Quarterly Results

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Third Quarter 2017 Highlights

  • Higher quarterly silver equivalent1 production - Third quarter silver and gold production were 4.0 million ounces and 93,293 ounces, respectively, or 9.5 million AgEqOz1, representing an increase of 7% quarter-over-quarter and 10% year-over-year. Higher companywide production was driven primarily by Palmarejo, where higher mining rates and silver grades delivered 25% quarter-over-quarter and 89% year-over-year increases in AgEqOz1 production. At Wharf, mining at the higher-grade Golden Reward deposit during the quarter drove a 21% increase in its gold production
  • Lower third quarter costs per ounce - Third quarter companywide AISC and adjusted AISC per average spot AgEqOz1 of $15.30 and $15.18, respectively, were 4% and 3% lower quarter-over-quarter primarily due to lower unit costs at Palmarejo, partially offset by higher unit costs at San Bartolomé as well as increased sustaining capital expenditures and exploration expense
  • Major milestones achieved at key capital projects - At Palmarejo, Rochester, and Kensington, important milestones were achieved in key capital projects during the quarter. Following a multi-year development and ramp-up period, the targeted mining rate of 4,500 tons per day was achieved one quarter ahead of schedule at Palmarejo. At Rochester, the new Stage IV leach pad expansion was successfully commissioned on-schedule after three years of permitting and ten months of construction. At Kensington, development ore was mined and stockpiled from the high-grade Jualin deposit after two years of underground development activities
  • Acquisition of high-grade Silvertip mine announced - Announced acquisition of newly-constructed Silvertip silver-zinc-lead operation located in British Columbia on September 11, 2017, which closed on October 17, 2017. Underground drilling and development activities are now underway and mill commissioning is proceeding on-schedule. Production is expected to begin during the first quarter of 2018 and average approximately ten million AgEqOz1 per year at an average AISC per AgEqOz1 of $10.50 - $11.50, generating average annual EBITDA1 of $70 million over its initial 7.5-year mine life
  • Modifications to full-year guidance - Full-year production guidance was revised on October 5, 2017 for San Bartolomé to reflect the impact of ongoing drought conditions in the Potosí region of Bolivia. San Bartolomé's cost guidance has been increased as a result. The Company has also increased cost guidance for Rochester due to higher processing costs induced by the residual effects of record rainfall earlier in the year and at Kensington to reflect higher year-to-date unit costs driven by lower-than-expected gold grades. Companywide AISC guidance has been revised accordingly while full-year capital expenditure guidance has been increased to reflect anticipated investments in the newly-acquired Silvertip mine. Finally, full-year exploration expense guidance has been raised to reflect the higher investment levels at Palmarejo and Kensington and to incorporate anticipated exploration expense at Silvertip during the fourth quarter

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

"During the third quarter, the Company delivered higher production and cash flow, lower costs, and realized key objectives at several major, multi-year growth projects," said Mitchell J. Krebs, Coeur's President and Chief Executive Officer. "Palmarejo and Wharf were the strongest performers during the quarter, delivering strong production growth and generating combined free cash flow of nearly $25 million.

"We announced and recently completed the acquisition of the high-grade Silvertip mine in British Columbia for US$200 million of upfront consideration, which we expect will meaningfully grow our production and cash flow beginning next year. Our team is applying the same approach to Silvertip that has been successful at our existing operations and with recent acquisitions such as Wharf to position our newest mine for long-term success

"Our third quarter results were negatively impacted by higher costs at San Bartolomé, lower-than-expected gold grades at Kensington, and significantly higher income and mining tax expense mostly attributable to changes in deferred tax estimates. Given San Bartolomé's high costs and short mine life, we are evaluating several alternatives for this operation. In the meantime, we reduced San Bartolomé’s workforce by 23%, which resulted in a one-time severance expense of $2.2 million during the quarter and is expected to yield significant savings going forward. Although Kensington’s grades have been lower than expected, we anticipate significantly higher grades in the fourth quarter as mining activities accelerate in the higher-grade Raven and Jualin zones.

"Importantly, we are maintaining our significantly higher level of exploration investment, especially in near-mine drilling programs at Palmarejo and Kensington, due to the ongoing success of these programs and the lack of drilling these assets have received historically."

Financial Highlights

(Amounts in millions, except per share amounts, gold ounces produced & sold, and per-ounce metrics) 3Q 2017 2Q 2017 3Q 2016
Revenue $ 176.0 $ 173.4 $ 176.2
Costs Applicable to Sales $ 118.9 $ 125.6 $ 105.4
Net Income (Loss) $ (16.7) $ (11.0) $ 69.6
Adjusted Net Income (Loss)1 $ (18.4) $ (2.5) $ 38.6
Adjusted EBITDA1 $ 39.5 $ 33.4 $ 62.7
Cash Flow from Operating Activities $ 29.4 $ 29.3 $ 47.8
Capital Expenditures $ 29.5 $ 37.5 $ 25.6
Free Cash Flow1 $ -- $ (8.2) $ 14.6
Cash, Equivalents & Short-Term Investments $ 236.2 $ 250.0 $ 222.5
Total Debt2 $ 288.9 $ 284.8 $ 401.7
Silver Ounces Sold 3.8 4.1 3.4
Gold Ounces Sold 89,972 86,194 83,389
Silver Equivalent Ounces Sold1 9.2 9.3 8.4
Silver Equivalent Ounces Sold (Average Spot)1 10.6 10.4 9.1
Adjusted CAS per AgEqOz1 $ 12.08 $ 12.91 $ 12.10
Adjusted CAS per Average Spot AgEqOz1 $ 11.01 $ 12.00 $ 11.64
Adjusted CAS per AuEqOz1 $ 843 $ 860 $ 712
Adjusted AISC per AgEqOz1 $ 17.54 $ 17.64 $ 16.46
Adjusted AISC per Average Spot AgEqOz1 $ 15.18 $ 15.73 $ 15.23
Notes
  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. For purposes of silver equivalence in the context of Silvertip's initial mine plan, metal prices of $1,250/oz gold, $17.50/oz silver, $1.13/lb lead, and $1.40/lb zinc are assumed. For additional information regarding Silvertip's initial mine plan, including underlying assumptions, please refer to the Company's press release dated September 11, 2017. 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