Quarterly Results

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Second Quarter 2017 Highlights

  • Quarterly silver and gold production down - As reported on July 6, 2017, second quarter silver and gold production were 4.0 million ounces and 82,819 ounces, respectively, or 8.9 million silver equivalent ounces (AgEqOz)1, representing declines of 3% quarter-over-quarter and 7% year-over-year. Palmarejo’s production increased significantly year-over-year due to higher underground mining rates. Rochester’s production declined year-over-year due to fewer tons placed in the quarter. Kensington’s quarterly production declined year-over-year due to lower grades, which are expected to increase during the second half of 2017. Wharf’s production was lower as expected year-over-year due to lower grades, which is expected to be offset by higher mining rates during the second half of 2017. San Bartolomé’s production was lower due to a lack of water and fewer higher-grade third-party ore purchases during the quarter
  • Higher second quarter costs per ounce driven by lower production - Second quarter companywide all-in sustaining costs (AISC) and adjusted AISC per average spot AgEqOz1 were $15.90 and $15.73, respectively. Costs related to accessing higher-grade material during the second half of 2017 impacted second quarter costs at Rochester (pre-stripping), Kensington (expensed development and paste backfill) and Palmarejo (ground support). Lower grades and pad timing and sequencing led to higher costs per ounce at Wharf. Higher diesel costs and reagent consumption also contributed to temporarily higher costs, which are expected to reverse during the second half of 2017
  • Significant investments in long-term growth; key development projects on-schedule - Quarterly exploration expense increased to $7.8 million, up nearly 50% from first quarter and 250% compared to the second quarter of 2016. Second quarter capital expenditures increased by approximately 60% quarter-over-quarter and year-over-year to $37.5 million. Rochester's Stage IV leach pad expansion has now been commissioned, the Jualin deposit at Kensington is on-track to begin production in late 2017, and mining rates at the Independencia deposit at Palmarejo are now above 1,400 tons per day after temporarily declining in the second quarter
  • Accomplished key balance sheet initiatives - The Company successfully refinanced 7.875% senior notes due 2021 with 5.875% senior notes due 2024. Quarterly interest expense declined 66%. Balance sheet repositioning has led to credit ratings upgrades by both agencies. Cash and cash equivalents were $250.0 million at June 30, 2017, up from $162.2 million at year-end. Additionally, cash flow from operating activities and free cash flow1 were impacted by the acceleration of interest on the repurchased senior notes of $5.1 million, which would have otherwise been paid on August 1, 2017
  • Modifications to full-year guidance - Full-year production guidance was revised on July 6, 2017 by increasing Wharf's expected gold production and decreasing San Bartolomé's expected silver production. As a result, Wharf's full-year cost guidance range has been reduced and San Bartolomé's full-year cost guidance range has been increased. Full-year companywide cost guidance remains unchanged
  • Further portfolio enhancements - The Company agreed to sell the Endeavor silver stream and other non-core royalties for total consideration of $13.0 million. The transaction is expected to close in the third quarter of 2017. Investments totaling approximately $12 million through mid-July were made in six earlier-stage silver and gold companies

From Coeur's President & Chief Executive Officer, Mitchell J. Krebs

"We accomplished or advanced several strategic priorities during the quarter that are critical to achieving our full-year and longer-term objectives," said Mitchell J. Krebs, Coeur's President and Chief Executive Officer. “Our stepped-up exploration programs targeting higher-grade mineralization at Palmarejo and Kensington are yielding positive results, we significantly strengthened our balance sheet, the development of Jualin remains on-track to commence production later in the year, and we have now begun to stack ore on the new Stage IV leach pad at Rochester.

"Through the first half of the year, we generated $84.6 million of cash flow from operating activities and $23.1 million of free cash flow. As we enter the second half of the year, we anticipate higher production from all five of our operations: Palmarejo due to the rising mining rates we are now seeing from Independencia, Kensington due to higher expected gold grades from three separate areas in the mine, Rochester and Wharf due to higher anticipated mining and crushing rates, and San Bartolomé due to an expected increase in third party ore purchases. Based on these production increases, together with lower expected unit costs, we anticipate delivering additional free cash flow during the remainder of the year.

"Upcoming milestones include initial production from Jualin and the release of an updated Preliminary Economic Assessment (PEA) for La Preciosa, both expected later this year, as well as updated technical reports for Kensington and Rochester planned for early 2018. The updated technical report for Rochester is expected to reflect several operating and capital enhancements, and the updated technical report for Kensington will incorporate the results of the Company's ongoing drill program in Alaska, particularly at Jualin.”

Financial Highlights

(Amounts in millions, except per share amounts, gold ounces produced & sold, and per-ounce metrics) 2Q 2017 1Q 2017 2Q 2016
Revenue $ 173.4 $ 206.1 $ 182.0
Costs Applicable to Sales $ 125.6 $ 132.7 $ 100.5
Net Income (Loss) $ (11.0) $ 18.7 $ 14.5
Adjusted Net Income (Loss)1 $ (2.5) $ 7.0 $ 16.9
Adjusted EBITDA1 $ 33.4 $ 56.6 $ 72.0
Cash Flow from Operating Activities $ 29.3 $ 55.3 $ 45.9
Capital Expenditures $ 37.5 $ 24.0 $ 23.3
Free Cash Flow1 $ (8.2) $ 31.3 $ 12.2
Cash, Equivalents & Short-Term Investments $ 250.0 $ 210.2 $ 257.6
Total Debt2 $ 284.8 $ 219.1 $ 511.1
Silver Ounces Sold 4.1 4.5 4.0
Gold Ounces Sold 86,194 110,874 88,543
Silver Equivalent Ounces Sold1 9.3 11.1 9.3
Silver Equivalent Ounces Sold (Average Spot)1 10.4 12.2 10.6
Adjusted CAS per AgEqOz1 $ 12.91 $ 11.38 $ 10.71
Adjusted CAS per Average Spot AgEqOz1 $ 12.00 $ 10.63 $ 9.90
Adjusted CAS per AuEqOz1 $ 860 $ 791 $ 644
Adjusted AISC per AgEqOz1 $ 17.64 $ 15.02 $ 14.82
Adjusted AISC per Average Spot AgEqOz1 $ 15.73 $ 13.66 $ 12.95
  1. EBITDA, adjusted EBITDA, adjusted net income (loss), costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce or per average spot silver equivalent ounce), adjusted costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce or per average spot silver equivalent ounce), adjusted costs applicable to sales per silver ounce (or per gold ounce), all-in sustaining costs, and adjusted all-in sustaining costs are non-GAAP measures. Please see tables in the Appendix for the reconciliation to U.S. GAAP. For purposes of silver and gold equivalence, a 60:1 silver to gold ratio is assumed except where noted as average spot prices. Please see table below for average silver and gold spot prices during the period and the silver to gold ratio. Free cash flow is defined as cash flow from operating activities less capital expenditures and gold production royalty payments. Please see table in Appendix for the calculation of consolidated free cash flow.
  2. Includes capital leases. Net of debt issuance costs and premium received.

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Coeur Mining, Inc.
104 S. Michigan Avenue, Suite 900 Chicago, Illinois, 60603 - (312) 489-5800