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Coeur Reports Second Quarter 2022 Results

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Rochester Expansion Remains On-Track; Full-Year Production Guidance Reaffirmed; Updated Cost Guidance

CHICAGO, August 03, 2022--(BUSINESS WIRE)--Coeur Mining, Inc. ("Coeur" or the "Company") (NYSE: CDE) today reported second quarter 2022 financial results, including revenue of $204 million and cash flow from operating activities of $23 million. The Company reported GAAP net loss from continuing operations of $77 million, or $0.28 per share. On an adjusted basis1, Coeur reported EBITDA of $43 million, cash flow from operating activities before changes in working capital of $30 million and net loss from continuing operations of $13 million, or $0.05 per share.

Key Highlights

  • 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 Rochester – Kensington’s gold production increased by 23% versus the first quarter, driven by an all-time quarterly record mill throughput. Wharf’s gold production increased by 15% while Rochester’s silver and gold production 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 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 has 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 net cash proceeds 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 best-in-class corporate governance, Jeane Hull has been appointed to Coeur’s Board of Directors

"Our second quarter results demonstrate the resilience of Coeur’s multi-asset mine portfolio," said Mitchell J. Krebs, President and Chief Executive Officer. "Despite weaker gold and silver prices, Company-wide revenue increased 8% versus the prior quarter due to higher production levels from our Kensington, Wharf and Rochester operations. With continued expected production growth during the second half of the year, we remain on track to achieve our 2022 production guidance for gold and silver.

"We have also significantly advanced and de-risked the expansion project taking place at our Rochester operation, which is expected to provide a step-change in Coeur’s production and cash flow profile once completed and commissioned. The project remains on-track to be completed mid-2023 and the total project cost remains approximately $600 million. The Rochester team completed the installation of pre-screens on the existing crushing circuit on July 22, which is providing the team with important operating experience that will be applied to the expansion project.

"Our balance sheet has been further strengthened by recent initiatives and remains sound with total adjusted liquidity1 of nearly $360 million including recent sales of a portion of our equity investments. Following completion of the Rochester expansion, we expect to de-lever the balance sheet from strong anticipated cash flows as we advance and evaluate opportunities to enhance stockholder value, including a potential future expansion and restart of the high-grade Silvertip asset.

"Given ongoing impressive drilling results at Silvertip and Palmarejo and recent positive results from the upper portions of the main Kensington deposit that suggest strong potential for extended mine life, we plan to invest an additional $11 million to accelerate these priority targets during the second half of the year. We remain committed to investing in brownfield exploration and development as a key element of our strategy and an important driver of future returns."

Financial and Operating Highlights (Unaudited)

(Amounts in millions, except per share amounts, gold ounces produced & sold, and per-ounce metrics)

2Q 2022

1Q 2022

4Q 2021

3Q 2021

2Q 2021

Gold Sales

$

146.6

$

129.5

$

146.7

$

147.7

$

146.2

Silver Sales

$

57.5

$

59.0

$

61.2

$

60.2

$

68.7

Consolidated Revenue

$

204.1

$

188.4

$

207.8

$

208.0

$

214.9

Costs Applicable to Sales2

$

150.7

$

133.3

$

136.5

$

134.3

$

132.6

General and Administrative Expenses

$

9.3

$

10.3

$

9.6

$

8.7

$

10.5

Net Income (Loss)

$

(77.4

)

$

7.7

$

(10.7

)

$

(54.8

)

$

32.1

Net Income (Loss) Per Share

$

(0.28

)

$

0.03

$

(0.04

)

$

(0.21

)

$

0.13

Adjusted Net Income (Loss)1

$

(13.1

)

$

(13.8

)

$

(11.6

)

$

(2.9

)

$

(0.8

)

Adjusted Net Income (Loss)1 Per Share

$

(0.05

)

$

(0.05

)

$

(0.05

)

$

(0.01

)

$

0.00

Weighted Average Shares Outstanding

278.0

263.6

254.8

254.7

252.1

EBITDA1

$

(32.8

)

$

40.4

$

28.3

$

(14.2

)

$

84.6

Adjusted EBITDA1

$

43.3

$

41.5

$

48.7

$

48.8

$

52.7

Cash Flow from Operating Activities

$

22.6

$

(6.4

)

$

35.0

$

21.8

$

58.1

Capital Expenditures

$

73.2

$

69.5

$

100.9

$

71.3

$

78.2

Free Cash Flow1

$

(50.6

)

$

(75.9

)

$

(65.9

)

$

(49.4

)

$

(20.2

)

Cash, Equivalents & Short-Term Investments

$

74.2

$

73.3

$

56.7

$

85.0

$

124.1

Total Debt4

$

547.5

$

485.5

$

487.5

$

442.4

$

414.2

Average Realized Price Per Ounce – Gold

$

1,729

$

1,721

$

1,652

$

1,645

$

1,651

Average Realized Price Per Ounce – Silver

$

22.61

$

24.06

$

23.17

$

24.18

$

26.60

Gold Ounces Produced

83,772

75,409

88,946

87,083

87,275

Silver Ounces Produced

2.5

2.5

2.6

2.5

2.6

Gold Ounces Sold

84,786

75,211

88,930

89,804

88,501

Silver Ounces Sold

2.5

2.5

2.6

2.5

2.6

Financial Results

Second quarter 2022 revenue totaled $204 million compared to $188 million in the prior period and $215 million in the second quarter of 2021. The Company produced 83,772 and 2.5 million ounces of gold and silver, respectively, during the quarter. Metal sales for the quarter totaled 84,786 ounces of gold and 2.5 million ounces of silver. Average realized gold and silver prices for the quarter were $1,729 and $22.61 per ounce, respectively, compared to $1,721 and $24.06 per ounce in the prior period and $1,651 and $26.60 per ounce in the second quarter of 2021.

Gold and silver sales represented 72% and 28% of quarterly revenue, respectively. The Company’s U.S. operations accounted for approximately 58% of second quarter revenue.

Costs applicable to sales2 increased quarter-over-quarter to $151 million, largely due to inflationary pressures on consumable costs. General and administrative expenses decreased slightly quarter-over-quarter to $9 million.

Coeur invested approximately $13 million ($5 million expensed and $8 million capitalized) in exploration during the quarter, compared to roughly $14 million ($5 million expensed and $8 million capitalized) in the prior period, reflecting lower planned investment across the portfolio following the Company’s highest-ever exploration investment in 2021. See the "Operations" and "Exploration" sections for additional detail on the Company’s exploration activities.

The Company recorded income tax expense of approximately $12 million during the second quarter. Cash income and mining taxes paid during the period totaled approximately $8 million.

Quarterly operating cash flow totaled $23 million compared to $(6) million in the prior period, mainly driven by higher metal sales and favorable changes in working capital. Changes in working capital during the quarter were $(7) million, compared to $(30) million in the prior period.

Capital expenditures increased 5% quarter-over-quarter to $73 million compared to $70 million in the prior period. Expenditures related to the POA 11 expansion project at Rochester totaled $42 million during the quarter compared to $30 million in the first quarter. Sustaining and development capital expenditures accounted for approximately 37% and 63%, respectively, of Coeur’s total capital investment during the quarter.

Capital Projects Update

Rochester Expansion

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 stockpile reclaim area, (iv) completion of concrete in the tertiary crusher area, and (v) continuation of concrete work 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.

Silvertip Expansion and Restart

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 exploration activities continue to generate positive results. Exploration investment in the second quarter totaled approximately $2 million (substantially all capitalized) compared to roughly $2 million (substantially all capitalized) in the prior period.

Up to three core drill rigs were active during the second quarter focused on infill drilling. Two underground rigs drilled at the Southern Silver and Discovery zones, while one surface rig drilled at the Camp Creek zone. During the third quarter, a second surface rig will be added to target infill and expansion drilling at the Camp Creek and Discovery zones while the underground rigs will focus on infill and expansion drilling at the Southern Silver zone along with testing for chimney feeder structures beneath the Discovery zone.

Ongoing carrying costs at Silvertip totaled $5 million in the second quarter, compared to $6 million in the prior period. Capital expenditures related to infill drilling and underground development during the second quarter totaled $6 million compared to $12 million in the prior period. For full-year 2022, capital expenditures are now expected to be approximately $28 - $36 million (previously $18 - $24 million). The revised figures reflect increased underground development and infill drilling.

Liquidity Update

Coeur ended the quarter with total liquidity of approximately $319 million, including $74 million of cash and $245 million of available capacity under its $390 million revolving credit facility ("RCF")3. Additionally, Coeur had $99 million of marketable securities at the end of the second quarter.

On June 28, 2022, the Company announced the sale of 5 million shares of Victoria Gold for net proceeds of approximately $40 million, which is not included as part of Coeur’s second quarter results due to timing of settlement.

Hedging Update

The Company did not execute any additional hedges during the second quarter. The Company’s silver price exposure remains unhedged. An overview of the hedges in place are outlined below:

2022

2023

Gold Ounces Hedged

108,500

112,500

Avg. Forward Price ($/oz)

$1,965

$1,982

Mark-to-Market Adjustments

The Company values its strategic investments in equity securities as of the end of each reporting period. The estimated fair values of Coeur’s equity investments in Victoria Gold, Avino Silver & Gold Mines Ltd. and Integra Resources Corp. were $88 million, $8 million and $4 million, respectively, at June 30, 2022 (and does not reflect the sale of Victoria Gold stock that settled subsequent to quarter-end) compared to $141 million, $13 million and $5 million at March 31, 2022, respectively, resulting in a non-cash unrealized loss of approximately $63 million during the second quarter of 2022. This figure is included in "Fair value adjustments, net" on the Company’s income statement.

Rochester LCM Adjustment

Coeur reports the carrying value of metal and leach pad inventory at the lower of cost or net realizable value, with cost being determined using a weighted average cost method. At the end of the second quarter, the cost of ore on leach pads at Rochester exceeded its net realizable value which resulted in a lower of cost or market ("LCM") adjustment of $10 million (approximately $9 million in costs applicable to sales3 and $1 million of amortization).

Operations

Second quarter 2022 highlights for each of the Company’s operations are provided below.

Palmarejo, Mexico

(Dollars in millions, except per ounce amounts)

2Q 2022

1Q 2022

4Q 2021

3Q 2021

2Q 2021

Tons milled

539,600

565,211

587,615

517,363

517,373

Average gold grade (oz/t)

0.054

0.056

0.055

0.050

0.058

Average silver grade (oz/t)

3.95

3.87

3.86

3.86

3.94

Average recovery rate – Au

92.4

%

90.6

%

89.7

%

93.7

%

92.4

%

Average recovery rate – Ag

84.2

%

83.0

%

81.3

%

85.5

%

81.9

%

Gold ounces produced

27,109

28,931

28,748

24,254

27,595

Silver ounces produced (000’s)

1,795

1,813

1,843

1,708

1,667

Gold ounces sold

29,285

28,242

27,706

24,897

30,516

Silver ounces sold (000’s)

1,855

1,796

1,813

1,715

1,640

Average realized price per gold ounce

$

1,507

$

1,419

$

1,374

$

1,335

$

1,351

Average realized price per silver ounce

$

22.56

$

23.94

$

23.26

$

24.15

$

26.71

Metal sales

$

86.0

$

83.1

$

80.4

$

74.6

$

85.0

Costs applicable to sales2

$

49.1

$

43.2

$

38.8

$

39.0

$

41.9

Adjusted CAS per AuOz1

$

855

$

730

$

653

$

704

$

662

Adjusted CAS per AgOz1

$

12.97

$

12.43

$

11.25

$

12.50

$

13.34

Exploration expense

$

1.7

$

1.6

$

2.3

$

2.8

$

1.8

Cash flow from operating activities

$

22.3

$

34.3

$

32.9

$

23.2

$

33.4

Sustaining capital expenditures (excludes capital lease payments)

$

10.1

$

13.6

$

8.3

$

8.4

$

9.8

Development capital expenditures

$

$

$

(0.1

)

$

0.1

$

Total capital expenditures

$

10.1

$

13.6

$

8.2

$

8.5

...