Coeur Reports Fourth Quarter and Full-Year 2016 Results

09-Feb-2017 10:48 AM

 

CHICAGO--()--Coeur Mining, Inc. (the “Company” or “Coeur”) (NYSE:CDE) today reported 2016 financial results, posting net income of $55.4 million, or $0.34 per share, and cash flow from operating activities of $125.8 million, an increase of $12.3 million, or 11%, over 2015. Adjusted EBITDA1 for the year was $215.2 million, increasing nearly $90 million, or 68%, year-over-year. Over the course of 2016, the Company also meaningfully strengthened its balance sheet, ending the year with total outstanding debt of $210.9 million, a 57% reduction compared to a year ago, net debt1 of $48.7 million, and a year-end cash balance of $162.2 million.

In the fourth quarter, the Company generated a net loss of $8.3 million, or $0.03 per share, due mostly to lower metal prices and a one-time loss of $11.3 million related to the redemption of $190 million in principal of the Company's 7.875% Senior Notes due 2021. Quarterly cash flow from operating activities was $25.5 million and adjusted EBITDA1 was $44.0 million.

Highlights

  • As announced on January 5, 2017, Coeur achieved record production of 3.9 million ounces of silver and 102,500 ounces of gold, or 10.0 million silver equivalent ounces (AgEqOz)1, for the fourth quarter and 14.8 million ounces of silver and 358,170 ounces of gold, or 36.3 million AgEqOz1 for the full year
  • For Coeur's primary silver operations, CAS and adjusted CAS per average spot AgEqOz1 were $11.42 and $11.34, respectively, for the fourth quarter and $11.12 and $10.99 for the full year. The full-year figures represented 10% and 7% year-over-year declines, respectively
  • For Coeur's primary gold operations, fourth quarter CAS and adjusted CAS per gold equivalent ounce (AuEqOz)1 were $675 and $676, respectively. Relative to 2015, full-year CAS and adjusted CAS per AuEqOz1 declined 8% and 10%, respectively, to $705 and $688
  • Companywide AISC and adjusted AISC per average spot AgEqOz1 were $14.56 and $14.52, respectively, for the quarter and $14.27 and $14.09 for the full year. Full-year figures both represent year-over-year decreases of 2%. On a 60:1 equivalence basis, companywide AISC and adjusted AISC per AgEqOz1 were $16.08 and $15.88, respectively, both within the Company guidance range of $15.75 - $16.25
  • General and administrative expenses were $29.4 million, within Company guidance and representing a year-over-year decrease of 10%
  • Capital expenditures for the quarter were $29.9 million, driven by the ramp-up of Palmarejo underground operations at Guadalupe and Independencia, construction of the Stage IV leach pad expansion at Rochester, and continued development of the Jualin decline at Kensington. Full-year capital expenditures were $101.0 million, below Company guidance of $105 - $115 million
  • Total debt decreased $279.5 million, or 57%, year-over-year. Together with rising adjusted EBITDA1, the Company's total debt to last twelve month (LTM) adjusted EBITDA1 declined to 1.0x, down from 3.8x a year ago and 5.5x fifteen months ago
  • In 2016, Coeur monetized several non-core assets for a total consideration of $23.8 million, consistent with its strategy of redeploying capital to higher-return opportunities. This focus has continued into the new year, with the pending Joaquin Project sale announced in January 2017 for total consideration of $25 million plus a 2% NSR

"2016 marked a key inflection point for Coeur. Our silver equivalent production set a new Company record, operating and non-operating costs continued to decline, adjusted EBITDA increased materially, and we achieved strong earnings for the year. In addition, we delivered on our commitment to strengthen our balance sheet by reducing total debt by $280 million,” said Mitchell J. Krebs, Coeur's President and Chief Executive Officer.

“Coeur has entered 2017 well-positioned to continue delivering high-quality growth through ongoing initiatives at our Palmarejo, Kensington, and Rochester operations. In addition, our exploration programs targeting near-mine additions to reserves and resources have been accelerated and are expected to further enhance and extend the economics of our existing operations. Our team has done a terrific job executing our strategic plan and striving to establish a higher standard in all areas of the business.”

                             

Financial and Operating Highlights (Unaudited)

                             
(Amounts in millions, except per share amounts, gold ounces produced & sold, and per-ounce metrics)   2016   4Q 2016   3Q 2016   2Q 2016   1Q 2016   2015   4Q 2015
Revenue   $ 665.8     $ 159.2     $ 176.2     $ 182.0     $ 148.4     $ 646.1     $ 164.2  
Costs Applicable to Sales   $ 409.5     $ 102.0     $ 105.4     $ 100.5     $ 101.6     $ 479.7     $ 125.3  
General and Administrative Expenses   $ 29.4     $ 6.6     $ 7.1     $ 7.4     $ 8.3     $ 32.8     $ 8.8  
Net Income (Loss)   $ 55.4     $ (8.3 )   $ 69.6     $ 14.5     $ (20.4 )   $ (367.2 )   $ (303.0 )
Net Income (Loss) Per Share   $ 0.34     $ (0.03 )   $ 0.42     $ 0.09     $ (0.14 )   $ (2.83 )   $ (2.28 )
Adjusted Net Income (Loss)1   $ 47.8     $ 2.8     $ 38.6     $ 16.9     $ (10.5 )   $ (103.6 )   $ (44.0 )
Adjusted Net Income (Loss)1 Per Share   $ 0.29     $ 0.01     $ 0.23     $ 0.11     $ (0.06 )   $ (0.80 )   $ (0.31 )
Weighted Average Shares   163.5     178.6     161.0     157.9     150.2     129.6     145.0  
EBITDA1   $ 161.2     $ 27.4     $ 50.9     $ 62.1     $ 20.8     $ (204.0 )   $ (272.9 )
Adjusted EBITDA1   $ 215.2     $ 44.0     $ 62.7     $ 72.0     $ 37.4     $ 127.9     $ 32.9  
Cash Flow from Operating Activities   $ 125.8     $ 25.5     $ 47.8     $ 45.9     $ 6.6     $ 113.5     $ 43.2  
Capital Expenditures   $ 101.0     $ 29.9     $ 25.6     $ 23.3     $ 22.2     $ 95.2     $ 30.0  
Free Cash Flow1   $ (2.4 )   $ (4.5 )   $ 14.6     $ 12.2     $ (24.7 )   $ (20.9 )   $ 4.2  
Cash, Equivalents & Short-Term Investments   $ 162.2     $ 162.2     $ 222.5     $ 257.6     $ 173.4     $ 200.7     $ 200.7  
Total Debt2   $ 210.9     $ 210.9     $ 401.7     $ 511.1     $ 511.1     $ 490.4     $ 490.4  
Average Realized Price Per Ounce – Silver   $ 17.18     $ 16.64     $ 19.61     $ 17.38     $ 15.16     $ 15.46     $ 14.27  
Average Realized Price Per Ounce – Gold   $ 1,230     $ 1,170     $ 1,317     $ 1,255     $ 1,178     $ 1,143     $ 1,093  
Silver Ounces Produced   14.8     3.9     3.5     4.0     3.4     15.9     4.0  
Gold Ounces Produced   358,170     102,500     84,871     92,727     78,072     327,908     91,551  
Silver Equivalent Ounces Produced1   36.3     10.0     8.6     9.6     8.1     35.6     9.5  
Silver Ounces Sold   14.3     3.4     3.4     4.0     3.5     16.5     4.4  
Gold Ounces Sold   338,131     87,108     83,389     88,543     79,091     335,882     92,032  
Silver Equivalent Ounces Sold1   34.6     8.6     8.4     9.3     8.3     36.7     9.9  
Silver Equivalent Ounces Sold (Average Spot)1   39.0     9.6     9.1     10.6     9.8     41.4     11.3  
Adjusted CAS per AgEqOz1   $ 11.73     $ 12.05     $ 12.10     $ 10.71     $ 12.05     $ 12.75     $ 12.65  
Adjusted CAS per Average Spot AgEqOz1   $ 10.99     $ 11.34     $ 11.64     $ 9.90     $ 11.00     $ 11.87     $ 11.79  
Adjusted CAS per AuEqOz1   $ 688     $ 676     $ 712     $ 644     $ 721     $ 764     $ 663  
Adjusted AISC per AgEqOz1   $ 15.88     $ 16.13     $ 16.46     $ 14.82     $ 16.05     $ 16.16     $ 15.66  
Adjusted AISC per Average Spot AgEqOz1   $ 14.09     $ 14.52     $ 15.23     $ 12.95     $ 13.51     $ 14.32     $ 13.73  
                                                         

Financial Results

During the quarter, the Company realized average silver and gold prices of $16.64 and $1,170 per ounce, representing quarter-over-quarter decreases of 15% and 11%, respectively. Importantly, the average realized gold price in the fourth quarter reflected the impact of the new gold stream agreement with Franco-Nevada, which provides for a payment of $800 per ounce delivered. For the full year, average realized silver and gold prices were $17.18 and $1,230, 11% and 8% higher, respectively, year-over-year.

Fourth quarter revenue was $159.2 million, a decrease of 10% quarter-over-quarter, driven by lower metal prices. Silver metal sales contributed 33% and gold 67%. For the full year, revenue increased 3% to $665.8 million, with silver metal sales contributing 37% and gold 63%.

Costs applicable to sales were $102.0 million for the fourth quarter. Full-year costs applicable to sales were $409.5 million, representing a year-over-year decrease of 15%, primarily driven by lower unit costs. Other contributing factors include increased operating efficiencies, lower input costs, and more favorable currency exchange rates.

Free cash flow1 for the quarter was negatively impacted by an increase in inventory at Palmarejo as well as the acceleration of cash interest paid in connection with the redemption of $190 million in principal of the Company's 7.875% Senior Notes due 2021. The increase in inventory at Palmarejo resulted from the timing of a quarter-end shipment and gold retained for purchase by Franco-Nevada in January 2017.

Fourth quarter expensed exploration was $5.3 million, bringing full-year expensed exploration to $12.9 million, representing a year-over-year increase of 11% due to expanded exploration drilling activities at Palmarejo, Kensington, and Rochester.

Net income in 2016 was $55.4 million, or $0.34 per share. This compares to a net loss of $367.2 million, or $2.83 per share in 2015, which included after-tax, non-cash impairment charges of $313.3 million. Adjusted net income1 in 2016 was $47.8 million, or $0.29 per share, a significant improvement over the adjusted net loss1 in 2015 of $103.6 million, or $0.80 per share.

Operations

Highlights of fourth quarter and full-year 2016 results for each of the Company's operating segments are provided below.

                             

Palmarejo, Mexico

                             
(Dollars in millions, except per ounce amounts)   2016   4Q 2016   3Q 2016   2Q 2016   1Q 2016   2015   4Q 2015
Underground Operations:                            
Tons mined   1,047,000   293,706   253,681   283,971   215,642   701,662   189,383
Average silver grade (oz/t)   4.69   5.00   3.96   5.40   4.21   4.06   3.96
Average gold grade (oz/t)   0.08   0.09   0.08   0.08   0.07   0.08   0.06
Surface Operations:                            
Tons mined   36,906       1,695   35,211   888,432   102,018
Average silver grade (oz/t)   4.34       7.77   4.18   3.64   3.86
Average gold grade (oz/t)   0.04       0.07   0.04   0.03   0.03
Processing:                            
Total tons milled   1,078,888   287,569   274,644   270,142   246,533   1,616,668   301,274
Average recovery rate – Ag   88.4%   89.1%   85.5%   89.5%   89.1%   84.3%   95.4%
Average recovery rate – Au   86.5%   90.4%   77.7%   86.4%   92.1%   80.6%   88.8%
Silver ounces produced (000's)   4,442   1,269   933   1,307   933   5,149   1,126
Gold ounces produced   73,913   23,906   16,608   18,731   14,668   70,922   14,326
Silver equivalent ounces produced1 (000's)   8,877   2,703   1,930   2,431   1,813   9,404   1,985
Silver ounces sold (000's)   3,993   937   778   1,350   928   5,448   1,465
Gold ounces sold   59,081   15,558   11,410   19,214   12,899   73,218   18,719
Silver equivalent ounces sold1 (000's)   7,538   1,872   1,462   2,502   1,702   9,841   2,588
Silver equivalent ounces sold1 (average spot) (000's)   8,305   2,042   1,555   2,792   1,955   10,865   2,867
Metal sales   $141.3   $32.5   $30.7   $48.3   $29.8   $169.1   $41.6
Costs applicable to sales   $80.8   $20.9   $16.0   $22.9   $21.0   $138.5   $39.8
Adjusted CAS per AgEqOz1   $10.55   $11.01   $10.70   $9.02   $11.54   $13.03   $13.48
Adjusted CAS per average spot AgEqOz1   $9.57   $10.11   $10.05   $8.09   $10.03   $11.80   $12.15
Exploration expense   $5.1   $2.4   $1.3   $0.6   $0.8   $4.5   $0.5
Cash flow from operating activities   $26.7   $(1.7)   $13.7   $11.3   $3.4   $52.7   $20.3
Sustaining capital expenditures   $22.7   $3.9   $6.7   $5.5   $6.6   $5.5   $(1.4)
Development capital expenditures   $13.1   $4.2   $3.3   $3.4   $2.2   $30.5   $7.0
Total capital expenditures   $35.8   $8.1   $10.0   $8.9   $8.8   $36.0   $5.6
Free cash flow (before royalties)   $(9.1)   $(9.8)   $3.7   $2.4   $(5.4)   $16.7   $14.7
Gold production royalty payments   $27.2   $—   $7.6   $10.5   $9.1   $39.2   $9.0
Free cash flow1   $(36.3)   $(9.8)   $(3.9)   $(8.1)   $(14.5)   $(22.5)   $5.7
                             
  • In 2016, legacy open pit and underground operations at Palmarejo were completed while underground operations at Guadalupe and Independencia steadily accelerated, reaching a mining rate of approximately 2,400 and 1,000 tons per day, respectively, as of year-end. The Company is targeting a combined mining rate of 4,500 tons per day by year-end 2017
  • Silver equivalent1 production increased 40% quarter-over-quarter to 2.7 million ounces as a result of higher mining rates and improved recovery rates. As expected, full-year silver equivalent1 production declined 6% to 8.9 million as the mine transitioned from legacy Palmarejo operations to higher-grade underground operations at Guadalupe and Independencia
  • Fourth quarter adjusted CAS per average spot AgEqOz1 was $10.11 while full-year adjusted CAS per average spot AgEqOz1was $9.57, representing a year-over-year decrease of 19% as a result of higher grade production, lower input costs, and a more favorable exchange rate
  • Exploration expense increased in the second half of the year as drilling efforts to extend mine life accelerated
  • In July 2016, the 400,000 ounce minimum royalty obligation with Franco-Nevada under the original agreement was satisfied and the new, more favorable gold stream agreement became effective. The first sale under the new stream agreement occurred in the fourth quarter at a gold price of $800 per ounce
  • In 2017, Palmarejo is expected to produce 6.5 - 7.0 million ounces of silver and 110,000 - 120,000 ounces of gold, or 13.1 - 14.2 million silver equivalent1 ounces at CAS per AgEqOz1 of $10.00 - $10.50. Using a 69:1 spot silver to gold ratio, Palmarejo's 2017 CAS per spot AgEqOz1 is expected to be $9.25 - $9.75
  • Capital expenditures are expected to increase to $40 - $45 million in 2017 as a result of the ongoing transition to underground mining operations at Guadalupe and Independencia
                             

Rochester, Nevada

                             
(Dollars in millions, except per ounce amounts)   2016   4Q 2016   3Q 2016   2Q 2016   1Q 2016   2015   4Q 2015
Ore tons placed   19,555,998   3,878,487   4,901,039   6,402,013   4,374,459   16,414,302   4,411,590
Average silver grade (oz/t)   0.57   0.57   0.54   0.54   0.64   0.63   0.60
Average gold grade (oz/t)   0.003   0.002   0.003   0.003   0.004   0.003   0.003
Silver ounces produced (000's)   4,564   1,277   1,161   1,197   929   4,631   1,107
Gold ounces produced   50,751   14,231   12,120   13,940   10,460   52,588   11,564
Silver equivalent ounces produced1 (000's)   7,609   2,131   1,888   2,033   1,557   7,786   1,800
Silver ounces sold (000's)   4,584   1,205   1,163   1,137   1,079   4,900   1,125
Gold ounces sold   49,320   12,988   11,751   12,909   11,672   57,963   11,587
Silver equivalent ounces sold1 (000's)   7,543   1,984   1,868   1,912   1,779   8,378   1,821
Silver equivalent ounces sold1 (average spot) (000's)   8,183   2,128   1,963   2,106   2,009   9,188   1,993
Metal sales   $139.9   $36.2   $37.9   $35.8   $30.0   $143.9   $29.0
Costs applicable to sales   $89.7   $23.7   $21.8   $21.7   $22.5   $104.0   $22.8
Adjusted CAS per AgEqOz1   $11.86   $11.99   $11.56   $11.30   $12.61   $12.36   $12.37
Adjusted CAS per average spot AgEqOz1   $10.93   $11.16   $11.02   $10.24   $11.17   $11.28   $11.32
Exploration expense   $0.8   $0.4   $0.1   $0.2   $0.1   $1.3   $0.1
Cash flow from operating activities   $28.4   $7.6   $9.5   $9.2   $2.1   $32.1   $0.4
Sustaining capital expenditures   $7.8   $1.5   $1.2   $2.6   $2.5   $10.3   $5.3
Development capital expenditures   $8.6   $4.3   $2.2   $1.3   $0.8   $15.0   $5.5
Total capital expenditures   $16.4   $5.8   $3.4   $3.9   $3.3   $25.3   $10.8
Free cash flow1   $12.0   $1.8   $6.1   $5.3   $(1.2)   $6.8   $(10.4)
                             
  • Fourth quarter silver equivalent1 production increased 13% quarter-over-quarter to 2.1 million ounces due to improved Stage III leach pad performance resulting from strong ore placement rates throughout 2016. Full-year silver equivalent1 production was 7.6 million ounces
  • Tons placed of 19.6 million in 2016 was approximately 19% higher year-over-year and the highest since Rochester first began operating in 1986
  • Adjusted CAS per average spot AgEqOz1 increased slightly to $11.16 in the fourth quarter and decreased 3% to $10.93 for the full year
  • Full-year free cash flow1 was $12.0 million, representing an increase of $5.2 million, or 76%, over 2015. This was primarily driven by increased production, lower unit costs, and lower capital expenditures
  • Construction of the Stage IV leach pad expansion remains on-schedule and on-budget, with commissioning expected in the third quarter of 2017
  • Full-year 2017 production expected to be 4.2 - 4.7 million ounces of silver and 47,000 - 52,000 ounces of gold, or 7.0 - 7.8 million silver equivalent1 ounces at CAS per AgEqOz1 of $11.50 - $12.00. Using a 69:1 spot silver to gold ratio, Rochester's 2017 CAS per spot AgEqOz1 is expected to be $10.75 - $11.25
  • Capital expenditures are expected to increase to $30 - $35 million in 2017 due to continued construction of the Stage IV leach pad expansion
                             

Kensington, Alaska

                             
(Dollars in millions, except per ounce amounts)   2016   4Q 2016   3Q 2016   2Q 2016   1Q 2016   2015   4Q 2015
Tons milled   620,209   163,410   140,322   157,117   159,360   660,464   159,666
Average gold grade (oz/t)   0.21   0.22   0.20   0.22   0.21   0.20   0.22
Average recovery rate   94.7%   94.4%   94.8%   94.1%   95.8%   94.9%   96.0%
Gold ounces produced   124,331   33,688   26,459   32,210   31,974   126,266   33,713
Gold ounces sold   121,688   28,864   30,998   30,178   31,648   131,553   29,989
Metal sales   $146.6   $34.2   $40.2   $36.5   $35.7   $148.7   $31.7
Costs applicable to sales   $96.7   $23.0   $26.7   $22.6   $24.4   $105.6   $23.7
Adjusted CAS per AuOz1   $790   $801   $859   $740   $761   $798   $777
Exploration expense   $3.5   $1.3   $1.2   $1.0   $—   $2.6   $0.3
Cash flow from operating activities   $50.8   $11.4   $18.0   $7.7   $13.7   $37.7   $4.5
Sustaining capital expenditures   $22.8   $8.9   $5.2   $4.3   $4.4   $14.8   $5.5
Development capital expenditures   $14.0   $3.7   $3.4   $3.2   $3.7   $9.0   $4.0
Total capital expenditures   $36.8   $12.6   $8.6   $7.5   $8.1   $23.8   $9.5
Free cash flow1   $14.0   $(1.2)   $9.4   $0.2   $5.6   $13.9   $(5.0)
                             
  • Fourth quarter gold production was the highest of the year, increasing 27% quarter-over-quarter to 33,688 ounces due to higher tons milled and higher grades. Full-year production was near the high end of the Company's guidance range at 124,331 ounces of gold
  • Fourth quarter adjusted CAS per gold ounce (AuOz)1 decreased 7% quarter-over-quarter to $801 due to higher grades. Full-year adjusted CAS per AuOz1 was within guidance at $790 and represented a 1% decrease year-over-year
  • Despite a year-over-year $13.0 million increase in capital expenditures, free cash flow1 remained flat in 2016 at $14.0 million
  • 2017 production is expected to be 120,000 - 125,000 ounces of gold at CAS per AuOz1 of $800 - $850
  • Capital expenditures are expected to increase to over $40 million in 2017 primarily as a result of ongoing development of the Jualin deposit, where production is expected to begin late in the year
                             

Wharf, South Dakota

                             
(Dollars in millions, except per ounce amounts)   2016   4Q 2016   3Q 2016   2Q 2016   1Q 2016   2015   4Q 2015
Ore tons placed   4,268,105   1,178,803   1,199,008   915,631   974,663   3,600,279   1,147,130
Average silver grade (oz/t)   0.28   0.29   0.24   0.28   0.30   0.23   0.21
Average gold grade (oz/t)   0.032   0.027   0.033   0.037   0.031   0.030   0.032
Average plant recovery rate – Au   94.3%   98.9%   94.4%   88.5%   95.9%   89.5%   96.3%
Gold ounces produced   109,175   30,675   29,684   27,846   20,970   78,132   31,947
Silver ounces produced (000's)   105   32   25   35   13   56   18
Gold equivalent ounces produced1   110,927   31,202   30,106   28,433   21,186   79,061   32,231
Silver ounces sold (000's)   95   30   17   33   15   49   17
Gold ounces sold   108,042   29,698   29,230   26,242   22,872   73,148   31,737
Gold equivalent ounces sold1   109,620   30,204   29,508   26,786   23,122   73,965   32,014
Metal sales   $136.7   $35.5   $39.3   $34.0   $27.9   $84.1   $35.7
Costs applicable to sales   $66.4   $16.9   $19.7   $14.3   $15.5   $52.2   $17.8
Adjusted CAS per AuEqOz1   $575   $556   $559   $534   $667   $706   $556
Exploration expense   $—   $—   $—   $—   $—   $0.1   $0.1
Cash flow from operating activities   $62.4   $15.4   $21.1   $16.2   $9.7   $32.0   $18.1
Sustaining capital expenditures   $4.8   $1.3   $0.6   $1.5   $1.4   $3.2   $1.2
Development capital expenditures   $—   $—   $—   $—   $—   $—   $—
Total capital expenditures   $4.8   $1.3   $0.6   $1.5   $1.4   $3.2   $1.2
Free cash flow1   $57.6   $14.1   $20.5   $14.7   $8.3   $28.8   $16.9
                             
  • Gold production in the fourth quarter was 30,675 ounces, the strongest quarter of 2016. The concurrent decline in average gold grade for the period was anticipated due to seasonal mine sequencing
  • Full-year production of 109,175 ounces of gold exceeded the high-end of Company guidance by over 9,000 ounces and represented an increase of 40% compared to 2015. This was largely the result of two additional months of production, as well as improved grades and plant recovery rates
  • Fourth quarter adjusted CAS per AuEqOz1 was relatively flat quarter-over-quarter at $556, while full-year adjusted CAS per AuEqOz1 beat guidance, decreasing 19% to $575, primarily due to lower mining and leaching costs
  • Full-year free cash flow1 of $57.6 million brings total free cash flow to $86.4 million since the acquisition of Wharf in February 2015 for $99 million
  • Production in 2017 is expected to be 85,000 - 90,000 ounces of gold at CAS per AuEqOz1 of $775 - $825, both of which reflect the anticipated completion of the higher-grade Golden Reward deposit by mid-year
                             

San Bartolomé, Bolivia

                             
(Dollars in millions, except per ounce amounts)   2016   4Q 2016   3Q 2016   2Q 2016   1Q 2016   2015   4Q 2015
Tons milled   1,666,787   368,131   450,409   440,441   407,806   1,713,079   475,695
Average silver grade (oz/t)   3.69   3.96   3.43   3.79   3.64   3.75   3.84
Average recovery rate   88.8%   86.3%   88.7%   87.4%   93.1%   84.6%   84.9%
Silver ounces produced (000's)   5,469   1,259   1,370   1,458   1,382   5,436   1,550
Silver ounces sold (000's)   5,411   1,218   1,391   1,418   1,384   5,495   1,564
Metal sales   $93.9   $19.9   $27.5   $25.2   $21.3   $84.7   $22.4
Costs applicable to sales   $74.2   $17.3   $20.8   $18.6   $17.5   $75.8   $20.0
Adjusted CAS per AgOz1   $13.46   $13.97   $14.40   $12.97   $12.56   $13.63   $12.48
Exploration expense   $—   $—   $—   $—   $—   $0.1   $—
Cash flow from operating activities   $29.4   $4.1   $8.6   $11.2   $5.5   $26.1   $10.0
Sustaining capital expenditures   $6.6   $1.8   $3.0   $1.3   $0.5   $6.2   $2.5
Development capital expenditures   $—   $—   $—   $—   $—   $—   $—
Total capital expenditures   $6.6   $1.8   $3.0   $1.3   $0.5   $6.2   $2.5
Free cash flow1   $22.8   $2.3   $5.6   $9.9   $5.0   $19.9   $7.5
                             
  • Fourth quarter silver production decreased 8% quarter-over-quarter to 1.3 million ounces due to an ongoing water shortage in Bolivia resulting from nationwide drought conditions
  • Full-year silver production was relatively constant at 5.5 million ounces
  • Fourth quarter and full-year adjusted CAS per silver ounce (AgOz)1 decreased 3% quarter-over-quarter and 1% year-over-year, respectively, to $13.97 and $13.46. Fourth quarter CAS per AgOz1 benefited from higher grade ore while the decrease in full-year CAS per AgOz1 was driven by lower consumables costs
  • Cash flow from operating activities and free cash flow1 for the full year were $29.4 million and $22.8 million, respectively, representing year-over-year increases of 13% and 15%
  • The Company's 2017 production guidance is 5.4 - 5.9 million silver ounces at CAS per AgOz1 of $14.00 - $14.50
                             

Coeur Capital

                             
(Dollars in millions, except per ounce amounts)   2016   4Q 2016   3Q 2016   2Q 2016   1Q 2016   2015   4Q 2015
Tons milled   219,430   52,711   42,335   37,521   86,863   767,314   198,927
Average silver grade (oz/t)   2.48   2.09   2.28   1.66   3.17   1.87   2.05
Average recovery rate   45.6%   39.8%   58.2%   52.5%   41.9%   43.8%   42.1%
Silver ounces produced (000's)   248   44   56   33   115   629   171
Silver ounces sold (000's)   262   58   46   35   123   615   193
Metal sales   $4.1   $0.9   $0.8   $0.5   $1.9   $8.7   $2.4
Royalty revenue   $3.3   $(0.2)   $(0.1)   $1.8   $1.8   $6.9   $1.5
Costs applicable to sales (Endeavor silver stream)   $1.7   $—   $0.4   $0.3   $1.0   $3.5   $1.0
CAS per AgOz1   $6.56   $7.06   $8.10   $7.94   $5.35   $5.72   $5.50
Cash flow from operating activities   $0.2   $2.2   $0.4   $(3.2)   $0.8   $8.2   $0.8
Free cash flow1   $0.2   $2.2   $0.4   $(3.2)   $0.8   $8.2   $0.8
                             
  • Fourth quarter and full-year silver production from the Company's silver stream on the Endeavor mine in Australia decreased 21% quarter-over-quarter and 61% year-over-year, respectively, to 43,901 and 247,998 ounces, due to the operator's decision to reduce mining rates in response to lower lead and zinc prices
  • 2017 production is expected to be 300,000 - 400,000 ounces of silver due to an anticipated increase in production following recent improvements in zinc and lead prices
  • Royalty revenue decreased compared to 2015 primarily due to non-core asset sales during the year that totaled $23.8 million

Exploration

Fourth quarter expensed exploration was $5.3 million, bringing full-year expensed exploration to $12.9 million, an 11% year-over-year increase, due to expanded exploration drilling activities. Fourth quarter and full-year capitalized drilling were $2.5 million and $12.9 million, respectively. As of year-end, the Company had 17 drill rigs active across Palmarejo, Kensington, Rochester, La Preciosa, and two early-stage exploration properties and had completed over 400,896 feet (122,195 meters) of combined core and reverse circulation drilling throughout the year.

Highlights from Coeur’s expanded exploration program in 2016 include:

  • Increased both surface and underground drilling at Palmarejo, and specifically at the Guadalupe and Independencia mines and the Los Bancos and Nación-Dana deposits, with eight drill rigs active at year-end
  • Accelerated surface and underground exploration at Kensington with a focus on growth at Kensington Main as well as at Jualin, Raven, and several new veins discovered through surface sampling programs
  • Continued extension and infill of the East Rochester discovery as well as resource conversion drilling within the western portions of the main pit
  • Development of a new geologic model for Wharf, which is expected to set the stage for continued resource growth

In 2017, the expensed exploration budget has been nearly doubled to $23 - $25 million with a continued focus on resource growth. Another $11 - $13 million of capital is expected to be allocated to resource conversion. Priorities for 2017 include:

  • Increased step-out drilling at all of our mine sites, with the largest budget allocation to Palmarejo
  • Continued definition drilling at La Preciosa
  • Early-stage exploration in Mexico, USA, and Canada focused on developing a long-term pipeline of high-quality projects

Full-Year 2017 Outlook

Full-year 2017 guidance highlights are provided below. Production guidance remains unchanged from the guidance published January 5, 2017.

  • Expected silver equivalent1 production increase driven by ongoing acceleration of Palmarejo underground operations offset by lower expected production at Wharf
  • Higher expected CAS per AuEqOz1 at Wharf due to anticipated completion of mining of the higher-grade Golden Reward deposit, higher tons mined compared to 2016, and one-time plant maintenance expenses
  • Anticipated increase in capital expenditures driven by carryover from 2016, the Stage IV leach pad expansion at Rochester, and higher underground development levels at Kensington and Palmarejo
  • Higher exploration expense primarily due to step-out drilling at Palmarejo, definition drilling at La Preciosa, and early-stage exploration
             

2017 Production Outlook

             
(silver and silver equivalent ounces in thousands)   Silver   Gold   Silver Equivalent1
Palmarejo   6,500 - 7,000   110,000 - 120,000   13,100 - 14,200
Rochester   4,200 - 4,700   47,000 - 52,000   7,020 - 7,820
San Bartolomé   5,400 - 5,900     5,400 - 5,900
Endeavor   300 - 400     300 - 400
Kensington     120,000 - 125,000   7,200 - 7,500
Wharf     85,000 - 90,000   5,100 - 5,400
Total   16,400 - 18,000   362,000 - 387,000   38,120 - 41,220
             
           

2017 Cost Outlook

           
    2017 Guidance Based On     2016 Results3 Based On
(dollars in millions, except per ounce amounts)   60:1   69:1 Spot     60:1   Average Spot
CAS per AgEqOz1 – Palmarejo   $10.00 - $10.50   $9.25 - $9.75     $10.55   $9.57
CAS per AgEqOz1 – Rochester   $11.50 - $12.00   $10.75 - $11.25     $11.86   $10.93
CAS per AgOz1 – San Bartolomé   $14.00 - $14.50     $13.46
CAS per AuOz1 – Kensington   $800 - $850     $790
CAS per AuEqOz1 – Wharf   $775 - $825     $575
Capital Expenditures   $115 - $135     $101
General and Administrative Expenses   $28 - $32     $29
Exploration Expense   $23 - $25     $13
AISC per AgEqOz1   $15.75 - $16.25   $14.50 - $15.00     $15.88   $14.09
                   

Conference Call Information

Coeur will report its full operational and financial results for fourth quarter and full-year 2016 on February 8, 2017 after the New York Stock Exchange closes for trading. There will be a conference call on February 9, 2017 at 11:00 a.m. Eastern time.

       
Dial-In Numbers:     (855) 560-2581 (US)
       
      (855) 669-9657 (Canada)
       
      (412) 542-4166 (International)
       
Conference ID:     Coeur Mining
       

The conference call and presentation will also be webcast on the Company’s website www.coeur.com. Hosting the call will be Mitchell J. Krebs, President and Chief Executive Officer of Coeur, who will be joined by Peter C. Mitchell, Senior Vice President and Chief Financial Officer, Frank L. Hanagarne, Jr., Senior Vice President and Chief Operating Officer, Hans Rasmussen, Senior Vice President of Exploration, and other members of management. A replay of the call will be available through February 23, 2017.

       
Replay numbers:     (877) 344-7529 (US)
       
      (855) 669-9658 (Canada)
       
      (412) 317-0088 (International)
       
Conference ID:     100 98 890
       

About Coeur

Coeur Mining is a well-diversified, growing precious metals producer with five precious metals mines in the Americas employing approximately 2,000 people. Coeur produces from its wholly owned operations: the Palmarejo silver-gold complex in Mexico, the Rochester silver-gold mine in Nevada, the Kensington gold mine in Alaska, the Wharf gold mine in South Dakota, and the San Bartolomé silver mine in Bolivia. The Company also has a non-operating interest in the Endeavor mine in Australia. In addition, the Company owns the La Preciosa project in Mexico, a silver-gold exploration stage project. Coeur conducts ongoing exploration activities in Alaska, Nevada, South Dakota, and Mexico.

Cautionary Statement

This news release contains forward-looking statements within the meaning of securities legislation in the United States and Canada, including statements regarding interest expense, production, costs, capital expenditures, expenses, mining rates, development activity at Palmarejo and Kensington, expansion at Rochester, transitioning to a lower-cost, high-quality profitable precious metals producer, cash flow, mine lives, growth, operations at Kensington and Wharf, drilling, resource growth and conversion, development of a pipeline of future projects, and exploration efforts. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause Coeur's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the risk that anticipated production, cost and expense levels are not attained, the risks and hazards inherent in the mining business (including risks inherent in developing large-scale mining projects, environmental hazards, industrial accidents, weather or geologically related conditions), changes in the market prices of gold and silver and a sustained lower price environment, the uncertainties inherent in Coeur's production, exploratory and developmental activities, including risks relating to permitting and regulatory delays, ground conditions, grade variability, any future labor disputes or work stoppages (including those involving third parties), the uncertainties inherent in the estimation of gold and silver reserves and resources, changes that could result from Coeur's future acquisition of new mining properties or businesses, the absence of control over and reliance on third parties to operate mining operations in which Coeur or its subsidiaries hold royalty or streaming interests and risks related to these mining operations (including results of mining and exploration activities, environmental, economic and political risks of the jurisdiction in which the mining operations are located), the loss of access to any third-party smelter to whom Coeur markets silver and gold, the effects of environmental and other governmental regulations, the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries, the political risks and uncertainties associated with recent developments in Bolivia, Coeur's ability to raise additional financing necessary to conduct its business, make payments or refinance its debt, as well as other uncertainties and risk factors set out in filings made from time to time with the United States Securities and Exchange Commission, and the Canadian securities regulators, including, without limitation, Coeur's most recent report on Form 10-K. Actual results, developments and timetables could vary significantly from the estimates presented. Readers are cautioned not to put undue reliance on forward-looking statements. Coeur disclaims any intent or obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, Coeur undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of Coeur, its financial or operating results or its securities.

Christopher Pascoe, Coeur's Director, Technical Services and a qualified person under Canadian National Instrument 43-101, approved the scientific and technical information concerning Coeur's mineral projects in this news release. For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources, as well as data verification procedures and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors, Canadian investors should refer to the Technical Reports for each of Coeur's properties as filed on SEDAR at www.sedar.com.

Non-U.S. GAAP Measures

We supplement the reporting of our financial information determined under United States generally accepted accounting principles (U.S. GAAP) with certain non-U.S. GAAP financial measures, including EBITDA, adjusted EBITDA, net debt, total debt to LTM 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), all-in sustaining costs, and adjusted all-in sustaining costs. We believe that these adjusted measures provide meaningful information to assist management, investors and analysts in understanding our financial results and assessing our prospects for future performance. We believe these adjusted financial measures are important indicators of our recurring operations because they exclude items that may not be indicative of, or are unrelated to our core operating results, and provide a better baseline for analyzing trends in our underlying businesses. We believe EBITDA, adjusted EBITDA, net debt, total debt to LTM 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), all-in sustaining costs, and adjusted all-in sustaining costs are important measures in assessing the Company's overall financial performance. For additional explanation regarding our use of non-U.S. GAAP financial measures, please refer to our Form 10-K for the year ended December 31, 2016.

Notes

  1. EBITDA, adjusted EBITDA, net debt, total debt to LTM 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), 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.
  3. 2016 results reflect adjusted CAS and AISC. Please see reconciliation tables in the Appendix for additional information.
                             

Average Spot Prices

                             
    2016   4Q 2016   3Q 2016   2Q 2016   1Q 2016   2015   4Q 2015
Average Silver Spot Price Per Ounce   $ 17.14     $ 17.19     $ 19.61     $ 16.78     $ 14.85     $ 15.68     $ 14.77
Average Gold Spot Price Per Ounce   $ 1,251     $ 1,222     $ 1,335     $ 1,260     $ 1,183     $ 1,160     $ 1,106
Average Silver to Gold Spot Equivalence   73:1   71:1   68:1   75:1   80:1   74:1   75:1
                             
     
Coeur Mining, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
     
    Year ended December 31,
    2016   2015   2014
    In thousands, except share data
Revenue   $ 665,777     $ 646,086     $ 635,742  
COSTS AND EXPENSES            
Costs applicable to sales(1)   409,541     479,654     477,945  
Amortization   123,161     143,751     162,436  
General and administrative   29,376     32,834     40,845  
Exploration   12,930     11,647     21,740  
Write-downs   4,446     313,337     1,472,721  
Pre-development, reclamation, and other   17,219     17,793     26,037  
Total costs and expenses   596,673     999,016     2,201,724  
OTHER INCOME (EXPENSE), NET            
Gain (loss) on debt extinguishment   (21,365 )   15,916      
Fair value adjustments, net   (11,581 )   5,202     3,618  
Interest expense, net of capitalized interest   (36,920 )   (45,703 )   (47,546 )
Other, net   1,875     (15,931 )   (5,218 )
Total other income (expense), net   (67,991 )   (40,516 )   (49,146 )
Income (loss) before income and mining taxes   1,113     (393,446 )   (1,615,128 )
Income and mining tax (expense) benefit   54,239     26,263     428,254  
NET INCOME (LOSS)   $ 55,352     $ (367,183 )   $ (1,186,874 )
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:            
Unrealized gain (loss) on equity securities, net of tax of $(767) and $1,446 for the years ended December 31, 2016, and 2014, respectively   3,222     (4,154 )   (2,290 )
Reclassification adjustments for impairment of equity securities, net of tax of $(2,552) for the year ended December 31, 2014   703     2,346     4,042  
Reclassification adjustments for realized (gain) loss on sale of equity securities, net of tax of $(219) for the year ended December 31, 2014   (2,691 )   894     346  
Other comprehensive income (loss)   1,234     (914 )   2,098  
COMPREHENSIVE INCOME (LOSS)   $ 56,586     $ (368,097 )   $ (1,184,776 )
             
NET INCOME (LOSS) PER SHARE            
Basic   $ 0.35     $ (2.83 )   $ (11.59 )
             
Diluted   $ 0.34     $ (2.83 )   $ (11.59 )
     
Coeur Mining, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
     
    Year ended December 31,
    2016   2015   2014
    In thousands
CASH FLOWS FROM OPERATING ACTIVITIES:            
Net income (loss)   $ 55,352     (367,183 )   (1,186,874 )
Adjustments:            
Amortization   123,161     143,751     162,436  
Accretion   10,248     14,149     16,246  
Deferred income taxes   (71,350 )   (40,838 )   (448,905 )
Loss on termination of revolving credit facility           3,035  
(Gain) Loss on extinguishment of debt   21,365     (15,916 )    
Fair value adjustments, net   11,581     (5,202 )   (3,618 )
Stock-based compensation   9,715     9,272     9,288  
Impairment of equity securities   703     2,346     6,593  
Write-downs   4,446     313,337     1,472,721  
Other   (1,067 )   16,303     124  
Changes in operating assets and liabilities:            
Receivables   9,011     17,560     (11,611 )
Prepaid expenses and other current assets   (826 )   (3,063 )   5,635  
Inventory and ore on leach pads   (35,591 )   19,573     12,971  
Accounts payable and accrued liabilities   (10,931 )   9,453     15,507  
CASH PROVIDED BY OPERATING ACTIVITIES   125,817     113,542     53,548  
CASH FLOWS FROM INVESTING ACTIVITIES:            
Capital expenditures   (101,013 )   (95,193 )   (64,244 )
Acquisitions, net   (1,417 )   (110,846 )   (21,329 )
Proceeds from the sale of assets   16,296     607     329  
Purchase of investments   (178 )   (1,880 )   (50,513 )
Sales and maturities of investments   7,077     605     54,344  
Other   (4,208 )   (4,586 )   (321 )
CASH USED IN INVESTING ACTIVITIES   (83,443 )   (211,293 )   (81,734 )
CASH FLOWS FROM FINANCING ACTIVITIES:            
Issuance of common stock   269,556          
Issuance of notes and bank borrowings       153,500     167,784  
Payments on debt, capital leases, and associated costs   (322,801 )   (84,715 )   (25,902 )
Gold production royalty payments   (27,155 )   (39,235 )   (48,395 )
Other   172     (542 )   (509 )
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES   (80,228 )   29,008     92,978  
Effect of exchange rate changes on cash and cash equivalents   (678 )   (1,404 )   (621 )
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   (38,532 )   (70,147 )   64,171  
Cash and cash equivalents at beginning of period   200,714     270,861     206,690  
Cash and cash equivalents at end of period   $ 162,182     $ 200,714     $ 270,861  
         
Coeur Mining, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
         
    December 31, 2016   December 31, 2015
ASSETS   In thousands, except share data
CURRENT ASSETS        
Cash and cash equivalents   $ 162,182     $ 200,714  
Receivables   60,431     85,992  
Inventory   106,026     81,711  
Ore on leach pads   64,167     67,329  
Prepaid expenses and other   17,981     10,942  
    410,787     446,688  
NON-CURRENT ASSETS        
Property, plant and equipment, net   216,796     195,999  
Mining properties, net   558,455     589,219  
Ore on leach pads   67,231     44,582  
Restricted assets   17,597     11,633  
Equity securities   4,488     2,766  
Receivables   30,951     24,768  
Deferred tax assets   191     1,942  
Other   12,413     14,892  
TOTAL ASSETS   $ 1,318,909     $ 1,332,489  
LIABILITIES AND STOCKHOLDERS’ EQUITY        
CURRENT LIABILITIES        
Accounts payable   $ 53,335     $ 52,153  
Accrued liabilities and other   42,743     50,532  
Debt   12,039     10,431  
Royalty obligations   4,995     24,893  
Reclamation   3,522     2,071  
    116,634     140,080  
NON-CURRENT LIABILITIES        
Debt   198,857     479,979  
Royalty obligations   4,292     4,864  
Reclamation   95,804     83,197  
Deferred tax liabilities   74,798     147,132  
Other long-term liabilities   60,037     55,761  
    433,788     770,933  
STOCKHOLDERS’ EQUITY        
Common stock, par value $0.01 per share; authorized 300,000,000 shares, issued and outstanding 180,933,287 at December 31, 2016 and 151,339,136 at December 31, 2015   1,809     1,513  
Additional paid-in capital   3,314,590     3,024,461  
Accumulated other comprehensive income (loss)   (2,488 )   (3,722 )
Accumulated deficit   (2,545,424 )   (2,600,776 )
    768,487     421,476  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 1,318,909     $ 1,332,489  
                             

Adjusted EBITDA Reconciliation

                             
(Dollars in thousands except per share amounts)   2016   4Q 2016   3Q 2016   2Q 2016   1Q 2016   2015   4Q 2015
Net income (loss)   $ 55,352     $ (8,306 )   $ 69,557     $ 14,497     $ (20,396 )   $ (367,183 )   $ (303,000 )
Interest expense, net of capitalized interest   36,920     6,857     8,068     10,875     11,120     45,703     11,758  
Income tax provision (benefit)   (54,239 )   (1,122 )   (54,455 )   (768 )   2,106     (26,263 )   (17,811 )
Amortization   123,161     29,929     27,763     37,505     27,964     143,751     36,190  
EBITDA   161,194     27,358     50,933     62,109     20,794     (203,992 )   (272,863 )
Fair value adjustments, net   11,581     (1,654 )   961     3,579     8,695     (5,202 )   (1,546 )
Impairment of equity securities   703     683         20         2,346     317  
Foreign exchange loss   10,720     3,435     1,466     5,655     164     15,769     2,597  
(Gain) loss on sale of assets   (11,334 )   339     (7,462 )   (3,126 )   (1,085 )   352     (168 )
(Gain) loss on debt extinguishment   21,365     11,325     10,040             (15,916 )