Provides Updated Full-Year 2020 Guidance

CHICAGO--(BUSINESS WIRE)--Coeur Mining, Inc. (“Coeur” or the “Company”) (NYSE: CDE) today reported second quarter 2020 financial results, including revenue of $154.2 million, cash flow from operating activities of $9.9 million and GAAP net loss from continuing operations of $1.2 million, or $0.01 per share. On an adjusted basis1, the Company reported EBITDA of $42.2 million, cash flow from operating activities prior to changes in working capital of $16.4 million and net income from continuing operations of $2.6 million, or $0.01 per share.

Key Highlights

  • Successful restart of Palmarejo post-suspension - Coeur safely restarted its Palmarejo mine, following receipt of updated guidance from the Mexican government that precious metals mining is now considered an essential business activity. After being temporarily suspended for approximately 45 days, production began ramping up in June and is expected to continue increasing during the second half of the year
  • Prepared to begin construction on upcoming expansion at Rochester - The Company received authorizations necessary to advance the expansion under Plan of Operations Amendment 11 (“POA 11”) at Rochester. Coeur expects to commence construction on the project in early August 2020
  • Strong operating and financial results at Kensington and Wharf - Kensington’s gold production remained strong during the second quarter, helping to generate $27.8 million2 in operating cash flow and $23.9 million2 of free cash flow1, compared to $11.9 million3 and $7.1 million3, respectively, in the prior period. Gold production at Wharf increased 60% quarter-over-quarter, leading to $19.1 million and $18.8 million in operating and free cash flow1, respectively, compared to $2.6 million and $2.2 million in the first quarter of 2020
  • Aggressive investment in exploration - Coeur continued to execute its largest exploration program in Company history, investing $13.0 million, a 60% increase over the prior period and approximately 90% higher than the second quarter of 2019. The Company plans to publish an exploration update in August 2020, outlining program highlights through the first half of the year
  • Continued execution of hedging program to underpin expected cash flow - The Company took advantage of stronger gold prices to implement additional zero-cost collar (“ZCC”) hedges to support the expected funding requirement for the POA 11 expansion at Rochester, targeting up to 50% of the Company’s expected gold production in 2021 and 2022
  • Higher cash position and successful debt reduction initiatives - Cash and cash equivalents totaled $70.9 million at June 30, 2020, 34% higher than at the end of the first quarter of 2020. The Company also repaid $90.0 million of its senior secured revolving credit facility (“RCF”) using cash on hand, leaving a $60.0 million balance at the end of the second quarter. Coeur intends to repay the remaining RCF balance by year-end from internally generated cash flow and expects cash to build over the coming quarters in preparation for the expansion at Rochester

“Like most companies, our second quarter results were negatively impacted by COVID-19. Most notably at Palmarejo, our strongest performing asset in the first quarter, operations were temporarily suspended due to a decree from the Federal government of Mexico. However, with Palmarejo now back in production, our three U.S. operations hitting their strides and the tailwind of higher gold and silver prices, we are anticipating a strong second half of 2020 and expect to continue this momentum into 2021,” said Mitchell J. Krebs, President and Chief Executive Officer. “I would like to thank everyone at Coeur for working tirelessly under challenging circumstances to safely and responsibly deliver critical minerals that are essential to nearly every aspect of modern life. Their ongoing efforts have allowed the Company to be well positioned to benefit from higher gold and silver prices going forward.”

Mr. Krebs continued, “Looking ahead over the coming quarters, we are excited about the direction we are headed as a company. We recently enhanced our team by bringing in Mick Routledge as our new Chief Operating Officer and appointing Terry Smith as our Chief Development Officer, which has provided us greater organizational bandwidth and a leadership structure that is better aligned with our strategy and key priorities. Our top strategic priority is the POA 11 expansion at Rochester, which is expected to generate exponentially higher annual free cash flow and represents a fundamental inflection point for Coeur. Additionally, the success of our exploration programs and acquisitions made at much lower gold and silver prices provides a balanced pipeline of near-, medium- and long-term growth opportunities that we believe will unlock meaningful value for our stockholders.”

“With multiple key catalysts in the coming quarters, we plan to proactively update investors on our capital allocation decisions and their expected impact on the Company’s growth, costs and cash flow. We plan to publish an exploration update in August given the size and importance of our investment in exploration in 2020. We also intend to deliver the results of Rochester’s updated technical report in the fourth quarter that will detail the updated economics of this important expansion project,” concluded Mr. Krebs.

Financial and Operating Highlights (Unaudited)

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

2Q 2020

1Q 2020

4Q 2019

3Q 2019

2Q 2019

Gold Sales

$

127.9

$

127.6

$

134.3

$

141.9

$

110.3

Silver Sales

$

26.3

$

44.9

$

54.8

$

51.6

$

45.0

Zinc Sales

$

—

$

(0.7

)

$

2.6

$

2.0

$

2.6

Lead Sales

$

—

$

1.3

$

3.3

$

4.0

$

4.2

Consolidated Revenue

$

154.2

$

173.2

$

195.0

$

199.5

$

162.1

Costs Applicable to Sales4

$

90.0

$

118.9

$

146.6

$

141.0

$

131.9

General and Administrative Expenses

$

8.6

$

8.9

$

7.6

$

9.6

$

7.8

Net Income (Loss)

$

(1.2

)

$

(11.9

)

$

(270.9

)

$

(14.3

)

$

(36.8

)

Net Income (Loss) Per Share

$

(0.01

)

$

(0.05

)

$

(1.13

)

$

(0.06

)

$

(0.18

)

Adjusted Net Income (Loss)1

$

2.6

$

(0.9

)

$

(3.3

)

$

(5.3

)

$

(23.0

)

Adjusted Net Income (Loss)1 Per Share

$

0.01

$

—

$

(0.01

)

$

(0.02

)

$

(0.11

)

Weighted Average Shares Outstanding

240.9

240.3

238.7

225.9

207.8

EBITDA1

$

35.3

$

25.5

$

(214.5

)

$

37.6

$

7.7

Adjusted EBITDA1

$

42.2

$

46.5

$

59.8

$

61.0

$

30.6

Cash Flow from Operating Activities

$

9.9

$

(8.0

)

$

39.3

$

42.0

$

26.4

Capital Expenditures

$

16.7

$

22.2

$

21.0

$

30.7

$

20.7

Free Cash Flow1

$

(6.7

)

$

(30.2

)

$

18.4

$

11.3

$

5.7

Cash, Equivalents & Short-Term Investments

$

70.9

$

52.9

$

55.6

$

65.3

$

37.9

Total Debt5

$

348.6

$

343.1

$

295.5

$

298.7

$

370.0

Average Realized Price Per Ounce – Gold

$

1,641

$

1,490

$

1,407

$

1,413

$

1,277

Average Realized Price Per Ounce – Silver

$

16.25

$

16.63

$

16.99

$

17.17

$

14.75

Average Realized Price Per Pound – Zinc

$

—

$

(0.21

)

$

0.62

$

0.50

$

0.49

Average Realized Price Per Pound – Lead

$

—

$

0.54

$

0.78

$

0.92

$

0.82

Gold Ounces Produced

78,229

85,077

94,716

99,782

86,584

Silver Ounces Produced

1.6

2.7

3.1

3.0

3.1

Zinc Pounds Produced

—

2.5

3.9

4.2

5.3

Lead Pounds Produced

—

2.2

4.0

4.5

5.0

Gold Ounces Sold

77,933

85,635

95,532

100,407

86,385

Silver Ounces Sold

1.6

2.7

3.3

3.0

3.0

Zinc Pounds Sold

—

3.2

4.1

4.1

5.3

Lead Pounds Sold

—

2.5

4.3

4.3

5.2

Financial Results

Second quarter 2020 revenue totaled $154.2 million compared to $173.2 million in the prior period, primarily driven by the temporary suspension at Palmarejo. The Company produced 78,229 ounces of gold and 1.6 million ounces of silver during the second quarter, selling 77,933 ounces of gold and 1.6 million ounces of silver. Average realized gold and silver prices for the quarter were $1,641 and $16.25 per ounce, respectively, or 10% higher and 2% lower quarter-over-quarter.

Gold and silver sales accounted for 83% and 17% of second quarter revenue, respectively. The Company’s U.S. operations accounted for approximately 75% of second quarter revenue, up from approximately 56% in the prior period, due primarily to the temporary suspension at Palmarejo.

Costs applicable to sales4 of $90.0 million were 24% lower quarter-over-quarter, reflecting a full quarter of suspended operations at Silvertip and compliance with the government-mandated temporary suspension at Palmarejo. Second quarter general and administrative expenses decreased modestly to $8.6 million, primarily driven by lower employee-related expenses and outside service fees.

Second quarter exploration expense totaled $11.9 million, or 86% higher quarter-over-quarter, reflecting the ramp-up of seasonal drilling programs at Rochester, Wharf and Silvertip. See the “Operations” section and page 14 for additional details on the Company’s exploration activities.

Operating costs related to COVID-19 totaled $6.1 million during the second quarter, compared to $0.3 million in the prior period, primarily related to higher employee-related expenses incurred at Palmarejo and Kensington. These costs are included in “Pre-development, reclamation, and other expenses” on the Company’s income statement.

Coeur recorded an income tax expense of $2.8 million during the second quarter. Cash income and mining taxes paid during the quarter totaled approximately $5.9 million.

Quarterly operating cash flow improved to $9.9 million, compared to $(8.0) million in the prior period, reflecting improved cash flow from most operations and working capital changes quarter-over-quarter. The Company satisfied the remaining $8.0 million obligation under its prepayment agreement at Kensington and exercised an option to receive an additional $15.0 million prepayment, resulting in a net cash inflow of approximately $7.0 million in the second quarter. Changes in working capital during the quarter totaled $(6.5) million, compared to $(38.1) million in the first quarter of 2020.

Second quarter capital expenditures were $16.7 million, compared to $22.2 million in the prior period, reflecting lower investment across most of the Company’s operations. Sustaining and development capital expenditures accounted for approximately 71% and 29%, respectively, of the Company’s capital expenditures during the quarter.

Liquidity Update

Prudent balance sheet management remains a key element of Coeur’s strategy. The Company used cash on hand to repay $90.0 million of outstanding indebtedness under its RCF, reducing the total amount drawn from $150.0 million in April 2020 to $60.0 million at the end of the second quarter. Coeur also opportunistically monetized a portion of its holding in Metalla Royalty & Streaming Ltd., resulting in net proceeds of approximately $19.4 million.

At June 30, 2020, cash and cash equivalents totaled $70.9 million, while total debt5 outstanding was $348.6 million. Additionally, the Company’s issued and outstanding share count remained consistent at 240.9 million in the second quarter.

Hedging Update

Coeur continued to add to its hedge position by executing additional ZCC hedges on a portion of its expected gold production. The structure allows for downside protection against potential decreases in the price of gold, while enabling participation in the potential upside to a specified ceiling price.

The Company implemented the program in preparation for POA 11 at Rochester, which it expects to fund with a combination of cash on hand, internally generated cash flow and existing debt capacity. Coeur has completed its gold hedging program for 2021 and will look to continue opportunistically executing ZCC hedges on up to 50% of expected gold production in 2022. The Company’s silver price exposure is currently unhedged. An overview of the hedges currently implemented is outlined below:

3Q 2020

4Q 2020

Total 2H 2020

2021

2022

Gold Ounces Hedged

49,500

55,500

105,000

158,700

126,000

Avg. Ceiling ($/oz)

$1,826

$1,823

$1,825

$1,875

$2,030

Avg. Floor ($/oz)

$1,441

$1,471

$1,457

$1,600

$1,626

Rochester Expansion

Coeur completed its internal review of the business case supporting POA 11 during the second quarter, resulting in the approval to proceed with construction of the expansion project. The Company also received its revised water pollution control permit, authorizing mining, milling and mineral beneficiation for POA 11. The expansion project includes the construction of a new leach pad, crushing facility equipped with two high-pressure grinding roll (“HPGR”) units and Merrill-Crowe process plant as well as related infrastructure to support the extension of Rochester’s mine life.

Together with SNC-Lavalin, the Company’s engineering, procurement and project management contractor for POA 11, Coeur has made significant progress on detailed design work. The Company expects to complete the work necessary to finalize its total capital estimate by the end of the third quarter of 2020. Coeur also plans to file an updated technical report in late 2020 further outlining the details of the expansion, including an updated mine plan and drilling results as well as additional operational and financial information regarding the expected impacts of HPGR technology.

Coeur expects to begin construction activities for POA 11 in early August 2020, including (i) advancing early-stage earthworks and (ii) establishing project-specific infrastructure, providing the Company additional flexibility on the back end of its project schedule. Major construction projects are expected to begin in early 2021 and be largely completed by late 2022. The current timeline for the key elements of the expansion is 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

Second quarter 2020 highlights for each of the Company’s operations are provided below.

Palmarejo, Mexico

(Dollars in millions, except per ounce amounts)

2Q 2020

1Q 2020

4Q 2019

3Q 2019

2Q 2019

Tons milled

269,641

479,562

486,779

442,464

447,727

Average gold grade (oz/t)

0.07

0.07

0.07

0.09

0.07

Average silver grade (oz/t)

4.46

4.69

5.11

4.88

4.74

Average recovery rate – Au

86.0%

91.6%

84.9%

81.7%

87.7%

Average recovery rate – Ag

72.2%

81.5%

81.7%

79.6%

81.8%

Gold ounces produced

15,223

31,578

28,702

31,779

28,246

Silver ounces produced (000’s)

867

1,835

2,029

1,720

1,735

Gold ounces sold

16,924

31,287

27,952

32,731

28,027

Silver ounces sold (000’s)

875

1,895

1,980

1,747

1,709

Average realized price per gold ounce

$1,399

$1,331

$1,238

$1,269

$1,210

Average realized price per silver ounce

$16.35

$17.25

$17.28

$17.05

$14.86

Metal sales

$38.0

$74.3

$68.9

$71.3

$59.3

Costs applicable to sales4

$18.8

$36.0

$34.8

$37.4

$36.5

Adjusted CAS per AuOz1

$686

$645

$622

$660

$741

Adjusted CAS per AgOz1

$8.13

$8.37

$8.79

$8.95

$9.17

Exploration expense

$0.9

$1.5

$2.0

$1.6

$1.1

Cash flow from operating activities

$(3.5)

$28.9

$41.4

$36.3

$15.6

Sustaining capital expenditures (excludes capital lease payments)

$4.5

$7.1

$6.2

$4.7

$5.0

Development capital expenditures

$—

$—

$2.4

$3.1

$2.6

Total capital expenditures

$4.5

$7.1

$8.6

$7.8

$7.6

Free cash flow1

$(8.0)

$21.8

$32.8

$28.5

$8.0

  • Active mining, processing and exploration activities were temporarily suspended at Palmarejo during the second quarter in accordance with a government decree in response to COVID-19. The Federal government of Mexico amended its guidance in May, clarifying that precious metals mining is an essential business activity, allowing Palmarejo to resume operations

Operational

  • Operations were ramped down in the beginning of April and were suspended for approximately 45 days during the second quarter. Production began ramping back up in June and increased steadily during the month
  • Second quarter gold and silver production totaled 15,223 ounces and 0.9 million ounces, respectively, compared to 31,578 ounces and 1.8 million ounces in the prior period

Financial

  • Second quarter adjusted CAS1 for gold on a co-product basis increased 6% compared to the prior period to $686 per ounce, while adjusted CAS1 for silver on a co-product basis decreased 3% to $8.13 per ounce
  • Quarterly capital expenditures decreased 37% to $4.5 million and continued to focus on mine development and infrastructure projects
  • Free cash flow1 in the second quarter totaled $(8.0) million, compared to $21.8 million in the prior period

Exploration

  • Exploration investment for the second quarter totaled approximately $1.5 million ($0.9 million expensed and $0.6 million capitalized), compared to roughly $2.7 million ($1.5 million expensed and $1.2 million capitalized) in the prior quarter
  • Up to eight surface and underground core rigs were active during the quarter, with four rigs mobilized at the end of June 2020
  • Exploration activity focused on infill drilling within the two underground mine complexes, Independencia and Guadalupe, and on resource expansion north, southwest and southeast of both mine complexes. New resource expansion holes were also drilled east, northwest and north of Independencia
  • A total of 10 expansion and 18 infill holes were drilled during the quarter for a total 30,440 feet (9,278 meters). Coeur expects to ramp up to six active rigs during the third quarter, targeting a balanced focus of expansion and infill drilling

Other

  • Workforce staffing levels are currently limited to approximately 85% due to compliance with government-imposed restrictions related to COVID-19
  • Approximately 35% of Palmarejo’s gold sales in the second quarter, or 5,988 ounces, were sold under its gold stream agreement at a price of $800 per ounce

Guidance

  • Full-year 2020 production is expected to be 95,000 - 105,000 ounces of gold and 6.0 - 7.0 million ounces of silver
  • CAS1 are expected to be $785 - $885 per gold ounce and $9.50 - $10.50 per silver ounce
  • Capital expenditures are expected to be approximately $32 - $36 million

Rochester, Nevada

(Dollars in millions, except per ounce amounts)

2Q 2020

1Q 2020

4Q 2019

3Q 2019

2Q 2019

Ore tons placed

3,743,331

3,428,578

2,612,319

2,516,353

2,786,287

Average silver grade (oz/t)

0.51

0.57

0.47

0.43

0.45

Average gold grade (oz/t)

0.002

0.002

0.003

0.004

0.003

Silver ounces produced (000’s)

728

687

848

982

971

Gold ounces produced

5,159

5,936

10,634

7,901

8,609

Silver ounces sold (000’s)

724

632

932

951

962

Gold ounces sold

5,278

5,473

11,248

7,651

8,642

Average realized price per silver ounce

$16.11

$16.99

$17.22

$17.02

$14.83

Average realized price per gold ounce

$1,702

$1,583

$1,484

$1,476

$1,295

Metal sales

$20.6

$19.4

$32.6

$27.5

$25.5

Costs applicable to sales4

$18.3

$17.0

$25.3

$27.7

$24.7

Adjusted CAS per AgOz1

$13.75

$14.38

$13.25

$14.24

$13.19

Adjusted CAS per AuOz1

$1,481

$1,359

$1,142

$1,230

$1,153

Exploration expense

$1.8

$0.2

$0.4

$0.1

$0.1

Cash flow from operating activities

$(5.6)

$(9.3)

$6.9

$8.3

$1.6

Sustaining capital expenditures (excludes capital lease payments)

$1.5

$0.1

$0.9

$(1.0)

$0.4

Development capital expenditures

$4.3

$5.0

$4.1

$11.2

$2.4

Total capital expenditures

$5.8

$5.1

$5.0

$10.2

$2.8

Free cash flow1

$(11.4)

$(14.4)

$1.9

$(1.9)

$(1.2)

Operational

  • Silver production increased 6% quarter-over-quarter to approximately 0.7 million ounces, while gold production decreased 13% to 5,159 ounces
  • Despite continued restocking of metal inventories during the second quarter, production was impacted by dilution from stacking HPGR-crushed material on top of historic ore on the Stage IV leach pad
  • Slightly higher silver production was driven by residual leaching on the Stage III leach pad and a modest improvement in solution grades on the Stage IV leach pad. Gold production was affected by the placement of slightly lower grade material during the first half of the year
  • Tons placed increased 9% quarter-over-quarter and 34% year-over-year to approximately 3.7 million tons. The Company was able to process 36,360 tons per day6 through the upgraded crushing circuit, in-line with its target for the quarter. Coeur supplemented placement rates by stacking roughly 650,000 tons of run-of-mine material, taking advantage of favorable fuel and consumable costs
  • In June 2020, Coeur calibrated a new recovery model for the Stage IV leach pad and began executing a new stacking plan to maximize silver recoveries on HPGR-crushed ore. The new plan utilizes an inter-lift liner to place ounces on shallower portions of the Stage IV leach pad, leveraging two existing collection systems. Production is expected to increase steadily and reach sustainable levels during the second half of the year
  • Initial results received from thirty-foot column tests conducted during the second quarter further validate the Company’s recovery rate assumptions on HPGR-crushed ore

Financial

  • Second quarter adjusted CAS1 for silver on a co-product basis decreased 4% quarter-over-quarter to $13.75 per ounce, while adjusted CAS1 for gold on a co-product basis increased 9% to $1,481 per ounce, reflecting modestly higher crushing and mining costs as well as higher silver and lower gold sales
  • Capital expenditures of $5.8 million were approximately 14% higher quarter-over-quarter, reflecting increased investment related to POA 11 and a milestone payment for the inter-lift liner
  • Free cash flow1 totaled $(11.4) million in the second quarter, compared to $(14.4) million in the first quarter, largely driven by improved operating cash flow and partially offset by higher capital expenditures

Exploration

  • Exploration investment for the second quarter accelerated to approximately $2.2 million ($1.8 million expensed and $0.4 million capitalized), compared to roughly $0.4 million ($0.2 million expensed and $0.2 million capitalized) in the prior period
  • Following the success of prior drill programs, two core rigs began directional drilling in the beginning of the quarter to test areas of potential mineralization under the Stage I and Stage II leach pads at East Rochester. A total of 8 expansion core holes were drilled for a total of 13,465 feet (4,104 meters)
  • One reverse circulation rig was subsequently added, transitioning focus to infill drilling within the existing Rochester pit. A total of 23 infill holes were drilled in the area for a total of 14,239 feet (4,340 meters)
  • Based on its success, Coeur has decided to extend the directional drilling program at East Rochester as well as the southeast Rochester infill program

Other

  • Mining remains an essential business in Nevada. The Company continues to maintain rigorous health and safety protocols aimed at limiting the exposure and transmission of COVID-19
  • During the quarter, Coeur entered into a first-of-its-kind agreement to protect critical sagebrush habitat in Nevada while ensuring continued environmentally sensitive and sustainable mining practices. Funding by Coeur will preserve and enhance over 3,000 acres of vital greater sage-grouse habitat in Elko and Humboldt Counties

Guidance

  • Full-year 2020 production is expected to be 3.5 - 4.5 million ounces of silver and 27,000 - 33,000 ounces of gold
  • CAS1 in 2020 are expected to be $12.75 - $14.00 per silver ounce and $1,250 - $1,400 per gold ounce
  • Capital expenditures are expected to be approximately $38 - $43 million

Kensington, Alaska

(Dollars in millions, except per ounce amounts)

2Q 2020

1Q 2020

4Q 2019

3Q 2019

2Q 2019

Tons milled

170,478

162,341

167,061

166,475

160,510

Average gold grade (oz/t)

0.21

0.21

0.20

0.22

0.23

Average recovery rate

92.0%

93.5%

87.2%

93.2%

93.0%

Gold ounces produced

33,058

32,022

29,736

34,156

34,049

Gold ounces sold

32,367

32,781

29,293

35,452

34,415

Average realized price per gold ounce, gross

$1,762

$1,603

$1,493

$1,505

$1,332

Treatment and refining charges per gold ounce

$57

$27

$24

$20

$20

Average realized price per gold ounce, net

$1,705

$1,576

$1,469

$1,485

$1,312

Metal sales

$55.2

$51.7

$43.0

$52.6

$45.2

Costs applicable to sales4

$30.4

$30.5

$28.8

$29.5

$29.1

Adjusted CAS per AuOz1

$934

$928

$976

$822

$842

Prepayment, working capital cash flow

$7.0

$(7.0)

$4.7

$(14.7)

$25.0

Exploration expense

$2.6

$1.8

$1.6

$1.5

$2.0

Cash flow from operating activities

$27.8

$11.9

$19.9

$4.5

$41.4

Sustaining capital expenditures (excludes capital lease payments)

$3.9

$4.8

$4.3

$4.9

$4.9

Development capital expenditures

$—

$—

$—

$—

$—

Total capital expenditures

$3.9

$4.8

$4.3

$4.9

$4.9

Free cash flow1

$23.9

$7.1

$15.6

$(0.4)

$36.5

Contacts

For Additional Information 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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