CDE - Earnings call transcript Q2 2019

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Operator

Good day, and welcome to the Coeur Mining Inc.

Second Quarter 2019 Financial Results Conference Call and Webcast. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Mr. Investor of Director DePartout, Relations. Paul Please go ahead.

Paul DePartout

Good Earnings Conference you. morning. Welcome Quarter Second Mining's Coeur Call. to Thank

Our results and from today's may were copy released our forward-looking would after yesterday's market statements everyone remind our press on website. that and differ. comments like available include to of release, closed results release slides of are which for slides actual call press our I some our and a today

risk our review in factors cautionary presentation, included release Please XXXX described in recent press in the XX-Q our and statements XX-K.

to Now it turn I'll over Mitch.

Mitchell Krebs

Paul, here with and and represented Thanks, line and members Results Tom good increase of American strong handful a five me morning. of along in the are operations Smith, our our management prior largely quarter. team. With from with Terry expectations other over the Whelan a North were

half an the guidance and year, look and quarter plans second are we our remain quarter production as of As year our cost intact. reiterating even fourth the stronger third full stronger to we for

saw leading adjusted five four that production quarter, free second from and flow Four operations cash increase of XX% out four stood flow cash are me. the the improved overall, all metals a across to operating solid during growth our delivered EBITDA. double-digit There to in and quarter our highlights operations

to of the First, from it continue. was great the we to strong free higher grades back expect deposit, see flow on Kensington cash generate Jualin which

recoveries our in team reporting we material quarters. to of to Rochester look proud feed and silver to now coming impact very I'm configuration, to on you its they crusher Second, at as have new begun forward

goal attended. potential visibility a operation better to into to high-grade analyst Third, the tour, at an provide recently Silvertip, many was the showcase of and deposits. the you of we The hosted

and cash glad ability significantly us million reserves June, far demonstrated improves finally, efforts total resources about I was break-even our nearly exceptional we While quarter-over-quarter by have expand resumed time. the We drilling flexibility to which balance optimistic our achieving $XX XX%, thus forward. and greatly over going during flow, or significant make our And in see our declined to quarter at improvements. not sheet returned yet Silvertip debt Silvertip is which results

some this in a provide color additional will Tom minutes. on few

project handing I another Before signed to call you over release to in project. to life an have extend work Terry, represents option owned note our Hill the to noticed gold for and Gold, mine's our items Hill wanted and by the it's is its that mine, relating in nearby we leverage Richmond agreement a Richmond further to opportunity past adjacent infrastructure. producing Barrick an may earnings

set approach proactive highlight Slide Lastly, I to XX of to facilities. want that starting managing a on outline tailings our slides our

that, with it Terry. to I'll over And turn

Terrence Smith

represented an everyone. step the operational good From up and Mitch, the second morning, period. prior from Thanks, to quarter standpoint,

saw to As we and which plan, catalysts Slide rock for Mitch a XXXX half production the at increased XX%, largely place gold of Quarter-over-quarter, our remainder and as respectively. the the mentioned, took results this flow. Palmarejo, highlight we on X cash of XX% trend is of second at the focused first in positive due free cemented field silver the expected to an generating the mine and year. Starting our continue each of maintenance quarter. production expansion completion and key remain into

July. by important increase with of in began nearly and team the better of recovery throughput access mining the This La reaching end deposit to At an mill XX%. milestone characteristics quarter, achieved allowed Nación oraphase the secondary us and stokes to the by early the

mill day add XXX once tons to up. La reminder, additional of Nación per a field As around expected ramped is

roughly recoveries of commissioning expected for X%. is metallurgical which thickener silver, improve to are week, completed last and a new also both We gold

current to initiatives CapEx guidance today's the line the At summarizes production, Palmarejo's X which these with the Russian includes and are now circuit of reach of and Together Rochester, presentation, deliver Slide year expected recovery pleased ranges. and for status in full preliminary new to running, cost faster I'm up The and fully is expectations unit. report line that is upgraded and HPGR silver higher recoveries. test configuration, newly in our crushing gradation work with

on quickly accelerate pad, to upgrade place the complete, which recoveries. IV to the leach will With newly liner completed crusher allow we a Stage helping plan to fresh of section solution material hit

end access we've the planning higher been IV. continue runner grade capacity the strategy to hiring addition, We're free maximize year. mine Stage In this and of through to using

the of operational, on and team's deliver Rochester's production guidance. metallurgy fully Jualin flow extra, and third grade remain full at CapEx contribute We improved stream. ounce Jualin driving cash cost. the for with average and to period, promising, mine coming results and of internal of confident free XX% preliminary, total of expected cost Kensington, trend production ability production an year expectations, this Kensington ton. our ahead approximately to quarters run from With ore the our fourth production of the We X.XX unit per XX% with remains strong in supplementary for At plans continue approximately in anticipate

Jualin of demonstrate XXX $XX.X overall of do economics during and operating deposit quarter. that of quarter ounce at results a Kensington financial approximately like generated the high-grade for average the free Kensington can per cash million operations. second an flow the cost

pad drilling diluted cost to this [indiscernible] including Johnston experienced impacted Eureka, Our strategy capacity. extend quarter, unseasonably and at wet solutions Kensington to deposits, At wharf, lower during Elmira, and other grade Raven is Jualin we weather higher profile. known crushing which like leach continue the

water and just we amount in double months. our of whole annual the In six treated released fact,

allowing plant year extremely to to unseasonable last has proven be conditions. investment Our us our up upgrade these beneficial keep on to denitrification

from plant, benefit the last to I'll While the third Silvertip. crash to higher take an stacking primarily of achieve not place is but year. contractor off which of crusher or ore, planned remainder And quarter. our least, with to the also XXX,XXX during finish has mobilized XXXX of additional been grade has tons our to Production the expected through

performance we highlighted was As acquisition. Slide of quarter period since operational best second on X, XXXX the

quarter-over-quarter, higher Although was drove grades in production. throughput increases down our recovery improved significant rates and slightly

we type It last metals As rates increased through expected, the including quarter. XX%. the days recovery of above we challenges also discussed during see many was recoveries encouraging all quarter, mass work to very for mill balance

priorities, feed mill we direction, go grades highlighted and on While right are are will remain Slide way the X, a which focused and availability. are in operation. the still to recoveries heading confident we key stabilizing on on continue have We

encouraging the high-grade potential expanse help highlighted deposit. XX, demonstrate of mentioned, resource Slide very and Mitch we which drilling are this seeing are results from As at on Silvertip,

the Our at reducing by achieved positive top cost stabilized operating remain Silvertip goals simple, line flow end began of cash the year. performance and

call the delivering safe the continued I'd positive to handing and for production just Before to our a like results moment dedications, take thank everyone and over business. Tom, for their operations across

Now Tom quarter. highlights will cover for the the financial

Thomas Whelan

Thanks, Darry.

I steps towards financial we our of Before results, in during We reducing balance bit color to the referred his add the initiatives levels. are into dive debt more Mitch last opening. our that helped a to million to focused reduction concentrate balance market That These to and portion to In million several we I'd us work sheet offering quarter's prepay million the goal at facility second call, equity total $XX debt a down for from $XX revolving Kensington. completed a executed the reduce quarter-over-quarter. initiatives at credit to million and sales within XX% $XX quarter, lead a $XXX counterparty in like took existing comfortable goal. this on to quarter during a mentioned

the remained following expected revolving We is the conveyance additional flow our June balance the in including is to compliance year. cost. facility amendment of credit for half sheet. mill and quarter revenue prepay, XXXX, liabilities this with in presented our additional Providing working of on And XX, accrued we was our some million minor through brought be capital deferred received in key that as of the color cash forward in second at recorded for fact, $XX a and the originally

gold potential the expect note the value the maintained the exposure it and is to recognize the to However, important prepay to in year. full the of we price that upside end of our by of

million increased million. by $XXX Slide on XX, to $XX quarter the highlighted As we during our liquidity

Turning projects In million across remain cost over quarter million higher CapEx. our management prior free CapEx second cash as flow operating to growth compared and Slide from and the well $XX disciplined investing results of line guidance as proceeds driven financial positive expect cash from the continue second portfolio in the full $X year, to key was top negative range. improved X, flow in on performance, to we quarter. year our within the by prepay our lower half This was

Between positive strengthening about our silver cost anticipated our achieving to are to Slide framework we performance goal. extremely As managing flow we continue stated half in to We we and focusing business. focused free this gold delivering cash on our ounces, the the second on according and XX. continuing on plan prices, summarized and allocate to dollars capital past, optimistic are strong not generating

it Mitch. to back hand I'll that, over With

Mitchell Krebs

Thanks, Tom.

Looking at Slide XX.

need leverage remainder the the between during stockholders. to gold the cash our rationalize the higher now on end HPGR of the top structure half and positioned well operating deliver and are recoveries for can of for priorities Top performance silver and generate value see with generating reducing long-term year. free be to end of by so flow the You we line XXXX key levels meaningful to Optimizing and cash of second year. maximizing the we Silvertip of year items starting its Rochester reiterate, the cost X To achieving flow the positive can from our

precious on results growth higher to continue metals portfolio American we remain positive North and do, will and to We assets. balanced our focused and from quality standard pursue a everything delivering

go With that, questions. open it up let's for ahead and

Operator

Instructions]. [Operator

The question Research comes Michael Partners. from Vertical with Dudas first

Michael Dudas

wonderful Kensington. First results question, again, with

look is mix mix drilling You little through forward, out that XXXX somebody mix helpful how you've of a XX%, quickly those the profile? that bit or into did on talk forward early going sweetened going can some and help gets doing over to in about been targets Jualin that the

Mitchell Krebs

take I'll ask Sure. to Yes. Terry that.

Terrence Smith

getting question. really just at going Sure. Jualin. We're Mike, good

declared year, into two last project are the production as late We remember. And now. quarters just you'll commercial we're

hold We are starting more to consistently. take long strokes

good will establish. And there profile our that that Jualin is so consistent I think

will of pretty been numerous some have I we've that are for sources other about. events at been Raven we've there we're means more And on another exploring, is and time. the news high-grade some in one, excited other but mining Kensington,

as is high-grade long for idea ore the stream to supplemental So this as we can. continue

Michael Dudas

through surprising at Secondly, targets the on good upside? the been for XXXX, half plans challenges earth Anything Or indications. news that's the that second looking the into maybe look you and else to 'XX. those investments something on any -- to on the at Rochester, might early meet accelerating

Mitchell Krebs

ahead. go It's will and Mitchell. I'll start, then Terry

of the and its from to Mike, recall, of production get our failed you us highlighted thing that plan did a removed and here on the contingency release, in replaced a August. that were of there part there secondary early As crusher everything great out July, and and going up last of we fact implementing part team the job

a did was challenge, to job that. that team So and great a responding

think at material the is going what stages be between the a steady as you so pretty test and anything three so is seen out crusher that Terry, end is I the of? you of on mindful XX-hour the good. that performance look in and of [indiscernible] entire should we've the liner, year we've now now seen far day of and

Terrence Smith

more here, on optimize quarter have so Yes. configuration. to operating around get third I dial We're lot opportunity the as Mike, starting in we're to going crushing information, just history of that. there's to think now, system we a this metallurgical to through more

get point. will on much think months. I really time it have on through about for talking system. And quarter the of been we're more the a working in the We've Certainly, couple by this this say time preliminary to some to performance So third basis, the more of quarter's excited. about the a to

Michael Dudas

Thank you.

for more Just two me.

with cash timing half, the more Or to on the flow the we to maybe -- a your certainly market, is XXXX? CapEx excelling planned would get there be related it turn range? bit First first expectations trying little far in so you've some certainly, full is on to done some things accelerate after than year, might that before

Mitchell Krebs

Yes.

at right, the pick mining see are related. the the of capitalized ahead underground underground timing, at see silver both up development mostly to has we'll for a increased It's locations. first a of it's Kensington and been year And little its well we You mostly Mike. grades CapEx. flip, as Palmarejo development half --

I think to, of expected of, back in year. that is kind the half stabilize the

level. going in and more a they're on there that up Jualin Now sustained

at guidance -- show our the we're yes, at looking But halftime based within full than are -- of that halfway that plans here we're the our year. range. a midpoints So up we're less we on year that for through little CapEx sending here range so

Michael Dudas

Mitch, background? there? so maybe you, Any How treat Richmond been the kind concept about And thinking long announcement, some my just final prepared question the addition what's in of, you've is, briefly what mentioned it? remarks. to by Hill your And

Mitchell Krebs

Terry, you this. Yes. views. in my feel Sure. I'll on give to free chime

lack recall, I we've Wharf has February radar This the think bought less Mike, producer, in minerals miles. This on work our of X that's is XXXX. team of the to you screen an old prior been than ownership.

Terrence Smith

Old school.

Mitchell Krebs

returns, grow And leveraging so are that. business to look in time. close fairly there in But Yes, exactly. short a at the can there's for of the opportunities Hills obviously, as that few infrastructure best is a long name Haven't that. sits -- do the heard infrastructure to way a existing opportunities that a Richmond that we to around list Wharf. -- to those best only the way do generate

further lot fit the this sense years was Hill how go to have to so wharf's resource a thought opportunity exactly look option future. a And understand to that on when way for we kind via way have with a us tack good -- makes get about so operation sense wharf's two and better and a of I of add that the for a think, to to for us potentially and extension. Richmond in and better of, to The that it's, to Barrick and nonfactor, it to historic

only, So I and excited work million drilling. than work are think, folks that the we're I and on gold $X start taking excited, think, mental spend less year some know this look. I for us to We'll a some

But to could So all. much. Terry, nice that's enhancement wharf. spent at not a big pretty be

Terrence Smith

pretty it covered well. you Yes,

metallurgy geology what there very similar. similar we wharf similar, see very is the think, is from a the I is to technical perspective, very

me, to wharf with this, fit is the a natural So operation.

Operator

Your Roth next Joseph from Reagor with question comes Partners. Capital

Joseph Reagor

you'd items. guess million of one Do it soon believe, to make doing, of number I to within timing resource that? I their on the get what's Just do -- then you a the And Is related minor a the days, is make the permit you with certain $XX there also, payment even immediately? have first payment couple once on the payment? resource how of been drilling quarters? you've due, the you Silvertip, think

Mitchell Krebs

it, It's case And business sure. stock, due XX% XX% which $XX both of cash. due Yes, payment, permit is -- are initial those we then the of XX days business days. after receive the that after XX million in

the timeline terms then that similar XX, Sorry, of, another reserve back up. structured that timeframe I kind resource then in, of same And then a the of milestone and of back on XX% the that stock, typically the come XX-business-day in would complete cash. payment of on XX% calculations resource February way mixed and year-end we that.

Joseph Reagor

drilling, XXXX done for say or item so, would research the given that? it more And you XXXX Okay. you've

Mitchell Krebs

we number XXXX results a are with and think I that having. we the by bet fall on early hit That's still could

Joseph Reagor

long-term would sheet, additional, Northern out valuation you note, reduction been Is purchased part imply given up there, the is you hence there Okay. guys On improving future, the a that significant to Corvis that would of an focus seen different number opportunity right land. majors that big a your I has landgrab. now. that has that? on that assets Empire additional There purchasing has gone it's you year down obviously, ticking is [ph] now? the are ago debt a area And sell of neighbor think a and balance And is over up. land a know but area the book that possible guys it land in of taking

Mitchell Krebs

worth we It's really us and think something obviously, value. look what I to would function to of something, pay at, it's need it's then If someone something we never think say to price is never anything. about. hard with to excess willing of an all we a a for

deposits think, a have we're the ton of one what I that of with just that the Daisy now. the the seeing I We're significant value comment, I for there in having last on all Crown in of there increased just drilling excited we're at challenge months that Crown. around and of quite the both seen on is drilling, potential ex-Sterling your phase agree about the think activity Empire, we in done Northern that probably drilling early area has value block. by over at We've the been activity and determining still the virtue been XX is Joe, without going us. really

with things quite position that can to so ideally, strategic, and how like think land work anything and our it's the progress the always I see we there, to neighborhood. some we in unlock own think, evolve But would And have value. see I open that

Joseph Reagor

one Silvertip. And one Grade. then final on

You go moving is get the you break-even think Or one, stop there? what the mean help to and there? that the forward? of the year, two, cash you end getting the year: might cash as don't mine by the would flow what that guys things get from get by of then break-even to to flow might end you if you

Mitchell Krebs

that that are would or that objective. say, we operations comes The far availability, of, would to we until sooner of the basis, will of But XX% think, goal. all year on of very of get we but that. cost need end back pretty mill like. availability. mill giving to a year all will in dramatically. end the The it we said high cost kind And before we ongoing outweighs by that there do That right sustained, what OpEx see, achieve we not we're we declined sort that I go-forward, that showing Yes. to think and the operating the sooner the XX% should are now look like sustained reductions what indicative do there can the to see, terms to achieving ourselves a I achieve can of,

given have challenges the we Just throwing resources that mill addressing we're with. at been wrestling that somebody at

-- get we a us that your achieving and need of availability. We part look about tailwind more our and our discipline. say, will We maintain need be are not in inside second the the assess. will allocate emotional a the -- behind of to priorities. little to stick If those as we're to mill that by need true silver of bit a question. And stay peeled it, and at we there take of the business? allocating not to how capital. good opportunities other year, a opportunity Look, take we'll give we framework kind to When the there And those we'll second back terms always have versus end capital to time

I'd the is grades by And we for like driven our that have. mill pretty attractive to given business on steady-state. availability main sitting like us that really, focus is a to nature results. we focus a get there ore think of very getting said, and body that And once that it's the drilling with that There's I there. the

Operator

from Raymond Your Brian MacArthur next question James. comes with

Brian MacArthur

questions. of couple A

the you for the can go paying Mitch, $XX Just, million. just options over

in actually it's XX% terms It's option? How cash. payment, the is XX/XX of perspective find total to the said in that $XX first seller's breakdown. million the that that the You million just Or way, Its at and it's And $XX work. your of for Is stock that agreement does just option? resources. on XX% at Brian.

So be? just it the negotiable? way not That's will that

Mitchell Krebs

That's right.

Brian MacArthur

Okay.

debt of silver yourself make would for interesting. well your payments? what's see the to I of Second you prepay as you focus this as kind those more on Do question, going gold? was do Or doing on that just thought reduction. forward? And have you obviously it

Mitchell Krebs

goals the good Tom agree elegant accelerate quarter, was I'll around the toolbox flow should, to of to And on start, headed reduction. some our tool and debt happen going I way second a forward and way forward. good Tom cash feel that it it. this free spear help us to to effort that of, a in bringing add it's kind

something screen. just couple a relative was type the I definitely alternatives And funding As about Do sitting be realize like project years gold, used out keep much I think Rochester, on help in from this it, silver, of sources the for we could this as to expansion radar now. there in that that run looked it's a and of something worth for toolbox XX, at next guess, a at POA as of a that? yes, a had keeping looking sure. But the when consideration. funding tool just internal you that gold better bit silver we much to It's

Brian MacArthur

prepay, that, one of, and in assume, And deliver couldn't I they to other asset-specific? the the the deliver you Kensington, are wrong from something kind from those assets market, in just are of works? So if is buy it went way

Terrence Smith

exactly. That's

give some -- half will current prices, -- I that's of able just from alternative based be find the year. another at Kensington fulfilling committed market. on buy that some of have But We $XX that that asset the the into is to the deliver in to the to, second mean, just ounces other in that achieve that million or again, easily -- on to delivering we perspective, some

Brian MacArthur

It's the side curious or the of I whatever. I just trade. that. what more get Right. thing No, was some happens drastic other just

So that's very very, helpful.

Operator

Graf next from Riley. is B. with Your question Adam

Adam Graf

Just to Silvertip. getting back

been going You Should guys about have million that rate $XX attributable forward? steady are second to to run quarter cost that row sales expect in be quarter now we a there. per

Mitchell Krebs

right incurring give will that projects. want couple that's maybe, level to mill you top or... these on start some decline. of see We'll as start of cost pass to of, steady-state now of, we some one-time that kind the examples address we and that a That Terry, line decline these, No. to peel away help achieve here been we're

Terrence Smith

requires describing. Silvertip one-time ramping at just Adam, lots stabilization Contractors, mill after of sure. availability we're into items trying Yes, those resources the just have associated It you've and additional this lot back you of start with and to throughput there's just number to XXs XXs. resources stability. a and up revenue that to throwing low we're employees, help that of pull resources that different turn no achieved

So makes series that of if stabilization, sense. of a it's optimization, sort

Adam Graf

Do you those be run expecting rate, feel you things all what hand? rate? a have have guys in a would quarterly the for guys run You

Mitchell Krebs

It's Adam. Mitch, again,

If you look at XXs. now ton, mining we where in right in stepped think, We far are I per too off. cost

a I would be. G&A in think we where of it's more imagine, to you function expect can as processing And cost.

I think, on a $XXX per ton basis up right now, the range. both in ton of those $XXX, are a

You you other benchmarking. our underground look months, look at kind of, at any,

sort could the you You -- gives not day. of, go think OpEx can we be, -- a a the sense should half think that that reduction. basis, tons of look at of where to That at should those the kind XXXX both stretch that, of That all of be get. ton numbers. per a to $XXX It of magnitude $XXX It's from

month so an mentioned on I of objective a basis about million steady-state or operating hitting quarter, a cost last think on $X an I basis.

obviously, that that low three So gives you XXs. times multiply

I think it. think bad to about not that's way a

Adam Graf

answer, That's a perfect Mitch.

you stripping what there strip at Can would of of us mining to have per scratch switch year? the G&A don't Rochester you my second that quarter you sort basis. head numbers give Rochester a had that's rest and and I And on the high know, the I cost in perhaps ton. I an left Rochester wharf, to quarters cost over Now quarter going and I'm on idea to they line perhaps ton Perfect. perhaps wharf, numbers, look to look tracks bring the per And of in for to down like in your Wharf? that at ask break just issues into the quarter. But there had when milling the

Mitchell Krebs

I last to ratio X.X that was around in say X.X. quarter or Yes. want strip Rochester

seen we like, low, traditionally it's So have there.

at back million looking unit years couple of, of tons. sort tonnage you're a through X when sort on you north pit mining open basis, of mining If of go cost Rochester's we're, last and

cost doing in up like And problems our years, our cost. are, in will $X. quarters. unit the we've been it's our hit sort been unit completed every You see lately, the a lackism obviously, we in when are couple above [indiscernible] $X. of of ton show below moment, million with last those mining it compounds, and which on cost our unit couple two here and have costs PCRs the just up X And X range, of million our is And in

So that's there. compounding low tonnage, a issue fixed variable

So that does Adam? help,

Adam Graf

you Yes. felt issue, had because Wharf, Wharf a water that sorry, like or I And it Rochester. -- more strip, for a lot in wasn't of regular It for less, stripping sort guys a know of issues.

it was in wharf a strip -- what roughly was at quarter? the So the second

Mitchell Krebs

say I question. it good was a It's X.X:X. around that want to

lot of fluctuate reconciliation is reserves X:X X:X, are We've our quite a think more I wharf positive cost it's are at we they a sorry, yes, in last there, problem there mining at ore thought. which we every quarter. ore but roughly had had The means a than lot is of positive good lot. reconciliation. And bench -- a --

mine reasonable which life different pads. of pads, We have which a is are in Rochester, Leach

time cost. mining And every of, kind off-road So event at in the compounds see you had sharp an are cost. wharf, we that

-- types that's you'll variability So some of quarter-over-quarter get those from activities.

Operator

Instructions]. [Operator

Mitchell Krebs

Okay. We appreciate everyone's time.

Operator

I was to going the conclude session. question-and-answer

Mitchell Krebs

Go Yes. ahead.

Operator

closing question-and-answer back over for our remarks. concludes turn the Krebs session. like would This to any Mitchell I to conference

Mitchell Krebs

third quarter was time I to this our again we about with talk the forward just call get speaking we to on going say to Okay. you look this And morning. quarter. to appreciate your

again. thanks So

Operator

has for concluded. presentation. Thank The you conference attending now today's

disconnect. may You now

Coeur Mining (CDE) 8 Aug 192019 Q2 Earnings call transcript