and will be able to satisfy future bonding requirements through existing or alternative means, as they arise.
NOTE 18 – ADDITIONAL BALANCE SHEET DETAIL AND SUPPLEMENTAL CASH FLOW INFORMATION
Accrued liabilities and other consist of the following:
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
| | | | | | | | | | | |
In thousands | June 30, 2022 | | December 31, 2021 |
Accrued salaries and wages | $ | 21,844 | | | $ | 28,408 | |
| | | |
Deferred revenue (1) | 26,081 | | | 16,093 | |
Income and mining taxes | 10,214 | | | 13,856 | |
Accrued operating costs | 8,158 | | | 5,592 | |
Unrealized losses on derivatives | 77 | | | 1,374 | |
Taxes other than income and mining | 2,812 | | | 3,284 | |
Accrued interest payable | 8,072 | | | 8,038 | |
Operating lease liabilities | 11,076 | | | 11,301 | |
Accrued liabilities and other | $ | 88,334 | | | $ | 87,946 | |
(1) See Note 17 -- Commitments and Contingencies for additional details on deferred revenue liabilities
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that total the same such amounts shown in the statement of cash flows in the three and six months ended June 30, 2022 and 2021:
| | | | | | | | | | | | | | | |
In thousands | | | | | June 30, 2022 | | June 30, 2021 |
Cash and cash equivalents | | | | | $ | 74,159 | | | $ | 124,075 | |
Restricted cash equivalents | | | | | 1,396 | | | 1,383 | |
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | | | | | $ | 75,555 | | | $ | 125,458 | |
NOTE 19 – DISPOSITIONS
On October 27, 2021 the Company entered into a definitive agreement (the “Agreement”) to sell its La Preciosa projected located in the State of Durango, Mexico to Avino (the “La Preciosa Sale”). On March 21, 2022, the La Preciosa Sale was completed.
Coeur and its subsidiaries received the following consideration at closing:
•$15.3 million cash,
•$5.0 million promissory note that matures prior to the first anniversary of the transaction closing, valued at $4.7 million,
•Equity consideration of 14.0 million units, consisting of 1 share of Avino common stock and one half of one common share purchase warrant of Avino common stock, valued at $13.7 million and $2.2 million, respectively. Common share purchase warrants are exercisable at $1.09 per share and expire September 2023.
•In addition, under the revolving credit facility.Agreement, Coeur is entitled to the following additional consideration:
•$8.8 million deferred cash consideration to be paid no later than the first anniversary of initial production from any portion of the La Preciosa project, valued at $7.4 million,
•Contingent payments of $0.25 per silver equivalent ounce (subject to an inflationary adjustment) on any new mineral reserves discovered and declared outside of the current resource area at the La Preciosa project, up to a maximum payment of $50.0 million, valued at $1.2 million, and
•NaN royalties, valued at $11.2 million, covering the La Preciosa land package, including (i) a 1.25% net smelter returns royalty on properties covering the Gloria and Abundancia areas of the La Preciosa project and (ii) a 2.00% gross value royalty on all areas of the La Preciosa project other than the Gloria and Abundancia areas, offset by the amount of any new mineral reserve contingent payments made to Coeur.
The La Preciosa sale resulted in a gain on the sale of $1.5 million, which was recognized in Other, Net in the condensed consolidated statements of comprehensive income (loss).
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis (“MD&A”) provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Coeur Mining, Inc. and its subsidiaries (collectively the “Company”, “our”, or “we”). We use certain non-GAAP financial performance measures in our MD&A. For a detailed description of these measures, please see “Non-GAAP Financial Performance Measures” at the end of this item.Item. We provide certain operationalCosts applicable to sales (“CAS”) allocation, referred to as the co-product method, based on revenue contribution for Palmarejo, Rochester and financial dataSilvertip and based on a silver equivalent basis, converting goldthe primary metal, referred to as the by-product method, for Wharf. Revenue from secondary metal, such as silver at Wharf, is treated as a historical 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.cost credit.
Overview
We are primarily a gold and silver producer with minesassets located in the United States, Canada and Mexico
Second Quarter Highlights
For the quarter, Coeur reported revenue of $204.1 million and Boliviacash flow from operating activities of $22.6 million. We reported GAAP net loss of $77.4 million, or $0.28 per diluted share. On an adjusted basis1, the Company reported EBITDA of $43.3 million and exploration projects innet loss of $13.1 million or $0.05 per diluted share. For the United Statessix months ended June 30, 2022, Coeur reported revenue of $392.5 million and Mexico. The Palmarejo complex,cash flow from operating activities of $16.2 million. We reported GAAP net loss of $69.8 million, or $0.26 per diluted share. On an adjusted basis1, the Company reported EBITDA of $77.3 million and Rochester,net loss of $26.9 million or $0.10 per diluted share.
•Reaffirming full-year gold and silver production guidance – Increased gold and silver production during the quarter remains in-line with the Company’s expectations, leading Coeur to reaffirm consolidated and site level production guidance for 2022
•Strong quarterly production increases at Kensington, Wharf and San Bartolomé mines constitute our principal sources of revenue. In October 2017,Rochester – Kensington’s gold production increased by 23% versus the Company added its sixth mine to Coeur’s North America-focused platform with the acquisition of the high-grade silver-zinc-lead Silvertip mine (“Silvertip”) located in northern British Columbia, Canada. Silvertip is expected to achieve commercialfirst quarter, driven by an all-time quarterly record mill throughput. Wharf’s gold production in 2018.
The Company's strategy is to discover, acquire, develop and operate low-costincreased by 15% while Rochester’s silver and gold mines that produce long-term cash flow, provide opportunitiesproduction increased by 5% and 37%, respectively
•Full-year cost guidance updated – The Company has updated its full-year site level cost guidance to reflect inflationary pressures. Additionally, Coeur has elected to increase its planned exploration investment by approximately $11 million in 2022 due to positive drilling results at the Kensington, Palmarejo and Silvertip assets
•Rochester expansion project remains on-track – The ongoing expansion at the Rochester silver and gold operation in Nevada remains on-track for growth through continued exploration,completion in mid-2023. The total estimated project capital remains approximately $600 million as of June 30, 2022. Coeur has committed approximately $523 million of the project capital and generate superior and sustainable returnshas incurred roughly $350 million towards the expansion
•Strategic sale of Victoria Gold shares – Coeur announced the sale of 5 million shares of Victoria Gold Corporation (“Victoria Gold”) stock for stockholders. Management focuses on maximizing net cash flow through identifyingproceeds of approximately $40 million, which were received on July 5, 2022
•Appointment of Jeane Hull to Board of Directors – Consistent with the Company’s commitment to Board refreshment and implementing revenue enhancement opportunities, reducing operating and non-operating costs, exercising consistent capital discipline, and efficient working capital management.best-in-class corporate governance, Jeane Hull has been appointed to Coeur’s Board of Directors
Production of 9.5 million silver equivalent ounces, consisting of 4.0 million silver ounces and 93,293 gold ounces | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended | | | | | | |
In thousands | June 30, 2022 | | March 31, 2022 | | June 30, 2022 | | June 30, 2021 | | | | | | |
Financial Results: | | | | | | | | | | | | | |
Gold sales | $ | 146,625 | | | $ | 129,451 | | | $ | 276,076 | | | $ | 284,480 | | | | | | | |
Silver sales | $ | 57,498 | | | $ | 58,953 | | | $ | 116,451 | | | $ | 132,495 | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Consolidated Revenue | $ | 204,123 | | | $ | 188,404 | | | $ | 392,527 | | | $ | 416,975 | | | | | | | |
Net income (loss) | $ | (77,434) | | | $ | 7,682 | | | $ | (69,752) | | | $ | 34,206 | | | | | | | |
Net income (loss) per share, diluted | $ | (0.28) | | | $ | 0.03 | | | $ | (0.26) | | | $ | 0.14 | | | | | | | |
Adjusted net income (loss)(1) | $ | (13,104) | | | $ | (13,782) | | | $ | (26,887) | | | $ | 13,100 | | | | | | | |
Adjusted net income (loss) per share, diluted(1) | $ | (0.05) | | | $ | (0.05) | | | $ | (0.10) | | | $ | 0.05 | | | | | | | |
EBITDA(1) | $ | (32,797) | | | $ | 40,377 | | | $ | 7,580 | | | $ | 134,245 | | | | | | | |
Adjusted EBITDA(1) | $ | 43,330 | | | $ | 41,527 | | | $ | 77,261 | | | $ | 118,603 | | | | | | | |
Total debt(2) | $ | 547,500 | | | $ | 485,488 | | | $ | 547,500 | | | $ | 414,246 | | | | | | | |
Operating Results: | | | | | | | | | | | | | |
Gold ounces produced | 83,772 | | | 75,409 | | | 159,181 | | | 172,500 | | | | | | | |
Silver ounces produced | 2,496,186 | | | 2,479,442 | | | 4,975,628 | | | 4,990,536 | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Gold ounces sold | 84,786 | | | 75,211 | | | 159,997 | | | 171,613 | | | | | | | |
Silver ounces sold | 2,543,200 | | | 2,450,282 | | | 4,993,482 | | | 5,018,406 | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Average realized price per gold ounce | $ | 1,729 | | | $ | 1,721 | | | $ | 1,726 | | | $ | 1,658 | | | | | | | |
Average realized price per silver ounce | $ | 22.61 | | | $ | 24.06 | | | $ | 23.32 | | | $ | 26.40 | | | | | | | |
| | | | | | | | | | | | | |
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| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Sales of 9.2 million silver equivalent ounces, consisting of 3.8 million silver ounces and 89,972 gold ounces
Net loss of $16.7 million ($0.09 per share) and adjusted net loss of $18.4 million ($0.10 per share) (see(1)See “Non-GAAP Financial Performance Measures”)Measures.”
Costs applicable to sales were $12.28 per silver equivalent ounce ($11.19 per average spot silver equivalent ounce)(2)Includes finance leases. Net of debt issuance costs and $845 per gold equivalent ounce (see “Non-GAAP Financial Performance Measures”)premium received.
All-in sustaining costs were $17.68 per silver equivalent ounce ($15.30 per average spot silver equivalent ounce) (see “Non-GAAP Financial Performance Measures”)
Operating cash flow of $29.4 million and adjusted EBITDA of $39.5 million (see “Non-GAAP Financial Performance Measures”)
Cash and cash equivalents of $236.2 million at September 30, 2017
Acquired the Silvertip mine for initial consideration of $200.0 million (closed in October 2017). Additional consideration up to $50.0 million is contingent upon achieving specific future permitting and exploration milestones.
Established a $200.0 million secured revolving credit facility, which may be increased by up to $50.0 million in incremental loans and commitments subject to the terms of the Credit Agreement; drew $100.0 million on October 12, 2017 in connection with the Silvertip closing
Selected Financial and Operating Results
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Metal sales | $ | 175,963 |
| | $ | 176,386 |
| | $ | 555,455 |
| | $ | 503,219 |
|
Net income (loss) | $ | (16,652 | ) | | $ | 69,557 |
| | $ | (8,944 | ) | | $ | 63,660 |
|
Net income (loss) per share, diluted | $ | (0.09 | ) | | $ | 0.42 |
| | $ | (0.05 | ) | | $ | 0.40 |
|
Adjusted net income (loss)(1) | $ | (18,425 | ) | | $ | 38,555 |
| | $ | (13,958 | ) | | $ | 45,045 |
|
Adjusted net income (loss) per share, diluted(1) | $ | (0.10 | ) | | $ | 0.23 |
| | $ | (0.08 | ) | | $ | 0.28 |
|
EBITDA(1) | $ | 35,016 |
| | $ | 50,933 |
| | $ | 132,057 |
| | $ | 133,837 |
|
Adjusted EBITDA(1) | $ | 39,477 |
| | $ | 62,725 |
| | $ | 128,125 |
| | $ | 171,137 |
|
Silver ounces produced | 3,951,616 |
| | 3,545,697 |
| | 11,858,974 |
| | 10,948,145 |
|
Gold ounces produced | 93,293 |
| | 84,871 |
| | 264,330 |
| | 255,669 |
|
Silver equivalent ounces produced | 9,549,196 |
|
| 8,637,957 |
|
| 27,718,774 |
|
| 26,288,285 |
|
Silver ounces sold | 3,817,063 |
| | 3,394,121 |
| | 12,377,603 |
| | 10,897,097 |
|
Gold ounces sold | 89,972 |
| | 83,389 |
| | 287,040 |
| | 251,023 |
|
Silver equivalent ounces sold | 9,215,393 |
| | 8,397,467 |
| | 29,599,974 |
| | 25,958,451 |
|
Average realized price per silver ounce | $ | 16.86 |
| | $ | 19.61 |
| | $ | 17.17 |
| | $ | 17.36 |
|
Average realized price per gold ounce | $ | 1,240 |
| | $ | 1,317 |
| | $ | 1,195 |
| | $ | 1,251 |
|
Costs applicable to sales per silver equivalent ounce(1) | $ | 12.28 |
| | $ | 12.38 |
| | $ | 12.21 |
| | $ | 11.79 |
|
Costs applicable to sales per average spot silver equivalent ounce(1) | $ | 11.19 |
| | $ | 11.91 |
| | $ | 11.28 |
| | $ | 11.02 |
|
Costs applicable to sales per gold equivalent ounce(1) | $ | 845 |
| | $ | 767 |
| | $ | 831 |
| | $ | 716 |
|
All-in sustaining costs per silver equivalent ounce(1) | $ | 17.68 |
| | $ | 17.02 |
| | $ | 16.72 |
| | $ | 16.03 |
|
All-in sustaining costs per average spot silver equivalent ounce(1) | $ | 15.30 |
| | $ | 15.75 |
| | $ | 14.86 |
| | $ | 14.17 |
|
| |
(1) | See “Non-GAAP Financial Performance Measures.”
|
Consolidated Financial Results
Three Months Ended SeptemberJune 30, 20172022 compared to Three Months Ended September 30, 2016March 31, 2022
Net Income (Loss)Revenue
Net loss was $16.7We sold 84,786 gold ounces and 2.5 million ($0.09 per share)silver ounces, compared to Net income75,211 gold ounces and 2.5 million silver ounces. Revenue increased by $15.7 million, or 8%, as a result of $69.6 million ($0.42 per share). The decreasein Net income is primarily due to a significant tax benefit realized13% and 4% increase in 2016, lower realizedgold and silver and gold prices and higher all-in sustaining costs per silver equivalent ounce,ounces sold, respectively, partially offset by higher production, lower interest expense and loss on debt extinguishment in the third quarter of 2016.
Revenue
Metal sales were lower due to a 6% decrease in average realized silver andprices. The increase in gold prices of 14% and 6%, respectively, partially offset by higher silver and gold production. The Company sold 3.8 million silver ounces sold was primarily due to higher production at Rochester, Kensington and 89,972 gold ounces, compared to sales of 3.4 million silver ounces and 83,389 gold ounces.Wharf. Gold contributed 63% of sales and silver contributed 37%, comparedrepresented 72% and 28% of second quarter of 2022 sales revenue, respectively. This compares to 62% of sales from gold and 38% from silver. Metalsilver represented 69% and 31% of first quarter of 2022 sales from North American operations provided 91% ofrevenue, respectively.
The following table summarizes consolidated revenue, compared to 84%.metal sales:
| | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | Increase (Decrease) | | Percentage Change |
In thousands | June 30, 2022 | | March 31, 2022 | |
Gold sales | $ | 146,625 | | | $ | 129,451 | | $ | 17,174 | | | 13 | % |
Silver sales | 57,498 | | | 58,953 | | (1,455) | | | (2) | % |
Metal sales | $ | 204,123 | | | $ | 188,404 | | $ | 15,719 | | | 8 | % |
Costs Applicable to Sales
Costs applicable to sales increased $17.4 million, or 13%, primarily due to higher silvergold and goldsilver ounces sold and higher operating costs applicableprimarily due to sales per gold ounce.inflationary pressures relating to consumable costs, most notably higher diesel prices. For a complete discussion of costs applicable to sales, see Results of Operations below.
Amortization
Amortization increased $6.1$1.5 million, or 22%6%, primarily due to higher gold and silver and gold ounces sold.
Expenses
General and administrative expenses increased 4%decreased $1.0 million, or 10%, primarily due to higher professionallower compensation and outside service costs.
Exploration expense increased $6.1decreased $0.1 million, due to the Company’s expansion of near-mine drillingor 3% driven by lower spending at Palmarejo, Kensington and Rochester and regionalCanadian exploration focused on projects in Nevada and Chihuahua, Mexico.investment incentives earned at Silvertip.
Pre-development, reclamation, and other expenses increased 77% due to additional workdecreased $2.2 million, or 20%, stemming from lower costs incurred in connection with the Company’s COVID-19 health and safety protocols, lower ongoing carrying costs at La Preciosa, Silvertip acquisitionand lower operating costs at non-core asset locations.
The following table summarizes pre-development, reclamation, and workforce reduction severance at San Bartolomé.other expenses:
| | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | Increase (Decrease) | | Percentage Change |
In thousands | June 30, 2022 | | March 31, 2022 | |
COVID-19 | $ | 318 | | | $ | 972 | | $ | (654) | | | (67) | % |
Silvertip ongoing carrying costs | 4,754 | | | 6,159 | | (1,405) | | | (23) | % |
| | | | | | |
| | | | | | |
Asset retirement accretion | 3,529 | | | 3,463 | | 66 | | | 2 | % |
Other | 577 | | | 818 | | (241) | | | (29) | % |
Pre-development, reclamation and other expense | $ | 9,178 | | | $ | 11,412 | | $ | (2,234) | | | (20) | % |
Other Income and Expenses
In 2016, the Company incurred losses of $10.0 million on extinguishment of debt and non-cash fairFair value adjustments, relatednet, decreased to the Palmarejo gold production royalty which was terminateda loss of $62.8 million compared to a gain of $10.6 million as a result of a decrease in the third quartervalue of 2016 and the Rochester royalty obligation which was terminated inCompany’s equity investments. For additional details on the second quarter of 2017.Company’s equity investments see Note 6 -- Investments.
Interest expense (net of capitalized interest of $0.7$2.9 million) decreasedincreased to $3.6$5.2 million from $8.1$4.6 million primarily due to higher interest paid under the RCF and finance lease obligations, and lower debt levels and the lower 2024 Senior Notes interest rate.capitalized interest.
Other, net decreased by $3.2to a gain of $0.3 million compared to a gain of $1.7 million primarily dueattributable to lower gains onthe $1.5 million gain from the sale of non-core assets and investments.the La Preciosa project in the first quarter of 2022.
Income and Mining Taxes
During the thirdsecond quarter of 2017, the Company reported estimated2022, income and mining tax expense of approximately $14.2$11.5 million resultingresulted in an effective tax rate of (588.1%).17.4% for 2022. This compares to estimated income and mining tax benefitexpense of $54.5$1.7 million for an effective tax rate of (360.6%) during18.1% for the thirdfirst quarter of 2016.2022. The comparability of the Company’s income and mining tax (expense) benefit and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) variations in our income before income taxes; (ii) geographic distribution of that income; (iii) mining taxes; (iv) foreign exchange rates; (v) the impact of uncertain tax positions; (vi) percentage depletion; (vii) the sale of non-core assets; and (viii) the non-recognition of tax assets. Therefore, the effective tax rate will fluctuate, sometimes significantly, period to period.
The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit:
|
| | | | | | | | | | | | | |
| Three months ended September 30, |
| 2017 | | 2016 |
In thousands | Income (loss) before tax | Tax (expense) benefit | | Income (loss) before tax | Tax (expense) benefit |
United States | $ | (6,008 | ) | $ | (2,362 | ) | | $ | 3,286 |
| $ | 10,712 |
|
Argentina | 738 |
| (366 | ) | | (301 | ) | 67 |
|
Mexico | 3,210 |
| (9,057 | ) | | 3,020 |
| 37,821 |
|
Bolivia | (5,029 | ) | (518 | ) | | 4,325 |
| 5,904 |
|
Other jurisdictions | 4,669 |
| (1,929 | ) | | 4,772 |
| (49 | ) |
| $ | (2,420 | ) | $ | (14,232 | ) | | $ | 15,102 |
| $ | 54,455 |
|
The Company’s 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 the consolidated effective tax rate, along with mining taxes, uncertain tax positions, and a full valuation allowance on deferred tax assets related to losses in the United States and certain foreign jurisdictions. Favorable operating results at Palmarejo continued to contribute to higher income and mining tax expense. The three months ended September 30, 2016 benefited from a legal entity reorganization to integrate acquisitions that resulted in a valuation allowance release of $40.8 million and a $15.0 million deferred tax benefit related to unremitted earnings. | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | Three months ended March 31, |
| | | | | 2022 | | 2022 |
In thousands | | | | | | | Income (loss) before tax | Tax (expense) benefit | | Income (loss) before tax | Tax (expense) benefit |
United States | | | | | | | $ | (85,122) | | $ | (998) | | | $ | (10,130) | | $ | (1,199) | |
Canada | | | | | | | (6,374) | | (21) | | | (7,525) | | — | |
Mexico | | | | | | | 25,636 | | (10,483) | | | 27,033 | | (495) | |
Other jurisdictions | | | | | | | (72) | | — | | | (2) | | — | |
| | | | | | | $ | (65,932) | | $ | (11,502) | | | $ | 9,376 | | $ | (1,694) | |
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 risk factors that could impact the Company’s ability to realize its deferred tax assets.
Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016 For additional information, please see “Item 1A - Risk Factors” in the 2021 10-K.
Net Income (Loss)
Net loss was $8.9$77.4 million, ($0.05or $0.28 per share)diluted share, compared to Netnet income of $63.7$7.7 million, ($0.40or $0.03 per share).diluted share. The decrease in Netnet income is primarily due to a significant tax benefit realized in 2016, lower realized silver and gold prices, and higher all-in sustaining costs per silver equivalent ounce, partially offset was driven by a $21.1 million gain on the sale of the Joaquin project, less unfavorable fair value adjustments, lower interest expense and higher silver and gold production.
Revenue
Metal sales increased due to higher silver and gold production, and a reduction in metal inventory, partially offset by a 1% and 4%6% decrease in average realized silver prices, higher operating costs, unfavorable changes of $73.4 million and $9.8 million in the fair value of the Company’s equity investments and income tax expense, respectively, partially offset by a 13% and 4% increase in gold prices,and silver ounces sold, respectively. The CompanyAdjusted net loss was $13.1 million, or $0.05 per diluted share, compared to an adjusted net loss of $13.8 million, or $0.05 per share (see “Non-GAAP Financial Performance Measures”).
Six Months Ended June 30, 2022 compared to Six Months Ended June 30, 2021
Revenue
We sold 12.4159,997 gold ounces and 5.0 million silver ounces, and 287,040compared to 171,613 gold ounces compared to sales of 10.9and 5.0 million silver ounces. Revenue decreased by $24.4 million, or 6%, as a result of a 7% decrease in gold ounces sold and 251,023an 12% decrease in average realized silver prices, partially offset by a 4% increase in average realized gold ounces.prices. The decrease in gold ounces sold was primarily due to lower grades at Kensington. Gold contributed 62% of sales and silver contributed 38%accounted for both periods. Royalty70% and 30% of 2022 sales revenue, was lower duerespectively. This compares to the Company’s divestituregold and silver accounting for 68% and 32% of non-core royalty assets throughout 2016 and the first half of 2017. Metal2021 sales from North American operations provided 89% of revenue, compared to 85%.respectively.
The following table summarizes consolidated metal sales:
| | | | | | | | | | | | | | | | | | | | |
| Six Months Ended | Increase (Decrease) | | Percentage Change |
In thousands | June 30, 2022 | | June 30, 2021 | |
Gold sales | $ | 276,076 | | | $ | 284,480 | | $ | (8,404) | | | (3) | % |
Silver sales | 116,451 | | | 132,495 | | (16,044) | | | (12) | % |
| | | | | | |
| | | | | | |
Metal sales | $ | 392,527 | | | $ | 416,975 | | $ | (24,448) | | | (6) | % |
Costs Applicable to Sales
Costs applicable to sales increased $43.2 million, or 18%, primarily due to higher silveroperating costs partially due to inflationary pressures related to consumables, most notably higher diesel prices, and gold ounces soldemployee-related costs and higher miningincreased maintenance costs, lower of cost or net realizable value (“LCM”) adjustments at Rochester, and processing costs.the $6.6 million favorable impact from foreign currency hedges in the comparable period of 2021. For a complete discussion of costs applicable to sales, see Results of Operations below.
Amortization
Amortization increased $13.6decreased $7.5 million, or 15%12%, primarily due to higher silver andlower gold ounces sold.sold and longer assumed mine life based on year-end mineral reserve growth.
Expenses
General and administrative expenses increased 8%decreased $2.5 million, or 11%, primarily due to higherlower compensation severance and professional service costs.
Exploration expense increased $15.2decreased $11.4 million, due toor 52% driven by lower planned investment across the Company’s expansion of near-mineportfolio and Canadian exploration drillinginvestment incentives earned at Palmarejo, Kensington and Rochester as well as regional exploration with a focus on projects in Nevada and Chihuahua, Mexico.Silvertip.
Pre-development, reclamation, and other expenses increased 29% to $16.9decreased $5.9 million, due to additional workor 22%, stemming from lower costs incurred in connection with the Company’s COVID-19 health and safety protocols and lower ongoing carrying costs at La Preciosa, Silvertip, acquisition costspartially offset by higher asset retirement accretion.
The following table summarizes pre-development, reclamation, and workforce reduction severance at San Bartolomé.other expenses:
| | | | | | | | | | | | | | | | | | | | |
| Six Months Ended | Increase (Decrease) | | Percentage Change |
In thousands | June 30, 2022 | | June 30, 2021 | |
COVID-19 | $ | 1,290 | | | $ | 5,319 | | $ | (4,029) | | | (76) | % |
Silvertip ongoing carrying costs | 10,913 | | | 13,368 | | (2,455) | | | (18) | % |
| | | | | | |
| | | | | | |
Asset retirement accretion | 6,992 | | | 5,870 | | 1,122 | | | 19 | % |
Other | 1,395 | | | 1,893 | | (498) | | | (26) | % |
Pre-development, reclamation and other expense | $ | 20,590 | | | $ | 26,450 | | $ | (5,860) | | | (22) | % |
Other Income and Expenses
In 2017,During the first half of 2021, the Company incurred a $9.3$9.2 million loss in connection with the repurchasetender and redemption of the 2021 7.875%5.875% Senior Notes due 2024 (the “2024 Senior Notes”) concurrent with the completed offering of the 2024 5.875%2029 Senior Notes compared to $10.0 million primarily related to the voluntary repayment of a term loan.Notes.
Non-cash fairFair value adjustments, net, weredecreased to a loss of $0.9$52.2 million compared to a lossgain of $13.2$33.4 million primarily due toas a result of an decrease in the terminationvalue of the Palmarejo gold production royalty in the third quarter of 2016 and the lesser impact of changes in future metal pricesCompany’s equity investments. For additional details on the Rochester royalty obligation, which was repurchased and terminated in May 2017.Company’s equity investments see Note 6 -- Investments.
Interest expense (net of capitalized interest of $1.8$6.0 million) decreased to $10.9$9.7 million from $30.1$10.0 million primarily due lower debt levels and a lowerto higher capitalized interest rate onassociated with the 2024POA 11 project at Rochester, partially offset by higher interest paid under the 2029 Senior Notes compared to the 20212024 Senior Notes.Notes, and higher interest paid under the RCF and finance lease obligations.
Other, net increased by $22.6decreased to a gain of $2.1 million primarilycompared to $4.3 million due to a $21.1 million gainlower gains on the sale of the Joaquin project in Argentina and a $2.3 million gain on the repurchase of the Rochester royalty obligation.assets.
Income and Mining Taxes
During the first three quartershalf of 2017, the Company reported estimated2022, income and mining tax expense of approximately $23.2$13.2 million resultingresulted in an effective tax rate of 162.8%.23.3% for 2022. This compares to estimated income and mining tax benefitexpense of $53.1$28.1 million for an effective tax rate of (503.9%) during45.1% for 2021. The comparability of the first nine monthsCompany’s income and mining tax (expense) benefit and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) the sale of 2016.non-core assets; (ii) the non-recognition of tax assets; (iii) variations in our income before income taxes; (iv) geographic distribution of that income; (v) mining taxes; (vi) foreign exchange rates; (vii) the impact of uncertain tax positions; and (viii) percentage depletion. Therefore, the effective tax rate will fluctuate, sometimes significantly, period to period.
The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit:
|
| | | | | | | | | | | | | |
| Nine months ended September 30, |
| 2017 | | 2016 |
In thousands | Income (loss) before tax | Tax (expense) benefit | | Income (loss) before tax | Tax (expense) benefit |
United States | $ | 8,213 |
| $ | (2,739 | ) | | $ | (5,956 | ) | $ | 8,370 |
|
Argentina | 281 |
| 1,704 |
| | 3,137 |
| (183 | ) |
Mexico | 9,665 |
| (23,745 | ) | | (1,136 | ) | 42,155 |
|
Bolivia | (6,559 | ) | (304 | ) | | 10,388 |
| 5,182 |
|
Other jurisdictions | 2,636 |
| 1,904 |
| | 4,109 |
| (2,406 | ) |
| $ | 14,236 |
| $ | (23,180 | ) | | $ | 10,542 |
| $ | 53,118 |
|
The Company’s 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 the consolidated effective tax rate, along with mining taxes, uncertain tax positions, and a full valuation allowance on deferred tax assets related to losses in the United States and certain foreign jurisdictions. During the first three quarters of the year, fluctuations in foreign exchange rates on deferred tax balances increased income and mining tax expense by $7.2 million, predominately due to the strength of the Mexican Peso. Also, continued favorable operating results at Palmarejo contributed to higher income and mining tax expense. The first three quarters of 2016 benefited from a legal entity reorganization to integrate acquisitions that resulted in a valuation allowance release of $40.8 million and a $15.0 million deferred tax benefit related to unremitted earnings. | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six months ended June 30, |
| | | | | 2022 | | 2021 |
In thousands | | | | | | | Income (loss) before tax | Tax (expense) benefit | | Income (loss) before tax | Tax (expense) benefit |
United States | | | | | | | $ | (95,252) | | $ | (2,197) | | | $ | 21,116 | | $ | (8,853) | |
Canada | | | | | | | (13,899) | | (21) | | | (25,763) | | — | |
Mexico | | | | | | | 52,669 | | (10,978) | | | 63,741 | | (19,273) | |
Other jurisdictions | | | | | | | (74) | | — | | | 3,238 | | — | |
| | | | | | | $ | (56,556) | | $ | (13,196) | | | $ | 62,332 | | $ | (28,126) | |
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 risk factors that could impact the Company’s ability to realize its deferred tax assets.
2017 Outlook
Full-year 2017 production guidance remains unchanged from the revised guidance published For additional information, please see “Item 1A - Risk Factors” in the third2021 10-K.
Net Income (Loss)
Net loss was $69.8 million, or $0.26 per diluted share, compared to net income of $34.2 million, or $0.14 per diluted share. The decrease in net income was driven by unfavorable changes in the fair value of the Company’s equity investments, higher operating costs, a 7% decrease in gold ounces sold and an 12% decrease in average realized silver prices, partially offset by a 4% increase in average realized gold prices, a $9.2 million loss on debt extinguishment in the comparable period in 2021 and lower income and mining taxes. Adjusted net loss was $26.9 million, or $0.10 per diluted share, compared to adjusted net income of $13.1 million, or $0.05 per diluted share (see “Non-GAAP Financial Performance Measures”).
2022 Guidance
Production during the second quarter was in-line with Coeur’s expectations, leading the Company to reaffirm 2022 production release on October 5, 2017, which reflected lower expected silver production at the San Bartolomé mine due to persistent drought conditions. Revised 2017guidance. Updated cost guidance is shownreflects industry-wide inflationary pressures on consumables. Updated exploration guidance shows an increase in the table below.exploration expense and capitalized exploration The increase in exploration investment reflects additional planned expansion and infill drilling at Silvertip, Palmarejo and Kensington.
20172022 Production Outlook
|
| | | |
(silver and silver equivalent ounces in thousands) | Silver | Gold | Silver Equivalent1 |
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 | 4,500 - 4,750 | — | 4,500 - 4,750 |
Endeavor | 107 | — | 107 |
Kensington | — | 120,000 - 125,000 | 7,200 - 7,500 |
Wharf | — | 90,000 - 95,000 | 5,400 - 5,700 |
Total | 15,307 - 16,557 | 367,000 - 392,000 | 37,327 - 40,077 |
2017 Cost Outlook
| | | | | | | | | | | | | | | | | |
| | |
(dollars in millions, except per ounce amounts)Gold | Previous Guidance | Revised GuidanceSilver |
CAS per AgEqOz1 – Palmarejo
| $10.00 - $10.50 | $10.00 - $10.50 | (oz) | | (K oz) |
CAS per AgEqOz1 – Rochester Palmarejo | $11.50 | | 100,000 - $12.00110,000 | $12.50 | 6,000 - $13.007,000 |
CAS per AgOz1 – San Bartolomé Rochester | $15.75 | | 35,000 - $16.2543,000 | $16.50 | 3,000 - $17.004,000 |
CAS per AuOz1 – Kensington
| $800 | | 110,000 - $850120,000 | $850 - $900 | — |
CAS per AuEqOz1 – Wharf
| $700 | | 70,000 - $75080,000 | $700 - $750 | — |
Capital Expenditures | $109 - $129 | $120 - $140 |
General and Administrative Expenses | $28 - $32 | $28 - $32 |
Exploration Expense | $29 - $31 | $32 - $36 |
AISC per AgEqOz1
| $15.75 - $16.25 | $16.25 - $16.75 |
| |
(1)Total | See “Non-GAAP Financial Performance Measures.”
| | 315,000 - 353,000 | | 9,000 - 11,000 |
2022 Costs Applicable to Sales Guidance | | | | | | | | | | | | | | | | | |
| Previous | | Updated |
| Gold | Silver | | Gold | Silver |
| ($/oz) | ($/oz) | | ($/oz) | ($/oz) |
Palmarejo (co-product) | $750 - $850 | $13.50 - $14.50 | | $825 - $925 | $12.75 - $13.75 |
Rochester (co-product) | $1,490 - $1,590 | $20.75 - $22.75 | | $1,650 - $1,850 | $20.00 - $26.00 |
Kensington | $1,150 - $1,250 | | | $1,300 - $1,400 | — |
Wharf (by-product) | $1,225 - $1,325 | | | $1,250 - $1,350 | — |
| | | | | |
2022 Capital, Exploration and G&A Guidance
| | | | | | | | | | | | | | | | | |
| | | Previous | | Updated |
| | | ($M) | | ($M) |
Capital Expenditures, Sustaining | | | $115 - $140 | | $110 - $135 |
Capital Expenditures, Development | | | $205 - $250 | | $220 - $260 |
Exploration, Expensed | | | $18 - $23 | | $25 - $30 |
Exploration, Capitalized | | | $18 - $23 | | $22 - $27 |
General & Administrative Expenses | | | $42 - $46 | | $42 - $46 |
Note: The Company’s previous guidance figures assume estimated prices of $1,800/oz gold and $24.00/oz silver as well as CAD of 1.25 and MXN of 20.00. The Company’s updated guidance figures assume estimated prices of $1,800/oz gold and $22.00/oz silver as well as CAD of 1.25 and MXN of 20.00. Guidance figures exclude the impact of any metal sales or foreign exchange hedges.
Results of Operations
The Company produced 4.0Palmarejo
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended | |
| June 30, 2022 | | March 31, 2022 | | June 30, 2022 | | June 30, 2021 | | | | | |
Tons milled | 539,600 | | | 565,211 | | | 1,104,811 | | | 1,001,763 | | | | | | |
Average gold grade (oz/t) | 0.054 | | | 0.056 | | | 0.055 | | | 0.060 | | | | | | |
Average silver grade (oz/t) | 3.95 | | | 3.87 | | | 3.91 | | | 4.00 | | | | | | |
Average recovery rate – Au | 92.4 | % | | 90.6 | % | | 91.5 | % | | 94.0 | % | | | | | |
Average recovery rate – Ag | 84.2 | % | | 83.0 | % | | 83.6 | % | | 81.6 | % | | | | | |
Gold ounces produced | 27,109 | | | 28,931 | | | 56,040 | | | 56,200 | | | | | | |
Silver ounces produced | 1,795,050 | | | 1,812,530 | | | 3,607,580 | | | 3,269,819 | | | | | | |
Gold ounces sold | 29,285 | | | 28,242 | | | 57,527 | | | 56,203 | | | | | | |
Silver ounces sold | 1,854,695 | | | 1,796,028 | | | 3,650,723 | | | 3,277,315 | | | | | | |
CAS per gold ounce(1) | $ | 854 | | | $ | 735 | | | $ | 802 | | | $ | 648 | | | | | | |
CAS per silver ounce(1) | $ | 12.96 | | | $ | 12.51 | | | $ | 12.64 | | | $ | 12.04 | | | | | | |
(1)See Non-GAAP Financial Performance Measures.
Three Months Ended June 30, 2022 compared to Three Months Ended March 31, 2022
Gold production decreased 6% as a result of lower mill throughput and gold grade, partially offset by higher recoveries as a result of blending optimization as well as enhancements in the flotation and solution management processes. Silver production decreased 1% as a result of lower mill throughput, partially offset by higher silver grade and recoveries as a result of blending optimization as well as a drawdown of in-circuit inventory. Metal sales were $86.0 million, ouncesor 42% of silver and 93,293 ouncesCoeur’s metal sales, compared with $83.1 million, or 44% of gold inCoeur’s metal sales. Revenue for the three months ended SeptemberJune 30, 2017, compared2022 increased by $2.9 million or 3%, primarily due to 3.5 million ounces of silver and 84,871 ouncesa higher volume of gold in the three months ended September 30, 2016. Silver production increased 11% due to higher mill throughput and higher grade at Palmarejo, partially offset by lower tons placed at Rochester and lower grade and mill throughput at San Bartolomé. Gold production increased 10% due to higher mill throughput and grade at Palmarejo, partially offset by lower grades at Wharf.
The Company produced 11.9 million ounces of silver and 264,330 ounces of gold in the nine months ended September 30, 2017, compared to 10.9 million ounces of silver and 255,669 ounces of gold in the nine months ended September 30, 2016. Silver production increased 8% due to higher mill throughput and grade at Palmarejo and timing of leach pad recoveries at Rochester, partially offset by lower mill throughput and grade at San Bartolomé and lower tons placed at Rochester. Gold production increased 3% due to higher mill throughput and grade Palmarejo, partially offset by lower grades at Kensington and Wharf.
Costs applicable to sales were $12.28 per silver equivalent ounce ($11.19 per average spot silver equivalent ounce) and $845 per gold equivalent ounce in the three months ended September 30, 2017 compared to $12.38 per silver equivalent ounce ($11.91 per average spot silver equivalent ounce) and $767 per gold equivalent ounce in the three months ended September 30, 2016. Costs applicable to sales per silver equivalent ounce remained comparable while costs applicable to sales per gold equivalent ounce increased10%in the three months ended September 30, 2017 due to lower grades and production at Kensington and Wharf.
Costs applicable to sales were $12.21 per silver equivalent ounce ($11.28 per average spot silver equivalent ounce) and $831 per gold equivalent ounce in the nine months ended September 30, 2017 compared to $11.79 per silver equivalent ounce ($11.02 per average spot silver equivalent ounce) and $716 per gold equivalent ounce in the nine months ended September 30, 2016. Costs applicable to sales per silver equivalent ounce increased 4% in the nine months ended September 30, 2017 due to higher mining and maintenance costs at Rochester and lower production at San Bartolomé. sales.Costs applicable to sales per gold equivalentand silver ounce increased16%in the nine months ended September 30, 2017 and 4%, respectively, due to lower gradesthe mix of gold and production at Kensingtonsilver sales, higher employee-related and Wharf.
All-in sustainingconsumable costswere $17.68 per silver equivalent ounce ($15.30 per average spot silver equivalent ounce) in the three months ended September 30, 2017, compared largely due to $17.02 per silver equivalent ounce ($15.75 per average spot silver equivalent ounce) in the three months ended September 30, 2016. The 4% increase in all-in sustaining costs per silver equivalent ounce in 2017 was primarilyinflationary pressures. Amortization increased to $9.7 million due to higher costs applicableounces sold. Capital expenditures decreased to sales$10.1 million reflecting delays in capital project advancements, partially offset by continued planned investment in underground development and exploration expense,infill drilling.
Six Months Ended June 30, 2022 compared to Six Months Ended June 30, 2021
Gold production was in-line with the prior year as a result of higher mill throughput, partially offset by lower sustaining capital.
All-in sustaining costswere $16.72 per silver equivalent ounce ($14.86 per average spot silver equivalent ounce) in the nine months ended September 30, 2017, compared to $16.03 per silver equivalent ounce ($14.17 per average spot silver equivalent ounce) in the nine months ended September 30, 2016. The 4% increase in all-in sustaining costs per silver equivalent ounce in 2017 was primarily due togold grade and recoveries. Silver production increased 10% as a result of higher costs applicable to salesmill throughput and exploration expense,recoveries, partially offset by lower sustaining capital.
Palmarejo
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Tons milled | 413,086 |
| | 274,644 |
| | 1,108,897 |
| | 791,319 |
|
Silver ounces produced | 1,907,548 |
| | 933,200 |
| | 4,894,910 |
| | 3,173,665 |
|
Gold ounces produced | 28,948 |
| | 16,608 |
| | 84,032 |
| | 50,006 |
|
Silver equivalent ounces produced | 3,644,428 |
| | 1,929,680 |
| | 9,936,830 |
| | 6,174,025 |
|
Costs applicable to sales per silver equivalent oz(1) | $ | 9.82 |
| | $ | 10.96 |
| | $ | 10.19 |
| | $ | 10.58 |
|
Costs applicable to sales per average spot silver equivalent oz(1) | $ | 8.73 |
| | $ | 10.29 |
| | $ | 9.17 |
| | $ | 9.58 |
|
| |
(1) | See Non-GAAP Financial Performance Measures. |
Three Months Ended September 30, 2017 compared to Three Months Ended September 30, 2016
Silver equivalent production increased 89% due to higher mining rates from Guadalupe and Independencia and higher silver and gold grade. Metal sales were $60.7$169.0 million, or 34%44% of Coeur’s metal sales, compared with $30.7$165.4 million, or 40% of Coeur’s metal sales. Revenue for the six months ended June 30, 2022 increased by $3.7 million or 2%, of which $10.6 million resulted from a higher volume of gold and silver sales was partially offset by a decrease of $6.9 million primarily due to lower average realized silver prices.Costs applicable to sales per gold and silver ounce increased 24% and 5%, respectively, due to the mix of gold and silver sales, higher employee-related, maintenance and consumable costs largely due to inflationary pressures, and the absence of the favorable impact of foreign currency hedges ($6.6 million) included in the prior year. Amortization increased to $19.1 million due to increased sales. Capital expenditures increased to $23.7 million from $19.8 million due to higher underground development, infill drilling activities and equipment purchases.
Rochester
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended | |
| June 30, 2022 | | March 31, 2022 | | June 30, 2022 | | June 30, 2021 | | | | | |
Tons placed | 4,236,459 | | | 4,377,873 | | | 8,614,332 | | | 6,436,694 | | | | | | |
Average gold grade (oz/t) | 0.003 | | | 0.003 | | | 0.003 | | | 0.003 | | | | | | |
Average silver grade (oz/t) | 0.35 | | | 0.34 | | | 0.34 | | | 0.41 | | | | | | |
Gold ounces produced | 8,319 | | | 6,066 | | | 14,385 | | | 14,136 | | | | | | |
Silver ounces produced | 689,169 | | | 655,176 | | | 1,344,345 | | | 1,661,985 | | | | | | |
Gold ounces sold | 8,071 | | | 5,928 | | | 13,999 | | | 14,752 | | | | | | |
Silver ounces sold | 682,677 | | | 638,116 | | | 1,320,793 | | | 1,683,215 | | | | | | |
CAS per gold ounce(1) | $ | 2,351 | | | $ | 2,287 | | | $ | 2,308 | | | $ | 1,557 | | | | | | |
CAS per silver ounce(1) | $ | 27.80 | | | $ | 29.34 | | | $ | 28.71 | | | $ | 23.23 | | | | | | |
(1)See Non-GAAP Financial Performance Measures.
Three Months Ended June 30, 2022 compared to Three Months Ended March 31, 2022
Gold and silver production increased 37% and 5%, respectively, largely due to increased placement rates from the first quarter. Metal sales were $30.5 million, or 15% of Coeur’s metal sales, compared with $26.4 million, or 14% of Coeur’s metal sales. Revenue for the three months ended June 30, 2022 increased by $4.1 million or 16%, of which $5.0 million was the result of a higher volume of gold and silver sales, partially offset by a $0.9 million decrease as a result of lower average realized silver prices. Costs applicable to sales per gold ounce increased 3% and decreased 5% per silver ounce due to the mix of gold and silver sales and higher maintenance and consumable costs partially due to inflationary pressures. Amortization increased to $5.0 million due to higher ounces sold. Capital expenditures increased to $47.0 million due to timing of payments related to the POA 11 expansion project.
Six Months Ended June 30, 2022 compared to Six Months Ended June 30, 2021
Gold production increased 2% while silver production decreased 19%, as a result of lower tons placed in prior year, lower silver grades and the timing of gold and silver recoveries. Metal sales were $56.9 million, or 14% of Coeur’s metal sales, compared with $70.8 million, or 17% of Coeur’s metal sales. Revenue for the six months ended June 30, 2022 decreased by $14.0 million or 20%, of which $9.8 million was the result of a lower volume of gold and silver sales and $4.2 million was the result of lower average realized silver prices, partially offset by higher average realized gold prices. Costs applicable to sales per gold and silver ounce increased 48% and 24%, respectively, due to the mix of gold and silver sales, higher maintenance and consumable costs partially due to inflationary pressures, and LCM adjustments. Amortization decreased 10%to $9.7 million due to lower ounces sold. Capital expenditures increased to $80.0 million from $72.4 million due to payments related to the POA 11 expansion project.
As of June 30, 2022, the total estimated project capital cost remained approximately $600 million. With the commencement of structural, mechanical, piping, electrical and instrumentation construction work, completion of final major high-voltage electrical contracts and initial commitments for the pre-screen addition to the expanded crusher circuit, the Company has committed approximately $523 million and incurred $350 million of the total estimated project cost through June 30, 2022.
The expansion consists of three major components: (i) a new 300-million-ton leach pad, for which civil work is essentially complete and piping work is near completion; (ii) a Merrill-Crowe process plant with construction completion scheduled for the first half of 2023; and (iii) a new three-stage crushing circuit with construction completion scheduled for mid-2023. These scheduled construction completion dates for the project remain unchanged.
Construction of the Merrill-Crowe process plant ramped up during the second quarter, including completion of concrete work, continuation of equipment setting, and the commencement of building and process plant steel pipe rack erection, as well as piping and cable tray installation.
Work on the crusher corridor included (i) continued civil construction in the primary crusher area, (ii) the completion of concrete work, start of steel construction, and setting of conveyor and equipment in the secondary crusher area, (iii) continued advancement of concrete work and start of steel erection in the secondary stock pile reclaim area, (iv) completion of concrete in the tertiary crusher area, and (v) continuation of concrete in the tertiary reclaim and final product load-out areas. Deliveries of equipment and materials for the project continue to support the overall construction schedule.
The Company also recently advanced detailed engineering on the pre-screens. Equipment procurement and construction contract development is well underway as Coeur continues working to align construction of the pre-screens with the completion of the new crusher. Final cost estimates related to pre-screens are expected in the third quarter.
The Company began installation of pre-screens on the existing crusher corridor on June 23 and commenced commissioning on July 22. Ramp-up of the pilot system as well as optimization of the product size placed under leach is scheduled to take place during the month of August. The experience and knowledge gained from utilizing pre-screens is expected to facilitate the integration of pre-screen technology into the new crusher system flowsheet for POA 11.
Kensington
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended | |
| June 30, 2022 | | March 31, 2022 | | June 30, 2022 | | June 30, 2021 | | | | | |
Tons milled | 175,722 | | | 165,968 | | | 341,690 | | | 338,669 | | | | | | |
Average gold grade (oz/t) | 0.17 | | | 0.14 | | | 0.16 | | | 0.19 | | | | | | |
Average recovery rate | 91.6 | % | | 95.3 | % | | 93.3 | % | | 92.9 | % | | | | | |
Gold ounces produced | 27,866 | | | 22,646 | | | 50,512 | | | 59,003 | | | | | | |
Gold ounces sold | 27,666 | | | 22,834 | | | 50,500 | | | 58,391 | | | | | | |
CAS per gold ounce(1) | $ | 1,412 | | | $ | 1,606 | | | $ | 1,500 | | | $ | 1,038 | | | | | | |
(1)See Non-GAAP Financial Performance Measures.
Three Months Ended June 30, 2022 compared to Three Months Ended March 31, 2022
Gold production increased 23% as a result of higher mill throughput and higher grade, partially offset by lower recoveries. Metal sales were $50.3 million, or 25% of Coeur’s metal sales, compared to $44.3 million, or 24% of Coeur’s metal sales. Revenue for the three months ended June 30, 2022 increased by $6.0 million or 13%, of which $8.8 million resulted from a higher volume of gold sales, partially offset by a decrease of $2.8 million due to lower average realized gold prices. Costs applicable to sales per gold ounce decreased 12% due to higher production, partially offset by higher consumable costs.costs partially due to inflationary pressures. Amortization increased to $16.4 million, primarily due to due to higher production from Guadalupe and Independencia. Capital expenditures decreased to $5.5 million due to lower underground development at Independencia.
Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016
Silver equivalent production increased 61% due to higher mining rates from Guadalupe and Independencia and higher silver and gold grade, partially offset by lower silver recovery. Metal sales were $191.6 million, or 34% of Coeur’s metal sales, compared with $108.7 million, or 22% of Coeur’s metal sales. Costs applicable to sales per ounce decreased 4% as a result of higher production. Amortization increased to $51.0 million compared to $27.8$9.4 million primarily due to higher production from Guadalupe and Independencia.ounces sold. Capital expenditures decreasedwas consistent quarter over quarter at $8.8 million compared to $23.0 million due to lower underground development at Independencia.$8.0 million.
Rochester
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Tons placed | 4,262,011 |
| | 4,901,039 |
| | 12,268,819 |
| | 15,677,511 |
|
Silver ounces produced | 1,069,945 |
| | 1,160,902 |
| | 3,353,608 |
| | 3,286,817 |
|
Gold ounces produced | 10,955 |
| | 12,120 |
| | 32,056 |
| | 36,521 |
|
Silver equivalent ounces produced | 1,727,245 |
| | 1,888,102 |
| | 5,276,968 |
| | 5,478,077 |
|
Costs applicable to sales per silver equivalent oz(1) | $ | 13.91 |
| | $ | 11.66 |
| | $ | 13.31 |
| | $ | 11.87 |
|
Costs applicable to sales per average spot silver equivalent oz(1) | $ | 12.66 |
| | $ | 11.11 |
| | $ | 12.32 |
| | $ | 10.90 |
|
| |
(1) | See Non-GAAP Financial Performance Measures. |
ThreeSix Months Ended SeptemberJune 30, 20172022 compared to ThreeSix Months Ended SeptemberJune 30, 20162021
Silver equivalentGold production decreased 9% due to14% as a result of lower tons placed, partially offset bygrade and lower mill throughput resulting from the timingimpact of silver recoveries.COVID-19 on workforce availability. Metal sales were $31.2$94.6 million, or 18% of Coeur’s metal sales, compared with $37.9 million, or 22% of Coeur’s metal sales. Costs applicable to sales per silver equivalent ounce increased 19% due to lower production, higher waste tons mined as well as higher hauling and maintenance costs. Amortization decreased to $4.6 million compared to $5.2 million due to lower production. Capital expenditures increased to $9.7 million compared to $3.4 million due to the stage IV leach pad expansion and commissioning.
Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016
Silver equivalent production decreased 4% due to lower tons placed resulting from planned crusher maintenance and higher waste tons mined, partially offset by the timing of silver recoveries. Metal sales were $102.9 million, or 19% of Coeur’s metal sales, compared with $103.7 million, or 21% of Coeur’s metal sales. Costs applicable to sales per silver equivalent ounce increased 12% due to lower placed recoverable ounces, higher waste tons mined as well as higher hauling and maintenance costs. Amortization remained comparable at $15.3 million. Capital expenditures increased to $34.1 million compared to $10.6 million due to the stage IV leach pad expansion and commissioning.
Kensington
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Tons milled | 172,038 |
| | 140,322 |
| | 501,096 |
| | 456,799 |
|
Gold ounces produced | 27,541 |
| | 26,459 |
| | 80,162 |
| | 90,642 |
|
Costs applicable to sales/oz(1) | $ | 948 |
| | $ | 862 |
| | $ | 931 |
| | $ | 794 |
|
| |
(1) | See Non-GAAP Financial Performance Measures. |
Three Months Ended September 30, 2017 compared to Three Months Ended September 30, 2016
Gold production increased 4% due to higher mill throughput, partially offset by lower grades mined. Metal sales were $36.6 million, or 21%24% of Coeur’s metal sales, compared to $40.2$103.3 million, or 23%25% of Coeur’s metal sales. Revenue for the six months ended June 30, 2022 decreased by $8.7 million or 8%, of which $14.7 million resulted from lower volume of gold sales, partially offset by an increase of $6.0 million due to higher average realized gold prices. Costs applicable to sales per gold ounce were 10%increased 45% due to lower production and higher employee-related, maintenance and consumable costs partially due to inflationary pressures. Amortization decreased to $18.0 million primarily due to lower grade, higher maintenance costs and contract services. Amortization remained comparable at $7.9 million.ounces sold. Capital expenditures increased to $10.1$16.8 million compared to $8.6from $13.2 million due to higher rates ofinfill drilling and underground mine development.
Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016
Gold production decreased 12% due to lower grades mined, partially offset by higher mill throughput. Metal sales were $110.1 million, or 20% of Coeur’s metal sales, compared to $112.4 million, or 22% of Coeur’s metal sales. Costs applicable to sales per ounce were 17% higher, primarily due to lower grade and higher contract services. Amortization was $25.4 million compared to $26.2 million due to lower production, partially offset by higher amortizable mining properties and equipment. Capital expenditures remained comparable at $24.3 million.
Wharf
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended | |
| June 30, 2022 | | March 31, 2022 | | June 30, 2022 | | June 30, 2021 | | | | | |
Tons placed | 1,050,215 | | | 1,127,569 | | | 2,177,784 | | | 2,139,524 | | | | | | |
Average gold grade (oz/t) | 0.015 | | | 0.025 | | | 0.020 | | | 0.031 | | | | | | |
Gold ounces produced | 20,478 | | | 17,766 | | | 38,244 | | | 43,161 | | | | | | |
Silver ounces produced | 11,967 | | | 11,736 | | | 23,703 | | | 58,732 | | | | | | |
Gold ounces sold | 19,764 | | | 18,207 | | | 37,971 | | | 42,267 | | | | | | |
Silver ounces sold | 5,828 | | | 16,138 | | | 21,966 | | | 57,876 | | | | | | |
CAS per gold ounce(1) | $ | 1,226 | | | $ | 1,124 | | | $ | 1,177 | | | $ | 961 | | | | | | |
(1)See Non-GAAP Financial Performance Measures.
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Tons placed | 1,150,308 |
| | 1,199,008 |
| | 3,435,656 |
| | 3,089,302 |
|
Gold ounces produced | 25,849 |
| | 29,684 |
| | 68,080 |
| | 78,500 |
|
Silver ounces produced | 14,817 |
| | 25,335 |
| | 47,469 |
| | 73,515 |
|
Gold equivalent ounces produced(1) | 26,096 |
|
| 30,106 |
|
| 68,871 |
|
| 79,725 |
|
Costs applicable to sales per gold equivalent oz(1) | $ | 720 |
| | $ | 668 |
| | $ | 704 |
| | $ | 623 |
|
| |
(1) | See Non-GAAP Financial Performance Measures. |
Three Months Ended SeptemberJune 30, 20172022 compared to Three Months Ended September 30, 2016March 31, 2022
Gold equivalent production decreased 13%increased 15% driven by the timing of recoveries due to fewer high-grade tonshigher grades placed fromin the Golden Reward deposit.first quarter. Metal sales were $31.3$37.4 million, or 18% of Coeur’s metal sales, compared to $39.3$34.7 million, or 22%18% of Coeur’s metal sales. Revenue for the three months ended June 30, 2022 increased by $2.7 million or 8%, of which $2.7 million resulted from a higher volume of gold sales. Costs applicable to sales per gold equivalent ounce increased 8%9% due to lower production,higher consumable costs partially offset by lower mining, crushing and processing costs.due to inflationary pressures. Amortization was $3.2 million comparedincreased to $6.5$2.2 million due to lower production and higher life of mine reserves.ounces sold. Capital expenditures increased to $3.1 million due to mining equipment purchases.were $0.5 million.
NineSix Months Ended SeptemberJune 30, 20172022 compared to NineSix Months Ended SeptemberJune 30, 20162021
Gold equivalent production decreased 14% due to lower grade, partially offset11% driven by higher tons placed.the timing of recoveries. Metal sales were $88.6$72.1 million, or 16%18% of Coeur’s metal sales, compared to $101.3$77.5 million, or 20%19% of Coeur’s metal sales. Revenue for the six months ended June 30, 2022 decreased by $5.4 million, of which $8.9 million was due to a lower volume of gold and silver sales, partially offset by an increase of $3.5 million due to higher average realized gold prices. Costs applicable to sales per gold equivalent ounce increased 13%22% due to lower productionhigher equipment rental and higher blasting and crushing costs.consumable costs partially due to inflationary pressures. Amortization was $8.9 million compareddecreased to $15.6$4.3 million due to lower production and higher life of mine reserves.ounces sold. Capital expenditures increased to $5.5 million due to mining equipment purchases.were $1.8 million.
San BartoloméSilvertip
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Tons milled | 365,554 |
| | 450,409 |
| | 1,167,605 |
| | 1,298,656 |
|
Silver ounces produced | 956,893 |
| | 1,370,194 |
| | 3,455,961 |
| | 4,210,051 |
|
Costs applicable to sales/oz(1) | $ | 18.26 |
| | $ | 14.97 |
| | $ | 16.86 |
| | $ | 13.58 |
|
| |
(1) | See Non-GAAP Financial Performance Measures. |
ThreeSix Months Ended SeptemberJune 30, 20172022
Silvertip suspended mining and processing activities, unrelated to COVID-19, in February 2020. Ongoing carrying and suspension costs are included in Pre-development, reclamation, and other.
Coeur continues to advance study work to assess the economics of a potential future expansion and restart of its high-grade Silvertip silver-zinc-lead development project in British Columbia, Canada. The Company’s objective remains to complete an evaluation by year end of higher throughput scenarios to reduce unit costs and to take advantage of Silvertip’s expanding, high-grade resource base.
Ongoing carrying costs at Silvertip totaled $10.9 million in the first half of 2022, compared to Three Months Ended September 30, 2016
Silver production decreased 30% due$13.4 million in the prior year. Capital expenditures during the first half of 2022 totaled $17.6 million compared to lower high-grade ore purchases and mill throughput$28.9 million in the prior year due to continued drought conditionsinfill drilling and lower third-party ore purchases. Silver sales were $16.0underground development. For 2022, capital expenditures are now expected to be approximately $28 - $36 million or 9%of Coeur’s metal sales, compared with $27.5 million, or 16% of Coeur’s metal sales. Costs applicable to sales per ounce increased due to lower production(previously $18 - $24 million). The revised figures reflect increase underground development and an inventory adjustment of $0.6 million. Amortization remained comparable at $1.4 million due to lower life of mine reserves. Capital expenditures decreased to $0.5 million.infill drilling.
Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016
Silver production decreased 18% due to lower high-grade ore purchases and mill throughput due to continued drought conditions and lower third-party ore purchases, partially offset by higher recoveries. Silver sales were $60.4 million, or 11%of Coeur’s metal sales, compared with $73.9 million, or 15% of Coeur’s metal sales. Costs applicable to sales per ounce increased due to lower production and inventory adjustments of $1.6 million. Amortization remained comparable at $5.1 million due to lower life of mine reserves. Capital expenditures decreased to $1.2 million.
Endeavor Silver Stream
|
| | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Tons milled | — |
| | 42,335 |
| | 133,905 |
| | 166,740 |
|
Silver ounces produced | 2,413 |
| | 56,066 |
| | 107,026 |
| | 204,097 |
|
Costs applicable to sales/oz(1) | $ | 4.86 |
| | $ | 8.10 |
| | 6.95 |
| | 6.42 |
|
| |
(1) | See Non-GAAP Financial Performance Measures. |
In July 2017, the Company sold the Endeavor silver stream and our remaining portfolio of royalties for total consideration of $13.0 million to Metalla Royalty & Streaming Ltd. Reported production and financial results include operations through May 2017, as the buyer is entitled to production and any associated sales subject to the stream agreement after June 1, 2017 under the terms of the sale agreement. Amounts presented for the three months ended September 30, 2017 relate to final adjustments for provisional sales.
Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016
Silver production at Endeavor decreased due to lower grades. 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 $0.3 million compared to $0.9 million due to lower production and lower amortizable mining properties.
Liquidity and Capital Resources
At June 30, 2022, the Company had $75.6 million of cash, cash equivalents and restricted cash and $244.5 million available under the RCF. Cash and cash equivalents increased $17.5 million in the six months ended June 30, 2022, due to the net proceeds of $98.3 million from the sale of 22.1 million shares of its common stock, net proceeds of $15.3 million received from the sale of the La Preciosa project, and a 13% and 4% increase in gold and silver ounces sold, respectively, partially offset by a 6% decrease in average realized silver prices, higher operating costs and capital expenditures related to POA 11 at Rochester.
In March 2022, the Company completed a $100.0 million “at the market” offering of its common stock, par value $0.01 per share (the “Equity Offering”). The Company sold a total of 22,053,275 shares of common stock in the Equity Offering at an average price of $4.53 per share, raising net proceeds (after sales commissions) of $98.3 million.
On May 2, 2022, the Company entered into an amendment (the “Amendment”) to the RCF to, among other things, increase the maximum principal amount of the RCF by $90.0 million in incremental loans and commitments to an aggregate of $390.0 million. At June 30, 2022, the Company had $115.0 million drawn and $30.0 million in outstanding letters of credit under the RCF. The Company also holds $99.1 million of equity securities including a 17.8% interest in Victoria Gold Corporation (“Victoria Gold”). On June 28, 2022, the Company entered into an agreement to sell 5,000,000 shares of common stock of Victoria Gold (“Victoria Gold Common Shares”) at a price of $8.34 per Victoria Gold Common Share, which settled on July 5, 2022 for net proceeds of $40.5 million. Following the sale, the Company holds a 9.4% interest in Victoria Gold.
The Company had outstanding forward contracts on 221,000 ounces of gold at June 30, 2022 that settle monthly through December 2023. The Company is targeting to hedge up to 70% of expected gold production in 2022, 50% of expected gold production for the first half of 2023 and 25% of expected gold production for the second half of 2023 in order to protect cash flow during a period of elevated capital expenditures, and may in the future layer on additional hedges as circumstances warrant. The weighted average fixed price on the forward contracts is $1,974 per ounce of gold.
We currently believe we have sufficient sources of funding to meet our business requirements for the next twelve months and longer-term. We expect to use a combination of cash provided by operating activities, borrowings under our RCF and additional finance leases to fund near term capital requirements, including those described in this Report for POA 11 and in our 2022 capital expenditure guidance. We also have additional potential sources of funding including proceeds from potential asset sales, and the monetization of our equity investments, including our remaining common shares of Victoria Gold. Our longer-term plans contemplate the expansion and restart of Silvertip, as well as the continued exploration and potential development of our other projects, such as Crown/Sterling and the Lincoln Hill area adjacent to Rochester.
As of June 30, 2022, the total estimated project capital cost remained approximately $600 million. With the commencement of structural, mechanical, piping, electrical and instrumentation construction work, completion of final major high-voltage electrical contracts and initial commitments for the pre-screen addition to the expanded crusher circuit, the Company has committed approximately $523 million and incurred $350 million of the total estimated project cost through June 30, 2022.
We also have additional obligations as part of our ordinary course of business, beyond those committed for capital expenditures and other purchase obligations and commitments for purchases of goods and services.
If and to the extent liquidity resources are insufficient to support short- and long-term expenditures, we may need to incur additional indebtedness or issue additional equity securities, among other financing options, which may not be available on acceptable terms or at all. This could have a material adverse impact on the Company, as discussed in more detail under Item 1A – Risk Factors in the 2021 10-K and part II, Item 1A of this report.
Cash Provided by (Used in) Operating Activities
Net cash provided by operating activities for the three and nine months ended SeptemberJune 30, 20172022 was $29.4$22.6 million, and $114.0 million, respectively, compared to net cash used in operating activities of $6.4 million for the three months ended March 31, 2022. Net cash provided by operating activities of $47.8for the six months ended June 30, 2022 was $16.2 million, and $100.4compared to $53.7 million respectively,for the six months ended June 30, 2021. Adjusted EBITDA for the three and nine months ended SeptemberJune 30, 2016, and2022 was $43.3 million, compared to $41.5 million for the three months ended March 31, 2022. Adjusted EBITDA for the six months ended June 30, 2022 was $77.3 million, compared to $118.6 million for the six months ended June 30, 2021 (see “Non-GAAP Financial Performance Measures”). Net cash provided by (used in) operating activities was impacted by the following key factors:factors for the applicable periods:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended | | |
In thousands | June 30, 2022 | | March 31, 2022 | | June 30, 2022 | | June 30, 2021 | | |
Cash flow before changes in operating assets and liabilities | $ | 29,773 | | | $ | 23,779 | | | $ | 53,552 | | | $ | 73,022 | | | |
Changes in operating assets and liabilities: | | | | | | | | | |
Receivables | (4,882) | | | 9,100 | | | 4,218 | | | 1,960 | | | |
Prepaid expenses and other | 3,523 | | | (509) | | | 3,014 | | | 673 | | | |
Inventories | (11,263) | | | (17,672) | | | (28,935) | | | (14,227) | | | |
Accounts payable and accrued liabilities | 5,493 | | | (21,125) | | | (15,632) | | | (7,728) | | | |
Cash provided by (used in) operating activities | $ | 22,644 | | | $ | (6,427) | | | $ | 16,217 | | | $ | 53,700 | | | |
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Consolidated silver equivalent ounces sold | 9,215,393 |
| | 8,397,467 |
| | 29,599,974 |
| | 25,958,451 |
|
Average realized price per consolidated silver equivalent ounce | $ | 19.09 |
| | $ | 21.00 |
| | $ | 18.77 |
| | $ | 19.39 |
|
Costs applicable to sales per consolidated silver equivalent ounce (1) | (12.90 | ) | | (12.55 | ) | | (12.75 | ) | | (11.84 | ) |
Operating margin per consolidated silver equivalent ounce | $ | 6.19 |
| | $ | 8.45 |
| | $ | 6.02 |
| | $ | 7.55 |
|
| |
(1) | See Non-GAAP Financial Performance Measures. |
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
In thousands | 2017 | | 2016 | | 2017 | | 2016 |
Cash flow before changes in operating assets and liabilities | $ | 21,237 |
| | $ | 58,118 |
| | $ | 92,421 |
| | $ | 128,867 |
|
Changes in operating assets and liabilities: | | | | | | | |
Receivables | 6,529 |
| | 19,672 |
| | 17,719 |
| | 10,751 |
|
Prepaid expenses and other | (3,195 | ) | | (2,816 | ) | | (3,882 | ) | | (2,435 | ) |
Inventories | (2,874 | ) | | (8,900 | ) | | 10,421 |
| | (24,408 | ) |
Accounts payable and accrued liabilities | 7,735 |
| | (18,262 | ) | | (2,697 | ) | | (12,407 | ) |
CASH PROVIDED BY OPERATING ACTIVITIES | $ | 29,432 |
| | $ | 47,812 |
| | $ | 113,982 |
| | $ | 100,368 |
|
CashNet cash provided by operating activities decreased $18.4increased $29.1 million for the three months ended SeptemberJune 30, 20172022 compared to the three months ended September 30, 2016 due toMarch 31, 2022, primarily as a result of a 13% and 4% increase in gold and silver ounces sold, respectively, mining and income taxes paid at Palmarejo in the first quarter of 2022, lower average realized pricesexploration costs and higherlower Silvertip ongoing carrying costs, applicable to sales per consolidated silver equivalent ounce, partially offset by highera 6% decrease in average realized silver equivalent ounces soldprices and favorable working capital adjustments. Metal salestiming of VAT collections at Palmarejo. Revenue for the three months ended SeptemberJune 30, 2017 decreased $0.42022 compared to the three months ended March 31, 2022 increased by $15.7 million, with $15.7of which $18.6 million was due to higher volume of gold and silver sales, partially offset by a decrease of $2.9 million due to lower average realized prices mostly offset by $15.3 million due to higher silver equivalent ounces sold. The $8.2 million working capital decrease in the three months ended September 30, 2017 was primarily due to an increase in accounts payable partially offset by an increase in inventories and prepaid assets, compared to the $10.3 million working capital increase in the three months ended September 30, 2016 primarily due to an increase on ore on leach pads and timing of payments, partially offset by lower trade receivables.prices.
CashNet cash provided by operating activities increased $13.6decreased $37.5 million for the ninesix months ended SeptemberJune 30, 20172022 compared to the ninesix months ended SeptemberJune 30, 20162021, primarily due to higher silver equivalentlower gold ounces sold (7%), a 12% decrease in average realized silver prices, and favorable working capital adjustments,higher operating costs, partially offset by higher costs applicable to sales per consolidated silver equivalent ounce and lowera 4% increase in average realized prices. Metal salesgold prices, lower exploration costs, lower Silvertip ongoing carrying costs, and timing of VAT collections at Palmarejo. Revenue for the ninesix months ended SeptemberJune 30, 2017 increased $52.22022 compared to the six months ended June 30, 2021 decreased by $24.4 million, with $68.5of which $20.6 million was due to higherlower volume of gold and silver equivalent ounces sold, partially offset by $16.2sales and $3.8 million was due to lower average realized silver prices. The $21.6 million working capital decrease in the nine months ended September 30, 2017 was primarily due to the reduction in precious metal inventory and
receivables, compared to the $28.5 million working capital increase in the nine months ended September 30, 2016, primarily due to an increase in ore on leach pads and precious metal inventory, and a reduction in accounts payable partially offset by lower receivables.
Cash Used in Investing Activities
Net cash used in investing activities in the three months ended SeptemberJune 30, 20172022 was $37.4$72.5 million compared to $18.1$54.1 million in the three months ended September 30, 2016,March 31, 2022. Cash used in investing activities increased primarily due to the purchasetiming of strategic equity investments,payments related to POA 11 construction activities at Rochester and higher capital expenditures, partially offset by non-core asset sales.the impact of the receipt of net proceeds of $15.3 million from the sale of the La Preciosa project in the first quarter of 2022. The Company hadincurred capital expenditures of $29.5$73.2 million in the three months ended SeptemberJune 30, 20172022 compared with $25.6$69.5 million in the three months ended September 30, 2016. Capital expenditures in the three months ended September 30, 2017 wereMarch 31, 2022 primarily related to POA 11 construction activities at Rochester and underground development at Palmarejo and Kensington capitalized conversion drilling, and the Stage IV leach pad expansion and commissioning at Rochester. Capital expenditures in the three months ended September 30, 2016 were primarily related to underground development at Palmarejo and Kensington.both periods.
Net cash used in investing activities in the ninesix months ended SeptemberJune 30, 20172022 was $84.1$126.7 million compared to $53.7$132.1 million in the ninesix months ended SeptemberJune 30, 2016,2021. Cash used in investing activities decreased primarily due to higher capital expenditures and the purchasereceipt of strategic equity investments, partially offset by thenet proceeds of $15.3 million from the sale of the Joaquin project.La Preciosa project in the first quarter of 2022, partially offset by construction activities related to POA 11 at Rochester. The Company hadincurred capital expenditures of $90.9$142.7 million in the ninesix months ended SeptemberJune 30, 20172022 compared with $71.1$137.6 million in the ninesix months ended SeptemberJune 30, 2016.2021. Capital expenditures in the ninesix months ended SeptemberJune 30, 20172022 were primarily related to POA 11 construction activities at Rochester and underground development at Palmarejo and Kensington, capitalized conversion drilling, and the Stage IV leach pad expansion and commissioning at Rochester.Kensington. Capital expenditures in the ninesix months ended SeptemberJune 30, 20162021 were primarily related to POA 11 construction activities at Rochester, potential expansion expenditures at Silvertip and underground development at Palmarejo and Kensington.
The Company is experiencing inflationary pressures, specifically with respect to building materials and fuel as well as overall tightness in the construction market related to capital projects, most notably the POA 11 project at Rochester, and to operating costs company-wide.
Cash Provided by (Used in) Financing Activities
Net cash used in financing activities in the three months ended September 30, 2017 was $5.6 million compared to $64.9 million in the three months ended September 30, 2016, primarily due to issuance costs incurred in connection with the Revolving Credit Facility. During the three months ended September 30, 2016, the Company repaid the Term Loan, partially offset by net proceeds from the settlement of sales of shares of its common stock. In addition, the Company made payments of $7.6 million under the Palmarejo gold production royalty obligation that terminated in July 2016. Coeur Mexicana now sells 50% of Palmarejo gold production (excluding production from Independencia Este, acquired in the 2015 Paramount transaction) for the lesser of $800 or spot price per ounce under a gold stream agreement.
Net cash provided by financing activities in the ninethree months ended SeptemberJune 30, 20172022 was $43.5$50.7 million compared to net cash used in financing activities of $24.8$76.7 million in the ninethree months ended September 30, 2016.March 31, 2022. During the ninethree months ended SeptemberJune 30, 2017,2022, the Company drew $60.0 million, net, from the RCF. During the three months ended March 31, 2022, the Company received net proceeds of approximately $245.0$98.3 million from the sale of 22.1 million shares of its common stock in the Equity Offering, partially offset by the net repayment of $10.0 million under the RCF.
Net cash provided by financing activities in the six months ended June 30, 2022 was $127.5 million compared to $109.8 million in the six months ended June 30, 2021. During the six months ended June 30, 2022, the Company borrowed $155.0 million and repaid $105.0 million under the RCF, and received net proceeds of $98.3 million from the sale of 22.1 million shares of its common stock in the Equity Offering. During the six months ended June 30, 2021, the Company received net proceeds of $367.5 million from the issuance of the 20242029 Senior Notes, partially offset by the repurchase of the 2021 Senior Notes for $185.5 million, including premiums. Payments of $27.2 million were made in 2016 under the Palmarejo gold production royalty that terminated in July 2016. Coeur Mexicana now sells 50% of Palmarejo gold production (excluding production from Independencia Este, acquired in 2015 Paramount transaction) for the lesser of $800 or spot price per ounce under a gold stream agreement.
In September 2017, the Company, as borrower,tender and certain subsidiaries of the Company, as guarantors, entered into a Credit Agreement (the “Credit Agreement”) with Bank of America, N.A, Royal Bank of Canada, Bank of Montreal, Chicago Branch, and the Bank of Nova Scotia. The Credit Agreement provides for a $200.0 million senior secured revolving credit facility (the “Facility”), which may be increased by up to $50.0 million in incremental loans and commitments subject to the terms of the Credit Agreement. The Facility has a term of four years. Loans under the Facility will bear interest at a rate equal to either a base rate plus a margin ranging from 1.00% to 1.75% or an adjusted LIBOR rate plus a margin ranging from 2.00% to 2.75%, as selected by the Company, in each case, with such margin determined in accordance with a pricing grid based upon the Company’s consolidated net leverage ratio as of the end of the applicable period.
The Facility is 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. The Credit Agreement contains representations and warranties and affirmative and negative covenants that are usual and customary, including representations, warranties, and covenants that, among other things, restrict the ability of the Company and its subsidiaries to incur additional debt, incur or permit liens on assets, make investments and acquisitions, consolidate or merge with any other company, engage in asset sales and make dividends and distributions. The Credit Agreement also contains financial covenants consisting of a consolidated net leverage ratio and a consolidated interest coverage ratio. Obligations under the Credit Agreement may be accelerated upon the occurrence of certain customary events of default At September 30, 2017, the Company had $200.0 million available under the Facility with no amounts drawn. Issuance costs of $1.8 million were recorded as prepaid costs and will be amortized over the term of the Facility. On October 12, 2017, the Company drew $100.0 million from the Facility at a rate of 3.5% based on the 1-month LIBOR rate plus a margin of 2.25%.
In May 2017, the Company completed an offering of $250.0 million in aggregate principal amount of 2024 Senior Notes in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended for net proceeds of approximately $245.0 million. The 2024 Senior Notes are governed by an Indenture dated as of May 31, 2017 (the “Indenture”), among the Company, as issuer, certain of the Company's subsidiaries named therein, as guarantors thereto (the “Guarantors”), and the Bank of New York Mellon, as trustee. In connection with the saleredemption of the 2024 Senior Notes the Company entered into a Registration Rights Agreement. On August 4, 2017, the Company commenced an exchange offerfor $238.3 million, including premiums.
Critical Accounting Policies and Accounting Developments
See Note 2 - Summary of registered 2024 Senior Notes for privately-placed 2024 Senior Notes which was completed on September 12, 2017. The 2024 Senior Notes bear interest at a rate of 5.875% per year from the date of issuance. Interest on the 2024 Senior Notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2017. The 2024 Senior Notes will mature on June 1, 2024 and are fully and unconditionally guaranteed by the Guarantors. At any time prior to June 1, 2020, the Company may redeem all or part of the 2024 Senior Notes upon not less than 30 nor more than 60 days’ prior notice at a redemption price equal to the sum of (i) 100% of the principal amount thereof, plus (ii) a make-whole premium as of the date of redemption, plus (iii) accrued and unpaid interest and additional interest, if any, thereon, to the date of redemption. In addition, the Company may redeem some or all of the 2024 Senior Notes on or after June 1, 2020, at redemption prices set forthSignificant Accounting Policies contained in the Indenture, together with accrued2021 10-K and unpaid interest. At any time prior to June 1, 2020, the Company may use the proceedsNote 2 - Summary of certain equity offerings to redeem up to 35% of the aggregate principal amount of the 2024 Senior Notes, including any permitted additional 2024 Senior Notes, at a redemption price equal to 105.875% of the principal amount. The Indenture contains covenants that, among other things, limitSignificant Accounting Policies contained in this Report for the Company’s ability under certain circumstances to incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem capital stock, prepay, redeem or repurchase certain debt, make loanscritical accounting policies and investments, create liens, sell, transfer or otherwise dispose of assets, enter into transactions with affiliates, enter into agreements restricting the Company's subsidiaries' ability to pay dividends and impose conditions on the Company’s ability to engage in mergers, consolidations and sales of all or substantially all of its assets. The Indenture also contains certain “Events of Default” (as defined in the Indenture) customary for indentures of this type.estimates.
Concurrent with the offering of the 2024 Senior Notes, the Company commenced a cash tender offer (the “Tender Offer”) to purchase the outstanding $178.0 million in aggregate principal amount of its 2021 Senior Notes. The Tender Offer was made on the terms and subject to the conditions set forth in the Offer to Purchase dated May 19, 2017. Holders of the 2021 Senior Notes who tendered their notes were entitled to receive $1,043.88 per $1,000 principal amount of the Notes, plus accrued and unpaid interest. $118.1 million aggregate principal amount of the Notes were tendered and purchased by the Company on May 31, 2017. In accordance with the terms of the indenture governing the 2021 Senior Notes, the remaining $59.9 million aggregate principal amount of the Notes were redeemed on June 30, 2017 at the redemption price of $1,039.38 per $1,000 principal amount, plus accrued and unpaid interest. The Company recorded a loss of $9.3 million as a result of the extinguishment of the 2021 Senior Notes.
Other Liquidity Matters
We believe that our liquidity and capital resources fromin the 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 indebtedness, fund future cash interest payments and/or amounts due at maturity or upon redemption and for general working capital purposes, from time-to-time we may (1) issue equity securities for cash in public or private offerings or (2) repurchase certain of our debt securities for cash or in exchange for other securities, which may include secured or unsecured notes or equity, in each case in open market or privately negotiated transactions. We evaluate any such transactions in light of prevailing market conditions, liquidity requirements, contractual restrictions, and other factors. The amounts involved may be significant and any debt repurchase transactions may occur at a substantial discount to the debt securities’ face amount.
Critical Accounting Policies and Accounting DevelopmentsPlease see Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contained in the Company’s Form
10-K for the year ended December 31, 2016 (the “2016 10-K”) for the Company’s critical accounting policies and estimates. Those critical accounting policies and estimates have been supplemented and updated in this Form 10-Q.
Non-GAAP Financial Performance Measures
Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles (“GAAP”). Unless otherwise noted, we present the Non-GAAP financial measures in the tables below. These measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.
Adjusted Net Income (Loss)
Management uses Adjusted net income (loss) to evaluate the Company’s operating performance, and to plan and forecast its operations. The Company believes the use of Adjusted net income (loss) reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies. Management’s determination of the components of Adjusted net income (loss) are evaluated periodically and areis 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:following table:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended | | |
In thousands except per share amounts | June 30, 2022 | | March 31, 2022 | | June 30, 2022 | | June 30, 2021 | | | | | | |
Net income (loss) | $ | (77,434) | | | $ | 7,682 | | | $ | (69,752) | | | $ | 34,206 | | | | | | | |
Fair value adjustments, net | 62,811 | | | (10,605) | | | 52,205 | | | (33,440) | | | | | | | |
Foreign exchange loss (gain) | 513 | | | 990 | | | 1,503 | | | 1,461 | | | | | | | |
(Gain) loss on sale of assets and securities | (621) | | | (1,831) | | | (2,452) | | | (4,674) | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Loss on debt extinguishment | — | | | — | | | — | | | 9,172 | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
COVID-19 costs | 318 | | | 972 | | | 1,290 | | | 5,319 | | | | | | | |
| | | | | | | | | | | | | |
Interest income on notes receivables | (179) | | | — | | | (179) | | | — | | | | | | | |
Tax effect of adjustments(1) | 1,488 | | | (10,990) | | | (9,502) | | | 1,056 | | | | | | | |
Adjusted net income (loss) | $ | (13,104) | | | $ | (13,782) | | | $ | (26,887) | | | $ | 13,100 | | | | | | | |
| | | | | | | | | | | | | |
Adjusted net income (loss) per share - Basic | $ | (0.05) | | | $ | (0.05) | | | $ | (0.10) | | | $ | 0.05 | | | | | | | |
Adjusted net income (loss) per share - Diluted | $ | (0.05) | | | $ | (0.05) | | | $ | (0.10) | | | $ | 0.05 | | | | | | | |
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
In thousands except per share amounts | 2017 | | 2016 | | 2017 | | 2016 |
Net income (loss) | $ | (16,652 | ) | | $ | 69,557 |
| | $ | (8,944 | ) | | $ | 63,660 |
|
Fair value adjustments, net | — |
| | 961 |
| | 864 |
| | 13,235 |
|
Impairment of equity and debt securities | — |
| | — |
| | 425 |
| | 20 |
|
Write-downs | — |
| | — |
| | — |
| | 4,446 |
|
Inventory write-downs | — |
| | 3,689 |
| | — |
| | 3,689 |
|
Gain on sale of Joaquin project | — |
| | — |
| | (21,138 | ) | | — |
|
(Gain) loss on sale of assets and securities | (2,117 | ) | | (7,462 | ) | | (565 | ) | | (11,674 | ) |
Gain on repurchase of Rochester royalty | — |
| | — |
| | (2,332 | ) | | — |
|
Loss on debt extinguishment | — |
| | 10,040 |
| | 9,342 |
| | 10,040 |
|
San Bartolomé workforce severance | 2,175 |
| | — |
| | 2,175 |
| | — |
|
Transaction costs | 819 |
| | 26 |
| | 819 |
| | 1,198 |
|
Deferred tax on reorganization | — |
| | (40,767 | ) | | — |
| | (40,767 | ) |
Foreign exchange loss (gain) | (1,660 | ) | | 2,549 |
| | 4,580 |
| | (1,384 | ) |
Tax effect of adjustments(1) | (990 | ) | | (38 | ) | | 816 |
| | 2,582 |
|
Adjusted net income (loss) | $ | (18,425 | ) |
| $ | 38,555 |
|
| $ | (13,958 | ) | | $ | 45,045 |
|
| | | | | | | |
Adjusted net income (loss) per share - Basic | $ | (0.10 | ) | | $ | 0.24 |
| | $ | (0.08 | ) | | $ | 0.29 |
|
Adjusted net income (loss) per share - Diluted | $ | (0.10 | ) | | $ | 0.23 |
| | $ | (0.08 | ) | | $ | 0.28 |
|
| |
(1) | For the three months ended September 30, 2017, tax effect of adjustments of $(1.0) million (112.9%) is primarily related to deferred taxes on the Metalla transaction. For the three months ended September 30, 2016, tax effect of adjustments of $(38) thousand (0.5%) is primarily related to the tax gain on the sale of an asset, partially offset by losses on other asset sales where no tax benefit was recognized and tax benefit from fair value adjustment. |
(1) For the ninethree months ended SeptemberJune 30, 2017,2022, tax effect of adjustments of $0.8-$1.5 million (-7.8%(2%) is primarily related to a taxable gainthe to the fair value adjustments on the sale of the Joaquin project and deferred taxes on the Metalla transaction.Company’s equity investments. For the ninethree months ended September 30, 2016,March 31, 2022, tax effect of adjustments of $2.6$11.0 million (-12.3%(96%) is primarily related to a taxable gain onthe de-recognition of deferred tax liabilities related to the sale of assetsLa Preciosa. For the six months ended June 30, 2022, tax effect of adjustments of $9.5 million (-19%) is primarily related to the de-recognition of deferred tax liabilities related to the sale of La Preciosa and the tax valuation allowance impact from an asset write-down, partially offset by tax benefit from fair value adjustments.adjustments on the Company’s equity investments. For the six months ended June 30, 2021, tax effect of adjustments of $1.1 million (-3%) are primarily related to the fair value adjustments on the Company’s equity investments.
EBITDA and Adjusted EBITDA
Management uses EBITDA to evaluate the Company’s operating performance, to plan and forecast its operations, and assess leverage levels and liquidity measures. The Company believes the use of EBITDA reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies. Adjusted EBITDA is a measure used in indenture governing the Indenture2029 Senior Notes and the FacilityRCF 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:following table:
| | | Three months ended September 30, | | Nine months ended September 30, | | Three Months Ended | | Six Months Ended | |
In thousands except per share amounts | 2017 | | 2016 | | 2017 | | 2016 | In thousands except per share amounts | June 30, 2022 | | March 31, 2022 | | June 30, 2022 | | June 30, 2021 | |
Net income (loss) | $ | (16,652 | ) | | $ | 69,557 |
| | $ | (8,944 | ) | | $ | 63,660 |
| Net income (loss) | $ | (77,434) | | | $ | 7,682 | | | $ | (69,752) | | | $ | 34,206 | | |
| Interest expense, net of capitalized interest | 3,606 |
| | 8,068 |
| | 10,941 |
| | 30,063 |
| Interest expense, net of capitalized interest | 5,170 | | | 4,568 | | | 9,738 | | | 10,003 | | |
Income tax provision (benefit) | 14,232 |
| | (54,455 | ) | | 23,180 |
| | (53,118 | ) | Income tax provision (benefit) | 11,502 | | | 1,694 | | | 13,196 | | | 28,126 | | |
Amortization | 33,830 |
| | 27,763 |
| | 106,880 |
| | 93,232 |
| Amortization | 27,965 | | | 26,433 | | | 54,398 | | | 61,910 | | |
EBITDA | 35,016 |
|
| 50,933 |
|
| 132,057 |
|
| 133,837 |
| EBITDA | (32,797) | | | 40,377 | | | 7,580 | | | 134,245 | | |
Fair value adjustments, net | — |
| | 961 |
| | 864 |
| | 13,235 |
| Fair value adjustments, net | 62,810 | | | (10,605) | | | 52,205 | | | (33,440) | | |
Impairment of equity and debt securities | — |
| | — |
| | 425 |
| | 20 |
| |
Foreign exchange (gain) loss | (229 | ) | | 1,466 |
| | (2,577 | ) | | 7,286 |
| Foreign exchange (gain) loss | 507 | | | 559 | | | 1,065 | | | 1,272 | | |
Gain on sale of Joaquin project | — |
| | — |
| | (21,138 | ) | | — |
| |
(Gain) loss on sale of assets and securities | (2,117 | ) | | (7,462 | ) | | (565 | ) | | (11,674 | ) | |
Gain on repurchase of Rochester royalty | — |
| | — |
| | (2,332 | ) | | — |
| |
Loss on debt extinguishment | — |
| | 10,040 |
| | 9,342 |
| | 10,040 |
| |
San Bartolomé workforce severance | 2,175 |
| | — |
| | 2,175 |
| | — |
| |
Transaction costs | 819 |
| | 26 |
| | 819 |
| | 1,198 |
| |
Asset retirement obligation accretion | 2,511 |
| | 2,096 |
| | 7,352 |
| | 6,221 |
| Asset retirement obligation accretion | 3,529 | | | 3,463 | | | 6,992 | | | 5,870 | | |
Inventory adjustments and write-downs | 1,302 |
| | 4,665 |
| | 1,703 |
| | 6,528 |
| Inventory adjustments and write-downs | 9,763 | | | 8,592 | | | 10,760 | | | 839 | | |
Write-downs | — |
| | — |
| | — |
| | 4,446 |
| |
(Gain) loss on sale of assets and securities | | (Gain) loss on sale of assets and securities | (621) | | | (1,831) | | | (2,452) | | | (4,674) | | |
| Loss on debt extinguishment | | Loss on debt extinguishment | — | | | — | | | — | | | 9,172 | | |
| COVID-19 costs | | COVID-19 costs | 318 | | | 972 | | | 1,290 | | | 5,319 | | |
| Interest income on notes receivables | | Interest income on notes receivables | (179) | | | — | | | (179) | | | — | | |
Adjusted EBITDA | $ | 39,477 |
|
| $ | 62,725 |
|
| $ | 128,125 |
|
| $ | 171,137 |
| Adjusted EBITDA | $ | 43,330 | | | $ | 41,527 | | | $ | 77,261 | | | $ | 118,603 | | |
Free Cash Flow
Management uses Free Cash Flow as a non-GAAP measure to analyze cash flows generated from operations. Free Cash Flow is Cash Provided By (used in) Operating Activities less Capital expenditures as presented on the Consolidated Statements of Cash Flows. The Company believes Free Cash Flow is also useful as one of the bases for comparing the Company’s performance with its competitors. Although Free Cash Flow and similar measures are frequently used as measures of cash flows generated from operations by other companies, the Company’s calculation of Free Cash Flow is not necessarily comparable to such other similarly titled captions of other companies.
The following table sets forth a reconciliation of Free Cash Flow, a non-GAAP financial measure, to Cash Provided By (used in) Operating Activities, which the Company believes to be the GAAP financial measure most directly comparable to Free Cash Flow.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended | | |
(Dollars in thousands) | June 30, 2022 | | March 31, 2022 | | June 30, 2022 | | June 30, 2021 | | | | | | |
Cash flow from operations | $ | 22,644 | | | $ | (6,427) | | | $ | 16,217 | | | $ | 53,700 | | | | | | | |
Capital expenditures | 73,156 | | | 69,502 | | | 142,658 | | | 137,647 | | | | | | | |
Free cash flow | $ | (50,512) | | $ | 42,224 | | $ | (75,929) | | | $ | (126,441) | | | $ | (83,947) | | | | | | | |
Operating Cash Flow Before Changes in Working Capital
Management uses Operating Cash Flow Before Changes in Working Capital as a non-GAAP measure to analyze cash flows generated from operations. Operating Cash Flow Before Changes in Working Capital is Cash Provided By (used in) Operating Activities excluding the change in Receivables, Prepaid expenses and other, Inventories and Accounts payable and accrued liabilities as presented on the Consolidated Statements of Cash Flows. The Company believes Operating Cash Flow Before Changes in Working Capital is also useful as one of the bases for comparing the Company’s performance with its competitors. Although Operating Cash Flow Before Changes in Working Capital and similar measures are frequently used as measures of cash flows generated from operations by other companies, the Company’s calculation of Operating Cash Flow Before Changes in Working Capital is not necessarily comparable to such other similarly titled captions of other companies.
The following table sets forth a reconciliation of Operating Cash Flow Before Changes in Working Capital, a non-GAAP financial measure, to Cash Provided By (used in) Operating Activities, which the Company believes to be the GAAP financial measure most directly comparable to Operating Cash Flow Before Changes in Working Capital.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended | |
(Dollars in thousands) | June 30, 2022 | | March 31, 2022 | | June 30, 2022 | | June 30, 2021 | | | | | |
Cash provided by (used in) operating activities | $ | 22,644 | | | $ | (6,427) | | | $ | 16,217 | | | $ | 53,700 | | | | | | |
Changes in operating assets and liabilities: | | | | | | | | | | | | |
Receivables | 4,882 | | | (9,100) | | | (4,218) | | | (1,960) | | | | | | |
Prepaid expenses and other | (3,523) | | | 509 | | | (3,014) | | | (673) | | | | | | |
Inventories | 11,263 | | | 17,672 | | | 28,935 | | | 14,227 | | | | | | |
Accounts payable and accrued liabilities | (5,493) | | | 21,125 | | | 15,632 | | | 7,728 | | | | | | |
Operating cash flow before changes in working capital | $ | 29,773 | | | $ | 23,779 | | | $ | 53,552 | | | $ | 73,022 | | | | | | |
Costs Applicable to Sales and All-in Sustaining Costs
Management uses Costs applicable to sales (“CAS”) and All-in sustaining costs (“AISC”)CAS to evaluate the Company’s current operating performance and life of mine performance from discovery through reclamation. We believe these measures assist analysts, investors and other stakeholders in understanding the costs associated with producing gold, silver, zinc and gold,lead, assessing our operating performance and ability to generate free cash flow from operations and sustaining production. These measures may not be indicative of operating profit or cash flow from operations as determined under GAAP. Management believes converting the benefit from sellingthat allocating CAS to gold, into silver, equivalent ounceszinc and lead based on gold, silver, zinc and lead metal sales relative to total metal sales best allows management, analysts, investors and other stakeholders to evaluate the operating performance of the Company. Other companies may calculate CAS 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.
Three Months Ended SeptemberJune 30, 20172022
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
In thousands (except metal sales, per ounce and per pound amounts) | Palmarejo | | Rochester | | Kensington | | Wharf | | Silvertip | | Total |
Costs applicable to sales, including amortization (U.S. GAAP) | $ | 58,800 | | | $ | 42,914 | | | $ | 48,680 | | | $ | 26,600 | | | $ | 1,259 | | | $ | 178,253 | |
Amortization | (9,737) | | | (4,961) | | | (9,369) | | | (2,248) | | | (1,259) | | | (27,574) | |
Costs applicable to sales | $ | 49,063 | | | $ | 37,953 | | | $ | 39,311 | | | $ | 24,352 | | | $ | — | | | $ | 150,679 | |
| | | | | | | | | | | |
Metal Sales | | | | | | | | | | | |
Gold ounces | 29,285 | | | 8,071 | | | 27,666 | | | 19,764 | | | | | 84,786 | |
Silver ounces | 1,854,695 | | | 682,677 | | | — | | | 5,828 | | | — | | | 2,543,200 | |
Zinc pounds | | | | | | | | | — | | | — | |
Lead pounds | | | | | | | | | — | | | — | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Costs applicable to sales | | | | | | | | | | | |
Gold ($/oz) | $ | 854 | | | $ | 2,351 | | | $ | 1,412 | | | $ | 1,226 | | | | | |
Silver ($/oz) | $ | 12.96 | | | $ | 27.80 | | | | | | | $ | — | | | |
Zinc ($/lb) | | | | | | | | | $ | — | | | |
Lead ($/lb) | | | | | | | | | $ | — | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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) | | $ | 49,669 |
| | $ | 27,866 |
| | $ | 18,795 |
| | $ | 59 |
| | $ | 96,389 |
| | $ | 35,522 |
| | $ | 20,553 |
| | $ | 56,075 |
| | $ | 152,464 |
|
Amortization | | 16,414 |
| | 4,591 |
| | 1,430 |
| | 20 |
| | 22,455 |
| | 7,864 |
| | 3,223 |
| | 11,087 |
| | 33,542 |
|
Costs applicable to sales | | $ | 33,255 |
| | $ | 23,275 |
| | $ | 17,365 |
| | $ | 39 |
| | $ | 73,934 |
| | $ | 27,658 |
| | $ | 17,330 |
| | $ | 44,988 |
| | $ | 118,922 |
|
Silver equivalent ounces sold | | 3,386,963 |
| | 1,673,704 |
| | 951,219 |
| | 8,027 |
| | 6,019,913 |
| | | | | | | | 9,215,393 |
|
Gold equivalent ounces sold | | | | | | | | | | | | 29,173 |
| | 24,085 |
| | 53,258 |
| | |
Costs applicable to sales per ounce | | $ | 9.82 |
| | $ | 13.91 |
| | $ | 18.26 |
| | $ | 4.86 |
| | $ | 12.28 |
| | $ | 948 |
| | $ | 720 |
| | $ | 845 |
| | $ | 12.90 |
|
| | | | | | | | | | | | | | | | | | |
Costs applicable to sales per average spot ounce | | $ | 8.73 |
| | $ | 12.66 |
| | | | | | $ | 11.19 |
| | | | | | | | $ | 11.17 |
|
| | | | | | | | | | | | | | | | | | |
Costs applicable to sales | | | | | | | | | | | | | | | | | | $ | 118,922 |
|
Treatment and refining costs | | | | | | | | | | | | | | | | | | 1,408 |
|
Sustaining capital(1) | | | | | | | | | | | | | | | | | | 18,626 |
|
General and administrative | | | | | | | | | | | | | | | | | | 7,412 |
|
Exploration | | | | | | | | | | | | | | | | | | 9,814 |
|
Reclamation | | | | | | | | | | | | | | | | | | 4,364 |
|
Project/pre-development costs | | | | | | | | | | | | | | | | | | 2,337 |
|
All-in sustaining costs | | | | | | | | | | | | | | | | | | $ | 162,883 |
|
Silver equivalent ounces sold | | | | | | | | | | | | | | | | | | 6,019,913 |
|
Kensington and Wharf silver equivalent ounces sold | | | | | | | | | | | | | | 3,195,480 |
|
Consolidated silver equivalent ounces sold | | | | | | | | | | | | | | | | 9,215,393 |
|
All-in sustaining costs per silver equivalent ounce | | | | | | | | | | | | | | $ | 17.68 |
|
| | | | | | | | | | | | | | | | | | |
Consolidated silver equivalent ounces sold (average spot) | | | | | | | | | | | | | | 10,645,948 |
|
All-in sustaining costs per average spot silver equivalent ounce | | | | | | | | | | | | | | $ | 15.30 |
|
| |
(1) | Excludes development capital for Jualin, Guadalupe South Portal and Rochester expansion permitting. |
Three Months Ended September 30, 2016March 31, 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
In thousands (except metal sales, per ounce and per pound amounts) | Palmarejo | | Rochester | | Kensington | | Wharf | | Silvertip | | Total |
Costs applicable to sales, including amortization (U.S. GAAP) | $ | 52,611 | | | $ | 36,985 | | | $ | 45,532 | | | $ | 22,918 | | | $ | 1,259 | | | $ | 159,305 | |
Amortization | (9,386) | | | (4,710) | | | (8,622) | | | (2,061) | | | (1,259) | | | (26,038) | |
Costs applicable to sales | $ | 43,225 | | | $ | 32,275 | | | $ | 36,910 | | | $ | 20,857 | | | $ | — | | | $ | 133,267 | |
| | | | | | | | | | | |
Metal Sales | | | | | | | | | | | |
Gold ounces | 28,242 | | | 5,928 | | | 22,834 | | | 18,207 | | | | | 75,211 | |
Silver ounces | 1,796,028 | | | 638,116 | | | — | | | 16,138 | | | — | | | 2,450,282 | |
Zinc pounds | | | | | | | | | — | | | — | |
Lead pounds | | | | | | | | | — | | | — | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Costs applicable to sales | | | | | | | | | | | |
Gold ($/oz) | $ | 735 | | | $ | 2,287 | | | $ | 1,606 | | | $ | 1,124 | | | | | |
Silver ($/oz) | $ | 12.51 | | | $ | 29.34 | | | | | | | $ | — | | | |
Zinc ($/lb) | | | | | | | | | $ | — | | | |
Lead ($/lb) | | | | | | | | | $ | — | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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) | | $ | 21,794 |
| | $ | 27,027 |
| | $ | 22,536 |
| | $ | 486 |
| | $ | 71,843 |
| | $ | 34,755 |
| | $ | 26,158 |
| | $ | 60,913 |
| | $ | 132,756 |
|
Amortization | | 5,761 |
| | 5,244 |
| | 1,723 |
| | 113 |
| | 12,841 |
| | 8,046 |
| | 6,461 |
| | 14,507 |
| | 27,348 |
|
Costs applicable to sales | | $ | 16,033 |
| | $ | 21,783 |
| | $ | 20,813 |
| | $ | 373 |
| | $ | 59,002 |
| | $ | 26,709 |
| | $ | 19,697 |
| | $ | 46,406 |
| | $ | 105,408 |
|
Silver equivalent ounces sold | | 1,462,401 |
| | 1,868,085 |
| | 1,390,552 |
| | 46,069 |
| | 4,767,107 |
| | | | | | | | 8,397,467 |
|
Gold equivalent ounces sold | | | | | | | | | | | | 30,998 |
| | 29,508 |
| | 60,506 |
| | |
Costs applicable to sales per ounce | | $ | 10.96 |
| | $ | 11.66 |
| | $ | 14.97 |
| | $ | 8.10 |
| | $ | 12.38 |
| | $ | 862 |
| | $ | 668 |
| | $ | 767 |
| | $ | 12.55 |
|
| | | | | | | | | | | | | | | | | | |
Costs applicable to sales per average spot ounce | | $ | 10.29 |
| | $ | 11.11 |
| | | | | | $ | 11.91 |
| | | | | | | | $ | 11.62 |
|
| | | | | | | | | | | | | | | | | | |
Costs applicable to sales | | | | | | | | | | | | | | | | | | $ | 105,408 |
|
Treatment and refining costs | | | | | | | | | | | | | | | | | | 761 |
|
Sustaining capital(1) | | | | | | | | | | | | | | | | | | 19,762 |
|
General and administrative | | | | | | | | | | | | | | | | | | 7,113 |
|
Exploration | | | | | | | | | | | | | | | | | | 3,706 |
|
Reclamation | | | | | | | | | | | | | | | | | | 4,036 |
|
Project/pre-development costs | | | | | | | | | | | | | | | | | | 2,133 |
|
All-in sustaining costs | | | | | | | | | | | | | | | | | | $ | 142,919 |
|
Silver equivalent ounces sold | | | | | | | | | | | | | | | | | | 4,767,107 |
|
Kensington and Wharf silver equivalent ounces sold | | | | | | | | | | | | | | 3,630,360 |
|
Consolidated silver equivalent ounces sold | | | | | | | | | | | | | | | | 8,397,467 |
|
All-in sustaining costs per silver equivalent ounce | | | | | | | | | | | | | | $ | 17.02 |
|
| | | | | | | | | | | | | | | | | | |
Consolidated silver equivalent ounces sold (average spot) | | | | | | | | | | | | | | 9,074,222 |
|
All-in sustaining costs per average spot silver equivalent ounce | | | | | | | | | | | | | | $ | 15.75 |
|
| |
(1) | Excludes development capital for Jualin, Guadalupe, Independencia and Rochester crushing capacity expansion. |
NineSix Months Ended SeptemberJune 30, 20172022
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
In thousands (except metal sales, per ounce and per pound amounts) | Palmarejo | | Rochester | | Kensington | | Wharf | | Silvertip | | Total |
Costs applicable to sales, including amortization (U.S. GAAP) | $ | 111,411 | | | $ | 79,899 | | | $ | 94,212 | | | $ | 49,518 | | | $ | 2,518 | | | $ | 337,558 | |
Amortization | (19,123) | | | (9,671) | | | (17,991) | | | (4,309) | | | (2,518) | | | (53,612) | |
Costs applicable to sales | $ | 92,288 | | | $ | 70,228 | | | $ | 76,221 | | | $ | 45,209 | | | $ | — | | | $ | 283,946 | |
| | | | | | | | | | | |
Metal Sales | | | | | | | | | | | |
Gold ounces | 57,527 | | | 13,999 | | | 50,500 | | | 37,971 | | | | | 159,997 | |
Silver ounces | 3,650,723 | | | 1,320,793 | | | — | | | 21,966 | | | — | | | 4,993,482 | |
Zinc pounds | | | | | | | | | — | | | — | |
Lead pounds | | | | | | | | | — | | | — | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Costs applicable to sales | | | | | | | | | | | |
Gold ($/oz) | $ | 802 | | | $ | 2,308 | | | $ | 1,500 | | | $ | 1,177 | | | | | |
Silver ($/oz) | $ | 12.64 | | | $ | 28.71 | | | | | | | $ | — | | | |
Zinc ($/lb) | | | | | | | | | $ | — | | | |
Lead ($/lb) | | | | | | | | | $ | — | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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) | | $ | 161,145 |
|
| $ | 89,220 |
| | $ | 64,032 |
| | $ | 1,045 |
| | $ | 315,442 |
| | $ | 109,478 |
| | $ | 58,301 |
| | $ | 167,779 |
| | $ | 483,221 |
|
Amortization | | 50,995 |
| | 15,345 |
| | 5,053 |
| | 301 |
| | 71,694 |
| | 25,389 |
| | 8,883 |
| | 34,272 |
| | 105,966 |
|
Costs applicable to sales | | $ | 110,150 |
| | $ | 73,875 |
| | $ | 58,979 |
| | $ | 744 |
| | $ | 243,748 |
| | $ | 84,089 |
| | $ | 49,418 |
| | $ | 133,507 |
| | $ | 377,255 |
|
Silver equivalent ounces sold | | 10,809,932 |
| | 5,551,913 |
| | 3,497,263 |
| | 107,026 |
| | 19,966,134 |
| | | | | | | | 29,599,974 |
|
Gold equivalent ounces sold | | | | | | | | | | | | 90,348 |
| | 70,216 |
| | 160,564 |
| | |
Costs applicable to sales per ounce | | $ | 10.19 |
|
| $ | 13.31 |
| | $ | 16.86 |
| | $ | 6.95 |
| | $ | 12.21 |
| | $ | 931 |
| | $ | 704 |
| | $ | 831 |
| | $ | 12.75 |
|
| | | | | | | | | | | | | | | | | | |
Costs applicable to sales per average spot ounce | | $ | 9.17 |
| | $ | 12.32 |
| |
| |
| | $ | 11.28 |
| |
| |
| |
| | $ | 11.33 |
|
| | | | | | | | | | | | | | | | | | |
Costs applicable to sales | | | | | | | | | | | | | | | | | | $ | 377,255 |
|
Treatment and refining costs | | | | | | | | | | | | | | | | | | 4,312 |
|
Sustaining capital(1) | | | | | | | | | | | | | | | | | | 47,795 |
|
General and administrative | | | | | | | | | | | | | | | | | | 24,587 |
|
Exploration | | | | | | | | | | | | | | | | | | 22,879 |
|
Reclamation | | | | | | | | | | | | | | | | | | 12,279 |
|
Project/pre-development costs | | | | | | | | | | | | | | | | | | 5,903 |
|
All-in sustaining costs | | | | | | | | | | | | | | | | | | $ | 495,010 |
|
Silver equivalent ounces sold | | | | | | | | | | | | | | | | | | 19,966,134 |
|
Kensington and Wharf silver equivalent ounces sold | | | | | | | | | | | | | | 9,633,840 |
|
Consolidated silver equivalent ounces sold | | | | | | | | | | | | | | | | 29,599,974 |
|
All-in sustaining costs per silver equivalent ounce | | | | | | | | | | | | | | $ | 16.72 |
|
| | | | | | | | | | | | | | | | | | |
Consolidated silver equivalent ounces sold (average spot) | | | | | | | | | | | | | | 33,311,575 |
|
All-in sustaining costs per average spot silver equivalent ounce | | | | | | | | | | | | | | $ | 14.86 |
|
| |
(1) | Excludes development capital for Jualin, Guadalupe South Portal and Rochester expansion permitting. |
NineSix Months Ended SeptemberJune 30, 20162021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
In thousands (except metal sales, per ounce and per pound amounts) | Palmarejo | | Rochester | | Kensington | | Wharf | | Silvertip | | Total |
Costs applicable to sales, including amortization (U.S. GAAP) | $ | 93,236 | | | $ | 72,147 | | | $ | 86,752 | | | $ | 47,644 | | | $ | 2,271 | | | $ | 302,050 | |
Amortization | (17,330) | | | (10,083) | | | (26,155) | | | (5,469) | | | (2,271) | | | (61,308) | |
Costs applicable to sales | $ | 75,906 | | | $ | 62,064 | | | $ | 60,597 | | | $ | 42,175 | | | $ | — | | | $ | 240,742 | |
| | | | | | | | | | | |
Metal Sales | | | | | | | | | | | |
Gold ounces | 56,203 | | | 14,752 | | | 58,391 | | | 42,267 | | | | | 171,613 | |
Silver ounces | 3,277,315 | | | 1,683,215 | | | | | 57,876 | | | — | | | 5,018,406 | |
Zinc pounds | | | | | | | | | — | | | — | |
Lead pounds | | | | | | | | | — | | | — | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Costs applicable to sales | | | | | | | | | | | |
Gold ($/oz) | $ | 648 | | | $ | 1,557 | | | $ | 1,038 | | | $ | 961 | | | | | |
Silver ($/oz) | $ | 12.04 | | | $ | 23.23 | | | | | | | $ | — | | | |
Zinc ($/lb) | | | | | | | | | $ | — | | | |
Lead ($/lb) | | | | | | | | | $ | — | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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) | | $ | 87,751 |
| | $ | 81,983 |
| | $ | 62,285 |
| | $ | 1,806 |
| | $ | 233,825 |
| | $ | 99,941 |
| | $ | 65,140 |
| | $ | 165,081 |
| | $ | 398,906 |
|
Amortization | | 27,815 |
| | 15,994 |
| | 5,330 |
| | 496 |
| | 49,635 |
| | 26,203 |
| | 15,640 |
| | 41,843 |
| | 91,478 |
|
Costs applicable to sales | | $ | 59,936 |
| | $ | 65,989 |
| | $ | 56,955 |
| | $ | 1,310 |
| | $ | 184,190 |
| | $ | 73,738 |
| | $ | 49,500 |
| | $ | 123,238 |
| | $ | 307,428 |
|
Silver equivalent ounces sold | | 5,667,133 |
| | 5,559,347 |
| | 4,193,397 |
| | 204,174 |
| | 15,624,051 |
| | | | | | | | 25,958,451 |
|
Gold equivalent ounces sold | | | | | | | | | | | | 92,824 |
| | 79,416 |
| | 172,240 |
| | |
Costs applicable to sales per ounce | | $ | 10.58 |
|
| $ | 11.87 |
|
| $ | 13.58 |
|
| $ | 6.42 |
|
| $ | 11.79 |
| | $ | 794 |
|
| $ | 623 |
|
| $ | 716 |
| | $ | 11.84 |
|
| | | | | | | | | | | | | | | | | | |
Costs applicable to sales per average spot ounce | | $ | 9.58 |
| | $ | 10.90 |
| |
| |
| | $ | 11.02 |
| | | | | | | | $ | 10.47 |
|
| | | | | | | | | | | | | | | | | | |
Costs applicable to sales | | | | | | | | | | | | | | | | | | $ | 307,428 |
|
Treatment and refining costs | | | | | | | | | | | | | | | | | | 3,047 |
|
Sustaining capital(1) | | | | | | | | | | | | | | | | | | 57,491 |
|
General and administrative | | | | | | | | | | | | | | | | | | 22,789 |
|
Exploration | | | | | | | | | | | | | | | | | | 7,669 |
|
Reclamation | | | | | | | | | | | | | | | | | | 11,967 |
|
Project/pre-development costs | | | | | | | | | | | | | | | | | | 5,789 |
|
All-in sustaining costs | | | | | | | | | | | | | | | | | | $ | 416,180 |
|
Silver equivalent ounces sold | | | | | | | | | | | | | | | | | | 15,624,051 |
|
Kensington and Wharf silver equivalent ounces sold | | | | | | | | | | | | | | 10,334,400 |
|
Consolidated silver equivalent ounces sold | | | | | | | | | | | | | | | | 25,958,451 |
|
All-in sustaining costs per silver equivalent ounce | | | | | | | | | | | | | | $ | 16.03 |
|
| | | | | | | | | | | | | | | | | | |
Consolidated silver equivalent ounces sold (average spot) | | | | | | | | | | | | | | 29,370,501 |
|
All-in sustaining costs per average spot silver equivalent ounce | | | | | | | | | | | | | | $ | 14.17 |
|
| |
(1) | Excludes development capital for Jualin, Guadalupe, Independencia and Rochester crushing capacity expansion. |
Reconciliation of All-in Sustaining Costs per Silver Equivalent OunceApplicable to Sales for Revised 20172022 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) | $ | 215,400 |
| $ | 118,700 |
| $ | 86,000 |
| $ | 1,044 |
| $ | 421,144 |
| $ | 153,800 |
| $ | 83,600 |
| $ | 237,400 |
| $ | 658,544 |
|
Amortization | 67,800 |
| 20,500 |
| 7,800 |
| 300 |
| 96,400 |
| 38,800 |
| 12,800 |
| 51,600 |
| 148,000 |
|
Costs applicable to sales | $ | 147,600 |
| $ | 98,200 |
| $ | 78,200 |
| $ | 744 |
| $ | 324,744 |
| $ | 115,000 |
| $ | 70,800 |
| $ | 185,800 |
| $ | 510,544 |
|
Silver equivalent ounces sold | 14,500,000 |
| 7,690,000 |
| 4,700,000 |
| 107,000 |
| 26,997,000 |
| | | | 40,557,000 |
|
Gold equivalent ounces sold | | | | | | 131,000 |
| 95,000 |
| 226,000 |
| |
Costs applicable to sales per ounce | $10.00 - $10.50 | $12.50 - $13.00 | $16.50 - $17.00 |
|
| $850 - $900 | $700 - $750 |
|
|
| | | | | | | | | |
Costs applicable to sales | | | | | | | | | $ | 510,544 |
|
Treatment and refining costs | | | | | | | | | 5,100 |
|
Sustaining capital, including capital lease payments | | | | | | | 70,000 |
|
General and administrative | | | | | | | | | 32,000 |
|
Exploration | | | | | | | | | 33,000 |
|
Reclamation | | | | | | | | | 16,000 |
|
Project/pre-development costs | | | | | | | | | 7,000 |
|
All-in sustaining costs | | | | | | | | | $ | 673,644 |
|
Silver equivalent ounces sold | | | | | | | | | 26,997,000 |
|
Kensington and Wharf silver equivalent ounces sold | | | | | | 13,560,000 |
|
Consolidated silver equivalent ounces sold | | | | | | | | 40,557,000 |
|
All-in sustaining costs per silver equivalent ounce | | | | | | $16.25 - $16.75 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
In thousands (except metal sales, per ounce or per pound amounts) | Palmarejo | | Rochester | | Kensington | | Wharf | | | | |
Costs applicable to sales, including amortization (U.S. GAAP) | $ | 219,862 | | | $ | 165,031 | | | $ | 191,055 | | | $ | 109,179 | | | | | |
Amortization | (35,687) | | | (22,218) | | | (39,051) | | | (7,811) | | | | | |
Costs applicable to sales | $ | 184,175 | | | $ | 142,813 | | | $ | 152,004 | | | $ | 101,368 | | | | | |
By-product credit | — | | | — | | | — | | | (745) | | | | | |
Adjusted costs applicable to sales | $ | 184,175 | | | $ | 142,813 | | | $ | 152,004 | | | $ | 100,623 | | | | | |
| | | | | | | | | | | |
Metal Sales | | | | | | | | | | | |
Gold ounces | 107,034 | | | 37,072 | | | 113,890 | | | 78,757 | | | | | |
Silver ounces | 6,831,642 | | | 3,257,498 | | | | | 32,199 | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Revenue Split | | | | | | | | | | | |
Gold | 51% | | 47% | | 100% | | 100% | | | | |
Silver | 49% | | 53% | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Adjusted costs applicable to sales | | | | | | | | | | | |
Gold ($/oz) | $825 - $925 | | $1,650 - $1,850 | | $1,300 - $1,400 | | $1,250 - $1,350 | | | | |
Silver ($/oz) | $12.75 - $13.75 | | $20.00 - $26.00 | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Reconciliation of All-in Sustaining Costs per Silver Equivalent OunceApplicable to Sales for Previous 20172022 Guidance
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
In thousands (except metal sales, per ounce or per pound amounts) | Palmarejo | | Rochester | | Kensington | | Wharf | | | | |
Costs applicable to sales, including amortization (U.S. GAAP) | $ | 211,800 | | | $ | 148,540 | | | $ | 185,494 | | | $ | 106,175 | | | | | |
Amortization | (34,183) | | | (20,094) | | | (48,763) | | | (8,378) | | | | | |
Costs applicable to sales | $ | 177,617 | | | $ | 128,446 | | | $ | 136,731 | | | $ | 97,797 | | | | | |
By-product credit | — | | | — | | | — | | | (1,802) | | | | | |
Adjusted costs applicable to sales | $ | 177,617 | | | $ | 128,446 | | | $ | 136,731 | | | $ | 95,995 | | | | | |
| | | | | | | | | | | |
Metal Sales | | | | | | | | | | | |
Gold ounces | 105,255 | | | 38,912 | | | 116,502 | | | 75,261 | | | | | |
Silver ounces | 6,501,289 | | | 3,405,155 | | | | | 75,093 | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Revenue Split | | | | | | | | | | | |
Gold | 49% | | 46% | | 100% | | 100% | | | | |
Silver | 51% | | 54% | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Adjusted costs applicable to sales | | | | | | | | | | | |
Gold ($/oz) | $750 - $850 | | $1,490 - $1,590 | | $1,150 - $1,250 | | $1,225 - $1,325 | | | | |
Silver ($/oz) | $13.50 - $14.50 | | $20.75 - $22.75 | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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) | $ | 228,500 |
| $ | 113,550 |
| $ | 92,300 |
| $ | 1,038 |
| $ | 435,388 |
| $ | 136,600 |
| $ | 82,200 |
| $ | 218,800 |
| $ | 654,188 |
|
Amortization | 76,500 |
| 22,550 |
| 8,300 |
| 281 |
| 107,631 |
| 29,100 |
| 13,200 |
| 42,300 |
| 149,931 |
|
Costs applicable to sales | $ | 152,000 |
| $ | 91,000 |
| $ | 84,000 |
| $ | 757 |
| $ | 327,757 |
| $ | 107,500 |
| $ | 69,000 |
| $ | 176,500 |
| $ | 504,257 |
|
Silver equivalent ounces sold | 14,900,000 |
| 7,800,000 |
| 5,200,000 |
| 105,000 |
| 28,005,000 |
| | | | 41,505,000 |
|
Gold equivalent ounces sold | | | | | | 130,000 |
| 95,000 |
| 225,000 |
| |
Costs applicable to sales per ounce guidance | $10.00 - $10.50 | $11.50 - $12.00 | $15.75 - $16.25 | | | $800 - $850 | $700 - $750 | | |
| | | | | | | | | |
Costs applicable to sales | | | | | | | | | $ | 504,257 |
|
Treatment and refining costs | | | | | | | | | 4,500 |
|
Sustaining capital, including capital lease payments | | | | | | | 77,000 |
|
General and administrative | | | | | | | | | 30,000 |
|
Exploration | | | | | | | | | 30,000 |
|
Reclamation | | | | | | | | | 15,000 |
|
Project/pre-development costs | | | | | | | | | 6,000 |
|
All-in sustaining costs | | | | | | | | | $ | 666,757 |
|
Silver equivalent ounces sold | | | | | | | | | 28,005,000 |
|
Kensington and Wharf silver equivalent ounces sold | | | | | | 13,500,000 |
|
Consolidated silver equivalent ounces sold | | | | | | | | 41,505,000 |
|
All-in sustaining costs per silver equivalent ounce guidance | | | | | | $15.75 - $16.25 |
Cautionary Statement Concerning Forward-Looking Statements
This report contains numerous forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) relating to the Company’s gold and silver mining business, including statements regarding operations at the Company’s properties, exploration and development efforts, strategies, to produce long-term cash flow, provide opportunities for growth through continued exploration, generate superiorexpectations regarding the Rochester POA 11 expansion project, the Silvertip mine's potential expansion and sustainable returns for stockholders, maximize net cash flow, reduce operating and non-operating costs, demonstrate consistent capital discipline, efficiently manage working capital, and statementsrestart, inflation, expectations regarding tax positions, the anticipated resultsconsideration received from the sale of the Silvertip acquisition,La Preciosa project, hedging strategies, realization of deferred tax assets, expectations about the recovery of VAT in Mexico, timing of completion of obligations under the Amended Sales Contract at Kensington, liquidity management, financing plans, risk management strategies, capital allocation and anticipated production, costs, and expenses, drought conditions in Bolivia, efforts to mitigate risks associated with gold and silver price and foreign currency fluctuations and the adequacy of liquidity and capital resources.expenses. Such forward-looking statements are identified by the use of words such as “believes,” “intends,” “expects,” “hopes,” “may,” “should,” “plan,” “projected,” “contemplates,” “anticipates” or similar words. Actual results could differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ materially from those projected in the forward-looking statements include (i) the risk factors set forth in thePart II, Item 1A of this Report and in “Risk Factors” section of the 20162021 10-K, in this Report and in the Company’s Quarterly Report on Form 10-Q filed on July 27, 2017, and the risks and uncertainties discussedset forth in this MD&A (ii) the risk that the anticipated resultsand Item 3 of the Silvertip acquisition are not realized, (iii)this report, (ii) the risks and hazards inherent in the mining business (including risks inherent in developing large-scale mining projects, environmental hazards, industrial accidents, weather or geologically related conditions), (iv)(iii) changes in the market prices of gold and silver and a sustained lower price or higher treatment and refining charge environment, including any resulting impact on cash flows, (v)(iv) the uncertainties inherent in the Company’s production, exploratory and developmental activities, including risks relating to permitting and regulatory delays (including the impact of government shutdowns), ground conditions and grade and recovery variability, (vi)(v) any future labor disputes or work stoppages (involving the Company and its subsidiaries or third parties), (vii)(vi) the uncertainties inherent in the estimation of gold and silvermineral reserves and mineralized material, (viii)resources, (vii) changes that could result from the Company’s future acquisition of new mining properties or businesses, (ix)(viii) the loss of access to any third-party smelter to whichwhom the Company markets silverits production, (ix) the potential effects of the COVID-19 pandemic, including impacts to workforce, equipment and gold,materials availability, inflationary pressures, continued access to financing sources, government orders that may require temporary suspension of operations at one or more of our sites and effects on our suppliers or the refiners and smelters to whom the Company markets its production, (x) the effects of environmental and other governmental regulations, (xi) the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries, (xii) the political risks and uncertainties associated with operations in Bolivia; and (xiii)(xii) the Company’s ability to raise additional financing necessary to conduct its business, make payments or refinance its debt. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.
Item 3.Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to various market risks as a part of its operations and engages in risk management strategies to mitigate these risks. The Company continually evaluates the potential benefits of engaging in these strategies based on current market conditions. The Company does not actively engage in the practice of trading derivative instruments for profit. Additional information about the Company’s derivative financial instruments may be found in Note 1113 -- Derivative Financial Instruments in the notes to the condensed consolidated financial statements.Consolidated Financial Statements. This discussion of the Company’s market risk assessments contains “forward looking statements”. For additional information regarding forward-looking statements and risks and uncertainties that could impact the Company, please refer to Item 2 of this Report - Cautionary Statement Concerning Forward-Looking Statements. Actual results and actions could differ materially from those discussed below.
Gold, Silver, Zinc and Silver PriceLead Prices
Gold, silver, zinc and silverlead prices may fluctuate widely due to numerous factors, such as U.S. dollar strength or weakness, demand, investor sentiment, inflation or deflation, and global mine production. The Company’s profitability and cash flow may be significantly impacted by changes in the market price of gold, silver, zinc and silver.lead.
Hedging
To mitigate the risks associated with gold and silvermetal price fluctuations, the Company may enter into option contracts to hedge future production. The Company had no outstanding forward contracts on 221,000 ounces of gold at June 30, 2022 that settle monthly through December 2023. The Company is targeting to hedge up to 70% of expected gold production through 2022, 50% of expected gold production for the first half of 2023 and silver option25% of expected gold production for the second half of 2023 in order to protect cash flow during a period of elevated capital expenditures, and may in the future layer on additional hedges as circumstances warrant. The weighted average fixed price on the forward contracts is $1,974 per ounce of gold. The contracts are generally net cash settled and, if the spot price of gold at Septemberthe time of expiration is lower than the fixed price or higher than the fixed prices, it would result in a realized gain or loss, respectively. The forward contracts expose us to (i) credit risk in the form of non-performance by counterparties for contracts in which the contract price is below the spot price of a commodity, and (ii) price risk to the extent that the spot price exceeds the contract price for quantities of our production covered under contract positions. To reduce counter-party credit exposure, the Company enters into contracts with institutions management deems credit-worthy and limits credit exposure to each institution. The Company does not anticipate non-performance by any of its counterparties. For additional information, please see the section titled “Risk Factors” in the 2021 10-K and part II, Item 1A of this report.
At June 30, 2017.2022, the fair value of the gold forward contracts was an asset of $29.3 million. For the six months ended June 30, 2022 the Company recognized a gain of $3.1 million related to expired contracts in Revenue and the remaining outstanding forwards contracts were included in accumulated other comprehensive income (loss). A 10% increase and decrease in the price of gold at June 30, 2022 would result in a net realized loss and gain of $7.2 million and $74.8 million, respectively. The closing price of gold was $1,817 per ounce. As of August 2, 2022, the closing price of gold was $1,780 per ounce.
Provisional Silver and GoldMetal Sales
The Company enters into sales contracts with third-party smelters and refiners which, in some cases, provide for a provisional payment based upon preliminary assays and quoted metal prices. The provisionally priced sales contracts contain an embedded derivative that is required to be separated from the host contract. Depending on the difference between the price at the time of sale and the final settlement price, embedded derivatives are recorded as either a derivative asset or liability. The embedded derivatives do not qualify for hedge accounting and, as a result, are marked to the market gold and silver price at the end of each period from the provisional sale date to the date of final settlement. The mark-to-market gains and losses are recorded in earnings. Changes in silver and gold prices resulted in provisional pricing mark-to-market losses of $0.1 million and gains of $0.6 million in the three and nine months ended SeptemberAt June 30, 2017, respectively, compared to losses of $0.8 million and gains of $0.4 million in the three and nine months ended September 30, 2016, respectively.
At September 30, 2017,2022, the Company had outstanding provisionally priced sales of 0.2 million ounces of silver and 26,08710,842 ounces of gold at an average price of $1,846. Changes in gold prices resulted in provisional pricing mark-to-market gain of $16.86 and $1,299, respectively.$0.01 million during the six months ended June 30, 2022. A 10% change in realized silver pricegold prices would cause revenue to vary by $0.4 million and a 10% change in realized gold price would cause revenue to vary by $3.4$2.0 million.
Foreign Currency
The Company operates, or has mineral interests, in several foreign countries including Australia, Bolivia, Chile,Canada, Mexico, Argentina, Ecuador, and New Zealand, which exposes it to foreign currency exchange rate risks. Foreign currency exchange rates are influenced by world market factors beyond the Company’s control such as supply and demand for U.S. and foreign currencies and related monetary and fiscal policies. Fluctuations in local currency exchange rates in relation to the U.S. dollar may significantly impact profitability and cash flow.
Foreign Exchange Hedging
To manage foreign currency risk, the Company may enter into foreign currency forward exchange forward and/or option contracts whencontracts. In 2020, the Company believes suchentered into foreign currency forward contracts would be beneficial.to manage this risk and designated these instruments as cash flow hedges of forecasted foreign denominated transactions. The Company had no outstanding foreign currency forward exchange contracts at SeptemberJune 30, 2017.2022.
Interest Rates
Interest Rate Hedging
We may use financial instruments to manage exposures to changes in interest rates on loans, which exposes us to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, it does not pose credit risk. We seek to minimize the credit risk in derivative instruments by entering into transactions with what we believe are high-quality counterparties. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. The Company had no outstanding interest rate swaps at June 30, 2022.
Investment Risk
Equity Price Risk
We are exposed to changes in the fair value of our investments in equity securities. For the six months ended June 30, 2022, the Company recognized unrealized losses of $49.1 million in Fair value adjustments, net due to decreases in the stock price of those equity securities. At June 30, 2022, the fair value of the equity securities was $99.1 million. A 10% change in realized equity prices would result in an unrealized gain or loss of $10.0 million.
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Item 4. | Controls and Procedures |
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(a) | Disclosure Controls and Procedures |
Item 4. Controls and Procedures
(a)Disclosure Controls and Procedures
As of the end of the period covered by this quarterly report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which by their nature, can provide only reasonable assurance regarding management’s control objectives. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events. Based upon the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective and operating to provide reasonable assurance that information required to be disclosed by it in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
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(b) | Management’s Report on (b)Changes in Internal Control Over Financial Reporting |
Based on an evaluation by the Company’s Chief Executive Officer and Chief Financial Officer, such officers concludedReporting
that there wasThere have been no changechanges in the Company’s internal control over financial reporting during the three months ended SeptemberJune 30, 20172022 that hashave materially affected, or isare reasonably likely to materially affect, the Company’sits internal control over financial reporting.
PART II
Item 1.Legal Proceedings
For a discussion of legal proceedings, seeSee Note 1917 -- Commitments and Contingencies in the notes to the Consolidated Financial Statements included herein.
Item 1A.Risk Factors
Item 1A --- Risk Factors of the 20162021 10-K and the Company’s Quarterly Report on Form 10-Q filed on July 27, 2017 sets forth information relating to important risks and uncertainties that could materially adversely affect the Company'sCompany’s business, financial condition or operating results. Those risk factors have been supplemented and updated in the Company’s Form 10-Q for the quarter ended March 31, 2022 (the “Q1 2022 10-Q”) and in this Form 10-Q. Except as supplemented and updated in the Q1 2022 10-Q and below, the risk factors set forth in the 2021 10-K remain current. Additional risks and uncertainties that the Company does not presently know or that it currently deems immaterial also may impair our business operations.
The CompanyWe are required to obtain and renew governmental permits in order to conduct operations, a process which is often costly and time-consuming. Our ability to obtain necessary government permits to expand operations or begin new operations may be unablematerially affected by third-party activists.
In the normal course of our business, we are required to successfully integrateobtain and renew governmental permits for exploration, operations and expansion of existing operations and for the development of new projects, such as the permits recently acquired Silvertipobtained for POA 11 at Rochester, POA 1 at Kensington and the permitting effort currently underway at Palmarejo to allow the deposit of future tailings into the legacy open pit rather than expand the current tailings impoundment facility. Obtaining and renewing governmental permits is a complex and time-consuming process. The timeliness and success of permitting efforts are contingent upon many variables not within our control, including the interpretation of permit approval requirements administered by the applicable permitting authority and government and third-party sentiment towards the mining industry generally. We may not be able to obtain or renew permits that are necessary to our operations or the cost and time required to obtain or renew permits may exceed our expectations. Any unexpected delays or costs associated with the permitting process could delay the development or impede the operation of a mine, which in turn could materially adversely affect our revenues and future growth. For example, we are currently experiencing prolonged delays by the Mexican federal environmental authority, SEMARNAT, in approving the permit described above to deposit future tailings into the legacy open pit at Palmarejo. We believe we have complied with all applicable requirements for the issuance of the permit, and expected to receive it last year. As has been publicized in media coverage, we understand that other mining projects in Mexico are also experiencing permitting delays or, other acquisitions.
Therein certain circumstances, denials of permits. We are engaging in advocacy with government authorities to advance our permit application, which we believe has satisfied all criteria for approval, but there can be no assurance thatas to the anticipated benefitstiming of approval. Any further delay in obtaining the recently completed acquisition of the Silvertip mine in British Columbia, Canada, or any future acquisition, will be realized. The success of this and any other acquisition will depend upon the Company’s ability to effectively manage the integration and operations of entities or properties it acquires and to realize other anticipated benefits. The process of managing acquired businesses may involve unforeseen difficulties andpermit may require a disproportionate amount of management resources,us to revise mine plans to curtail expected production at Palmarejo due to shortfalls in tailings storage capacity, which may divert management’s focus and resources from other strategic opportunities and from operational matters during this process.
Any acquisition would be accompanied by risks, including:
a significant change in commodity prices after the Company has committed to complete the transaction and established the purchase price or exchange ratio;
a material orebody may prove to be below expectations;
difficulties integrating and assimilating the operations and personnel of any acquired companies, realizing anticipated synergies and maximizing the financial and strategic position of the combined enterprise, and maintaining uniform standards, policies and controls across the organization; and
the acquired business or assets may have unknown liabilities which may be significant.
In addition, the Silvertip acquisition was funded, in part, with funds drawn under the Facility, resulting in increased interest expense. In connection with any future acquisition, the Company may incur indebtedness or issue equity securities or securities convertible into equity securities, resulting in increased interest expense, or dilution of the percentage ownership of existing stockholders. The Company cannot predict the impact of future acquisitions on the price of its common stock, or assure that it
would be able to obtain any necessary financing on acceptable terms. Unprofitable acquisitions, or additional indebtedness or issuances of securities in connection with such acquisitions, may negativelycould materially adversely affect results of operations.
Finally, the Company’s systems, procedures and controls may be inadequate to support the expansion of our operations resulting from an acquisition or development of a new mine, including the Silvertip mine. The Company’s future operating results could be affected by the ability of its officers and key employees to manage the changing business conditions and to integrate an acquired business or new operation into Coeur. There may also be liabilities, such as environmental liabilities, or significant capital expenditures that the Company failed to discover or have underestimated in connection with any acquisition or development. Any such liabilities or capital expenditure requirements could have a material adverse effect on the Company’s business, financial condition or future prospects.
The Company's results of operations, cash flows and operating costs are highly dependent upon the market prices of silver and gold and, following the Silvertip acquisition, other commodities, including zinc and lead, which are volatile and beyond the Company's control.
Silver, gold, lead and zinc are actively traded commodities, and their prices are volatile. During the twelve months ended September 30, 2017, the price of silver ranged from a low of $15.22 per ounce to a high of $19.35 per ounce, the price of gold ranged from a low of $1,126 per ounce to a high of $1,346 per ounce, the price of lead ranged from a low of $0.89 per pound to a high of $1.14 per pound, and the price of zinc ranged from a low of $1.01 per pound to a high of $1.45 per pound. The closing market prices of silver, gold, lead, and zinc on October 24, 2017 were $17.04 per ounce, $1,276 per ounce, $1.12 per pound, and $1.47 per pound, respectively.
Silver, gold, lead and zinc prices are affected by many factors beyond the Company’s control, including U.S. dollar strength or weakness, speculation, global currency values, the price of products that incorporate silver, gold, lead or zinc, global and regional demand and production, political and economic conditions and other factors. In addition, Exchange Traded Funds (“ETFs”), which have substantially facilitated the ability of large and small investors to buy and sell precious metals and base metals, have become significant holders of gold, silver, lead and zinc. Silver and gold prices are also affected by prevailing interest rates and returns on other asset classes, expectations regarding inflation and governmental decisions regarding precious metals stockpiles.
Because the Company derives a significant portion of its revenues from sales of silver and gold, and to a lesser extent, lead and zinc as a result of the Silvertip acquisition, its2023 results of operations and cash flows will fluctuateflow. In addition, key permits and approvals may be revoked or suspended or may be changed in a manner that adversely affects our operations.
Private parties such as environmental activists frequently attempt to intervene in the prices of these metals change. A period of significant and sustained lower gold and silver pricespermitting process and to persuade regulators to deny necessary permits or seek to overturn permits that have been issued. Obtaining the necessary governmental permits is a lesser extent, leadcomplex and zinc prices, wouldtime-consuming process involving numerous jurisdictions and often involving public hearings and costly undertakings. These third-party actions can materially and adversely affectincrease the Company’s results of operations and cash flows. Additionally, if market prices for silver, gold, lead and zinc decline further or remain at current or lower levels for a sustained period of time, the Company may have to revise its operating plans, including reducing operating costs and capital expenditures, terminating or suspending mining operations at one or more of its properties and discontinuing certain exploration and development plans. The Company may be unable to decrease its costs in an amount sufficient to offset reductions in revenues, and may continue to incur losses.
Operating costs at the Company’s mines are also affected by the price of input commodities, such as fuel, electricity, labor, chemical reagents, explosives, steel and concrete. Prices for these input commodities are volatile and can fluctuate due to conditions that are difficult to predict, including global competition for resources, currency fluctuations, consumer or industrial demand and other factors. Continued volatilitycause delays in the pricespermitting process and could cause us to not proceed with the development or expansion of commoditiesa mine. In addition, our ability to successfully obtain key permits and other suppliesapprovals to explore for, develop, operate and expand mines and to conduct our operations will likely depend on our ability to develop, operate, expand and close mines in a manner that is consistent with the Company purchases could lead to higher costs,creation of social and economic benefits in the surrounding communities, which would adversely affect results of operations and cash flows.
The terms of the Company’s debt impose restrictions on its operations.
The agreements governing the Company’s outstanding indebtedness include a number of significant negative covenants. These covenants, among other things:
limit the Company’smay or may not be required by law. Our ability to obtain additional financing, repurchase outstanding equitypermits and approvals and to successfully operate in particular communities may be adversely impacted by real or issue debt securities;
require the Company to meet certain financial covenants consisting of a consolidated net leverage ratio and a consolidated interest coverage ratio;
require a portion of the Company’s cash flows to be dedicated to debt service payments insteadperceived detrimental events associated with our activities or those of other purposes, thereby reducingmining companies affecting the amountenvironment, human health and safety of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;
limit the Company’s ability to sell, transfer or otherwise dispose of assets, enter into transactions with and invest capital in affiliates, enter into agreements restricting our subsidiaries’ ability to pay dividends, consolidate, amalgamate, merger or sell all or substantially all of the Company’s assets;
increase our vulnerability to general adverse economic and industry conditions;
limit the Company’s flexibility in planning for and reacting to changes in the industrycommunities in which we compete; andoperate.
place the Company at a disadvantage compared to other, less leveraged competitors.
A breach of any of these covenants could result in an event of default under the applicable agreement governing the Company’s outstanding indebtedness that, if not cured or waived, could cause all amounts outstanding with respect to the debt to be due and payable immediately. Acceleration of any debt could result in cross-defaults under the Company’s other debt instruments. The Company’s assets and cash flow may be insufficient to repay borrowings fully under all of its outstanding debt instruments if any of its debt instruments are accelerated upon an event of default, which could force the Company into bankruptcy or liquidation.
The Company’s future operating performance may not generate cash flows sufficient to meet debt payment obligations.
As of September 30, 2017, the Company had approximately $288.9 million of outstanding indebtedness. On October 12, 2017, the Company borrowed $100.0 million under the Facility. The Company’s ability to make scheduled debt payments on outstanding indebtedness will depend on future results of operations and cash flows. The Company’s results of operations and cash flows, in part, are subject to economic factors beyond its control, including the market prices of silver, gold, lead and zinc. The Company may not be able to generate enough cash flow to meet obligations and commitments under outstanding debt instruments. If the Company cannot generate sufficient cash flow from operations to service debt, it may need to further refinance debt, dispose of assets or issue equity to obtain the necessary funds.
If the Company’s cash flows and capital resources are insufficient to fund its debt services obligations, the Company could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance its indebtedness. The Company cannot predict whether it would be able to refinance debt, issue equity or dispose of assets to raise funds on a timely basis or on satisfactory terms. In a rising interest rate environment, the costs of borrowing additional funds or refinancing outstanding indebtedness would also be expected to increase. The agreements governing the Company’s outstanding indebtedness restrict the Company’s ability to dispose of assets and use the proceeds from those dispositions and may also restrict its ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. The Company may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due. If the Company raises additional funds by issuing equity securities or securities convertible into equity securities, holders of its common stock could experience significant dilution of their ownership interest, and these securities could have rights senior to those of the holders of common stock.
Item 4.Mine Safety Disclosures
Information pertaining to mine safety matters is reported in accordance with Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act in Exhibit 95.1 attached to this Form 10-Q.
Item 5. Other Information
In accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, and the Company’s insider trading policy, Mitchell J. Krebs, the Company’s President and Chief Executive Officer, entered into a selling plan on May 13, 2022. Under the selling plan, between August 2022 and August 2024, Mr. Krebs will sell a total of 200,000 shares of the Company’s common stock so long as the market price of the common stock is higher than the minimum threshold price specified in the plan.
None.Rule 10b5-1 permits an insider to implement a written prearranged trading plan entered into at a time when the insider is not aware of any material nonpublic information about the Company and allows the insider to trade on a one-time or regularly scheduled basis regardless of any material nonpublic information about the Company thereafter received by the insider.
Item 6. Exhibits
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3.1 |
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10.1 | Sixth Amendment to Credit Agreement, dated September 29, 2017,May 2, 2022, by and among Coeur Mining, Inc., certain subsidiaries of Coeur Mining, Inc., as guarantors, the lenders party thereto and Bank of America, N.A., as administrative agentagent. (Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 2, 2017May 3, 2022 (File No. 001-08641)). |
31.110.2 | |
31.1 | |
31.2 | |
32.1 | |
32.2 | |
95.1 | |
101.INS | XBRL Instance Document** |
101.SCH | XBRL Taxonomy Extension Schema** |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase** |
101.DEF | XBRL Taxonomy Extension Definition Linkbase** |
101.LAB | XBRL Taxonomy Extension Label Linkbase** |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase** |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and included in Exhibit 101). |
* Management contract or compensatory plan or arrangement.
** The following financial information from Coeur Mining, Inc.’s Quarterly's Annual Report on Form 10-Q for the three and nine monthsquarter ended SeptemberJune 30, 2017,2022, formatted in XBRL (Extensible Business Reporting Language): CondensedConsolidated Balance Sheets, Consolidated Statements of Comprehensive Income (Loss), Condensed Consolidated Statements of Cash Flows Condensed Consolidated Balance Sheets, and Condensed Consolidated Statement of Changes in Stockholders’Stockholders' Equity.
** Management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | COEUR MINING, INC. | |
| | (Registrant) | |
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Dated | August 3, 2022 | COEUR MINING, INC. | |
| | (Registrant) | |
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Dated | October 25, 2017 | /s/ Mitchell J. Krebs | |
| | MITCHELL J. KREBS | |
| | President and Chief Executive Officer (Principal Executive Officer) |
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Dated | October 25, 2017August 3, 2022 | /s/ Peter C. MitchellThomas S. Whelan | |
| | PETER C. MITCHELLTHOMAS S. WHELAN | |
| | Senior Vice President and Chief Financial Officer (Principal Financial Officer) |
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Dated | October 25, 2017August 3, 2022 | /s/ Mark SpurbeckKen Watkinson | |
| | MARK SPURBECKKEN WATKINSON | |
| | Vice President, FinanceCorporate Controller and Chief Accounting Officer (Principal Accounting Officer) |