Reaffirms Production Guidance; Updates Cost and Capital Expenditure Guidance
CHICAGO–(BUSINESS WIRE)–Coeur Mining, Inc. (�Coeur or the Company) (NYSE: CDE) today reported second quarter 2021 financial results, including revenue of $214.9 million, cash flow from operating activities of $58.1 million and GAAP net income from continuing operations of $32.1 million, or $0.13 per share. On an adjusted basis1, the Company reported EBITDA of $52.7 million, cash flow from operating activities before changes in working capital of $31.4 million and net loss from continuing operations of $0.8 million, or $0.00 per share.
Key Highlights
Second quarter revenue and cash flow increased quarter-over-quarter and year-over-year, primarily due to stronger silver production from our Palmarejo and Rochester operations as well as higher average realized silver prices, said Mitchell J. Krebs, President and Chief Executive Officer. We anticipate production to continue increasing during the second half of 2021, particularly from our Wharf and Rochester operations, and expect to achieve our full-year production guidance for both gold and silver. We also accelerated investment on the POA 11 expansion project at Rochester during the quarter. Construction is advancing on schedule and is expected to be largely completed late next year, leading to an anticipated step change in production and cash flow despite seeing some early signs of inflationary pressures in certain areas.
Mr. Krebs continued, Similarly, we continued to increase our investment in exploration and established a new quarterly drilling record, which is leading to additional positive results from the largest campaign in Company history. A third source of high-return organic growth is the potential expansion and restart of our Silvertip mine in northern British Columbia. We are accelerating investment at Silvertip to take advantage of the current construction season based on positive results from our exploration and technical programs to preserve the option of a potential restart in 2023. Finally, we further bolstered our portfolio by acquiring a 17.8% interest in Victoria, which aligns with our strategy of having a balanced collection of long-life, low-cost precious metals assets in high-quality jurisdictions that can generate strong returns for our stockholders.
Collectively, these initiatives reflect our strategy of discovering, developing and operating a balanced, multi-asset portfolio of precious metals assets located in high-quality jurisdictions to maximize free cash flow, returns and net asset value. Together with a flexible balance sheet and industry-leading environmental, social and governance practices, we believe we are well positioned to deliver solid results and generate meaningful value for our stockholders, concluded Mr. Krebs.
Financial and Operating Highlights (Unaudited)
(Amounts in millions, except per share amounts, gold/silver ounces produced & sold, and per-ounce metrics) | 2Q 2021 |
| 1Q 2021 |
| 4Q 2020 |
| 3Q 2020 |
| 2Q 2020 |
| ||||||||
Gold Sales | $ | 146.2 |
|
| $ | 138.3 |
|
| $ | 162.0 |
| $ | 167.1 |
| $ | 127.9 |
|
|
Silver Sales | $ | 68.7 |
|
| $ | 63.8 |
|
| $ | 66.4 |
| $ | 62.6 |
| $ | 26.3 |
|
|
Consolidated Revenue | $ | 214.9 |
|
| $ | 202.1 |
|
| $ | 228.3 |
| $ | 229.7 |
| $ | 154.2 |
|
|
Costs Applicable to Sales2 | $ | 132.6 |
|
| $ | 108.1 |
|
| $ | 118.6 |
| $ | 112.8 |
| $ | 90.0 |
|
|
General and Administrative Expenses | $ | 10.5 |
|
| $ | 11.6 |
|
| $ | 8.4 |
| $ | 7.8 |
| $ | 8.6 |
|
|
Net Income (Loss) | $ | 32.1 |
|
| $ | 2.1 |
|
| $ | 11.9 |
| $ | 26.9 |
| $ | (1.2 | ) |
|
Net Income (Loss) Per Share | $ | 0.13 |
|
| $ | 0.01 |
|
| $ | 0.05 |
| $ | 0.11 |
| $ | (0.01 | ) |
|
Adjusted Net Income (Loss)1 | $ | (0.8 | ) |
| $ | 13.9 |
|
| $ | 19.1 |
| $ | 38.2 |
| $ | 2.6 |
|
|
Adjusted Net Income (Loss)1 Per Share | $ | 0.00 |
|
| $ | 0.06 |
|
| $ | 0.08 |
| $ | 0.16 |
| $ | 0.01 |
|
|
Weighted Average Shares Outstanding | 252.1 |
|
| 244.5 |
|
| 244.3 |
| 243.8 |
| 240.9 |
|
| |||||
EBITDA1 | $ | 84.6 |
|
| $ | 49.7 |
|
| $ | 76.7 |
| $ | 77.3 |
| $ | 35.3 |
|
|
Adjusted EBITDA1 | $ | 52.7 |
|
| $ | 65.9 |
|
| $ | 84.0 |
| $ | 90.8 |
| $ | 42.2 |
|
|
Cash Flow from Operating Activities | $ | 58.1 |
|
| $ | (4.4 | ) |
| $ | 67.3 |
| $ | 79.5 |
| $ | 9.9 |
|
|
Capital Expenditures | $ | 78.2 |
|
| $ | 59.4 |
|
| $ | 37.4 |
| $ | 23.0 |
| $ | 16.7 |
|
|
Free Cash Flow1 | $ | (20.2 | ) |
| $ | (63.8 | ) |
| $ | 29.8 |
| $ | 56.5 |
| $ | (6.7 | ) |
|
Cash, Equivalents & Short-Term Investments | $ | 124.1 |
|
| $ | 154.1 |
|
| $ | 92.8 |
| $ | 77.1 |
| $ | 70.9 |
|
|
Total Debt3 | $ | 414.2 |
|
| $ | 412.1 |
|
| $ | 275.5 |
| $ | 301.1 |
| $ | 348.6 |
|
|
Average Realized Price Per Ounce Gold | $ | 1,651 |
|
| $ | 1,664 |
|
| $ | 1,663 |
| $ | 1,754 |
| $ | 1,641 |
|
|
Average Realized Price Per Ounce Silver | $ | 26.60 |
|
| $ | 26.19 |
|
| $ | 24.21 |
| $ | 24.15 |
| $ | 16.25 |
|
|
Gold Ounces Produced | 87,275 |
|
| 85,225 |
|
| 96,377 |
| 95,995 |
| 78,229 |
|
| |||||
Silver Ounces Produced | 2.6 |
|
| 2.4 |
|
| 2.8 |
| 2.6 |
| 1.6 |
|
| |||||
Gold Ounces Sold | 88,501 |
|
| 83,112 |
|
| 97,400 |
| 95,283 |
| 77,933 |
|
| |||||
Silver Ounces Sold | 2.6 |
|
| 2.4 |
|
| 2.7 |
| 2.6 |
| 1.6 |
|
|
Financial Results
Second quarter 2021 revenue totaled $214.9 million compared to $202.1 million in the prior period and $154.2 million in the second quarter of 2020. The Company produced 87,275 and 2.6 million ounces of gold and silver, respectively, during the quarter. Metal sales totaled 88,501 ounces of gold and 2.6 million ounces of silver.
Average realized gold and silver prices for the quarter were $1,651 and $26.60 per ounce, respectively, compared to $1,664 and $26.19 per ounce in the prior period. Gold and silver sales accounted for 68% and 32% of quarterly revenue, respectively. The Companys U.S. operations accounted for approximately 60% of second quarter revenue, consistent with the prior period.
Costs applicable to sales2 increased to $132.6 million, largely due to higher throughput rates, an increase in maintenance costs, higher consumable costs and a non-cash inventory charge at Rochester.
General and administrative expenses for the quarter totaled $10.5 million compared to $11.6 million in the prior period, reflecting lower employee-related expenses. Full-year general and administrative expenses are expected to be slightly higher at $40 – $45 million (previous guidance of $37 – $41 million) largely driven by increased accruals for previously-granted long-term performance share awards.
Coeur invested approximately $18.6 million ($12.4 million expensed and $6.2 million capitalized) in exploration during the quarter, compared to roughly $14.9 million ($9.7 million expensed and $5.2 million capitalized) in the prior period, reflecting an increase in drilling activity across most sites. Notably, the Company completed approximately 320,400 feet (97,675 meters) of expansion and infill drilling during the period, establishing a new Company record. See the Operations and Exploration sections for additional detail on the Companys exploration activities.
Operating costs related to COVID-19 mitigation and response efforts totaled $2.3 million during the second quarter, compared to $3.0 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 Companys 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.
The Company recorded an income tax expense of $15.3 million during the second quarter. Cash income and mining taxes paid during the period totaled approximately $12.4 million.
Quarterly operating cash flow totaled $58.1 million compared to $(4.4) million in the prior period, largely driven by higher metal sales and favorable changes in working capital. Changes in working capital during the quarter were $26.6 million, compared to $(45.9) million in the prior period.
Capital expenditures during the second quarter were $78.2 million compared to $59.4 million in the prior period, primarily driven by increased investment at Rochester and Silvertip. Investment related to the POA 11 expansion project at Rochester totaled $33.2 million during the quarter, compared to $28.1 million in the first quarter. Sustaining and development capital expenditures accounted for approximately 38% and 62%, respectively, of the Companys total capital investment during the quarter.
The Company satisfied the remaining $7.1 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 $7.9 million in the second quarter. Coeur expects the $15.0 million cash outflow under the arrangement to occur over the next two quarters.
Strategic Investment in Victoria
During the second quarter, Coeur entered into an agreement to acquire roughly 11.1 million outstanding common shares of Victoria (approximately 17.8% of issued and outstanding shares on an undiluted basis at time of transaction) from Orion Co-VI Ltd. (Orion) at a price of C$13.20 per share, reflecting a 5% discount to the trailing 30-day volume weighted price for the period ended May 7, 2021.
In connection with the transaction, Orion received roughly 12.8 million shares of Coeur common stock (approximately 4.9% of issued and outstanding shares on an undiluted basis at time of transaction), based on the trailing 30-day volume weighted price of $9.17 per share, for the period ended May 7, 2021. The transaction was completed on May 14, 2021 for consideration of approximately $118.8 million. The value of Victorias shares held by Coeur totaled approximately $164.7 million as of June 30, 2021.
Liquidity Update
Maintaining balance sheet flexibility remains a key element of Coeurs strategy. The Company ended the second quarter with total liquidity of approximately $389.1 million, including $124.1 million of cash and no borrowings under its $300.0 million revolving credit facility (RCF)4. Additionally, the aggregate borrowing capacity under its RCF may be increased by up to $100.0 million.
As of June 30, 2021, the Company also had $174.4 million of strategic investments in equity securities and the full $100.0 million available under its at-the-market common stock offering program it established in April 2020.
Hedging Update
During the second quarter, the Company added to its hedge position by executing additional zero-cost collar hedges on 6,000 ounces of its expected 2022 gold production. Coeur previously completed its gold hedging program for 2021 and continues to proactively monitor market conditions to potentially layer in additional hedges on up to 50% of expected gold production in 2022. The Companys silver price exposure remains unhedged. An overview of the hedges currently implemented is outlined below:
| 2021 | 2022 |
Gold Ounces Hedged | 79,350 | 132,000 |
Avg. Ceiling ($/oz) | $1,882 | $2,038 |
Avg. Floor ($/oz) | $1,600 | $1,630 |
Rochester Expansion
The Company continued to execute major construction activities on the POA 11 expansion project at Rochester during the second quarter, with overall progress approximately 31% complete at the end of the period. 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 |
Coeur began placing over-liner material on the Stage VI leach pad approximately six weeks ahead of schedule following the successful swap-out of the secondary crushing unit. The Company also mobilized a cement batch plant, began construction of a new high-voltage power line and started executing electrical substation upgrades during the period. Concrete foundation work for the Merrill-Crowe process plant and crusher corridor is expected to commence during the third quarter. Additionally, structural steel erection for the crusher corridor is expected to begin in early 2022.
As of June 30, 2021, the Company has committed approximately $334 million of capital since the inception of the expansion project in the third quarter of 2020, including 76 executed contracts valued at approximately $309 million. There are six packages yet to be awarded, including two structural, mechanical, piping, electrical and instrumentation construction contracts for the Merrill-Crowe process plant and crushing circuit, respectively. The Company has begun to see signs of inflationary pressures on recent bids received for the remaining uncommitted contracts related to building materials, fuel and overall tightness in the construction market.
Additionally, Coeur has elected to allocate approximately $20 million of additional capital investment to further enhance the projects economics and de-risk the execution of the project. The majority of this incremental capital is expected to be incurred in 2022.
The Company is also reviewing additional optimization opportunities based on key learnings from HPGR-placed material onto the current Stage IV leach pad since late 2019. The results from this work are expected to be available during the second half of 2021.
Coeur secured a capital lease package for nearly $60 million during the quarter, higher than its original target of $50 million. The package is earmarked for planned equipment purchases for the project in 2021 and 2022, and has an interest rate of 5.20%.
Operations
Second quarter 2021 highlights for each of the Companys operations are provided below.
Palmarejo, Mexico
(Dollars in millions, except per ounce amounts) | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 2Q 2020 |
Tons milled | 517,373 | 484,390 | 509,848 | 492,474 | 269,641 |
Average gold grade (oz/t) | 0.058 | 0.062 | 0.076 | 0.065 | 0.066 |
Average silver grade (oz/t) | 3.94 | 4.07 | 4.30 | 4.37 | 4.46 |
Average recovery rate Au | 92.4% | 95.7% | 88.9% | 91.3% | 86.0% |
Average recovery rate Ag | 81.9% | 81.3% | 81.3% | 82.8% | 72.2% |
Gold ounces produced | 27,595 | 28,605 | 34,511 | 29,296 | 15,223 |
Silver ounces produced (000s) | 1,667 | 1,603 | 1,783 | 1,784 | 867 |
Gold ounces sold | 30,516 | 25,687 | 35,359 | 27,252 | 16,924 |
Silver ounces sold (000s) | 1,640 | 1,638 | 1,767 | 1,765 | 875 |
Average realized price per gold ounce | $1,351 | $1,462 | $1,395 | $1,446 | $1,399 |
Average realized price per silver ounce | $26.71 | $26.12 | $24.45 | $23.98 | $16.35 |
Metal sales | $85.0 | $80.3 | $92.5 | $81.8 | $38.0 |
Costs applicable to sales2 | $41.9 | $34.0 | $36.1 | $34.3 | $18.8 |
Adjusted CASper AuOz1 | $662 | $621 | $542 | $602 | $686 |
Adjusted CASper AgOz1 | $13.34 | $10.98 | $9.61 | $10.06 | $8.13 |
Exploration expense | $1.8 | $1.7 | $2.6 | $2.0 | $0.9 |
Cash flow from operating activities | $33.4 | $13.2 | $43.2 | $49.7 | $(3.5) |
Sustaining capital expenditures (excludes capital lease payments) | $9.8 | $10.0 | $9.0 | $4.9 | $4.5 |
Development capital expenditures | $ | $ | $(0.1) | $0.1 | $ |
Total capital expenditures | $9.8 | $10.0 | $8.9 | $5.0 | $4.5 |
Free cash flow1 | $23.6 | $3.2 | $34.3 | $44.7 | $(8.0) |
Operational
Financial
Exploration
Other
Guidance
Rochester, Nevada
(Dollars in millions, except per ounce amounts) | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 2Q 2020 |
Ore tons placed | 3,195,777 | 3,240,917 | 4,000,889 | 4,523,767 | 3,743,331 |
Average silver grade (oz/t) | 0.38 | 0.45 | 0.53 | 0.49 | 0.51 |
Average gold grade (oz/t) | 0.003 | 0.003 | 0.002 | 0.002 | 0.002 |
Silver ounces produced (000s) | 888 | 774 | 1,020 | 740 | 728 |
Gold ounces produced | 7,232 | 6,904 | 9,590 | 6,462 | 5,159 |
Silver ounces sold (000s) | 912 | 771 | 912 | 786 | 724 |
Gold ounces sold | 7,818 | 6,934 | 8,672 | 6,834 | 5,278 |
Average realized price per silver ounce | $26.38 | $26.34 | $24.35 | $24.49 | $16.11 |
Average realized price per gold ounce | $1,794 | $1,794 | $1,825 | $1,882 | $1,702 |
Metal sales | $38.1 | $32.8 | $38.2 | $32.1 | $20.6 |
Costs applicable to sales2 | $38.0 | $24.0 | $31.7 | $19.1 | $18.3 |
Adjusted CASper AgOz1 | $26.09 | $19.07 | $20.18 | $14.98 | $13.75 |
Adjusted CASper AuOz1 | $1,787 | $1,300 | $1,537 | $1,148 | $1,481 |
Exploration expense | $0.9 | $0.5 | $0.8 | $0.5 | $1.8 |
Cash flow from operating activities | $4.0 | $(8.7) | $4.7 | $2.1 | $(5.6) |
Sustaining capital expenditures (excludes capital lease payments) | $7.3 | $2.0 | $2.9 | $2.5 | $1.5 |
Development capital expenditures | $35.0 | $28.2 | $13.9 | $7.3 | $4.3 |
Total capital expenditures | $42.3 | $30.2 | $16.8 | $9.8 | $5.8 |
Free cash flow1 | $(38.3) | $(38.9) | $(12.1) | $(7.7) | $(11.4) |
Operational
Financial
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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