Coeur Reports Third Quarter 2020 Results

Multi-Year High Financial Results Driven by Increased Production and Higher Prices;

Provides Updated Full-Year 2020 Guidance

CHICAGO–(BUSINESS WIRE)–Coeur Mining, Inc. (�Coeur” or the “Company”) (NYSE: CDE) today reported third quarter 2020 financial results, including revenue of $229.7 million, cash flow from operating activities of $79.5 million and GAAP net income from continuing operations of $26.9 million, or $0.11 per share. On an adjusted basis¹, the Company reported EBITDA of $90.8 million, cash flow from operating activities prior to changes in working capital of $57.4 million and net income from continuing operations of $38.2 million, or $0.16 per share.

Key Highlights

• Highest quarterly financial results in nearly a decade – Revenue increased 49% and adjusted EBITDA¹ more than doubled quarter-over-quarter. Operating cash flow was eight-times higher and now totals $81.4 million through the first nine months of the year. Free cash flow¹ increased significantly to $56.5 million, leading to year-to-date positive free cash flow¹ of $19.5 million
• Strong quarter-over-quarter production growth – Gold production increased 23% to 95,995 ounces driven by improved operational performance at Palmarejo, Rochester and Wharf, while silver production of 2.6 million ounces was 58% higher largely due to positive results at Palmarejo
• Well-executed restart at Palmarejo following temporary suspension – Palmarejo generated strong operational and financial results after being temporarily suspended for approximately 45 days in the prior period due to a COVID-19-related government decree. Gold production nearly doubled while silver production was more than two-times higher quarter-over-quarter, helping to generate $49.7 million and $44.7 million in operating and free cash flow¹, respectively
• Successfully commenced construction on schedule for Rochester expansion – The Company broke ground in early August on the Plan of Operations Amendment 11 (“POA 11”) expansion project at its Rochester mine. Coeur plans to file an updated technical report in December, which will provide a detailed economic and technical overview of the expansion project
• Record quarterly results at Wharf – Wharf produced 33,440 ounces of gold, which generated $39.1 million in operating cash flow and $38.6 million free cash flow¹ during the third quarter – all new quarterly records since Coeur’s acquisition of Wharf in early 2015 for approximately $99.5 million. Cumulative operating and free cash flow¹ since acquisition now totals $256.0 million and $232.4 million, respectively
• Continued execution of the Company’s largest exploration program in its history²– Building on the success from the first half of the year, approximately 20 drill rigs continue to operate across the Company, including at the new C-Horst discovery located in the northernmost portion of the Crown Block in southern Nevada. Results indicate potential for strong resource growth at Palmarejo, Rochester, Kensington, Silvertip and C-Horst, while infill drilling has demonstrated near-term upside potential for reserve growth at Palmarejo and Rochester
• Bolstered balance sheet and financial flexibility – The Company reduced total debt³ by $47.5 million, or 14%, quarter-over-quarter while cash and cash equivalents increased 9% to $77.1 million as of September 30, 2020

“Strong production growth and higher gold and silver prices combined to generate multi-year high financial results during the third quarter,” said Mitchell J. Krebs, President and Chief Executive Officer. “A strong rebound from Palmarejo and a record-breaking quarter at Wharf helped showcase the benefit of our balanced portfolio of North American-based precious metals assets. Quarterly revenue was the highest in nearly a decade, adjusted EBITDA¹ more than doubled and free cash flow¹ now totals $19.5 million through the first nine months of the year after jumping to $56.5 million in the third quarter.”

Mr. Krebs continued, “We achieved a major milestone by commencing construction on schedule on the POA 11 expansion project at Rochester and look forward to sharing the results of the updated technical report in December. In addition to strong operational execution at several sites, we significantly reduced debt while increasing cash, leaving us well-positioned as we head into major construction activities at Rochester next year. With strengthening operational performance, successful execution of our near-term organic growth opportunities and a sustained commitment to our exploration investments, we remain on-track to fundamentally reposition the Company and unlock meaningful long-term value for our stockholders.”

Financial and Operating Highlights (Unaudited)

(Amounts in millions, except per share amounts, gold ounces produced & sold, and per-ounce/pound metrics)		3Q 2020				2Q 2020				1Q 2020				4Q 2019				3Q 2019
Gold Sales		$	167.1			$	127.9			$	127.6			$	134.3			$	141.9
Silver Sales		$	62.6			$	26.3			$	44.9			$	54.8			$	51.6
Consolidated Revenue		$	229.7			$	154.2			$	173.2			$	195.0			$	199.5
Costs Applicable to Sales4		$	112.8			$	90.0			$	118.9			$	146.6			$	141.0
General and Administrative Expenses		$	7.8			$	8.6			$	8.9			$	7.6			$	9.6
Net Income (Loss)		$	26.9			$	(1.2)			$	(11.9)			$	(270.9)			$	(14.3)
Net Income (Loss) Per Share		$	0.11			$	(0.01)			$	(0.05)			$	(1.13)			$	(0.06)
Adjusted Net Income (Loss)1		$	38.2			$	2.6			$	(0.9)			$	(3.3)			$	(5.3)
Adjusted Net Income (Loss)1 Per Share		$	0.16			$	0.01			$	—			$	(0.01)			$	(0.02)
Weighted Average Shares Outstanding		243.8				240.9				240.3				238.7				225.9
EBITDA1		$	77.3			$	35.3			$	25.5			$	(214.5)			$	37.6
Adjusted EBITDA1		$	90.8			$	42.2			$	46.5			$	59.8			$	61.0
Cash Flow from Operating Activities		$	79.5			$	9.9			$	(8.0)			$	39.3			$	42.0
Capital Expenditures		$	23.0			$	16.7			$	22.2			$	21.0			$	30.7
Free Cash Flow1		$	56.5			$	(6.7)			$	(30.2)			$	18.4			$	11.3
Cash, Equivalents & Short-Term Investments		$	77.1			$	70.9			$	52.9			$	55.6			$	65.3
Total Debt3		$	301.1			$	348.6			$	343.1			$	295.5			$	298.7
Average Realized Price Per Ounce – Gold		$	1,754			$	1,641			$	1,490			$	1,407			$	1,413
Average Realized Price Per Ounce – Silver		$	24.15			$	16.25			$	16.63			$	16.99			$	17.17
Gold Ounces Produced		95,995				78,229				85,077				94,716				99,782
Silver Ounces Produced		2.6				1.6				2.7				3.1				3.0
Gold Ounces Sold		95,283				77,933				85,635				95,532				100,407
Silver Ounces Sold		2.6				1.6				2.7				3.3				3.0

Financial Results

Third quarter 2020 revenue increased 49% and 15% quarter-over-quarter and year-over-year, respectively, to $229.7 million driven by higher production and favorable metals prices. The Company’s gold and silver production increased 23% and 58% quarter-over-quarter to 95,995 and 2.6 million ounces, respectively. Gold and silver sales totaled 95,283 and 2.6 million ounces, respectively, 22% and 60% higher than the prior period. Average realized gold and silver prices for the quarter were $1,754 and $24.15 per ounce, respectively, or 7% and 49% higher quarter-over-quarter.

Gold and silver sales accounted for 73% and 27% of third quarter revenue, respectively. The Company’s U.S. operations accounted for approximately 64% of third quarter revenue, down from approximately 75% in the prior period, primarily due to the ramp-up of Palmarejo following the government-mandated temporary suspension in the prior period.

Costs applicable to sales⁴ increased 25% quarter-over-quarter to $112.8 million, largely due to the ramp-up of Palmarejo and higher production at Wharf. Third quarter general and administrative expenses decreased 9% to $7.8 million, primarily driven by lower employee-related expenses and outside service fees.

Third quarter exploration expense totaled $12.8 million, 8% higher quarter-over-quarter, reflecting a rebound in drilling activity at Palmarejo, an acceleration of Silvertip’s exploration program, and increased drilling expense at Kensington and Wharf. See the “Operations” and “Exploration” sections for additional detail on the Company’s exploration activities.

Operating costs related to COVID-19 mitigation and response efforts totaled $4.0 million during the third quarter, compared to $6.1 million in the prior period. These additional costs are primarily driven by employee-related expenses at Palmarejo and Kensington, and are included in “Pre-development, reclamation, and other expenses” on the Company’s income statement.

Coeur recorded an income tax expense of $13.1 million during the third quarter, primarily related to strong financial performance at Palmarejo. Cash income and mining taxes paid during the quarter totaled approximately $3.3 million, bringing the full-year figure to $20.1 million. The Company expects to pay approximately $30.0 to $35.0 million of cash income and mining taxes in 2020.

Quarterly operating cash flow improved to $79.5 million compared to $9.9 million in the prior period, reflecting strong revenue growth and margin expansion quarter-over-quarter. Changes in working capital during the quarter totaled $22.1 million, compared to $(6.5) million in the second quarter of 2020, largely driven by the timing of tax payments in Mexico, payables related to the ramp-up of Palmarejo and interest payments. Third quarter operating cash flow includes a cash outflow of $5.1 million associated with the Company’s prepayment agreement at Kensington. Coeur expects the remaining $9.9 million cash outflow under the arrangement to occur in the fourth quarter.

Third quarter capital expenditures were $23.0 million compared to $16.7 million in the prior period, reflecting higher investment across the Company’s operations as well as increased spending on POA 11. Sustaining and development capital expenditures accounted for approximately 51% and 49%, respectively, of the Company’s capital expenditures during the quarter.

Liquidity Update

Coeur continued to prudently manage its balance sheet during the third quarter of 2020 by repaying $47.5 million of total debt³, including $40.0 million of outstanding indebtedness under its senior secured revolving credit facility (“RCF”). The Company intends to repay the remaining $20.0 million RCF balance by year end from internally generated cash flow. At September 30, 2020, cash and cash equivalents totaled $77.1 million (9% higher quarter-over-quarter), while total debt³ outstanding was $301.1 million (14% lower quarter-over-quarter).

Hedging Update

The Company did not execute any additional zero-cost collar (“ZCC”) hedges during the third quarter. Coeur’s hedging strategy remains focused on supporting cash flow generation during the POA 11 expansion at Rochester, which the Company expects to fund with a combination of cash on hand, internally generated cash flow and existing debt capacity.

Coeur completed its gold hedging program for 2021 earlier this year and will proactively monitor market conditions to potentially layer in additional ZCC hedges on up to 50% of expected gold production in 2022. The Company’s silver price exposure remains unhedged. An overview of the hedges currently implemented is outlined below:

		4Q 2020		2021		2022
Gold Ounces Hedged		55,500		158,700		126,000
Avg. Ceiling ($/oz)		$1,823		$1,875		$2,030
Avg. Floor ($/oz)		$1,471		$1,600		$1,626

Rochester Expansion

Coeur commenced construction on the POA 11 expansion project on schedule in early August 2020, advancing early-stage earthworks and establishing infrastructure at site to support construction activities. The expansion project includes the construction of a new leach pad, a crushing facility equipped with two high-pressure grinding roll (“HPGR”) units, a Merrill-Crowe process plant, and related infrastructure to support the extension of Rochester’s mine life.

Together with SNC-Lavalin, Coeur’s engineering, procurement and project management contractor, the Company has completed over 75% of detailed design for the expansion project. Major construction is expected to begin in 2021 and be largely completed by late 2022. The project remains on schedule with no changes to key elements of the timeline (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

The Company expects to publish an updated technical report for Rochester in December further outlining details of the expansion, including estimated capital expenditures, an updated mine plan, and detailed operational and financial information regarding the expected impacts of HPGR technology.

Operations

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

Palmarejo, Mexico

(Dollars in millions, except per ounce amounts)		3Q 2020		2Q 2020		1Q 2020		4Q 2019		3Q 2019
Tons milled		492,474		269,641		479,562		486,779		442,464
Average gold grade (oz/t)		0.07		0.07		0.07		0.07		0.09
Average silver grade (oz/t)		4.37		4.46		4.69		5.11		4.88
Average recovery rate – Au		91.3%		86.0%		91.6%		84.9%		81.7%
Average recovery rate – Ag		82.8%		72.2%		81.5%		81.7%		79.6%
Gold ounces produced		29,296		15,223		31,578		28,702		31,779
Silver ounces produced (000’s)		1,784		867		1,835		2,029		1,720
Gold ounces sold		27,252		16,924		31,287		27,952		32,731
Silver ounces sold (000’s)		1,765		875		1,895		1,980		1,747
Average realized price per gold ounce		$1,446		$1,399		$1,331		$1,238		$1,269
Average realized price per silver ounce		$23.98		$16.35		$17.25		$17.28		$17.05
Metal sales		$81.8		$38.0		$74.3		$68.9		$71.3
Costs applicable to sales4		$34.3		$18.8		$36.0		$34.8		$37.4
Adjusted CASper AuOz1		$602		$686		$645		$622		$660
Adjusted CASper AgOz1		$10.06		$8.13		$8.37		$8.79		$8.95
Exploration expense		$2.0		$0.9		$1.5		$2.0		$1.6
Cash flow from operating activities		$49.7		$(3.5)		$28.9		$41.4		$36.3
Sustaining capital expenditures (excludes capital lease payments)		$4.9		$4.5		$7.1		$6.2		$4.7
Development capital expenditures		$0.1		$—		$—		$2.4		$3.1
Total capital expenditures		$5.0		$4.5		$7.1		$8.6		$7.8
Free cash flow1		$44.7		$(8.0)		$21.8		$32.8		$28.5

Operational

• Operations steadily ramped back up during June and into the third quarter following amended guidance from the Federal Government of Mexico that precious metals mining is considered an essential business activity
• Third quarter gold production increased 92% to 29,296 ounces and silver production more than doubled to approximately 1.8 million ounces compared to the prior quarter

Financial

• Third quarter adjusted CAS¹ for gold on a co-product basis decreased 12% compared to the prior period to $602 per ounce, while adjusted CAS¹ for silver on a co-product basis increased 24% to $10.06 per ounce. Co-product adjusted CAS¹ for the quarter reflect the ramp-up of operations following the temporary suspension and comparatively higher silver sales
• Quarterly capital expenditures increased 11% to $5.0 million, and focused on mine development and infrastructure projects
• Free cash flow¹ in the third quarter totaled $44.7 million, compared to $(8.0) million in the prior period

Exploration

• Exploration investment during the third quarter totaled approximately $3.2 million ($2.0 million expensed and $1.2 million capitalized), compared to approximately $1.5 million ($0.9 million expensed and $0.6 million capitalized) in the prior quarter

• Coeur began the third quarter with four active rigs and ramped up to seven surface and underground core rigs during the period. A total of 18 expansion and 30 infill holes were drilled during the quarter for a total of 68,554 feet (20,895 meters)
• Exploration activity focused on infill drilling within the two 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
• Resource expansion results continue to be encouraging, cutting multiple mineralized zones that extend south, northwest and north of Independencia. Similarly, infill drilling has been successful south and southwest of Guadalupe
• Coeur expects to continue with seven active rigs during the fourth quarter, primarily focusing on resource expansion drilling as well as infill drilling on select targets. Three expansion rigs have recently been mobilized to focus on growing mineralized material between Independencia and the mill

Other

• Workforce staffing levels gradually increased to near full capacity during September, up from approximately 85% earlier in the quarter due to government-imposed restrictions related to COVID-19. The Company is maintaining its rigorous health and safety protocols at Palmarejo aimed at limiting the exposure and transmission of COVID-19
• Approximately 38% of Palmarejo’s gold sales in the third quarter, or 10,348 ounces, were sold under its gold stream agreement at a price of $800 per ounce

Guidance

• Full-year 2020 gold production is expected to be slightly higher at 100,000 – 110,000 ounces (previously 95,000 – 105,000 ounces), while silver production is expected to be 6.0 – 7.0 million ounces (no change)
• With higher expected gold production and solid cost controls, CAS¹ for gold are expected to be $650 – $750 per ounce (previously $785 – $885 per ounce), while CAS¹ for silver are anticipated to be $9.50 – $10.50 per ounce (no change)
• Capital expenditures are expected to be modestly lower at approximately $27 – $30 million (previously $32 – $36 million)

Rochester, Nevada

(Dollars in millions, except per ounce amounts)		3Q 2020		2Q 2020		1Q 2020		4Q 2019		3Q 2019
Ore tons placed		4,523,767		3,743,331		3,428,578		2,612,319		2,516,353
Average silver grade (oz/t)		0.49		0.51		0.57		0.47		0.43
Average gold grade (oz/t)		0.002		0.002		0.002		0.003		0.004
Silver ounces produced (000’s)		740		728		687		848		982
Gold ounces produced		6,462		5,159		5,936		10,634		7,901
Silver ounces sold (000’s)		786		724		632		932		951
Gold ounces sold		6,834		5,278		5,473		11,248		7,651
Average realized price per silver ounce		$24.49		$16.11		$16.99		$17.22		$17.02
Average realized price per gold ounce		$1,882		$1,702		$1,583		$1,484		$1,476
Metal sales		$32.1		$20.6		$19.4		$32.6		$27.5
Costs applicable to sales4		$19.1		$18.3		$17.0		$25.3		$27.7
Adjusted CASper AgOz1		$14.98		$13.75		$14.38		$13.25		$14.24
Adjusted CASper AuOz1		$1,148		$1,481		$1,359		$1,142		$1,230
Exploration expense		$0.5		$1.8		$0.2		$0.4		$0.1
Cash flow from operating activities		$2.1		$(5.6)		$(9.3)		$6.9		$8.3
Sustaining capital expenditures (excludes capital lease payments)		$2.5		$1.5		$0.1		$0.9		$(1.0)
Development capital expenditures		$7.3		$4.3		$5.0		$4.1		$11.2
Total capital expenditures		$9.8		$5.8		$5.1		$5.0		$10.2
Free cash flow1		$(7.7)		$(11.4)		$(14.4)		$1.9		$(1.9)

Operational

• Silver production increased modestly quarter-over-quarter to approximately 0.7 million ounces, while gold production was 25% higher and totaled 6,462 ounces
• Improved production was driven by the placement of 4.5 million tons during the quarter, a 21% increase compared to the prior period and 80% higher than the third quarter of 2019. Just over 36,500 tons per day were processed through the upgraded crushing circuit, consistent with the prior period and 142% higher year-over-year. Placement rates were supplemented by stacking roughly 1.2 million tons of run-of-mine material during the quarter
• Upset conditions in the Merrill-Crowe process plant and residual impacts of dilution from stacking HPGR-crushed material on top of historical ore on the Stage IV leach pad earlier in the year resulted in lower-than-anticipated production during the quarter
• As a result of the upset conditions, approximately 0.1 million ounces of silver and 1,250 ounces of gold were held as work-in-process inventory at the end of the third quarter and are expected to be recovered by the end of the year

• Late in the third quarter, Coeur expanded the scope of its revised stacking plan by installing additional inter-lift liners to maximize the placement of HPGR-crushed ore on shallower portions of the Stage IV leach pad

Financial

• Third quarter adjusted CAS¹ for silver on a co-product basis increased 9% quarter-over-quarter to $14.98 per ounce, while adjusted CAS¹ for gold on a co-product basis decreased 22% to $1,148 per ounce, reflecting comparatively higher costs and increased gold production
• Third quarter capital expenditures totaled $9.8 million compared to $5.8 million in the prior period, largely due to increased investment in POA 11
• Free cash flow¹ totaled $(7.7) million in the third quarter, compared to $(11.4) million in the second quarter, primarily driven by improved operating cash flow and partially offset by higher capital expenditures

Exploration

• Exploration investment for the third quarter totaled approximately $1.3 million ($0.5 million expensed and $0.9 million capitalized), compared to approximately $2.2 million ($1.8 million expensed and $0.4 million capitalized) in the prior period
• Following the success of prior drill programs, two core rigs continued directional drilling at East Rochester to test areas of potential mineralization under the Stage I and Stage II leach pads. A total of four new expansion core holes were drilled during the quarter (12 through the first nine months of 2020). The core rigs were then moved to complete geotechnical holes in the existing open pit
• One reverse circulation rig continued infill drilling within the existing open pit. A total of 15 infill holes and five expansion holes were drilled during the quarter
• Based on the results received to date, significant potential exists for additional reserve and resource growth in the existing open pit and at East Rochester. Additionally, target generation in the district highlighted priorities for future drilling north of East Rochester and East Packard as well as around the Lincoln Hill, Gold Ridge and Independence Hill zones located immediately west of Rochester

• Based on the drilling success at East Rochester, Coeur has extended the expansion program through the winter with one reverse circulation rig focused on testing the extension of the zone northwards towards the Stage IV leach pad

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 at Rochester and in the surrounding communities

Guidance

• Full-year 2020 silver production is anticipated to be modestly lower at 3.1 – 3.7 million ounces (previously 3.5 – 4.5 million ounces) given greater-than-expected impacts from dilution, while gold production guidance remains consistent at 27,000 – 33,000 ounces (no change)
• Given lower expected silver production, CAS¹ for silver in 2020 are expected to be $13.50 – $14.75 per ounce (previously $12.75 – $14.00 per ounce). Comparatively higher gold production is expected to drive CAS¹ to $1,150 – $1,300 per ounce of gold (previously $1,250 – $1,400 per ounce)
• Capital expenditures are expected to remain relatively unchanged at approximately $38 – $42 million (previously $38 – $43 million)

Kensington, Alaska

(Dollars in millions, except per ounce amounts)		3Q 2020		2Q 2020		1Q 2020		4Q 2019		3Q 2019
Tons milled		163,276		170,478		162,341		167,061		166,475
Average gold grade (oz/t)		0.18		0.21		0.21		0.20		0.22
Average recovery rate		93.7%		92.0%		93.5%		87.2%		93.2%
Gold ounces produced		26,797		33,058		32,022		29,736		34,156
Gold ounces sold		27,815		32,367		32,781		29,293		35,452
Average realized price per gold ounce, gross		$1,917		$1,762		$1,603		$1,493		$1,505
Treatment and refining charges per gold ounce		$35		$57		$27		$24		$20
Average realized price per gold ounce, net		$1,882		$1,705		$1,576		$1,469		$1,485
Metal sales		$52.4		$55.2		$51.7		$43.0		$52.6
Costs applicable to sales4		$31.5		$30.4		$30.5		$28.8		$29.5
Adjusted CAS per AuOz1		$1,128		$934		$928		$976		$822
Prepayment, working capital cash flow		$(5.1)		$7.0		$(7.0)		$4.7		$(14.7)
Exploration expense		$3.4		$2.6		$1.8		$1.6		$1.5
Cash flow from operating activities		$9.1		$27.8		$11.9		$19.9		$4.5
Sustaining capital expenditures (excludes capital lease payments)		$5.3		$3.9		$4.8		$4.3		$4.9
Development capital expenditures		$—		$—		$—		$—		$—
Total capital expenditures		$5.3		$3.9		$4.8		$4.3		$4.9
Free cash flow1		$3.8		$23.9		$7.1		$15.6		$(0.4)

Contacts

Paul DePartout, Director, Investor Relations

Phone: (312) 489-5800

www.coeur.com

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