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Coeur Reports First Quarter 2021 Results

Reaffirms Full-Year 2021 Guidance

CHICAGO–(BUSINESS WIRE)–Coeur Mining, Inc. (“Coeur” or the “Company”) (NYSE: CDE) today reported first quarter 2021 financial results, including revenue of $202.1 million, cash flow from operating activities of $(4.4) million and GAAP net income from continuing operations of $2.1 million, or $0.01 per share. On an adjusted basis1, the Company reported EBITDA of $65.9 million, cash flow from operating activities before changes in working capital of $41.6 million and net income from continuing operations of $13.9 million, or $0.06 per share.

02 19 14 Coeur Mining R PMS H

The Company also reaffirmed its full-year 2021 production guidance of 322,500 – 367,500 ounces of gold and 9.7 – 12.2 million ounces of silver. Additionally, full-year cost, exploration and capital expenditure guidance was reaffirmed.

Key Highlights

  • Higher margins helped drive a stronger start to the year – Coeur’s first quarter results reflect a strong start to the year led by solid production and higher prices. Notably, quarterly revenue, operating cash flow before changes in working capital1 and adjusted EBITDA1 increased 17%, 38% and 42% year-over-year, respectively
  • Solid gold production and unit costs – The Company’s gold production of 85,225 ounces exceeded expectations for the quarter, tracking well towards its full-year guidance range. Additionally, all of the Company’s site-level gold unit costs were either below or within their full-year guidance ranges
  • Further enhanced liquidity and balance sheet – Coeur successfully refinanced its 5.875% senior notes due 2024 with 5.125% senior notes due 2029, capturing a lower interest rate, extending the maturity and opportunistically upsizing the offering. The Company also extended the maturity of its senior secured revolving credit facility (“RCF”) from October 2022 to March 2025. Together, these efforts improved Coeur’s liquidity profile and bolstered its balance sheet, helping to enhance financial flexibility ahead of a period of planned capital intensity
  • Commenced major construction on Rochester expansion – The Company began major construction on the Plan of Operations Amendment 11 (“POA 11”) expansion at its Rochester mine. Overall project progress was approximately 20% complete at the end of the first quarter. Key elements of the project timeline remain on schedule and are expected to be largely completed by late next year
  • Encouraging results from aggressive investment in exploration – Following its successful program in 2020, Coeur began the year with the largest exploration campaign in Company history. The Company invested approximately $14.9 million ($9.7 million expensed and $5.2 million capitalized) in exploration during the quarter, drilling roughly 250,500 feet (76,375 meters) across all sites. Drilling activities at Silvertip and Crown ramped up significantly during the quarter, while Coeur’s other sites continued to advance their resource expansion and infill programs

“Our first quarter results were in-line with our expectations driven by strong gold production performance across our portfolio of assets, which led to double digit year-over-year increases in quarterly revenue, adjusted EBITDA1 and operating cash flow before changes in working capital1,” said Mitchell J. Krebs, President and Chief Executive Officer. “Additionally, we achieved an important milestone by commencing major construction on the expansion of our Rochester mine in Nevada. The project remains on track and is expected to be largely completed by late next year, helping to drive an anticipated step change in production and cash flow.”

Mr. Krebs continued, “We took advantage of the low interest rate environment in March to opportunistically refinance our senior notes and extend the maturity of our RCF, which fortified our financial flexibility as we head into a phase of significant planned capital investment this year and next. On the exploration front, we are seeing early encouraging results as we execute on the largest drilling campaign in Company history. By following our strategy, adhering to our capital allocation framework, and executing our near-, medium- and long-term objectives, we are confident in our ability to maximize cash flow, returns and net asset value for our stockholders.”

Financial and Operating Highlights (Unaudited)

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

1Q 2021

4Q 2020

3Q 2020

2Q 2020

1Q 2020

Gold Sales

$

138.3

 

$

162.0

 

$

167.1

 

$

127.9

 

$

127.6

 

Silver Sales

$

63.8

 

$

66.4

 

$

62.6

 

$

26.3

 

$

44.9

 

Consolidated Revenue

$

202.1

 

$

228.3

 

$

229.7

 

$

154.2

 

$

173.2

 

Costs Applicable to Sales2

$

108.1

 

$

118.6

 

$

112.8

 

$

90.0

 

$

118.9

 

General and Administrative Expenses

$

11.6

 

$

8.4

 

$

7.8

 

$

8.6

 

$

8.9

 

Net Income (Loss)

$

2.1

 

$

11.9

 

$

26.9

 

$

(1.2

)

$

(11.9

)

Net Income (Loss) Per Share

$

0.01

 

$

0.05

 

$

0.11

 

$

(0.01

)

$

(0.05

)

Adjusted Net Income (Loss)1

$

13.9

 

$

19.1

 

$

38.2

 

$

2.6

 

$

(0.9

)

Adjusted Net Income (Loss)1 Per Share

$

0.06

 

$

0.08

 

$

0.16

 

$

0.01

 

$

 

Weighted Average Shares Outstanding

244.5

 

244.3

 

243.8

 

240.9

 

240.3

 

EBITDA1

$

49.7

 

$

76.7

 

$

77.3

 

$

35.3

 

$

25.5

 

Adjusted EBITDA1

$

65.9

 

$

84.0

 

$

90.8

 

$

42.2

 

$

46.5

 

Cash Flow from Operating Activities

$

(4.4

)

$

67.3

 

$

79.5

 

$

9.9

 

$

(8.0

)

Capital Expenditures

$

59.4

 

$

37.4

 

$

23.0

 

$

16.7

 

$

22.2

 

Free Cash Flow1

$

(63.8

)

$

29.8

 

$

56.5

 

$

(6.7

)

$

(30.2

)

Cash, Equivalents & Short-Term Investments

$

154.1

 

$

92.8

 

$

77.1

 

$

70.9

 

$

52.9

 

Total Debt3

$

412.1

 

$

275.5

 

$

301.1

 

$

348.6

 

$

343.1

 

Average Realized Price Per Ounce – Gold

$

1,664

 

$

1,663

 

$

1,754

 

$

1,641

 

$

1,490

 

Average Realized Price Per Ounce – Silver

$

26.19

 

$

24.21

 

$

24.15

 

$

16.25

 

$

16.63

 

Gold Ounces Produced

85,225

 

96,377

 

95,995

 

78,229

 

85,077

 

Silver Ounces Produced

2.4

 

2.8

 

2.6

 

1.6

 

2.7

 

Gold Ounces Sold

83,112

 

97,400

 

95,283

 

77,933

 

85,635

 

Silver Ounces Sold

2.4

 

2.7

 

2.6

 

1.6

 

2.7

 

Financial Results

First quarter 2021 revenue totaled $202.1 million compared to $228.3 million in the prior period and $173.2 million in the first quarter of 2020. The Company produced 85,225 and 2.4 million ounces of gold and silver, respectively, during the quarter. Metal sales totaled 83,112 ounces of gold and 2.4 million ounces of silver.

Average realized gold and silver prices for the quarter were $1,664 and $26.19 per ounce, respectively, compared to $1,663 and $24.21 per ounce in the prior period. Gold and silver sales accounted for 68% and 32% of quarterly revenue, respectively. The Company’s U.S. operations accounted for approximately 60% of first quarter revenue, relatively consistent with the prior period.

Costs applicable to sales2 decreased 9% quarter-over-quarter to $108.1 million, largely due to lower production in the period as well as a non-cash adjustment at Rochester in the prior quarter. General and administrative expenses for the quarter totaled $11.6 million compared to $8.4 million in the prior period, reflecting higher employee-related expenses including increased costs related to annual incentive payments.

Coeur invested approximately $14.9 million ($9.7 million expensed and $5.2 million capitalized) in exploration during the quarter, compared to roughly $14.5 million ($11.6 million expensed and $2.9 million capitalized) in the fourth quarter of 2020. Slightly higher exploration investment was driven by a greater allocation to capitalized infill drilling quarter-over-quarter. See the “Operations” and “Exploration” sections for additional detail on the Company’s exploration activities.

Operating costs related to COVID-19 mitigation and response efforts totaled $3.0 million during the first quarter, compared to $5.1 million in the prior period. These costs were primarily driven by employee-related expenses at Kensington and Palmarejo, and are included in “Pre-development, reclamation, and other expenses” on the Company’s income statement. Coeur continues to implement and maintain rigorous health and safety protocols across its operations and in surrounding communities aimed at limiting the exposure and transmission of COVID-19 while minimizing business interruptions.

Coeur recorded an income tax expense of $12.8 million during the first quarter. Cash income and mining taxes paid during the period totaled approximately $26.7 million, including the annual payment of the Mexican mining royalty tax of $9.6 million.

Quarterly operating cash flow totaled $(4.4) million compared to $67.3 million in the prior period, largely driven by lower metal sales, higher cash taxes and unfavorable changes in working capital. Changes in working capital during the quarter were $(45.9) million, compared to $8.8 million in the prior period, reflecting the timing of Mexican tax payments as well as the build-up of inventories primarily related to leach pads. First quarter operating cash flow also includes a cash outflow of $7.9 million associated with the Company’s prepayment agreement at Kensington. Coeur expects the remaining $7.1 million cash outflow under the arrangement to occur in the second quarter.

Capital expenditures during the first quarter were $59.4 million compared to $37.4 million in the prior period, reflecting increased investment across the Company’s portfolio. Investment related to the POA 11 expansion at Rochester totaled $28.1 million during the quarter, compared to $14.8 million in the fourth quarter of 2020. Sustaining and development capital expenditures accounted for approximately 43% and 57%, respectively, of the Company’s total capital investment during the quarter.

Balance Sheet Update

Coeur continued to prudently manage its balance sheet during the first quarter of 2021. The Company successfully refinanced $230.0 million in aggregate principal outstanding of its 5.875% senior notes due 2024 with $375.0 million of 5.125% senior notes due 2029. The Company also extended the maturity of its $300.0 million RCF from October 2022 to March 2025. Together, these initiatives strengthened Coeur’s financial flexibility ahead of the next two years of expected capital intensity. Coeur ended the quarter with total debt3 of $412.1 million and cash and cash equivalents of $154.1 million.

Hedging Update

The Company did not execute any additional zero-cost collar (“ZCC”) hedges during the first quarter. Coeur’s hedging strategy remains focused on supporting cash flow generation during the POA 11 expansion project at Rochester, which the Company expects to fund with a combination of cash on hand, internally generated cash flow and debt capacity.

Coeur previously completed its gold hedging program for 2021 and will proactively monitor market conditions to potentially layer in additional ZCC hedges on up to 50% of expected gold production in 2022. The Company’s silver price exposure remains unhedged. An overview of the hedges currently implemented is outlined below:

 

2021

2022

Gold Ounces Hedged

119,025

126,000

Avg. Ceiling ($/oz)

$1,877

$2,030

Avg. Floor ($/oz)

$1,600

$1,626

Rochester Expansion

Coeur began major construction activities on the POA 11 expansion project at Rochester in January 2021, including excavation of areas for the Merrill-Crowe process plant and crusher corridor. Project-specific offices and supporting infrastructure have been completed and are operational. At the end of the first quarter, Coeur and SNC-Lavalin (engineering, procurement and project management contractor) substantially completed detailed design work for the expansion project, and almost all of the equipment procurement and service arrangements have been committed. The Company had over $300.0 million of capital committed to the expansion project, including 72 executed contracts valued at approximately $290.0 million as of March 31, 2021. Overall project progress was approximately 20% complete at the end of the quarter.

Over the coming quarters, Coeur expects to remain focused on safely delivering the project with placement of over-liner material for the Stage VI leach pad, mobilization of a cement batch plant, construction of a new high-voltage power line and initiation of electrical substation upgrades planned mid-year. Additionally, structural steel erection for the crusher corridor is expected to begin in early 2022.

Key elements of the project timeline remain on schedule and are highlighted below:

 

Expected Start Date

Target Completion Date

Leach Pad (Incl. Ancillary Facilities)

2H 2020 ✓

Mid-2022

Merrill-Crowe Process Plant

1H 2021 ✓

YE 2022

Crushing Circuit

1H 2021 ✓

YE 2022

Supporting Infrastructure

2H 2020 ✓

Mid-2022

Operations

First quarter 2021 highlights for each of the Company’s operations are provided below.

Palmarejo, Mexico

(Dollars in millions, except per ounce amounts)

1Q 2021

4Q 2020

3Q 2020

2Q 2020

1Q 2020

Tons milled

484,390

509,848

492,474

269,641

479,562

Average gold grade (oz/t)

0.06

0.08

0.07

0.07

0.07

Average silver grade (oz/t)

4.07

4.30

4.37

4.46

4.69

Average recovery rate – Au

95.7%

88.9%

91.3%

86.0%

91.6%

Average recovery rate – Ag

81.3%

81.3%

82.8%

72.2%

81.5%

Gold ounces produced

28,605

34,511

29,296

15,223

31,578

Silver ounces produced (000’s)

1,603

1,783

1,784

867

1,835

Gold ounces sold

25,687

35,359

27,252

16,924

31,287

Silver ounces sold (000’s)

1,638

1,767

1,765

875

1,895

Average realized price per gold ounce

$1,462

$1,395

$1,446

$1,399

$1,331

Average realized price per silver ounce

$26.12

$24.45

$23.98

$16.35

$17.25

Metal sales

$80.3

$92.5

$81.8

$38.0

$74.3

Costs applicable to sales2

$34.0

$36.1

$34.3

$18.8

$36.0

Adjusted CASper AuOz1

$621

$542

$602

$686

$645

Adjusted CASper AgOz1

$10.98

$9.61

$10.06

$8.13

$8.37

Exploration expense

$1.7

$2.6

$2.0

$0.9

$1.5

Cash flow from operating activities

$13.2

$43.2

$49.7

$(3.5)

$28.9

Sustaining capital expenditures (excludes capital lease payments)

$10.0

$9.0

$4.9

$4.5

$7.1

Development capital expenditures

$—

$(0.1)

$0.1

$—

$—

Total capital expenditures

$10.0

$8.9

$5.0

$4.5

$7.1

Free cash flow1

$3.2

$34.3

$44.7

$(8.0)

$21.8

Operational

  • First quarter gold and silver production totaled 28,605 and 1.6 million ounces, respectively, compared to 34,511 and 1.8 million ounces in the prior period and 31,578 and 1.8 million ounces in the first quarter of 2020
  • Gold and silver production was impacted by a 5% decrease in mill throughput quarter-over-quarter, driven by a change in mine sequencing due to geotechnically-challenging conditions as well as lower average grades. First quarter recovery rates benefited from a drawdown of in-circuit inventory

Financial

  • First quarter adjusted CAS1 for gold and silver on a co-product basis increased 15% and 14% to $621 and $10.98 per ounce, respectively, compared to the prior quarter, largely driven by a decrease in average grades
  • Capital expenditures increased 12% quarter-over-quarter to $10.0 million, reflecting higher planned mine development and equipment purchases
  • Free cash flow1 in the first quarter totaled $3.2 million compared to $34.3 million in the prior period, driven by the payment of cash income and mining taxes totaling $25.1 million as well as lower metal sales quarter-over-quarter

Exploration

  • Exploration investment for the first quarter totaled approximately $3.0 million ($1.7 million expensed and $1.3 million capitalized), compared to roughly $3.7 million ($2.6 million expensed and $1.1 million capitalized) in the prior period
  • Up to seven surface and underground core rigs were active during the quarter following the success of both expansion and infill drilling during late 2020. A total of approximately 54,200 feet (16,525 meters) were drilled during the period, including 16,800 feet (5,125 meters) of expansion and 37,400 feet (11,400 meters) of infill
  • Infill drilling during the quarter focused on specific zones within the Independencia and Guadalupe deposits. Surface rigs targeted areas of the Hidalgo and La Patria zones as well as the northern portion of the Independencia zone, while underground rigs focused on the southern portion of the Independencia zone
  • Expansion drilling focused on the Hidalgo, North Independencia and Bavisa North/Ojito zones, located to the north of the Independencia deposit
  • Expansion and greenfield target generation is expected to continue moving north and east from the Independencia and Guadalupe deposits
  • In parallel, a new initiative to evaluate, target and drill the Guazapares district (located east of the Palmarejo district) was launched with the expectation of drilling to begin in the second half of the year
  • Coeur plans to maintain seven active drill rigs at Palmarejo, ramping up as needed later in the year

Other

  • Approximately 34% (8,738 ounces) of Palmarejo’s gold sales in the first quarter were sold under its gold stream agreement at a price of $800 per ounce

Guidance

  • Full-year 2021 production is expected to be 100,000 – 110,000 ounces of gold and 6.5 – 7.8 million ounces of silver
  • CAS1 are expected to be $710 – $810 per gold ounce and $11.00 – $12.00 per silver ounce
  • Capital expenditures are expected to be approximately $40 – $45 million

Rochester, Nevada

(Dollars in millions, except per ounce amounts)

1Q 2021

4Q 2020

3Q 2020

2Q 2020

1Q 2020

Ore tons placed

3,240,917

4,000,889

4,523,767

3,743,331

3,428,578

Average silver grade (oz/t)

0.45

0.53

0.49

0.51

0.57

Average gold grade (oz/t)

0.003

0.002

0.002

0.002

0.002

Silver ounces produced (000’s)

774

1,020

740

728

687

Gold ounces produced

6,904

9,590

6,462

5,159

5,936

Silver ounces sold (000’s)

771

912

786

724

632

Gold ounces sold

6,934

8,672

6,834

5,278

5,473

Average realized price per silver ounce

$26.34

$24.35

$24.49

$16.11

$16.99

Average realized price per gold ounce

$1,794

$1,825

$1,882

$1,702

$1,583

Metal sales

$32.8

$38.2

$32.1

$20.6

$19.4

Costs applicable to sales2

$24.0

$31.7

$19.1

$18.3

$17.0

Adjusted CASper AgOz1

$19.07

$20.18

$14.98

$13.75

$14.38

Adjusted CASper AuOz1

$1,300

$1,537

$1,148

$1,481

$1,359

Exploration expense

$0.5

$0.8

$0.5

$1.8

$0.2

Cash flow from operating activities

$(8.7)

$4.7

$2.1

$(5.6)

$(9.3)

Sustaining capital expenditures (excludes capital lease payments)

$2.0

$2.9

$2.5

$1.5

$0.1

Development capital expenditures

$28.2

$13.9

$7.3

$4.3

$5.0

Total capital expenditures

$30.2

$16.8

$9.8

$5.8

$5.1

Free cash flow1

$(38.9)

$(12.1)

$(7.7)

$(11.4)

$(14.4)

Operational

  • Silver and gold production during the quarter totaled 0.8 million and 6,904 ounces, respectively, compared to 1.0 million and 9,590 ounces in the fourth quarter of 2020. Year-over-year silver and gold production increased 13% and 16%, respectively
  • Coeur crushed approximately 30,200 tons per day during the first quarter compared to roughly 34,000 tons per day in the fourth quarter of 2020. Additionally, the Company supplemented placement rates in the quarter by stacking approximately 524,400 tons of run-of-mine material compared to just over 877,000 tons in the prior period
  • The Company encountered a new, softer ore type that required changes to crush size and throughput rates to help manage the amount of fine particles, with the ultimate goal of improving leachability and recoveries on the Stage IV leach pad
  • Lower production during the quarter was primarily driven by (i) reduced leaching rates on material placed in the prior period as a result of additional fine particles, (ii) the placement of material on deeper portions of the Stage IV leach pad, (iii) lower average silver grade consistent with the mine plan, and (iv) lower placement rates. Approximately 65,000 ounces of silver were held as work-in-process inventory at the end of the period and are expected to be recovered in the second quarter
  • The Company is executing the swap out of the secondary crushing unit during the month of April and plans to complete the fourth phase of its inter-lift liner strategy around mid-year. Both projects are aimed at de-risking the execution of POA 11 and further improving recovery rates on the Stage IV leach pad

Financial

  • First quarter adjusted CAS1 for silver and gold on a co-product basis decreased 6% and 15% quarter-over-quarter, respectively, to $19.07 and $1,300 per ounce, primarily driven by a non-cash adjustment of approximately $7.2 million in the prior period related to a change in the Company’s recovery rate assumption on the Stage IV leach pad as well as lower production levels and fewer ounces sold during the quarter
  • Capital expenditures increased 80% quarter-over-quarter to $30.2 million, largely due to the commencement of major construction on the POA 11 expansion project
  • Free cash flow1 in the first quarter totaled $(38.9) million, compared to $(12.1) million in the prior period, largely driven by higher capital expenditures and lower metal sales

Exploration

  • Quarterly exploration investment totaled approximately $0.7 million ($0.5 million expensed and $0.2 million capitalized), compared to roughly $1.2 million ($0.8 million expensed and $0.4 million capitalized) in the prior period
  • One reverse circulation rig continued drilling the northern portion of East Rochester as well as North Rochester and East Packard during the quarter. A total of approximately 8,900 feet (2,700 meters) were drilled during the period, primarily focused on resource expansion
  • The Company believes there is significant potential for resource growth both north and south of East Rochester and at North Rochester. Coeur continues to receive assay results that were not included in the updated technical report filed in December 2020, and expects to incorporate these results in its year-end 2021 reserves and resources
  • For the remainder of the year, Coeur plans to ramp up exploration activities at Rochester with at least three rigs focusing on infill drilling in the Rochester and Packard pits as well as expansion drilling at North Rochester, the southern portion of East Rochester and East Packard. Separately, Coeur also plans to mobilize two rigs towards the end of the second quarter to conduct infill drilling at the Lincoln Hill zone and expansion drilling at the Gold Ridge zone, both located immediately west of Rochester

Guidance

  • Full-year 2021 production is expected to be 3.2 – 4.4 million ounces of silver and 22,500 – 32,500 ounces of gold
  • CAS1 in 2021 are expected to be $15.00 – $17.00 per silver ounce and $1,180 – $1,330 per gold ounce
  • Capital expenditures are expected to be approximately $155 – $195 million

Kensington, Alaska

(Dollars in millions, except per ounce amounts)

1Q 2021

4Q 2020

3Q 2020

2Q 2020

1Q 2020

Tons milled

170,358

179,636

163,276

170,478

162,341

Average gold grade (oz/t)

0.19

0.20

0.18

0.21

0.21

Average recovery rate

93.2%

93.0%

93.7%

92.0%

93.5%

Gold ounces produced

30,681

32,990

26,797

33,058

32,022

Gold ounces sold

31,595

31,830

27,815

32,367

32,781

Average realized price per gold ounce, gross

$1,754

$1,837

$1,917

$1,762

$1,603

Treatment and refining charges per gold ounce

$30

$37

$35

$57

$27

Average realized price per gold ounce, net

$1,724

$1,800

$1,882

$1,705

$1,576

Metal sales

$54.5

$57.2

$52.4

$55.2

$51.7

Costs applicable to sales2

$31.4

$29.3

$31.5

$30.4

$30.5

Adjusted CAS per AuOz1

$989

$919

$1,128

$934

$928

Prepayment, working capital cash flow

$(7.9)

$5.1

$(5.1)

$7.0

$(7.0)

Exploration expense

$1.1

$0.8

$3.4

$2.6

$1.8

Cash flow from operating activities

$11.0

$31.0

$9.1

$27.8

$11.9

Sustaining capital expenditures (excludes capital lease payments)

$7.2

$5.8

$5.3

$3.9

$4.8

Development capital expenditures

$—

$—

$—

$—

$—

Total capital expenditures

$7.2

$5.8

$5.3

$3.9

$4.8

Free cash flow1

$3.8

$25.2

$3.8

$23.9

$7.1

Operational

  • Gold production in the first quarter totaled 30,681 ounces, compared to 32,990 ounces in the prior period and 32,022 ounces in the first quarter of 2020
  • Relatively lower produc

Contacts

Coeur Mining, Inc.

104 S. Michigan Avenue, Suite 900

Chicago, IL 60603

Attention: Paul DePartout, Director, Investor Relations

Phone: (312) 489-5800

www.coeur.com

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