Coeur Reports Second Quarter 2014 Results
06.08.2014 | Globenewswire Europe
Coeur Reports Second Quarter 2014 ResultsCash flow from operating activities increased by $40 million; Rochester cash
flow and production growth accelerates; Full-year cost guidance reduced
Chicago, Illinois - August 6, 2014 - Coeur Mining, Inc. (the "Company" or
"Coeur") (NYSE: CDE) reported second quarter 2014 revenue of $164.6 million,
adjusted net loss(1 )of $31.6 million, and cash flow from operating activities
of $30.5 million, the highest level in a year. The Company realized average
metal prices of $19.60 per silver ounce and $1,277 per gold ounce during the
quarter, which were 3% lower and roughly flat, respectively, compared to the
first quarter of 2014.
The Company is reducing its full-year costs applicable to sales(1) guidance
range from $500 - $530 million to $490 - $510 million due to its successful
ongoing cost reduction initiatives. Coeur is narrowing its 2014 production
guidance to 17.0 - 18.0 million silver ounces and 225,000 - 240,000 gold ounces
and is maintaining its full-year guidance for exploration ($23 - $28 million
including capitalized drilling), general and administrative expenses ($43 - $48
million), amortization ($190 million), and capital expenditures ($65 - $80
million).
--------------------------------------------------------------------------------
Second Quarter Highlights
* Silver production totaled 4.5 million ounces, a 10% increase compared to the
first quarter
* Gold production totaled 61,025 ounces, a 4% increase compared to the first
quarter
* Rochester produced 1.7 million silver equivalent ounces(1), a 34% increase
compared to the first quarter. Cash flow from operating activities of $4.3
million at Rochester in the second quarter is expected to increase during
the second half of 2014 as production levels continue to rise
* Cash flow from operating activities was $30.5 million in the second quarter,
compared to $(9.6) million in the first quarter
* Mine-level free cash flow(2) of $22.5 million increased from $(4.4) million
in the first quarter, reaching the highest level in a year
* Costs applicable to sales at Coeur's primary silver mines increased 8% from
the first quarter but declined 4% from last year's second quarter to $14.31
per silver equivalent ounce(1)
* All-in sustaining costs per silver equivalent ounce(1) increased 4% from the
first quarter but declined 6% from last year's second quarter to $19.89
* General and administrative expenses were $9.4 million in the second quarter,
down 32% from the first quarter
* Net loss was $43.1 million, or $0.42 per share
* Adjusted net loss(1) was $31.6 million, or $0.31 per share
* Cash, cash equivalents, and short-term investments totaled $316.8 million at
June 30, 2014, nearly unchanged from the first quarter
* Coeur announced a re-scoping of its Palmarejo mine, including plans to
complete development of the Guadalupe underground mine at Palmarejo and
terms for a new gold stream agreement with Franco-Nevada, which is expected
to significantly improve the mine's cash flow profile
"Our second quarter results demonstrate improved or consistent performance
across our portfolio. Our costs are tracking below initial expectations as we
make further progress increasing the efficiency of our operations," said
Mitchell J. Krebs, Coeur's President and Chief Executive Officer.
"In recent weeks, we made important decisions regarding the long-term plan for
our Palmarejo mine and La Preciosa silver-gold project in Mexico. Our re-scoped
mine plan for Palmarejo and deferral of mine construction at La Preciosa
demonstrate our commitment to disciplined capital deployment with the intent to
maximize free cash flow and stockholder returns."
Financial Highlights (Unaudited)
(Amounts in
millions,
except per
share
amounts,
average
realized
prices, gold
ounces
produced &
sold, and
per-ounce Quarter
metrics) 2Q 2014 1Q 2014 Variance 4Q 2013 3Q 2013 2Q 2013
-----------------------------------------------------------------
Revenue $ 164.6 $ 159.6 3 % $ 168.8 $ 200.8 $ 204.5
Costs
Applicable to
Sales(1) $ 118.7 $ 106.9 11 % $ 101.4 $ 131.8 $ 142.4
Net Income
(Loss) $ (43.1 ) $ (37.2 ) (16 %) $ (581.5 ) $ (46.3 ) $ (35.0 )
Earnings Per
Share $ (0.42 ) $ (0.36 ) (17 %) $ (5.77 ) $ (0.46 ) $ (0.35 )
Adjusted Net
Income
(Loss)(1) $ (31.6 ) $ (19.5 ) (62 %) $ (17.0 ) $ (29.3 ) $ (29.8 )
Adjusted Net
Income
(Loss)(1 )Per
Share $ (0.31 ) $ (0.19 ) (63 %) $ (0.17 ) $ (0.29 ) $ (0.30 )
Weighted
Average
Shares 102.4 102.4 - % 100.7 100.8 99.8
Cash Flow
From
Operating
Activities $ 30.5 $ (9.6 ) 418 % $ 10.4 $ 26.8 $ 63.3
Capital
Expenditures $ 15.4 $ 11.9 29 % $ 28.1 $ 32.7 $ 27.2
Cash, Cash
Equivalents &
Short-Term
Investments $ 316.8 $ 318.6 (1 %) $ 206.7 $ 211.4 $ 249.5
Total Debt(3) $ 480.1 $ 464.2 3 % $ 308.6 $ 310.2 $ 312.1
Average
Realized
Price Per
Ounce -
Silver $ 19.60 $ 20.28 (3 %) $ 20.50 $ 21.11 $ 22.73
Average
Realized
Price Per
Ounce - Gold $ 1,277 $ 1,279 - % $ 1,206 $ 1,300 $ 1,356
Silver Ounces
Produced 4.5 4.1 10 % 4.3 4.2 4.6
Gold Ounces
Produced 61,025 58,836 4 % 79,845 63,040 60,178
Silver
Equivalent
Ounces
Produced(1) 8.1 7.6 7 % 9.1 8.0 8.2
Silver Ounces
Sold 4.6 3.9 19 % 4.0 4.9 5.2
Gold Ounces
Sold 57,751 62,578 (8 %) 72,215 75,677 63,523
Silver
Equivalent
Ounces
Sold(1) 8.1 7.6 7 % 8.3 9.4 9.0
Costs
Applicable to
Sales per
Silver
Equivalent
Oz(1) $ 14.31 $ 13.22 8 % $ 12.49 $ 13.82 $ 14.88
All-in
Sustaining
Costs per
Silver
Equivalent
Oz(1) $ 19.89 $ 19.09 4 % $ 17.94 $ 19.97 $ 21.22
Financial Results
Second quarter revenue increased by $5.0 million, or 3%, compared to the first
quarter to $164.6 million due to an increase in silver ounces sold, partially
offset by fewer gold ounces sold and lower average realized silver and gold
prices. The Company sold 4.6 million ounces of silver and 57,751 ounces of gold,
compared to sales of 3.9 million ounces of silver and 62,578 ounces of gold in
the first quarter. The Company realized average silver and gold prices of $19.60
per ounce and $1,277 per ounce, respectively, compared with realized average
prices of $20.28 per ounce and $1,279 per ounce, respectively. Silver
contributed 55% of metal sales and gold contributed 45% during the second
quarter.
General and administrative expenses were $9.4 million in the second quarter,
down 32% from the first quarter. Cash flow from operating activities was $30.5
million in the second quarter, compared to $(9.6) million in the first quarter.
Capital expenditures of $15.4 million were 29% higher than the first quarter but
43% below the second quarter of 2013 and continue to track significantly below
2013 levels. Capital expenditures for the first half of the year were mainly for
underground development at Palmarejo and Kensington, plant improvements at San
Bartolomé, and resource definition at Rochester. In the second half of 2014,
underground development at Guadalupe and Kensington and construction of the
tailings dam at San Bartolomé are expected to comprise the majority of Coeur's
capital spending.
Coeur's adjusted net loss(1) was $31.6 million, or $0.31 per share, in the
second quarter 2014, compared with an adjusted net loss(1) of $19.5 million, or
$0.19 per share, in the first quarter. The second quarter adjusted net loss(1)
excludes a $6.5 million negative fair value adjustment, $2.3 million in stock-
based compensation, and a $1.7 million accretion of the Palmarejo royalty
obligation. Fair value adjustments are primarily driven by changes to gold and
silver prices, which adjust the estimated future liabilities for the Palmarejo
gold production royalty and the Rochester 3.4% net smelter returns royalty. The
Company realized a net loss of $43.1 million or $0.42 per share, in the second
quarter 2014.
Downside Price Protection
The Company extended its downside metal price protection program during the
second quarter, using put spreads to protect 25% - 40% of expected future
production against a sharp decrease in metal prices while selling intra-quarter,
out-of-the-money call options when appropriate to offset the net cost of the put
spreads. Put spreads through the end of 2014 cover 1.25 million ounces of
expected quarterly silver production and 25,000 ounces of expected quarterly
gold production. Put spreads in the first quarter of 2015 cover 1.25 million
ounces of expected silver production and 24,000 ounces of expected gold
production. All put options purchased have a strike price of $18/ounce and
$1,200/ounce for silver and gold, respectively. All put options sold have a
strike price of $16/ounce and $1,050/ounce for silver and gold, respectively.
Operations
Highlights of the second quarter 2014 results for each of the Company's mining
operations are provided below.
Palmarejo, Mexico
+-------+
(Dollars in millions, expect per ounce| |
amounts) |2Q 2014|1Q 2014 4Q 2013 3Q 2013 2Q 2013
+-------+-------------------------------
Underground Operations: | |
| |
Tons mined |177,359|209,854 237,384 219,909 183,267
| |
Average silver grade (oz/t) | 6.15 | 5.95 6.00 4.73 4.59
| |
Average gold grade (oz/t) | 0.11 | 0.11 0.14 0.11 0.11
| |
Surface Operations: | |
| |
Tons mined |320,583|358,222 361,493 385,379 363,758
| |
Average silver grade (oz/t) | 3.72 | 3.50 3.49 3.49 4.95
| |
Average gold grade (oz/t) | 0.03 | 0.03 0.03 0.03 0.04
| |
Processing: | |
| |
Total tons milled |534,718|571,345 595,803 583,365 570,322
| |
Average recovery rate - Ag | 75.6% | 73.3% 74.5% 81.8% 76.5%
| |
Average recovery rate - Au | 78.9% | 78.0% 80.6% 87.6% 81.2%
| |
Silver ounces produced (000's) | 1,761 | 1,820 1,994 1,918 2,045
| |
Gold ounces produced |23,706 |25,216 35,486 29,893 28,191
| |
Silver equivalent ounces produced(1) | 3,183 | 3,333 4,123 3,711 3,736
| |
Silver ounces sold (000's) | 1,983 | 1,677 1,768 2,592 2,007
| |
Gold ounces sold |25,753 |26,422 31,360 38,385 28,025
| |
Revenues | $72.4 | $68.0 $75.9 $104.5 $86.2
| |
Costs applicable to sales(1) | $49.6 | $43.6 $39.9 $66.8 $55.2
| |
Costs applicable to sales per silver | |
equivalent ounce(1) |$14.04 |$13.36 $10.90 $13.66 $14.97
| |
Exploration expense | $1.6 | $1.0 $1.1 $0.9 $3.2
| |
Cash flow from operating activities | $27.4 | $10.2 $16.6 $50.8 $37.2
| |
Sustaining capital expenditures | $5.3 | $3.7 $4.6 $7.1 $5.4
| |
Development capital expenditures | $0.3 | $- $4.3 $3.2 $3.8
+-------+-------------------------------
Total capital expenditures | $5.6 | $3.7 $8.9 $10.3 $9.2
| |
Free cash flow (before royalties) | $21.8 | $6.5 $7.7 $40.5 $28.0
| |
Royalties paid (credited) | $12.3 | $14.7 $13.5 $12.6 $15.5
| |
Free cash flow(2) | $9.5 |$(8.2) $(5.8) $27.9 $12.5
+-------+
* On July 20, Coeur announced a re-scoped mine plan for Palmarejo, reflecting
the mining of a portion of current mineral reserves and a portion of high-
grade inferred material located at the Guadalupe deposit. The mine plan
provided the expected long-term operational and financial profile of the
mine, which included the anticipated economics of the Guadalupe development
plan and new gold stream agreement with Franco-Nevada, which were both
announced on June 23
* The re-scoped mine plan forecasts lower throughput for 2014 - 2021 but at
higher grades, higher recovery rates, and lower unit costs than achieved in
recent quarters as Coeur transitions the mine to a higher-margin,
underground operation. Coeur plans to update the mine plan at year end to
incorporate drilling results from the second half of 2013 and first half of
2014
* Cash flow from operating activities of $27.4 million in the second quarter
was significantly higher than $10.2 million in the first quarter mainly due
to higher ounces sold and lower working capital
* Capital expenditures of $5.6 million in the second quarter were up from $3.7
million in the first quarter but continue to track meaningfully below 2013
levels
* Coeur expects higher recovery rates and proportionally fewer open-pit tons
mined in the second half of 2014. In line with the re-scoped mine plan,
total production at Palmarejo in 2014 is expected to be 6.7 - 7.0 million
ounces of silver and 84,000 - 90,000 ounces of gold
Rochester, Nevada
+---------+
(Dollars in millions, expect| |
per ounce amounts) | 2Q 2014 | 1Q 2014 4Q 2013 3Q 2013 2Q 2013
+---------+---------------------------------------
Ore tons placed |3,329,582|3,640,861 4,569,588 2,678,906 2,457,423
| |
Average silver grade (oz/t) | 0.58 | 0.59 0.57 0.53 0.58
| |
Average gold grade (oz/t) | 0.003 | 0.003 0.002 0.003 0.003
| |
Silver ounces produced | |
(000's) | 1,112 | 750 712 595 844
| |
Gold ounces produced | 9,230 | 8,192 7,890 4,824 9,404
| |
Silver equivalent ounces | |
produced(1) | 1,666 | 1,242 1,186 885 1,408
| |
Silver ounces sold (000's) | 1,006 | 695 621 741 851
| |
Gold ounces sold | 8,970 | 7,770 6,323 6,539 10,925
| |
Revenues | $31.2 | $24.2 $20.6 $24.3 $34.9
| |
Costs applicable to sales(1)| $24.4 | $14.7 $16.6 $17.9 $22.5
| |
Costs applicable to sales | |
per silver equivalent | |
ounce(1) | $15.79 | $12.67 $16.63 $15.83 $14.95
| |
Exploration expense | $0.7 | $1.2 $1.0 $0.6 $0.5
| |
Cash flow from operating | |
activities | $4.3 | $(9.0) $(9.7) $(3.6) $(3.4)
| |
Sustaining capital | |
expenditures | $3.9 | $1.0 $7.2 $12.3 $6.6
| |
Development capital | |
expenditures | $0.1 | $- $- $- $-
+---------+---------------------------------------
Total capital expenditures | $4.0 | $1.0 $7.2 $12.3 $6.6
| |
Free cash flow(2) | $0.3 | $(10.0) $(16.9) $(15.9) $(10.0)
+---------+
* Production of 1.1 million ounces of silver and 9,230 ounces of gold in the
second quarter increased 48% and 13%, respectively, compared to the first
quarter and reached the highest level since 2007
* Second quarter costs applicable to sales per silver equivalent ounce(1) were
$15.79, higher than $12.67 in the first quarter due to higher crushing,
royalty, and leaching costs. The Company expects costs applicable to sales
per silver equivalent ounce(1) in the second half of 2014 to be in line with
the first half
* Cash flow from operating activities of $4.3 million reached the highest
level in more than a year and revenue increased 29% from the first quarter
as the ramp up in production from the Stage III leach pad has accelerated
* Capital expenditures were $4.0 million during the second quarter, tracking
significantly below year-ago levels
* Rochester received a favorable ruling regarding an appeal of Rochester's
Plan of Operations Amendment ("POA") 8, an expansion project that had been
approved by the Bureau of Land Management in 2010. This decision comes just
days after the Notice of Intent for Rochester's POA 10 was published in the
Federal Register. POA 10 includes plans for an expansion of the Stage IV
heap leach pad and construction of the Stage V leach pad, which together are
expected to add approximately 120 million tons of pad capacity. Permits for
POA 10 are expected to be received during the second half of 2016
San Bartolomé, Bolivia
+-------+
(Dollars in millions, expect per ounce| |
amounts) |2Q 2014|1Q 2014 4Q 2013 3Q 2013 2Q 2013
+-------+-------------------------------
Tons milled |437,975|385,375 451,660 428,884 424,310
| |
Average silver grade (oz/t) | 3.87 | 3.88 3.79 3.89 3.98
| |
Average recovery rate | 87.5% | 90.5% 87.6% 91.5% 90.3%
| |
Silver ounces produced (000's) | 1,481 | 1,355 1,499 1,528 1,523
| |
Silver ounces sold (000's) | 1,494 | 1,357 1,485 1,334 2,151
| |
Revenues | $29.1 | $27.6 $30.6 $28.8 $49.2
| |
Costs applicable to sales(1) | $20.7 | $18.9 $20.6 $17.7 $32.8
| |
Costs applicable to sales per silver | |
equivalent ounce(1) |$13.85 |$13.93 $13.91 $13.25 $15.26
| |
Exploration expense | $0.1 | $- $- $- $-
| |
Cash flow from operating activities | $18.9 | $4.5 $8.9 $7.6 $32.8
| |
Sustaining capital expenditures | $1.7 | $1.4 $1.8 $3.0 $1.4
| |
Development capital expenditures | $- | $- $2.0 $1.2 $1.8
+-------+-------------------------------
Total capital expenditures | $1.7 | $1.4 $3.8 $4.2 $3.2
| |
Free cash flow(2) | $17.2 | $3.1 $5.1 $3.4 $29.6
+-------+
* Silver production of approximately 1.5 million ounces was 9% higher than the
first quarter due to increased throughput
* Cash flow from operating activities of $18.9 million reached its highest
level in a year
* Stable production, grades, and costs are expected for the remainder of 2014
Kensington, Alaska
+-------+
(Dollars in millions, expect per ounce| |
amounts) |2Q 2014|1Q 2014 4Q 2013 3Q 2013 2Q 2013
+-------+-------------------------------
Tons milled |163,749|159,697 149,246 147,427 127,987
| |
Average gold grade (oz/t) | 0.18 | 0.17 0.26 0.20 0.18
| |
Average recovery rate | 94.5% | 94.5% 93.6% 94.1% 95.8%
| |
Gold ounces produced |28,089 |25,428 36,469 28,323 22,583
| |
Gold ounces sold |23,028 |28,386 34,533 30,752 24,573
| |
Revenues | $29.0 | $36.1 $39.7 $38.9 $30.9
| |
Costs applicable to sales(1) | $23.2 | $28.5 $23.4 $27.5 $30.2
| |
Costs applicable to sales per gold | |
ounce(1) |$1,008 |$1,005 $677 $894 $1,227
| |
Exploration expense | $1.6 | $1.0 $1.5 $1.5 $0.6
| |
Cash flow from operating activities |$(0.6) | $13.9 $11.3 $1.9 $7.6
| |
Sustaining capital expenditures | $4.0 | $4.7 $5.7 $4.9 $7.4
| |
Development capital expenditures | $- | $- $- $- $-
+-------+-------------------------------
Total capital expenditures | $4.0 | $4.7 $5.7 $4.9 $7.4
| |
Free cash flow(2) |$(4.6) | $9.2 $5.6 $(3.0) $0.2
+-------+
* Gold production increased 10% compared to the first quarter due to higher
grades and milling rates. Gold grades are expected to be slightly above the
second quarter for the remainder of the year due to the mining of high-grade
stopes from the main section of the mine and from the high-grade Raven
deposit
* Costs applicable to sales per gold ounce(1 )were $1,008 during the second
quarter, nearly unchanged from the first quarter, and are expected to
decline in the second half of 2014 due to higher grades
* Cash flow from operating activities of $(0.6) million was below the $13.9
million generated in the first quarter due to timing of concentrate
shipments
Endeavor, Australia
+-------+
(Dollars in millions, expect per ounce| |
amounts) |2Q 2014|1Q 2014 4Q 2013 3Q 2013 2Q 2013
+-------+-------------------------------
Tons milled |185,538|193,219 200,843 197,237 198,517
| |
Average silver grade (oz/t) | 1.41 | 1.65 1.37 1.71 2.73
| |
Average recovery rate | 42.4% | 45.9% 42.0% 42.1% 37.0%
| |
Silver ounces produced (000's) | 111 | 147 115 142 200
| |
Silver ounces sold (000's) | 106 | 147 113 186 198
| |
Revenues | $2.0 | $2.9 $2.1 $4.3 $3.5
| |
Costs applicable to sales(1) | $0.8 | $1.2 $0.9 $1.9 $1.7
| |
Costs applicable to sales per silver | |
equivalent ounce(1) | $7.94 | $8.05 $8.32 $10.09 $8.49
| |
Cash flow from operating activities | $0.1 | $1.5 $0.9 $1.3 $1.2
| |
Free cash flow(2) | $0.1 | $1.5 $0.9 $1.3 $1.2
+-------+
* Silver production decreased 24% from the first quarter due to lower tons
milled, grades, and recovery rates
* Costs applicable to sales per silver equivalent ounce declined to $7.94
* Coeur owns all silver production and reserves at Endeavor up to a total of
20.0 million payable ounces. At June 30, 2014, the Company has received 5.1
million ounces
Exploration
Costs associated with exploration activities for the second quarter 2014 were
$5.2 million (expensed) for discovery of new silver and gold mineralization and
$3.9 million (capitalized) for definition and expansion of mineralized material,
for a total of $9.1 million. Coeur's exploration program used ten drill rigs
during the second quarter: four drills at Palmarejo, four at Kensington, and two
at Rochester. This work resulted in completion of over 165,146 feet (50,335
meters) of combined core and reverse circulation drilling.
2014 Production Outlook
Coeur's 2014 total silver and gold production guidance is shown below. The
Company has slightly narrowed the range, with higher than planned gold
production from Rochester expected to offset lower gold production from
Palmarejo, in line with Coeur's re-scoped mine plan and strategy to transition
the mine to a higher-margin, lower tonnage operation.
(silver and silver
equivalent ounces in
thousands) Silver Gold Silver Equivalent(1)
-------------------------------------------------------------------------------
Palmarejo, Mexico 6,700 - 7,000 84,000 - 90,000 11,740 - 12,400
San Bartolomé, Bolivia 5,700 - 6,000 - 5,700 - 6,000
Rochester, Nevada 4,100 - 4,400 34,000 - 38,000 6,140 - 6,680
Endeavor, Australia 500 - 600 - 500 - 600
-------------------------------------------------------------------------------
Kensington, Alaska - 107,000 - 112,000 6,420 - 6,720
Total 17,000 - 18,000 225,000 - 240,000 30,500 - 32,400
-------------------------------------------------------------------------------
Conference Call Information
Coeur will conduct a conference call and webcast at www.coeur.com to discuss the
Company's second quarter results on August 7, 2014 at 11:00 a.m. Eastern time.
Dial-In Numbers: (877) 768-0708 (U.S. and Canada)
(660) 422-4718 (International)
Conference ID: 716 78 100
A replay of the call will be available on Coeur's website through August
21, 2014.
Replay Numbers: (855) 859-2056 (U.S. and Canada)
(404) 537-3406 (International)
Conference ID: 716 78 100
About Coeur
Coeur Mining is the largest U.S.-based primary silver producer and a significant
gold producer with four precious metals mines in the Americas employing nearly
2,000 people. Coeur produces from its wholly owned operations: the Palmarejo
silver-gold mine in Mexico, the San Bartolomé silver mine in Bolivia, the
Rochester silver-gold mine in Nevada and the Kensington gold mine in Alaska. The
Company also has a non-operating interest in the Endeavor mine in Australia in
addition to net smelter royalties on the Cerro Bayo mine in Chile, the El Gallo
complex in Mexico, and the Zaruma mine in Ecuador. In addition, the Company has
two silver-gold feasibility stage projects - the La Preciosa project in Mexico
and the Joaquin project in Argentina. The Company also conducts ongoing
exploration activities in Alaska, Argentina, Bolivia, Mexico, and Nevada. The
Company owns strategic investment positions in several silver and gold
development companies with projects in North and South America.
Cautionary Statement
This news release contains forward-looking statements within the meaning of
securities legislation in the United States and Canada, including statements
regarding anticipated production, costs, capital and exploration expenditures,
amortization, exploration and development efforts, the longer-term operational
and financial profile of Palmarejo, the new gold stream agreement with Franco-
Nevada, recovery rates, grades, throughput, margins, permits, leach pad
capacity, and initiatives to increase efficiency, minimize exposure to declining
metal prices, and maximize free cash flow and returns. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause Coeur's actual results, performance or achievements to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Such factors include,
among others, the risks and hazards inherent in the mining business (including
risks inherent in developing large-scale mining projects, environmental hazards,
industrial accidents, weather or geologically related conditions), changes in
the market prices of gold and silver and a sustained lower price environment,
the uncertainties inherent in Coeur's production, exploratory and developmental
activities, including risks relating to permitting and regulatory delays, ground
conditions, grade variability, any future labor disputes or work stoppages, the
uncertainties inherent in the estimation of gold and silver reserves and
resources, changes that could result from Coeur's future acquisition of new
mining properties or businesses, reliance on third parties to operate certain
mines where Coeur owns silver production and reserves and the absence of control
over mining operations in which Coeur or its subsidiaries hold royalty or
streaming interests and risks related to these mining operations including
results of mining and exploration activities, environmental, economic and
political risks of the jurisdiction in which the mining operations are located,
the loss of access to any third-party smelter to which Coeur markets silver and
gold, the effects of environmental and other governmental regulations, the risks
inherent in the ownership or operation of or investment in mining properties or
businesses in foreign countries, Coeur's ability to raise additional financing
necessary to conduct its business, make payments or refinance its debt, as well
as other uncertainties and risk factors set out in filings made from time to
time with the United States Securities and Exchange Commission, and the Canadian
securities regulators, including, without limitation, Coeur's most recent
reports on Form 10-K and Form 10-Q. Actual results, developments and timetables
could vary significantly from the estimates presented. Readers are cautioned not
to put undue reliance on forward-looking statements. Coeur disclaims any intent
or obligation to update publicly such forward-looking statements, whether as a
result of new information, future events or otherwise. Additionally, Coeur
undertakes no obligation to comment on analyses, expectations or statements made
by third parties in respect of Coeur, its financial or operating results or its
securities.
W. David Tyler, Coeur's Vice President, Technical Services and a qualified
person under Canadian National Instrument 43-101, supervised the preparation of
the scientific and technical information concerning Coeur's mineral projects in
this news release. Mineral resources are in addition to mineral reserves and do
not have demonstrated economic viability. Inferred mineral resources are
considered too speculative geologically to have the economic considerations
applied to them that would enable them to be considered for estimation of
mineral reserves, and there is no certainty that the inferred mineral resources
will be realized. Insofar as the re-scoped Palmarejo mine plan referenced herein
is a preliminary economic assessment that is based, in part, on inferred mineral
resources, the re-scoped mine plan does not have as high a level of certainty as
would a plan that was based solely on proven and probable reserves. For a
description of the key assumptions, parameters and methods used to estimate
mineral reserves and resources, as well as data verification procedures and a
general discussion of the extent to which the estimates may be affected by any
known environmental, permitting, legal, title, taxation, socio-political,
marketing or other relevant factors, please see the Technical Reports for each
of Coeur's properties as filed on SEDAR at www.sedar.com and the new Technical
Report for the La Preciosa feasibility study to be filed on www.sedar.com no
later than September 14, 2014.
Cautionary Note to U.S. Investors
The United States Securities and Exchange Commission permits U.S. mining
companies, in their filings with the SEC, to disclose only those mineral
deposits that a company can economically and legally extract or produce. We may
use certain terms in public disclosures, such as "measured," "indicated,"
"inferred" and "resources," that are recognized by Canadian regulations, but
that SEC guidelines generally prohibit U.S. registered companies from including
in their filings with the SEC. U.S. investors are urged to consider closely the
disclosure in our Form 10-K which may be secured from us, or from the SEC's
website at http://www.sec.gov.
Non-U.S. GAAP Measures
We supplement the reporting of our financial information determined under United
States generally accepted accounting principles (U.S. GAAP) with certain non-
U.S. GAAP financial measures, including adjusted net income (loss), costs
applicable to sales per silver equivalent ounce, and all-in sustaining costs. We
believe that these adjusted measures provide meaningful information to assist
management, investors and analysts in understanding our financial results and
assessing our prospects for future performance. We believe these adjusted
financial measures are important indicators of our recurring operations because
they exclude items that may not be indicative of, or are unrelated to our core
operating results, and provide a better baseline for analyzing trends in our
underlying businesses. We believe adjusted net income (loss), costs applicable
to sales per silver equivalent ounce, and all-in sustaining costs are important
measures in assessing the Company's overall financial performance.
Notes
1. Adjusted net income (loss), all-in sustaining costs, and costs applicable to
sales per silver equivalent ounce are non-GAAP measures. Please see tables in
the Appendix for the reconciliation to U.S. GAAP. Silver equivalence calculated
using a 60:1 silver to gold ratio.
2. Free cash flow is defined as cash flow from operating activities less capital
expenditures and royalty payments. Mine-level free cash flow is the sum of free
cash flow generated by Palmarejo, Rochester, San Bartolomé, Kensington, and
Endeavor.
3. Includes capital leases. Net of debt discount.
For Additional Information:
Bridget Freas, Director, Investor Relations
(312) 489-5819
Donna Mirandola, Director, Corporate Communications
(312) 489-5842
www.coeur.com
Coeur Mining Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
Three months ended June
30, Six months ended June 30,
--------------------------- --------------------------
2014 2013 2014 2013
------------- ------------- ------------- ------------
(In thousands, except share data)
Revenue $ 164,562 $ 204,525 $ 324,195 $ 376,322
COSTS AND EXPENSES
Costs applicable to
sales 118,687 142,386 225,583 230,444
Amortization 41,422 56,894 81,849 106,589
General and
administrative 9,398 15,026 23,294 25,253
Exploration 5,153 6,774 9,370 13,615
Litigation settlement - 32,046 - 32,046
Pre-development,
reclamation, and other 8,760 1,817 15,775 7,163
------------- ------------- ------------- ------------
Total costs and expenses 183,420 254,943 355,871 415,110
OTHER INCOME (EXPENSE),
NET
Fair value adjustments,
net (8,282 ) 66,754 (19,717 ) 84,550
Impairment of marketable
securities (934 ) (17,192 ) (3,522 ) (17,227 )
Interest income and
other, net (116 ) 419 (2,100 ) 4,275
Interest expense, net of
capitalized interest (12,310 ) (10,930 ) (25,365 ) (20,662 )
------------- ------------- ------------- ------------
Total other income
(expense), net (21,642 ) 39,051 (50,704 ) 50,936
------------- ------------- ------------- ------------
Income (loss) before
income and mining taxes (40,500 ) (11,367 ) (82,380 ) 12,148
Income and mining tax
(expense) benefit (2,621 ) (23,673 ) 2,068 (34,918 )
------------- ------------- ------------- ------------
NET INCOME (LOSS) $ (43,121 ) $ (35,040 ) $ (80,312 ) $ (22,770 )
------------- ------------- ------------- ------------
OTHER COMPREHENSIVE
INCOME (LOSS), net of
tax:
Unrealized loss on
marketable securities,
net of tax of $487 and
$253 for the three and
six months ended June
30, 2014, respectively (773 ) (7,491 ) (401 ) (11,057 )
Reclassification
adjustments for
impairment of marketable
securities, net of tax
of $(362) and $(1,363)
for the three and six
months ended June
30, 2014, respectively 572 17,192 2,159 17,227
Reclassification
adjustments for realized
loss on sale of
marketable securities,
net of tax of $(10) for
the three and six months
ended June 30, 2014,
respectively 17 - 17 -
------------- ------------- ------------- ------------
Other comprehensive
income (loss) (184 ) 9,701 1,775 6,170
------------- ------------- ------------- ------------
COMPREHENSIVE INCOME
(LOSS) $ (43,305 ) $ (25,339 ) $ (78,537 ) $ (16,600 )
------------- ------------- ------------- ------------
NET INCOME (LOSS) PER
SHARE
Basic $ (0.42 ) $ (0.35 ) $ (0.78 ) $ (0.24 )
------------- ------------- ------------- ------------
Diluted $ (0.42 ) $ (0.35 ) $ (0.78 ) $ (0.24 )
------------- ------------- ------------- ------------
Coeur Mining Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Three months ended June
30, Six months ended June 30,
--------------------------- --------------------------
2014 2013 2014 2013
------------- ------------- ------------- ------------
(In thousands)
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss) $ (43,121 ) $ (35,040 ) $ (80,312 ) (22,770 )
Adjustments:
Amortization 41,422 56,896 81,849 106,589
Accretion 4,502 5,380 9,093 10,840
Deferred income taxes (3,844 ) 12,123 (15,705 ) 19,548
Loss on termination of
revolving credit
facility - - 3,035 -
Fair value
adjustments, net 8,288 (65,754 ) 18,845 (81,795 )
Litigation settlement - 22,046 - 22,046
Stock-based
compensation 2,385 1,617 4,950 2,713
(Gain) loss on sale of
assets (48 ) (264 ) 222 (1,132 )
Impairment of
marketable securities 934 17,192 3,522 17,227
Other (12 ) 234 (219 ) (112 )
Changes in operating
assets and
liabilities:
Receivables 4,921 4,401 10,544 8,647
Prepaid expenses and
other current assets 3,551 2,930 (4,558 ) 411
Inventory and ore on
leach pads (1,606 ) 31,483 (15,519 ) 10,990
Accounts payable and
accrued liabilities 13,118 10,094 5,117 (16,930 )
------------- ------------- ------------- ------------
CASH PROVIDED BY
OPERATING ACTIVITIES 30,490 63,338 20,864 76,272
------------- ------------- ------------- ------------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Capital expenditures (15,356 ) (27,201 ) (27,292 ) (40,028 )
Acquisitions (2,250 ) (101,648 ) (2,250 ) (113,214 )
Purchase of short-term
investments and
marketable securities (2,139 ) (683 ) (48,360 ) (5,332 )
Sales and maturities
of short-term
investments 800 1,522 890 6,344
Other 12 254 (13 ) 1,209
------------- ------------- ------------- ------------
CASH USED IN INVESTING
ACTIVITIES (18,933 ) (127,756 ) (77,025 ) (151,021 )
------------- ------------- ------------- ------------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Issuance of notes and
bank borrowings - - 153,000 300,000
Payments on long-term
debt, capital leases,
and associated costs (2,851 ) (1,857 ) (6,962 ) (57,197 )
Gold production
royalty payments (12,345 ) (15,480 ) (27,028 ) (30,929 )
Share repurchases - - - (12,557 )
Other (160 ) (25 ) (406 ) (477 )
------------- ------------- ------------- ------------
CASH PROVIDED BY (USED
IN) FINANCING
ACTIVITIES (15,356 ) (17,362 ) 118,604 198,840
------------- ------------- ------------- ------------
INCREASE (DECREASE) IN
CASH AND CASH
EQUIVALENTS (3,799 ) (81,780 ) 62,443 124,091
Cash and cash
equivalents at
beginning of period 272,932 331,311 206,690 125,440
------------- ------------- ------------- ------------
Cash and cash
equivalents at end of
period $ 269,133 $ 249,531 $ 269,133 $ 249,531
------------- ------------- ------------- ------------
Coeur Mining Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
June 30, December 31,
2014 2013
--------------- ------------------
ASSETS (In thousands, except share data)
CURRENT ASSETS
Cash and cash equivalents $ 269,133 $ 206,690
Investments 47,642 -
Receivables 68,693 81,074
Ore on leach pads 44,964 50,495
Inventory 137,644 132,023
Deferred tax assets 35,079 35,008
Prepaid expenses and other 23,593 25,940
--------------- ------------------
626,748 531,230
NON-CURRENT ASSETS
Property, plant and equipment, net 482,787 486,273
Mining properties, net 1,728,667 1,751,501
Ore on leach pads 46,956 31,528
Restricted assets 7,510 7,014
Marketable securities 13,761 14,521
Receivables 38,424 36,574
Debt issuance costs, net 11,031 10,812
Deferred tax assets 808 1,189
Other 10,830 15,336
--------------- ------------------
TOTAL ASSETS $ 2,967,522 $ 2,885,978
--------------- ------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 49,651 $ 53,847
Accrued liabilities and other 40,632 38,266
Debt 11,565 2,505
Royalty obligations 51,087 48,019
Reclamation 752 913
Deferred tax liabilities 1,858 1,011
--------------- ------------------
155,545 144,561
NON-CURRENT LIABILITIES
Debt 468,570 306,130
Royalty obligations 58,505 65,142
Reclamation 59,757 57,515
Deferred tax liabilities 540,232 556,246
Other long-term liabilities 28,280 25,817
--------------- ------------------
1,155,344 1,010,850
STOCKHOLDERS' EQUITY
Common stock, par value $0.01 per share;
authorized 150,000,000 shares, issued
and outstanding 103,485,960 at June
30, 2014 and 102,843,003 at December
31, 2013 1,034 1,028
Additional paid-in capital 2,785,761 2,781,164
Accumulated other comprehensive income
(loss) (3,131 ) (4,906 )
Accumulated deficit (1,127,031 ) (1,046,719 )
--------------- ------------------
1,656,633 1,730,567
--------------- ------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 2,967,522 $ 2,885,978
--------------- ------------------
Adjusted Net Income Reconciliation
(Dollars in
thousands
except per
share
amounts) 2Q 2014 1Q 2014 4Q 2013 3Q 2013 2Q 2013
------------- ------------- -------------- ------------- ------------
Net income
(loss) $ (43,121 ) $ (37,191 ) $ (581,528 ) $ (46,265 ) $ (35,040 )
Fair value
adjustments,
net 6,498 7,827 (11,289 ) 13,717 (48,434 )
Stock-based
compensation 2,299 2,453 1,034 358 1,554
Impairment
of
marketable
securities 934 2,588 211 870 17,192
Accretion of
royalty
obligation 1,789 1,821 2,974 2,022 2,897
Write-downs - - 580,365 - -
Litigation
settlement - - - - 32,046
Gain on sale
of building - - (1,200 ) - -
Gain on
commutation
of
reclamation
bonding
arrangements - - (7,609 ) - -
Loss on
revolver
termination - 3,035 - - -
------------- ------------- -------------- ------------- ------------
Adjusted net
income
(loss) $ (31,601 ) $ (19,467 ) $ (17,042 ) $ (29,298 ) $ (29,785 )
------------- ------------- -------------- ------------- ------------
Adjusted net
income
(loss) per
share $ (0.31 ) $ (0.19 ) $ (0.17 ) $ (0.29 ) $ (0.30 )
------------- ------------- -------------- ------------- ------------
Reconciliation of Non-U.S. GAAP Costs Applicable to Sales per Silver Equivalent
Ounce
for Three Months Ended June 30, 2014
Silver Gold
------------------------------------------------------------------- ------------ ------------
(Dollars in
thousands
except per San
ounce amounts) Palmarejo Bartolomé Rochester Endeavor Total Kensington Total
------------------------------------------------------------------- ------------ ------------
Costs
applicable to
sales,
including
amortization
(U.S. GAAP) $ 67,595 $ 25,550 $ 29,406 $ 1,701 $ 124,252 $ 34,784 $ 159,036
Amortization 18,044 4,855 5,025 859 28,783 11,566 40,349
------------- ------------- ------------- ----------- ------------- ------------ ------------
Costs
applicable to
sales $ 49,551 $ 20,695 $ 24,381 $ 842 $ 95,469 $ 23,218 $ 118,687
Silver
equivalent
ounces sold 3,528,219 1,494,100 1,544,456 106,126 6,672,901
Gold ounces
sold 23,028
------------- ------------- ------------- ----------- ------------- ------------
Costs
applicable to
sales per
ounce $ 14.04 $ 13.85 $ 15.79 $ 7.94 $ 14.31 $ 1,008
Treatment and
refining costs 963
Sustaining
capital 17,617
General and
administrative 9,398
Exploration 5,153
Reclamation 1,964
Project/pre-
development
costs 6,388
------------
All-in
sustaining
costs $ 160,170
Silver
equivalent
ounces sold 6,672,901
Kensington
silver
equivalent
ounces sold 1,381,680
------------
Consolidated
silver
equivalent
ounces sold 8,054,581
------------
All-in
sustaining
costs per
silver
equivalent
ounce $ 19.89
------------
Reconciliation of Non-U.S. GAAP Costs Applicable to Sales per Silver Equivalent
Ounce
for Three Months Ended March 31, 2014
Silver Gold
------------------------------------------------------------------- ------------ ------------
(Dollars in
thousands
except per San
ounce amounts) Palmarejo Bartolomé Rochester Endeavor Total Kensington Total
------------------------------------------------------------------- ------------ ------------
Costs
applicable to
sales,
including
amortization
(U.S. GAAP) $ 62,233 $ 23,358 $ 19,159 $ 2,135 $ 106,885 $ 39,240 $ 146,125
Amortization 18,659 4,457 4,451 953 28,520 10,709 39,229
------------- ------------- ------------- ----------- ------------- ------------ ------------
Costs
applicable to
sales $ 43,574 $ 18,901 $ 14,708 $ 1,182 $ 78,365 $ 28,531 $ 106,896
Silver
equivalent
ounces sold 3,261,982 1,357,307 1,160,829 146,842 5,926,960
Gold ounces
sold 28,386
------------- ------------- ------------- ----------- ------------- ------------
Costs
applicable to
sales per
ounce $ 13.36 $ 13.93 $ 12.67 $ 8.05 $ 13.22 $ 1,005
------------- ------------- ------------- ----------- ------------- ------------
Treatment and
refining costs 1,561
Sustaining
capital 12,851
General and
administrative 13,896
Exploration 4,217
Reclamation 1,914
Project/pre-
development
costs 4,325
------------
All-in
sustaining
costs $ 145,660
Silver
equivalent
ounces sold 5,926,960
Kensington
silver
equivalent
ounces sold 1,703,160
------------
Consolidated
silver
equivalent
ounces sold 7,630,120
------------
All-in
sustaining
costs per
silver
equivalent
ounce $ 19.09
------------
Reconciliation of Non-U.S. GAAP Costs Applicable to Sales per Silver Equivalent
Ounce
for Three Months Ended December 31, 2013
Silver Gold
------------------------------------------------------------------- ------------ ------------
(Dollars in
thousands
except per San
ounce amounts) Palmarejo Bartolomé Rochester Endeavor Total Kensington Total
------------------------------------------------------------------- ------------ ------------
Costs
applicable to
sales,
including
amortization
(U.S. GAAP) $ 75,690 $ 25,513 $ 19,167 $ 1,741 $ 122,111 $ 41,590 $ 163,701
Amortization 35,894 4,851 2,529 801 44,075 18,218 62,293
------------- ------------- ------------- ----------- ------------- ------------ ------------
Costs
applicable to
sales $ 39,796 $ 20,662 $ 16,638 $ 940 $ 78,036 $ 23,372 $ 101,408
Silver
equivalent
ounces sold 3,649,557 1,485,217 1,000,568 112,965 6,248,307
Gold ounces
sold 34,533
------------- ------------- ------------- ----------- ------------- ------------
Costs
applicable to
sales per
ounce $ 10.90 $ 13.91 $ 16.63 $ 8.32 $ 12.49 $ 677
------------- ------------- ------------- ----------- ------------- ------------
Treatment and
refining costs 2,494
Sustaining
capital 23,278
General and
administrative 13,851
Exploration 5,440
Reclamation 938
Project/pre-
development
costs 1,822
------------
All-in
sustaining
costs $ 149,231
Silver
equivalent
ounces sold 6,248,307
Kensington
silver
equivalent
ounces sold 2,071,980
------------
Consolidated
silver
equivalent
ounces sold 8,320,287
------------
All-in
sustaining
costs per
silver
equivalent
ounce $ 17.94
------------
Reconciliation of Non-U.S. GAAP Costs Applicable to Sales per Silver Equivalent
Ounce
for Three Months Ended September 30, 2013
Silver Gold
------------------------------------------------------------------- ------------ ------------
(Dollars in
thousands
except per San
ounce amounts) Palmarejo Bartolomé Rochester Endeavor Total Kensington Total
------------------------------------------------------------------- ------------ ------------
Costs
applicable to
sales,
including
amortization
(U.S. GAAP) $ 100,314 $ 22,460 $ 20,458 $ 2,765 $ 145,997 $ 45,571 $ 191,568
Amortization 33,475 4,788 2,519 894 41,676 18,086 59,762
------------- ------------- ------------- ----------- ------------- ------------ ------------
Costs
applicable to
sales $ 66,839 $ 17,672 $ 17,939 $ 1,871 $ 104,321 $ 27,485 $ 131,806
Silver
equivalent
ounces sold 4,894,600 1,334,066 1,133,525 185,505 7,547,696
Gold ounces
sold 30,752
------------- ------------- ------------- ----------- ------------- ------------
Costs
applicable to
sales per
ounce $ 13.66 $ 13.25 $ 15.83 $ 10.09 $ 13.82 $ 894
------------- ------------- ------------- ----------- ------------- ------------
Treatment and
refining costs 1,880
Sustaining
capital 29,802
General and
administrative 16,240
Exploration 3,305
Reclamation 968
Project/pre-
development
costs 3,546
------------
All-in
sustaining
costs $ 187,547
Silver
equivalent
ounces sold 7,547,696
Kensington
silver
equivalent
ounces sold 1,845,120
------------
Consolidated
silver
equivalent
ounces sold 9,392,816
------------
All-in
sustaining
costs per
silver
equivalent
ounce $ 19.97
------------
Reconciliation of Non-U.S. GAAP Costs Applicable to Sales per Silver Equivalent
Ounce
for Three Months Ended June 30, 2013
Silver Gold
------------------------------------------------------------------- ------------ ------------
(Dollars in
thousands
except per San
ounce amounts) Palmarejo Bartolomé Rochester Endeavor Total Kensington Total
------------------------------------------------------------------- ------------ ------------
Costs
applicable to
sales,
including
amortization
(U.S. GAAP) $ 90,602 $ 37,639 $ 24,505 $ 2,907 $ 155,653 $ 43,313 $ 198,966
Amortization 35,384 4,824 1,989 1,224 43,421 13,159 56,580
------------- ------------- ------------- ----------- ------------- ------------ ------------
Costs
applicable to
sales $ 55,218 $ 32,815 $ 22,516 $ 1,683 $ 112,232 $ 30,154 $ 142,386
Silver
equivalent
ounces sold 3,688,500 2,151,000 1,506,508 198,269 7,544,277
Gold ounces
sold 24,573
------------- ------------- ------------- ----------- ------------- ------------
Costs
applicable to
sales per
ounce $ 14.97 $ 15.26 $ 14.95 $ 8.49 $ 14.88 $ 1,227
Treatment and
refining costs 2,742
Sustaining
capital 22,776
General and
administrative 15,026
Exploration 6,774
Reclamation 936
Project/pre-
development
costs 701
------------
All-in
sustaining
costs $ 191,341
Silver
equivalent
ounces sold 7,544,277
Kensington
silver
equivalent
ounces sold 1,474,380
------------
Consolidated
silver
equivalent
ounces sold 9,018,657
------------
All-in
sustaining
costs per
silver
equivalent
ounce $ 21.22
------------
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(ii) they are solely responsible for the content, accuracy and
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Source: Coeur Mining Inc. via GlobeNewswire
[HUG#1846971]