Item 1.
Financial Statements
COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
2017
|
|
2016
|
|
Notes
|
In thousands, except share data
|
Revenue
|
3
|
$
|
206,138
|
|
|
$
|
148,387
|
|
COSTS AND EXPENSES
|
|
|
|
|
Costs applicable to sales
(1)
|
3
|
132,712
|
|
|
101,555
|
|
Amortization
|
|
40,104
|
|
|
27,964
|
|
General and administrative
|
|
10,133
|
|
|
8,276
|
|
Exploration
|
|
5,252
|
|
|
1,731
|
|
Write-downs
|
|
—
|
|
|
4,446
|
|
Pre-development, reclamation, and other
|
|
4,581
|
|
|
4,204
|
|
Total costs and expenses
|
|
192,782
|
|
|
148,176
|
|
OTHER INCOME (EXPENSE), NET
|
|
|
|
|
Fair value adjustments, net
|
10
|
(1,200
|
)
|
|
(8,695
|
)
|
Interest expense, net of capitalized interest
|
17
|
(3,586
|
)
|
|
(11,120
|
)
|
Other, net
|
7
|
21,139
|
|
|
1,314
|
|
Total other income (expense), net
|
|
16,353
|
|
|
(18,501
|
)
|
Income (loss) before income and mining taxes
|
|
29,709
|
|
|
(18,290
|
)
|
Income and mining tax (expense) benefit
|
8
|
(11,046
|
)
|
|
(2,106
|
)
|
NET INCOME (LOSS)
|
|
$
|
18,663
|
|
|
$
|
(20,396
|
)
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
|
|
|
|
|
Unrealized gain (loss) on equity securities, net of tax of ($1,101) for the three months ended March 31, 2016
|
|
(2,182
|
)
|
|
1,043
|
|
Reclassification adjustments for impairment of equity securities
|
|
121
|
|
|
—
|
|
Reclassification adjustments for realized (gain) loss on sale of equity securities
|
|
1,471
|
|
|
588
|
|
Other comprehensive income (loss)
|
|
(590
|
)
|
|
1,631
|
|
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
18,073
|
|
|
$
|
(18,765
|
)
|
|
|
|
|
|
NET INCOME (LOSS) PER SHARE
|
9
|
|
|
|
Basic
|
|
$
|
0.10
|
|
|
$
|
(0.14
|
)
|
|
|
|
|
|
Diluted
|
|
$
|
0.10
|
|
|
$
|
(0.14
|
)
|
(1) Excludes amortization.
The accompanying notes are an integral part of these condensed consolidated financial statements.
COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
2017
|
|
2016
|
|
Notes
|
In thousands
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
Net income (loss)
|
|
$
|
18,663
|
|
|
(20,396
|
)
|
Adjustments:
|
|
|
|
|
Amortization
|
|
40,104
|
|
|
27,964
|
|
Accretion
|
|
2,514
|
|
|
3,169
|
|
Deferred income taxes
|
|
1,375
|
|
|
(2,105
|
)
|
Fair value adjustments, net
|
10
|
1,200
|
|
|
8,695
|
|
Stock-based compensation
|
5
|
3,307
|
|
|
2,915
|
|
Gain on sale of the Joaquin project
|
|
(21,138
|
)
|
|
—
|
|
Write-downs
|
|
—
|
|
|
4,446
|
|
Other
|
|
(2,198
|
)
|
|
(1,435
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
Receivables
|
|
13,106
|
|
|
3,481
|
|
Prepaid expenses and other current assets
|
|
(4,299
|
)
|
|
1,279
|
|
Inventory and ore on leach pads
|
|
14,292
|
|
|
(7,822
|
)
|
Accounts payable and accrued liabilities
|
|
(11,655
|
)
|
|
(13,574
|
)
|
CASH PROVIDED BY OPERATING ACTIVITIES
|
|
55,271
|
|
|
6,617
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
Capital expenditures
|
|
(23,979
|
)
|
|
(22,172
|
)
|
Proceeds from the sale of assets
|
|
15,019
|
|
|
4,009
|
|
Purchase of investments
|
|
(1,016
|
)
|
|
(7
|
)
|
Sale of investments
|
|
10,020
|
|
|
997
|
|
Other
|
|
(1,546
|
)
|
|
(1,473
|
)
|
CASH USED IN INVESTING ACTIVITIES
|
|
(1,502
|
)
|
|
(18,646
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
Payments on debt, capital leases, and associated costs
|
|
(3,226
|
)
|
|
(5,971
|
)
|
Gold production royalty payments
|
|
—
|
|
|
(9,131
|
)
|
Other
|
|
(3,247
|
)
|
|
(280
|
)
|
CASH USED IN FINANCING ACTIVITIES
|
|
(6,473
|
)
|
|
(15,382
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
555
|
|
|
86
|
|
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
47,851
|
|
|
(27,325
|
)
|
Cash and cash equivalents at beginning of period
|
|
162,182
|
|
|
200,714
|
|
Cash and cash equivalents at end of period
|
|
$
|
210,033
|
|
|
$
|
173,389
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017 (Unaudited)
|
|
December 31, 2016
|
ASSETS
|
Notes
|
In thousands, except share data
|
CURRENT ASSETS
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
210,033
|
|
|
$
|
162,182
|
|
Receivables
|
13
|
67,064
|
|
|
60,431
|
|
Inventory
|
14
|
73,760
|
|
|
106,026
|
|
Ore on leach pads
|
14
|
66,585
|
|
|
64,167
|
|
Prepaid expenses and other
|
|
22,450
|
|
|
17,981
|
|
|
|
439,892
|
|
|
410,787
|
|
NON-CURRENT ASSETS
|
|
|
|
|
Property, plant and equipment, net
|
15
|
222,617
|
|
|
216,796
|
|
Mining properties, net
|
16
|
549,207
|
|
|
558,455
|
|
Ore on leach pads
|
14
|
72,461
|
|
|
67,231
|
|
Restricted assets
|
12
|
18,954
|
|
|
17,597
|
|
Equity securities
|
12
|
3,796
|
|
|
4,488
|
|
Receivables
|
13
|
15,558
|
|
|
30,951
|
|
Other
|
|
15,265
|
|
|
12,604
|
|
TOTAL ASSETS
|
|
$
|
1,337,750
|
|
|
$
|
1,318,909
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
Accounts payable
|
|
$
|
47,370
|
|
|
$
|
53,335
|
|
Accrued liabilities and other
|
|
37,999
|
|
|
42,743
|
|
Debt
|
17
|
13,451
|
|
|
12,039
|
|
Royalty obligations
|
10
|
4,961
|
|
|
4,995
|
|
Reclamation
|
4
|
3,604
|
|
|
3,522
|
|
|
|
107,385
|
|
|
116,634
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
Debt
|
17
|
205,625
|
|
|
198,857
|
|
Royalty obligations
|
10
|
4,316
|
|
|
4,292
|
|
Reclamation
|
4
|
97,595
|
|
|
95,804
|
|
Deferred tax liabilities
|
|
76,363
|
|
|
74,798
|
|
Other long-term liabilities
|
|
59,846
|
|
|
60,037
|
|
|
|
443,745
|
|
|
433,788
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
Common stock, par value $0.01 per share; authorized 300,000,000 shares, issued and outstanding 181,492,911 at March 31, 2017 and 180,933,287 at December 31, 2016
|
|
1,815
|
|
|
1,809
|
|
Additional paid-in capital
|
|
3,314,644
|
|
|
3,314,590
|
|
Accumulated other comprehensive income (loss)
|
|
(3,078
|
)
|
|
(2,488
|
)
|
Accumulated deficit
|
|
(2,526,761
|
)
|
|
(2,545,424
|
)
|
|
|
786,620
|
|
|
768,487
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
1,337,750
|
|
|
$
|
1,318,909
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
Common
Stock
Shares
|
|
Common
Stock Par
Value
|
|
Additional
Paid-In Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
Balances at December 31, 2016
|
180,933
|
|
|
$
|
1,809
|
|
|
$
|
3,314,590
|
|
|
$
|
(2,545,424
|
)
|
|
$
|
(2,488
|
)
|
|
$
|
768,487
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
18,663
|
|
|
—
|
|
|
18,663
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(590
|
)
|
|
(590
|
)
|
Common stock issued under stock-based compensation plans, net
|
560
|
|
|
6
|
|
|
54
|
|
|
—
|
|
|
—
|
|
|
60
|
|
Balances at March 31, 2017 (Unaudited)
|
181,493
|
|
|
$
|
1,815
|
|
|
$
|
3,314,644
|
|
|
$
|
(2,526,761
|
)
|
|
$
|
(3,078
|
)
|
|
$
|
786,620
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 1 - BASIS OF PRESENTATION
The interim condensed consolidated financial statements of Coeur Mining, Inc. and its subsidiaries (collectively, “Coeur” or the “Company”) are unaudited. In the opinion of management, all adjustments and disclosures necessary for the fair presentation of these interim statements have been included. The results reported in these interim statements may not be indicative of the results which will be reported for the year ending December 31, 2017. The condensed consolidated December 31, 2016 balance sheet data was derived from audited consolidated financial statements. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 10-K”).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recent Accounting Standards
In January 2017, the FASB issued ASU 2017-01, “
Business Combinations (Topic 805) - Clarifying the Definition of a Business,
” which clarifies the definition of a business to assist entities in the evaluation of acquisitions and disposals of assets or businesses. These changes become effective for the Company’s fiscal year beginning January 1, 2018. The Company is currently evaluating the potential impact of implementing these changes on the Company’s consolidated financial position, results of operations, and cash flows.
In November 2016, the FASB issued ASU 2016-18, “
Statement of Cash Flows (Topic 230) - Restricted Cash,
” which will require entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. These changes become effective for the Company’s fiscal year beginning January 1, 2018. The Company is currently evaluating the potential impact of implementing these changes on the Company’s consolidated financial position, results of operations, and cash flows.
In August 2016, the FASB issued ASU 2016-15, “
Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments,
” which provides guidance on presentation and classification of certain cash receipts and payments in the statement of cash flows. These changes become effective for the Company’s fiscal year beginning January 1, 2018. The Company is currently evaluating this standard and does not expect this ASU to materially impact the Company’s consolidated net income, financial position or cash flows.
In March 2016, the FASB issued ASU 2016-09, “
Improvements to Employee Share-Based Payment Accounting,
” which amends several aspects of the accounting for share-based payment transaction, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. These changes became effective for the Company’s fiscal year beginning January 1, 2017, and the Company’s adoption had no impact on the Company’s consolidated financial position, results of operations, and cash flows.
In February 2016, the FASB issued ASU 2016-02, “
Leases,
” which will require lessees to recognize assets and liabilities for the rights and obligations created by most leases on the balance sheet. These changes become effective for the Company’s fiscal year beginning January 1, 2019. Modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, is required with an option to use certain transition relief. The Company is currently evaluating the potential impact of implementing these changes on the Company’s consolidated financial position, results of operations, and cash flows.
In May 2014, the FASB issued ASU 2014-09, “
Revenue from Contracts with Customers
”
,
which has subsequently been amended several times. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. These changes become effective for the Company’s fiscal year beginning January 1, 2018. The Company has substantially completed its analysis of the new standard and reviewed potential impacts from timing of when control is transferred to customers, variable consideration on concentrate sales and classification of refining fees. The Company does not expect this ASU to materially impact the Company’s consolidated net income, financial position or cash flows.
In July 2015, the FASB issued ASU 2015-11, “
Simplifying the Measurement of Inventory,
”
which provides a revised, simpler measurement for inventory to be measured at the lower of cost and net realizable value. These changes become effective for the Company’s fiscal year beginning January 1, 2018. The Company is currently evaluating the potential impact of implementing these changes on the Company’s consolidated financial position, results of operations, and cash flows.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 3 – SEGMENT REPORTING
The Company’s operating segments include the Palmarejo complex, Rochester, Kensington, Wharf, and San Bartolomé mines. All operating segments are engaged in the discovery, mining, and production of gold and/or silver. Other includes the Endeavor silver stream, La Preciosa project, other royalties and mineral interests, strategic equity investments, corporate office, elimination of intersegment transactions, and other items necessary to reconcile to consolidated amounts. The Company eliminated Coeur Capital as a standalone reportable segment in the first quarter of 2017 and has classified the operating performance, segment assets, and capital expenditures of the Endeavor silver stream and other remaining non-core assets in Other. All prior period amounts have been adjusted to conform to the current presentation.
Financial information relating to the Company’s segments is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2017
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
San Bartolomé
|
|
Other
|
|
Total
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal sales
|
$
|
77,704
|
|
|
$
|
38,979
|
|
|
$
|
37,964
|
|
|
$
|
30,251
|
|
|
$
|
20,584
|
|
|
$
|
656
|
|
|
$
|
206,138
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
(1)
|
43,001
|
|
|
26,439
|
|
|
28,443
|
|
|
16,320
|
|
|
18,222
|
|
|
287
|
|
|
132,712
|
|
Amortization
|
20,150
|
|
|
5,816
|
|
|
9,178
|
|
|
3,111
|
|
|
1,411
|
|
|
438
|
|
|
40,104
|
|
Exploration
|
1,631
|
|
|
144
|
|
|
839
|
|
|
—
|
|
|
—
|
|
|
2,638
|
|
|
5,252
|
|
Other operating expenses
|
301
|
|
|
810
|
|
|
345
|
|
|
619
|
|
|
752
|
|
|
11,887
|
|
|
14,714
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustments, net
|
—
|
|
|
(1,200
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,200
|
)
|
Interest expense, net
|
(125
|
)
|
|
(117
|
)
|
|
(40
|
)
|
|
(19
|
)
|
|
(7
|
)
|
|
(3,278
|
)
|
|
(3,586
|
)
|
Other, net
|
1,794
|
|
|
(32
|
)
|
|
(808
|
)
|
|
89
|
|
|
279
|
|
|
19,817
|
|
|
21,139
|
|
Income and mining tax (expense) benefit
|
(12,245
|
)
|
|
(498
|
)
|
|
—
|
|
|
(957
|
)
|
|
(31
|
)
|
|
2,685
|
|
|
(11,046
|
)
|
Net income (loss)
|
$
|
2,045
|
|
|
$
|
3,923
|
|
|
$
|
(1,689
|
)
|
|
$
|
9,314
|
|
|
$
|
440
|
|
|
$
|
4,630
|
|
|
$
|
18,663
|
|
Segment assets
(2)
|
$
|
401,623
|
|
|
$
|
227,526
|
|
|
$
|
204,987
|
|
|
$
|
104,673
|
|
|
$
|
68,412
|
|
|
$
|
84,402
|
|
|
$
|
1,091,623
|
|
Capital expenditures
|
$
|
6,230
|
|
|
$
|
10,568
|
|
|
$
|
5,521
|
|
|
$
|
887
|
|
|
$
|
388
|
|
|
$
|
385
|
|
|
$
|
23,979
|
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2016
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
San Bartolomé
|
|
Other
|
|
Total
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal sales
|
$
|
29,813
|
|
|
$
|
29,982
|
|
|
$
|
35,743
|
|
|
$
|
27,929
|
|
|
$
|
21,278
|
|
|
$
|
1,891
|
|
|
$
|
146,636
|
|
Royalties
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,751
|
|
|
1,751
|
|
|
29,813
|
|
|
29,982
|
|
|
35,743
|
|
|
27,929
|
|
|
21,278
|
|
|
3,642
|
|
|
148,387
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
(1)
|
21,038
|
|
|
22,485
|
|
|
24,418
|
|
|
15,461
|
|
|
17,497
|
|
|
656
|
|
|
101,555
|
|
Amortization
|
7,289
|
|
|
5,313
|
|
|
8,349
|
|
|
4,051
|
|
|
1,754
|
|
|
1,208
|
|
|
27,964
|
|
Exploration
|
801
|
|
|
109
|
|
|
(47
|
)
|
|
—
|
|
|
—
|
|
|
868
|
|
|
1,731
|
|
Write-downs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,446
|
|
|
4,446
|
|
Other operating expenses
|
315
|
|
|
681
|
|
|
252
|
|
|
493
|
|
|
291
|
|
|
10,448
|
|
|
12,480
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustments, net
|
(4,864
|
)
|
|
(2,249
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,582
|
)
|
|
(8,695
|
)
|
Interest expense, net
|
(734
|
)
|
|
(171
|
)
|
|
(43
|
)
|
|
—
|
|
|
(3
|
)
|
|
(10,169
|
)
|
|
(11,120
|
)
|
Other, net
|
(1,235
|
)
|
|
3
|
|
|
(20
|
)
|
|
10
|
|
|
315
|
|
|
2,241
|
|
|
1,314
|
|
Income and mining tax (expense) benefit
|
98
|
|
|
(423
|
)
|
|
—
|
|
|
116
|
|
|
(1,571
|
)
|
|
(326
|
)
|
|
(2,106
|
)
|
Net income (loss)
|
$
|
(6,365
|
)
|
|
$
|
(1,446
|
)
|
|
$
|
2,708
|
|
|
$
|
8,050
|
|
|
$
|
477
|
|
|
$
|
(23,820
|
)
|
|
$
|
(20,396
|
)
|
Segment assets
(2)
|
$
|
422,086
|
|
|
$
|
209,692
|
|
|
$
|
192,805
|
|
|
$
|
113,383
|
|
|
$
|
87,750
|
|
|
$
|
92,224
|
|
|
$
|
1,117,940
|
|
Capital expenditures
|
$
|
8,815
|
|
|
$
|
3,289
|
|
|
$
|
8,090
|
|
|
$
|
1,410
|
|
|
$
|
521
|
|
|
$
|
47
|
|
|
$
|
22,172
|
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
Assets
|
March 31, 2017
|
|
December 31, 2016
|
Total assets for reportable segments
|
$
|
1,091,623
|
|
|
$
|
1,122,038
|
|
Cash and cash equivalents
|
210,033
|
|
|
162,182
|
|
Other assets
|
36,094
|
|
|
34,689
|
|
Total consolidated assets
|
$
|
1,337,750
|
|
|
$
|
1,318,909
|
|
Geographic Information
|
|
|
|
|
|
|
|
|
Long-Lived Assets
|
March 31, 2017
|
|
December 31, 2016
|
Mexico
|
$
|
376,890
|
|
|
$
|
397,697
|
|
United States
|
355,736
|
|
|
338,897
|
|
Bolivia
|
32,422
|
|
|
31,539
|
|
Australia
|
2,871
|
|
|
2,983
|
|
Argentina
|
227
|
|
|
10,228
|
|
Other
|
5,601
|
|
|
5,564
|
|
Total
|
$
|
773,747
|
|
|
$
|
786,908
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
Three months ended March 31,
|
2017
|
|
2016
|
United States
|
$
|
107,194
|
|
|
$
|
93,654
|
|
Mexico
|
77,704
|
|
|
30,522
|
|
Bolivia
|
20,584
|
|
|
21,278
|
|
Australia
|
656
|
|
|
1,891
|
|
Other
|
—
|
|
|
1,042
|
|
Total
|
$
|
206,138
|
|
|
$
|
148,387
|
|
NOTE 4 – RECLAMATION
Reclamation and mine closure costs are based principally on legal and regulatory requirements. Management estimates costs associated with reclamation of mining properties. On an ongoing basis, management evaluates its estimates and assumptions, and future expenditures could differ from current estimates.
Changes to the Company’s asset retirement obligations for operating sites are as follows:
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
In thousands
|
2017
|
|
2016
|
Asset retirement obligation - Beginning
|
$
|
97,380
|
|
|
$
|
82,072
|
|
Accretion
|
2,338
|
|
|
1,960
|
|
Additions and changes in estimates
|
—
|
|
|
251
|
|
Settlements
|
(478
|
)
|
|
(309
|
)
|
Asset retirement obligation - Ending
|
$
|
99,240
|
|
|
$
|
83,974
|
|
The Company has accrued
$2.0 million
and
$1.9 million
at
March 31, 2017
and
December 31, 2016
, respectively, for reclamation liabilities related to former mining activities, which are included in
Reclamation.
NOTE 5 – STOCK-BASED COMPENSATION
The Company has stock incentive plans for executives and eligible employees. Stock awards include performance shares, restricted stock and stock options. Stock-based compensation expense for the
three months ended March 31, 2017 and 2016
was
$3.3 million
and
$2.9 million
, respectively. At
March 31, 2017
, there was
$12.2 million
of unrecognized stock-based compensation cost which is expected to be recognized over a weighted-average remaining vesting period of
1.8
years.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
The following table summarizes the grants awarded during the
three months ended March 31, 2017
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant date
|
|
Restricted
stock
|
|
Grant date fair
value of
restricted stock
|
|
Stock options
|
|
Grant date
fair value of
stock
options
|
|
Performance
shares
|
|
Grant date fair
value of
performance
shares
|
January 18, 2017
|
|
236,581
|
|
|
$
|
11.47
|
|
|
—
|
|
|
$
|
—
|
|
|
316,213
|
|
|
$
|
11.58
|
|
March 7, 2017
|
|
539,858
|
|
|
$
|
7.60
|
|
|
14,820
|
|
|
$
|
3.91
|
|
|
—
|
|
|
$
|
—
|
|
The following options and stock appreciation rights were exercisable during the
three months ended March 31, 2017
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Award Type
|
|
Number of
Exercised Units
|
|
Weighted Average
Exercised Price
|
|
Number of Exercisable Units
|
|
Weighted Average
Exercisable Price
|
Stock options
|
|
—
|
|
|
$
|
—
|
|
|
425,850
|
|
|
$
|
14.29
|
|
Stock appreciation rights
|
|
—
|
|
|
$
|
—
|
|
|
42,152
|
|
|
$
|
14.14
|
|
NOTE 6 – RETIREMENT SAVINGS PLAN
The Company has a 401(k) retirement savings plan that covers all eligible U.S. employees. Eligible employees may elect to contribute up to
75%
of base salary, subject to ERISA limitations. The Company generally makes matching contributions equal to
100%
of the employee’s contribution up to
4%
of the employee’s salary. The Company may also provide an additional contribution based on an eligible employee’s salary. Total plan expenses recognized for the
three months ended March 31, 2017 and 2016
were
$2.1 million
and
$1.0 million
, respectively, due to timing of Company contributions. In addition, the Company has a deferred compensation plan for employees whose benefits under the 401(k) plan are limited by federal regulations.
NOTE 7 - OTHER, NET
Other, net
consists of the following:
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
In thousands
|
2017
|
|
2016
|
Foreign exchange gain (loss)
|
$
|
1,349
|
|
|
$
|
(164
|
)
|
Gain (loss) on sale of assets and investments
|
(2,066
|
)
|
|
1,085
|
|
Gain on sale of the Joaquin project
|
21,138
|
|
|
—
|
|
Impairment of equity securities
|
(121
|
)
|
|
—
|
|
Other
|
839
|
|
|
393
|
|
Other, net
|
$
|
21,139
|
|
|
$
|
1,314
|
|
NOTE 8 - INCOME AND MINING TAXES
The following table summarizes the components of
Income and mining tax (expense) benefit
for the
three months ended March 31, 2017 and 2016
by significant jurisdiction:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
2017
|
|
2016
|
In thousands
|
Income (loss) before tax
|
Tax (expense) benefit
|
|
Income (loss) before tax
|
Tax (expense) benefit
|
United States
|
$
|
20,714
|
|
$
|
(1,964
|
)
|
|
$
|
(9,361
|
)
|
$
|
(532
|
)
|
Argentina
|
(328
|
)
|
1,124
|
|
|
(1,015
|
)
|
1,543
|
|
Mexico
|
8,650
|
|
(9,923
|
)
|
|
(7,509
|
)
|
17
|
|
Bolivia
|
471
|
|
(31
|
)
|
|
2,047
|
|
(1,570
|
)
|
Other jurisdictions
|
202
|
|
(252
|
)
|
|
(2,452
|
)
|
(1,564
|
)
|
|
$
|
29,709
|
|
$
|
(11,046
|
)
|
|
$
|
(18,290
|
)
|
$
|
(2,106
|
)
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
The Company’s effective tax rate is impacted by recurring and nonrecurring items. These items include foreign exchange rates on deferred tax balances, uncertain tax positions, and the full valuation allowance on the deferred tax assets relating to losses in the United States and certain foreign jurisdictions. During the first quarter of 2017, foreign exchange increased income and mining tax expense by
$5.6 million
, predominately due to the strength of the Mexican peso. Additionally, the Company recognized
$1.8 million
income and mining tax expense from the sale of the Joaquin project. Also during the first quarter, favorable operating results at Palmarejo contributed to higher income and mining tax expense. The Company’s consolidated effective income and mining tax rate is a function of the combined effective tax rates and foreign exchange rates in the jurisdictions in which it operates. Variations in the jurisdictional mix of income and loss and foreign exchange rates result in significant fluctuations in our consolidated effective tax rate.
A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company will ultimately be more likely than not able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of factors that impact the Company’s ability to realize its deferred tax assets. For additional information, please see the sections titled “Risk Factors” set forth in the 2016 10-K.
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The statute of limitations remains open from 2012 forward for the U.S. federal jurisdiction and from 2008 forward for certain other foreign jurisdictions. As a result of statutes of limitation that will begin to expire within the next 12 months in various jurisdictions and possible settlements of audit-related issues with taxing authorities in various jurisdictions with respect to which none of the issues are individually significant, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits will decrease between
$2.5 million
and
$3.5 million
in the next 12 months.
At
March 31, 2017
and December 31, 2016, the Company had
$18.7 million
and
$19.6 million
of total gross unrecognized tax benefits, respectively. If recognized, these unrecognized tax benefits would positively impact the Company’s effective income tax rate. The Company’s continuing practice is to recognize potential interest and/or penalties related to unrecognized tax benefits as part of its income tax expense. At
March 31, 2017
and December 31, 2016, the amount of accrued income-tax-related interest and penalties was
$8.7 million
and
$8.7 million
, respectively.
NOTE 9 – NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.
For the
three months ended March 31, 2017 and 2016
,
1,368,685
and
3,321,424
of common stock equivalents, respectively, related to equity-based awards were not included in the diluted per share calculation as the shares would be antidilutive.
The
3.25%
Convertible Senior Notes (“Convertible Notes”) were not included in the computation of diluted net income (loss) per share for the three months ended March 31, 2016 because there is no excess value upon conversion over the principal amount of the Convertible Notes. The outstanding Convertible Notes were redeemed in the third quarter of 2016.
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
In thousands except per share amounts
|
2017
|
|
2016
|
Net income (loss) available to common stockholders
|
$
|
18,663
|
|
|
$
|
(20,396
|
)
|
Weighted average shares:
|
|
|
|
Basic
|
178,898
|
|
|
150,249
|
|
Effect of stock-based compensation plans
|
4,170
|
|
|
—
|
|
Diluted
|
183,068
|
|
|
150,249
|
|
Income (loss) per share:
|
|
|
|
Basic
|
$
|
0.10
|
|
|
$
|
(0.14
|
)
|
Diluted
|
$
|
0.10
|
|
|
$
|
(0.14
|
)
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 10 – FAIR VALUE MEASUREMENTS
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
In thousands
|
2017
|
|
2016
|
Rochester net smelter returns (“NSR”) royalty obligation
|
$
|
(1,200
|
)
|
|
$
|
(2,249
|
)
|
Palmarejo royalty obligation embedded derivative
|
—
|
|
|
(4,878
|
)
|
Silver and gold options
|
—
|
|
|
(1,568
|
)
|
Fair value adjustments, net
|
$
|
(1,200
|
)
|
|
$
|
(8,695
|
)
|
Accounting standards establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1), secondary priority to quoted prices in inactive markets or observable inputs (Level 2), and the lowest priority to unobservable inputs (Level 3).
The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at March 31, 2017
|
In thousands
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Assets:
|
|
|
|
|
|
|
|
Equity securities
|
$
|
3,796
|
|
|
$
|
3,517
|
|
|
$
|
—
|
|
|
$
|
279
|
|
Other derivative instruments, net
|
614
|
|
|
—
|
|
|
614
|
|
|
—
|
|
|
$
|
4,410
|
|
|
$
|
3,517
|
|
|
$
|
614
|
|
|
$
|
279
|
|
Liabilities:
|
|
|
|
|
|
|
|
Rochester NSR royalty obligation
|
9,277
|
|
|
—
|
|
|
—
|
|
|
9,277
|
|
Other derivative instruments, net
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
$
|
9,281
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
9,277
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at December 31, 2016
|
In thousands
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Assets:
|
|
|
|
|
|
|
|
Equity securities
|
$
|
4,488
|
|
|
$
|
4,209
|
|
|
$
|
—
|
|
|
$
|
279
|
|
Liabilities:
|
|
|
|
|
|
|
|
Rochester NSR royalty obligation
|
9,287
|
|
|
—
|
|
|
—
|
|
|
9,287
|
|
Other derivative instruments, net
|
762
|
|
|
—
|
|
|
762
|
|
|
—
|
|
|
$
|
10,049
|
|
|
$
|
—
|
|
|
$
|
762
|
|
|
$
|
9,287
|
|
The Company’s investments in equity securities are recorded at fair market value in the financial statements based primarily on quoted market prices. Such instruments are classified within Level 1 of the fair value hierarchy. Quoted market prices are not available for certain equity securities; these securities are valued using pricing models, which require the use of observable and unobservable inputs, and are classified within Level 3 of the fair value hierarchy.
The Company’s other derivative instruments, net, relate to concentrate and certain doré sales contracts valued using pricing models, which require inputs that are derived from observable market data, including contractual terms, forward market prices, yield curves, credit spreads, and other unobservable inputs. The model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.
The fair value of the Rochester NSR royalty obligation was estimated based on observable market data including contractual terms, forward silver and gold prices, yield curves, and credit spreads, as well as the Company’s current mine plan which is considered a significant unobservable input. Therefore, the Company has classified this obligation as Level 3 financial liabilities. Based on current mine plans,
1.6
years was used to estimate the fair value of the Rochester NSR royalty obligation at
March 31, 2017
.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
No assets or liabilities were transferred between fair value levels in the
three months ended March 31, 2017
.
The following tables present the changes in the fair value of the Company's Level 3 financial assets and liabilities for the
three months ended March 31, 2017
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2017
|
In thousands
|
Balance at the beginning of the period
|
|
Revaluation
|
|
Settlements
|
|
Balance at the
end of the
period
|
Assets:
|
|
|
|
|
|
|
|
Equity securities
|
$
|
279
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
279
|
|
Liabilities:
|
|
|
|
|
|
|
|
Rochester NSR royalty obligation
|
$
|
9,287
|
|
|
$
|
1,200
|
|
|
$
|
(1,210
|
)
|
|
$
|
9,277
|
|
The fair value of financial assets and liabilities carried at book value in the financial statements at
March 31, 2017
and
December 31, 2016
is presented in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
In thousands
|
Book Value
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
7.875% Senior Notes due 2021
(1)
|
$
|
176,114
|
|
|
$
|
184,279
|
|
|
$
|
—
|
|
|
$
|
184,279
|
|
|
$
|
—
|
|
|
|
(1)
|
Net of unamortized debt issuance costs and premium received of
$1.9 million
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
In thousands
|
Book Value
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
7.875% Senior Notes due 2021
(1)
|
$
|
175,991
|
|
|
$
|
184,373
|
|
|
—
|
|
|
$
|
184,373
|
|
|
—
|
|
|
|
(1)
|
Net of unamortized debt issuance costs and premium received of
$2.0 million
.
|
The fair value of the 7.875% Senior Notes due 2021 (the “Senior Notes”) was estimated using quoted market prices.
NOTE 11 – DERIVATIVE FINANCIAL INSTRUMENTS
Palmarejo Gold Production Royalty
In January 2009, the Company's subsidiary, Coeur Mexicana, S.A. de C.V. (“Coeur Mexicana”), entered into a gold production royalty agreement with a subsidiary of Franco-Nevada Corporation that covered
50%
of the life of mine production from the Palmarejo mine and legacy adjacent properties. The royalty transaction included a minimum obligation of
4,167
gold ounces per month and terminated upon delivery of
400,000
gold ounces, which occurred in July 2016.
The price volatility associated with the minimum royalty obligation was considered an embedded derivative. The Company was required to recognize the change in fair value of the remaining minimum obligation due to changing gold prices. For the three months ended March 31, 2016, the mark-to-market adjustment associated with the change was a loss of
$4.9 million
. Payments on the royalty obligation decreased the carrying amount of the minimum obligation and the derivative liability. For the three months ended March 31, 2016, realized loss on settlement of the liability was
$3.0 million
. The mark-to-market adjustments and realized losses are included in
Fair value adjustments, net
.
Provisional Silver and Gold Sales
The Company enters into sales contracts with third-party smelters and refiners which, in some cases, provide for a provisional payment based upon preliminary assays and quoted metal prices. The provisionally priced sales contracts contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable recorded at the forward price at the time of sale. The embedded derivatives do not qualify for hedge accounting and are marked to market through earnings each period until final settlement. Changes in silver and gold prices resulted in provisional pricing mark-to-market gains of
$1.4 million
and
$0.6 million
in the
three months ended March 31, 2017 and 2016
, respectively.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
At
March 31, 2017
, the Company had the following provisionally priced sales that settle as follows:
|
|
|
|
|
|
|
|
|
In thousands except average prices and notional ounces
|
2017
|
|
Thereafter
|
|
|
|
|
Provisional silver sales contracts
|
$
|
1,403
|
|
|
$
|
—
|
|
Average silver price
|
$
|
17.74
|
|
|
$
|
—
|
|
Notional ounces
|
79,084
|
|
|
—
|
|
|
|
|
|
Provisional gold sales contracts
|
$
|
35,849
|
|
|
$
|
—
|
|
Average gold price
|
$
|
1,211
|
|
|
$
|
—
|
|
Notional ounces
|
29,603
|
|
|
—
|
|
Silver and Gold Options
During three months ended March 31, 2016, the Company had realized losses of
$1.6 million
, from settled contracts. At
March 31, 2017
, the Company had no outstanding gold and silver options contracts.
The following summarizes the classification of the fair value of the derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
In thousands
|
Prepaid expenses and other
|
|
Accrued liabilities and other
|
|
Current portion of royalty obligation
|
|
Non-current portion of royalty obligation
|
Provisional silver and gold sales contracts
|
$
|
614
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
In thousands
|
Prepaid expenses and other
|
|
Accrued liabilities and other
|
|
Current portion of royalty obligation
|
|
Non-current portion of royalty obligation
|
Provisional silver and gold sales contracts
|
—
|
|
|
762
|
|
|
—
|
|
|
—
|
|
The following represent mark-to-market gains (losses) on derivative instruments for the
three months ended March 31, 2017 and 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
Financial statement line
|
Derivative
|
2017
|
|
2016
|
Revenue
|
Provisional silver and gold sales contracts
|
$
|
1,372
|
|
|
$
|
566
|
|
Fair value adjustments, net
|
Palmarejo gold production royalty
|
—
|
|
|
(4,878
|
)
|
Fair value adjustments, net
|
Silver and gold options
|
—
|
|
|
(1,568
|
)
|
|
|
$
|
1,372
|
|
|
$
|
(5,880
|
)
|
Credit Risk
The credit risk exposure related to any derivative instrument is limited to the unrealized gains, if any, on outstanding contracts based on current market prices. To reduce counter-party credit exposure, the Company enters into contracts with institutions management deems credit worthy and limits credit exposure to each institution. The Company does not anticipate non-performance by any of its counterparties.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 12 – INVESTMENTS
Equity Securities
The Company makes strategic investments in equity securities of silver and gold exploration and development companies. These investments are classified as available-for-sale and are measured at fair value in the financial statements with unrealized gains and losses recorded in
Other comprehensive income (loss)
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2017
|
In thousands
|
Cost
|
|
Gross
Unrealized
Losses
|
|
Gross
Unrealized
Gains
|
|
Estimated
Fair Value
|
Kootenay Silver, Inc.
|
$
|
2,167
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,167
|
|
Rockhaven Resources Ltd
|
514
|
|
|
(64
|
)
|
|
—
|
|
|
450
|
|
Silver Bull Resources, Inc.
|
131
|
|
|
—
|
|
|
356
|
|
|
487
|
|
Other
|
193
|
|
|
—
|
|
|
499
|
|
|
692
|
|
Equity securities
|
$
|
3,005
|
|
|
$
|
(64
|
)
|
|
$
|
855
|
|
|
$
|
3,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2016
|
In thousands
|
Cost
|
|
Gross
Unrealized
Losses
|
|
Gross
Unrealized
Gains
|
|
Estimated
Fair Value
|
Kootenay Silver, Inc.
|
$
|
2,645
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,645
|
|
Silver Bull Resources, Inc.
|
233
|
|
|
—
|
|
|
783
|
|
|
1,016
|
|
Other
|
229
|
|
|
—
|
|
|
598
|
|
|
827
|
|
Equity securities
|
$
|
3,107
|
|
|
$
|
—
|
|
|
$
|
1,381
|
|
|
$
|
4,488
|
|
The Company performs a quarterly assessment on each of its equity securities with unrealized losses to determine if the security is other than temporarily impaired. The Company recorded a pre-tax other-than-temporary impairment loss of
$0.1 million
in the
three months ended March 31, 2017
, and
no
impairment loss in the
three months ended March 31, 2016
, in
Other, net
. The following table summarizes unrealized losses on equity securities for which other-than-temporary impairments have not been recognized and the fair values of those securities, aggregated by the length of time the individual securities have been in a continuous unrealized loss position, at March 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than twelve months
|
|
Twelve months or more
|
|
Total
|
In thousands
|
Unrealized Losses
|
Fair Value
|
|
Unrealized Losses
|
Fair Value
|
|
Unrealized Losses
|
Fair Value
|
Equity securities
|
$
|
(64
|
)
|
$
|
450
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
(64
|
)
|
$
|
450
|
|
Restricted Assets
The Company, under the terms of its self-insurance and bonding agreements with certain banks, lending institutions and regulatory agencies, is required to collateralize certain portions of its obligations. The Company has collateralized these obligations by assigning certificates of deposit that have maturity dates ranging from three months to a year to the applicable institutions or agencies. At March 31, 2017 and December 31, 2016, the Company held certificates of deposit and cash under these agreements of $
19.0 million
and
$17.6 million
, respectively. The ultimate timing of the release of the collateralized amounts is dependent on the timing and closure of each mine and repayment of the obligation. In order to release the collateral, the Company must seek approval from certain government agencies responsible for monitoring the mine closure status. Collateral could also be released to the extent the Company is able to secure alternative financial assurance satisfactory to the regulatory agencies. The Company believes there is a reasonable probability that the collateral will remain in place beyond a twelve-month period and has therefore classified these investments as long-term.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 13 – RECEIVABLES
Receivables consist of the following:
|
|
|
|
|
|
|
|
|
In thousands
|
March 31, 2017
|
|
December 31, 2016
|
Current receivables:
|
|
|
|
Trade receivables
|
$
|
8,772
|
|
|
$
|
10,669
|
|
Income tax receivable
|
11,441
|
|
|
1,038
|
|
Value added tax receivable
|
44,085
|
|
|
46,083
|
|
Other
|
2,766
|
|
|
2,641
|
|
|
$
|
67,064
|
|
|
$
|
60,431
|
|
Non-current receivables:
|
|
|
|
Value added tax receivable
|
$
|
15,558
|
|
|
$
|
19,293
|
|
Income tax receivable
|
—
|
|
|
11,658
|
|
|
15,558
|
|
|
30,951
|
|
Total receivables
|
$
|
82,622
|
|
|
$
|
91,382
|
|
NOTE 14 – INVENTORY AND ORE ON LEACH PADS
Inventory consists of the following:
|
|
|
|
|
|
|
|
|
In thousands
|
March 31, 2017
|
|
December 31, 2016
|
Inventory:
|
|
|
|
Concentrate
|
$
|
13,476
|
|
|
$
|
17,994
|
|
Precious metals
|
20,938
|
|
|
47,228
|
|
Supplies
|
39,346
|
|
|
40,804
|
|
|
$
|
73,760
|
|
|
$
|
106,026
|
|
Ore on leach pads:
|
|
|
|
Current
|
$
|
66,585
|
|
|
$
|
64,167
|
|
Non-current
|
72,461
|
|
|
67,231
|
|
|
$
|
139,046
|
|
|
$
|
131,398
|
|
Total inventory and ore on leach pads
|
$
|
212,806
|
|
|
$
|
237,424
|
|
NOTE 15 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
|
|
|
|
|
|
|
|
|
In thousands
|
March 31, 2017
|
|
December 31, 2016
|
Land
|
$
|
8,403
|
|
|
$
|
7,878
|
|
Facilities and equipment
|
649,030
|
|
|
650,480
|
|
Assets under capital leases
|
63,775
|
|
|
54,968
|
|
|
721,208
|
|
|
713,326
|
|
Accumulated amortization
(1)
|
(531,480
|
)
|
|
(524,806
|
)
|
|
189,728
|
|
|
188,520
|
|
Construction in progress
|
32,889
|
|
|
28,276
|
|
Property, plant and equipment, net
|
$
|
222,617
|
|
|
$
|
216,796
|
|
(1) Includes
$15.6 million
of accumulated amortization related to assets under capital leases.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 16 – MINING PROPERTIES
Mining properties consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
San
Bartolomé
|
|
La Preciosa
|
|
Other
|
|
Total
|
Mine development
|
$
|
179,562
|
|
|
$
|
171,543
|
|
|
$
|
279,095
|
|
|
$
|
37,562
|
|
|
$
|
39,338
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
707,100
|
|
Accumulated amortization
|
(137,215
|
)
|
|
(139,519
|
)
|
|
(159,485
|
)
|
|
(12,530
|
)
|
|
(32,625
|
)
|
|
—
|
|
|
—
|
|
|
(481,374
|
)
|
|
42,347
|
|
|
32,024
|
|
|
119,610
|
|
|
25,032
|
|
|
6,713
|
|
|
—
|
|
|
—
|
|
|
225,726
|
|
Mineral interests
|
629,303
|
|
|
—
|
|
|
—
|
|
|
45,837
|
|
|
12,868
|
|
|
49,085
|
|
|
41,272
|
|
|
778,365
|
|
Accumulated amortization
|
(393,532
|
)
|
|
—
|
|
|
—
|
|
|
(20,106
|
)
|
—
|
|
(11,762
|
)
|
|
—
|
|
|
(29,484
|
)
|
|
(454,884
|
)
|
|
235,771
|
|
|
—
|
|
|
—
|
|
|
25,731
|
|
|
1,106
|
|
|
49,085
|
|
|
11,788
|
|
|
323,481
|
|
Mining properties, net
|
$
|
278,118
|
|
|
$
|
32,024
|
|
|
$
|
119,610
|
|
|
$
|
50,763
|
|
|
$
|
7,819
|
|
|
$
|
49,085
|
|
|
$
|
11,788
|
|
|
$
|
549,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
Palmarejo
|
|
Rochester
|
|
Kensington
|
|
Wharf
|
|
San
Bartolomé
|
|
La Preciosa
|
|
Joaquin
|
|
Other
|
|
Total
|
Mine development
|
$
|
174,890
|
|
|
$
|
165,230
|
|
|
$
|
271,175
|
|
|
$
|
37,485
|
|
|
$
|
39,184
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
687,964
|
|
Accumulated amortization
|
(134,995
|
)
|
|
(138,244
|
)
|
|
(154,744
|
)
|
|
(11,699
|
)
|
|
(32,192
|
)
|
|
—
|
|
|
|
|
|
—
|
|
|
(471,874
|
)
|
|
39,895
|
|
|
26,986
|
|
|
116,431
|
|
|
25,786
|
|
|
6,992
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
216,090
|
|
Mineral interests
|
629,303
|
|
|
—
|
|
|
—
|
|
|
45,837
|
|
|
12,868
|
|
|
49,085
|
|
|
10,000
|
|
|
37,272
|
|
|
784,365
|
|
Accumulated amortization
|
(381,686
|
)
|
|
—
|
|
|
—
|
|
|
(19,249
|
)
|
|
(11,695
|
)
|
|
—
|
|
|
—
|
|
|
(29,370
|
)
|
|
(442,000
|
)
|
|
247,617
|
|
|
—
|
|
|
—
|
|
|
26,588
|
|
|
1,173
|
|
|
49,085
|
|
|
10,000
|
|
|
7,902
|
|
|
342,365
|
|
Mining properties, net
|
$
|
287,512
|
|
|
$
|
26,986
|
|
|
$
|
116,431
|
|
|
$
|
52,374
|
|
|
$
|
8,165
|
|
|
$
|
49,085
|
|
|
$
|
10,000
|
|
|
$
|
7,902
|
|
|
$
|
558,455
|
|
In February 2017, the Company sold the Joaquin silver-gold exploration project for consideration of
$27.4 million
and a
2.0%
NSR royalty on the Joaquin project, which is included in Other. The Company recognized a
$21.1 million
pre-tax gain on this sale.
NOTE 17 – DEBT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
In thousands
|
Current
|
|
Non-Current
|
|
Current
|
|
Non-Current
|
Senior Notes, net
(1)
|
$
|
—
|
|
|
$
|
176,114
|
|
|
$
|
—
|
|
|
$
|
175,991
|
|
Capital lease obligations
|
13,451
|
|
|
29,511
|
|
|
12,039
|
|
|
22,866
|
|
|
$
|
13,451
|
|
|
$
|
205,625
|
|
|
$
|
12,039
|
|
|
$
|
198,857
|
|
(1)
Net of unamortized debt issuance costs and premium received of
$1.9 million
and
$2.0 million
at
March 31, 2017
and December 31, 2016, respectively.
7.875% Senior Notes due 2021
On or after February 1, 2017, the Company may redeem some or all of the Senior Notes at the applicable redemption prices set forth in the Indenture for the Senior Notes, together with accrued and unpaid interest.
Lines of Credit
At
March 31, 2017
, the Company’s subsidiary that holds the San Bartolomé mine had an available line of credit for
$12.0 million
that matures in June 30, 2018, bearing interest at
6.0%
per annum, which is secured by machinery and equipment. There was
no
outstanding balance at
March 31, 2017
.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Capital Lease Obligations
From time to time, the Company acquires mining equipment under capital lease agreements. In the
three months ended
March 31, 2017
, the Company entered into new lease financing arrangements primarily for diesel generators at Kensington and mining equipment at Rochester. All capital lease obligations are recorded, upon lease inception, at the present value of future minimum lease payments.
Interest Expense
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
In thousands
|
2017
|
|
2016
|
Senior Notes
|
$
|
3,504
|
|
|
7,457
|
|
Term Loan due 2020
|
—
|
|
|
2,264
|
|
Capital lease obligations
|
306
|
|
|
265
|
|
Accretion of Palmarejo gold production royalty obligation
|
—
|
|
|
765
|
|
Amortization of debt issuance costs
|
166
|
|
|
631
|
|
Accretion of debt premium
|
(43
|
)
|
|
(91
|
)
|
Other debt obligations
|
16
|
|
|
32
|
|
Capitalized interest
|
(363
|
)
|
|
(203
|
)
|
Total interest expense, net of capitalized interest
|
$
|
3,586
|
|
|
$
|
11,120
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 18 - SUPPLEMENTAL GUARANTOR INFORMATION
The following Consolidating Financial Statements are presented to satisfy disclosure requirements of Rule 3-10 of Regulation S-X resulting from the guarantees by Coeur Alaska, Inc., Coeur Explorations, Inc., Coeur Rochester, Inc., Coeur South America Corp., Wharf Resources (U.S.A.), Inc. and its subsidiaries, and Coeur Capital, Inc. (collectively, the “Subsidiary Guarantors”) of the Senior Notes. The following schedules present Consolidating Financial Statements of (a) Coeur, the parent company; (b) the Subsidiary Guarantors; and (c) certain wholly-owned domestic and foreign subsidiaries of the Company (collectively, the “Non-Guarantor Subsidiaries”). Each of the Subsidiary Guarantors is 100% owned by Coeur and the guarantees are full and unconditional and joint and several obligations. There are no restrictions on the ability of Coeur to obtain funds from the Subsidiary Guarantors by dividend or loan.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED
MARCH 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Revenue
|
|
$
|
—
|
|
|
$
|
107,194
|
|
|
$
|
98,944
|
|
|
$
|
—
|
|
|
$
|
206,138
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
(1)
|
|
—
|
|
|
71,202
|
|
|
61,510
|
|
|
—
|
|
|
132,712
|
|
Amortization
|
|
324
|
|
|
18,104
|
|
|
21,676
|
|
|
—
|
|
|
40,104
|
|
General and administrative
|
|
10,106
|
|
|
24
|
|
|
3
|
|
|
—
|
|
|
10,133
|
|
Exploration
|
|
336
|
|
|
1,727
|
|
|
3,189
|
|
|
—
|
|
|
5,252
|
|
Pre-development, reclamation, and other
|
|
175
|
|
|
1,781
|
|
|
2,625
|
|
|
—
|
|
|
4,581
|
|
Total costs and expenses
|
|
10,941
|
|
|
92,838
|
|
|
89,003
|
|
|
—
|
|
|
192,782
|
|
OTHER INCOME (EXPENSE), NET
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustments, net
|
|
—
|
|
|
(1,200
|
)
|
|
—
|
|
|
—
|
|
|
(1,200
|
)
|
Other, net
|
|
15,222
|
|
|
5,458
|
|
|
1,873
|
|
|
(1,414
|
)
|
|
21,139
|
|
Interest expense, net of capitalized interest
|
|
(3,279
|
)
|
|
(175
|
)
|
|
(1,546
|
)
|
|
1,414
|
|
|
(3,586
|
)
|
Total other income (expense), net
|
|
11,943
|
|
|
4,083
|
|
|
327
|
|
|
—
|
|
|
16,353
|
|
Loss before income and mining taxes
|
|
1,002
|
|
|
18,439
|
|
|
10,268
|
|
|
—
|
|
|
29,709
|
|
Income and mining tax (expense) benefit
|
|
1,588
|
|
|
(2,434
|
)
|
|
(10,200
|
)
|
|
—
|
|
|
(11,046
|
)
|
Total loss after income and mining taxes
|
|
2,590
|
|
|
16,005
|
|
|
68
|
|
|
—
|
|
|
18,663
|
|
Equity income (loss) in consolidated subsidiaries
|
|
16,073
|
|
|
70
|
|
|
(67
|
)
|
|
(16,076
|
)
|
|
—
|
|
NET INCOME (LOSS)
|
|
$
|
18,663
|
|
|
$
|
16,075
|
|
|
$
|
1
|
|
|
$
|
(16,076
|
)
|
|
$
|
18,663
|
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on marketable securities, net of tax
|
|
(2,182
|
)
|
|
(279
|
)
|
|
—
|
|
|
279
|
|
|
(2,182
|
)
|
Reclassification adjustments for impairment of equity securities, net of tax
|
|
121
|
|
|
121
|
|
|
—
|
|
|
(121
|
)
|
|
121
|
|
Reclassification adjustments for realized gain (loss) on sale of equity securities, net of tax
|
|
1,471
|
|
|
(369
|
)
|
|
—
|
|
|
369
|
|
|
1,471
|
|
Other comprehensive income (loss)
|
|
(590
|
)
|
|
(527
|
)
|
|
—
|
|
|
527
|
|
|
(590
|
)
|
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
18,073
|
|
|
$
|
15,548
|
|
|
$
|
1
|
|
|
$
|
(15,549
|
)
|
|
$
|
18,073
|
|
(1) Excludes amortization.
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED MARCH 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Revenue
|
|
$
|
—
|
|
|
$
|
93,954
|
|
|
$
|
54,433
|
|
|
$
|
—
|
|
|
$
|
148,387
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
(1)
|
|
—
|
|
|
62,364
|
|
|
39,191
|
|
|
—
|
|
|
101,555
|
|
Amortization
|
|
423
|
|
|
17,859
|
|
|
9,682
|
|
|
—
|
|
|
27,964
|
|
General and administrative
|
|
8,080
|
|
|
18
|
|
|
178
|
|
|
—
|
|
|
8,276
|
|
Exploration
|
|
623
|
|
|
184
|
|
|
924
|
|
|
—
|
|
|
1,731
|
|
Write-downs
|
|
—
|
|
|
—
|
|
|
4,446
|
|
|
—
|
|
|
4,446
|
|
Pre-development, reclamation, and other
|
|
452
|
|
|
1,416
|
|
|
2,336
|
|
|
—
|
|
|
4,204
|
|
Total costs and expenses
|
|
9,578
|
|
|
81,841
|
|
|
56,757
|
|
|
—
|
|
|
148,176
|
|
OTHER INCOME (EXPENSE), NET
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustments, net
|
|
(1,582
|
)
|
|
(2,249
|
)
|
|
(4,864
|
)
|
|
—
|
|
|
(8,695
|
)
|
Other, net
|
|
338
|
|
|
2,254
|
|
|
(253
|
)
|
|
(1,025
|
)
|
|
1,314
|
|
Interest expense, net of capitalized interest
|
|
(10,255
|
)
|
|
(213
|
)
|
|
(1,677
|
)
|
|
1,025
|
|
|
(11,120
|
)
|
Total other income (expense), net
|
|
(11,499
|
)
|
|
(208
|
)
|
|
(6,794
|
)
|
|
—
|
|
|
(18,501
|
)
|
Income (Loss) before income and mining taxes
|
|
(21,077
|
)
|
|
11,905
|
|
|
(9,118
|
)
|
|
—
|
|
|
(18,290
|
)
|
Income and mining tax (expense) benefit
|
|
(209
|
)
|
|
(307
|
)
|
|
(1,590
|
)
|
|
—
|
|
|
(2,106
|
)
|
Income (Loss) after income and mining taxes
|
|
(21,286
|
)
|
|
11,598
|
|
|
(10,708
|
)
|
|
—
|
|
|
(20,396
|
)
|
Equity income (loss) in consolidated subsidiaries
|
|
890
|
|
|
(4,479
|
)
|
|
—
|
|
|
3,589
|
|
|
—
|
|
NET INCOME (LOSS)
|
|
$
|
(20,396
|
)
|
|
$
|
7,119
|
|
|
$
|
(10,708
|
)
|
|
$
|
3,589
|
|
|
$
|
(20,396
|
)
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on equity securities, net of tax
|
|
1,043
|
|
|
976
|
|
|
—
|
|
|
(976
|
)
|
|
1,043
|
|
Reclassification adjustments for realized loss on sale of equity securities, net of tax
|
|
588
|
|
|
(381
|
)
|
|
—
|
|
|
381
|
|
|
588
|
|
Other comprehensive income (loss)
|
|
1,631
|
|
|
595
|
|
|
—
|
|
|
(595
|
)
|
|
1,631
|
|
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
(18,765
|
)
|
|
$
|
7,714
|
|
|
$
|
(10,708
|
)
|
|
$
|
2,994
|
|
|
$
|
(18,765
|
)
|
(1) Excludes amortization.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED
MARCH 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in) operating activities
|
|
$
|
(4,815
|
)
|
|
$
|
17,183
|
|
|
$
|
58,979
|
|
|
$
|
(16,076
|
)
|
|
55,271
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
(319
|
)
|
|
(16,975
|
)
|
|
(6,685
|
)
|
|
—
|
|
|
(23,979
|
)
|
Proceeds from the sale of long-lived assets
|
|
8,916
|
|
|
6,151
|
|
|
(48
|
)
|
|
—
|
|
|
15,019
|
|
Purchase of investments
|
|
(1,016
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,016
|
)
|
Sales and maturities of investments
|
|
9,157
|
|
|
863
|
|
|
—
|
|
|
—
|
|
|
10,020
|
|
Other
|
|
(1,486
|
)
|
|
—
|
|
|
(60
|
)
|
|
—
|
|
|
(1,546
|
)
|
Investments in consolidated subsidiaries
|
|
(12,454
|
)
|
|
(70
|
)
|
|
67
|
|
|
12,457
|
|
|
—
|
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
2,798
|
|
|
(10,031
|
)
|
|
(6,726
|
)
|
|
12,457
|
|
|
(1,502
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Payments on debt, capital leases, and associated costs
|
|
—
|
|
|
(1,874
|
)
|
|
(1,352
|
)
|
|
—
|
|
|
(3,226
|
)
|
Net intercompany financing activity
|
|
14,318
|
|
|
(9,325
|
)
|
|
(8,612
|
)
|
|
3,619
|
|
|
—
|
|
Other
|
|
(3,247
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,247
|
)
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
11,071
|
|
|
(11,199
|
)
|
|
(9,964
|
)
|
|
3,619
|
|
|
(6,473
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
—
|
|
|
—
|
|
|
555
|
|
|
—
|
|
|
555
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
|
9,054
|
|
|
(4,047
|
)
|
|
42,844
|
|
|
—
|
|
|
47,851
|
|
Cash and cash equivalents at beginning of period
|
|
58,048
|
|
|
50,023
|
|
|
54,111
|
|
|
—
|
|
|
162,182
|
|
Cash and cash equivalents at end of period
|
|
$
|
67,102
|
|
|
$
|
45,976
|
|
|
$
|
96,955
|
|
|
$
|
—
|
|
|
$
|
210,033
|
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in) operating activities
|
|
$
|
(28,642
|
)
|
|
$
|
21,460
|
|
|
$
|
10,210
|
|
|
$
|
3,589
|
|
|
6,617
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
(46
|
)
|
|
(12,790
|
)
|
|
(9,336
|
)
|
|
—
|
|
|
(22,172
|
)
|
Proceeds from the sale of long-lived assets
|
|
—
|
|
|
4,000
|
|
|
9
|
|
|
—
|
|
|
4,009
|
|
Purchase of investments
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
Sales and maturities of investments
|
|
501
|
|
|
496
|
|
|
—
|
|
|
—
|
|
|
997
|
|
Other
|
|
(1,539
|
)
|
|
107
|
|
|
(41
|
)
|
|
—
|
|
|
(1,473
|
)
|
Investments in consolidated subsidiaries
|
|
3,420
|
|
|
8,179
|
|
|
—
|
|
|
(11,599
|
)
|
|
—
|
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
2,329
|
|
|
(8
|
)
|
|
(9,368
|
)
|
|
(11,599
|
)
|
|
(18,646
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Payments on debt, capital leases, and associated costs
|
|
(250
|
)
|
|
(830
|
)
|
|
(4,891
|
)
|
|
—
|
|
|
(5,971
|
)
|
Gold production royalty payments
|
|
—
|
|
|
—
|
|
|
(9,131
|
)
|
|
—
|
|
|
(9,131
|
)
|
Net intercompany financing activity
|
|
(7,879
|
)
|
|
(24,965
|
)
|
|
24,834
|
|
|
8,010
|
|
|
—
|
|
Other
|
|
(280
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(280
|
)
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
(8,409
|
)
|
|
(25,795
|
)
|
|
10,812
|
|
|
8,010
|
|
|
(15,382
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
—
|
|
|
4
|
|
|
82
|
|
|
—
|
|
|
86
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
|
(34,722
|
)
|
|
(4,339
|
)
|
|
11,736
|
|
|
—
|
|
|
(27,325
|
)
|
Cash and cash equivalents at beginning of period
|
|
96,123
|
|
|
34,228
|
|
|
70,363
|
|
|
—
|
|
|
200,714
|
|
Cash and cash equivalents at end of period
|
|
$
|
61,401
|
|
|
$
|
29,889
|
|
|
$
|
82,099
|
|
|
$
|
—
|
|
|
$
|
173,389
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
67,102
|
|
|
$
|
45,976
|
|
|
$
|
96,955
|
|
|
$
|
—
|
|
|
$
|
210,033
|
|
Receivables
|
|
(12
|
)
|
|
9,084
|
|
|
57,992
|
|
|
—
|
|
|
67,064
|
|
Ore on leach pads
|
|
—
|
|
|
66,585
|
|
|
—
|
|
|
—
|
|
|
66,585
|
|
Inventory
|
|
—
|
|
|
38,295
|
|
|
35,465
|
|
|
—
|
|
|
73,760
|
|
Prepaid expenses and other
|
|
7,719
|
|
|
3,699
|
|
|
11,032
|
|
|
—
|
|
|
22,450
|
|
|
|
74,809
|
|
|
163,639
|
|
|
201,444
|
|
|
—
|
|
|
439,892
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
3,217
|
|
|
146,122
|
|
|
73,278
|
|
|
—
|
|
|
222,617
|
|
Mining properties, net
|
|
4,000
|
|
|
202,397
|
|
|
342,810
|
|
|
—
|
|
|
549,207
|
|
Ore on leach pads
|
|
—
|
|
|
72,461
|
|
|
—
|
|
|
—
|
|
|
72,461
|
|
Restricted assets
|
|
11,701
|
|
|
226
|
|
|
7,027
|
|
|
—
|
|
|
18,954
|
|
Equity securities
|
|
450
|
|
|
3,346
|
|
|
—
|
|
|
—
|
|
|
3,796
|
|
Receivables
|
|
—
|
|
|
—
|
|
|
15,558
|
|
|
—
|
|
|
15,558
|
|
Net investment in subsidiaries
|
|
274,724
|
|
|
11,720
|
|
|
(624
|
)
|
|
(285,820
|
)
|
|
—
|
|
Other
|
|
216,386
|
|
|
10,009
|
|
|
5,256
|
|
|
(216,386
|
)
|
|
15,265
|
|
TOTAL ASSETS
|
|
$
|
585,287
|
|
|
$
|
609,920
|
|
|
$
|
644,749
|
|
|
$
|
(502,206
|
)
|
|
$
|
1,337,750
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,547
|
|
|
$
|
21,364
|
|
|
$
|
24,459
|
|
|
$
|
—
|
|
|
$
|
47,370
|
|
Other accrued liabilities
|
|
7,234
|
|
|
9,555
|
|
|
21,210
|
|
|
—
|
|
|
37,999
|
|
Debt
|
|
—
|
|
|
7,852
|
|
|
5,599
|
|
|
—
|
|
|
13,451
|
|
Royalty obligations
|
|
—
|
|
|
4,961
|
|
|
—
|
|
|
—
|
|
|
4,961
|
|
Reclamation
|
|
—
|
|
|
2,754
|
|
|
850
|
|
|
—
|
|
|
3,604
|
|
|
|
8,781
|
|
|
46,486
|
|
|
52,118
|
|
|
—
|
|
|
107,385
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
176,114
|
|
|
23,288
|
|
|
222,609
|
|
|
(216,386
|
)
|
|
205,625
|
|
Royalty obligations
|
|
—
|
|
|
4,316
|
|
|
—
|
|
|
—
|
|
|
4,316
|
|
Reclamation
|
|
—
|
|
|
76,443
|
|
|
21,152
|
|
|
—
|
|
|
97,595
|
|
Deferred tax liabilities
|
|
9,072
|
|
|
6,354
|
|
|
60,937
|
|
|
—
|
|
|
76,363
|
|
Other long-term liabilities
|
|
2,407
|
|
|
4,756
|
|
|
52,683
|
|
|
—
|
|
|
59,846
|
|
Intercompany payable (receivable)
|
|
(397,707
|
)
|
|
326,814
|
|
|
70,893
|
|
|
—
|
|
|
—
|
|
|
|
(210,114
|
)
|
|
441,971
|
|
|
428,274
|
|
|
(216,386
|
)
|
|
443,745
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
1,815
|
|
|
250
|
|
|
191,613
|
|
|
(191,863
|
)
|
|
1,815
|
|
Additional paid-in capital
|
|
3,314,644
|
|
|
181,683
|
|
|
1,809,557
|
|
|
(1,991,240
|
)
|
|
3,314,644
|
|
Accumulated deficit
|
|
(2,526,761
|
)
|
|
(57,455
|
)
|
|
(1,836,813
|
)
|
|
1,894,268
|
|
|
(2,526,761
|
)
|
Accumulated other comprehensive income (loss)
|
|
(3,078
|
)
|
|
(3,015
|
)
|
|
—
|
|
|
3,015
|
|
|
(3,078
|
)
|
|
|
786,620
|
|
|
121,463
|
|
|
164,357
|
|
|
(285,820
|
)
|
|
786,620
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
585,287
|
|
|
$
|
609,920
|
|
|
$
|
644,749
|
|
|
$
|
(502,206
|
)
|
|
$
|
1,337,750
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Coeur Mining, Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
58,048
|
|
|
$
|
50,023
|
|
|
$
|
54,111
|
|
|
$
|
—
|
|
|
$
|
162,182
|
|
Receivables
|
|
12
|
|
|
6,865
|
|
|
53,554
|
|
|
—
|
|
|
60,431
|
|
Ore on leach pads
|
|
—
|
|
|
64,167
|
|
|
—
|
|
|
—
|
|
|
64,167
|
|
Inventory
|
|
—
|
|
|
49,393
|
|
|
56,633
|
|
|
—
|
|
|
106,026
|
|
Prepaid expenses and other
|
|
3,803
|
|
|
1,459
|
|
|
12,719
|
|
|
—
|
|
|
17,981
|
|
|
|
61,863
|
|
|
171,907
|
|
|
177,017
|
|
|
—
|
|
|
410,787
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
3,222
|
|
|
139,885
|
|
|
73,689
|
|
|
—
|
|
|
216,796
|
|
Mining properties, net
|
|
—
|
|
|
195,791
|
|
|
362,664
|
|
|
—
|
|
|
558,455
|
|
Ore on leach pads
|
|
—
|
|
|
67,231
|
|
|
—
|
|
|
—
|
|
|
67,231
|
|
Restricted assets
|
|
10,170
|
|
|
226
|
|
|
7,201
|
|
|
—
|
|
|
17,597
|
|
Equity securities
|
|
—
|
|
|
4,488
|
|
|
—
|
|
|
—
|
|
|
4,488
|
|
Receivables
|
|
—
|
|
|
—
|
|
|
30,951
|
|
|
—
|
|
|
30,951
|
|
Deferred tax assets
|
|
—
|
|
|
—
|
|
|
191
|
|
|
(191
|
)
|
|
—
|
|
Net investment in subsidiaries
|
|
273,056
|
|
|
11,650
|
|
|
—
|
|
|
(284,706
|
)
|
|
—
|
|
Other
|
|
221,381
|
|
|
9,263
|
|
|
3,153
|
|
|
(221,193
|
)
|
|
12,604
|
|
TOTAL ASSETS
|
|
$
|
569,692
|
|
|
$
|
600,441
|
|
|
$
|
654,866
|
|
|
$
|
(506,090
|
)
|
|
$
|
1,318,909
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
2,153
|
|
|
$
|
24,921
|
|
|
$
|
26,261
|
|
|
$
|
—
|
|
|
$
|
53,335
|
|
Other accrued liabilities
|
|
12,881
|
|
|
13,664
|
|
|
16,198
|
|
|
—
|
|
|
42,743
|
|
Debt
|
|
—
|
|
|
6,516
|
|
|
5,523
|
|
|
—
|
|
|
12,039
|
|
Royalty obligations
|
|
—
|
|
|
4,995
|
|
|
—
|
|
|
—
|
|
|
4,995
|
|
Reclamation
|
|
—
|
|
|
2,672
|
|
|
850
|
|
|
—
|
|
|
3,522
|
|
|
|
15,034
|
|
|
52,768
|
|
|
48,832
|
|
|
—
|
|
|
116,634
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
175,991
|
|
|
15,214
|
|
|
229,036
|
|
|
(221,384
|
)
|
|
198,857
|
|
Royalty obligations
|
|
—
|
|
|
4,292
|
|
|
—
|
|
|
—
|
|
|
4,292
|
|
Reclamation
|
|
—
|
|
|
75,183
|
|
|
20,621
|
|
|
—
|
|
|
95,804
|
|
Deferred tax liabilities
|
|
13,810
|
|
|
6,179
|
|
|
54,809
|
|
|
—
|
|
|
74,798
|
|
Other long-term liabilities
|
|
1,993
|
|
|
4,750
|
|
|
53,294
|
|
|
—
|
|
|
60,037
|
|
Intercompany payable (receivable)
|
|
(405,623
|
)
|
|
336,813
|
|
|
68,810
|
|
|
—
|
|
|
—
|
|
|
|
(213,829
|
)
|
|
442,431
|
|
|
426,570
|
|
|
(221,384
|
)
|
|
433,788
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
1,809
|
|
|
250
|
|
|
197,913
|
|
|
(198,163
|
)
|
|
1,809
|
|
Additional paid-in capital
|
|
3,314,590
|
|
|
181,009
|
|
|
1,864,261
|
|
|
(2,045,270
|
)
|
|
3,314,590
|
|
Accumulated deficit
|
|
(2,545,424
|
)
|
|
(73,529
|
)
|
|
(1,882,710
|
)
|
|
1,956,239
|
|
|
(2,545,424
|
)
|
Accumulated other comprehensive income (loss)
|
|
(2,488
|
)
|
|
(2,488
|
)
|
|
—
|
|
|
2,488
|
|
|
(2,488
|
)
|
|
|
768,487
|
|
|
105,242
|
|
|
179,464
|
|
|
(284,706
|
)
|
|
768,487
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
569,692
|
|
|
$
|
600,441
|
|
|
$
|
654,866
|
|
|
$
|
(506,090
|
)
|
|
$
|
1,318,909
|
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 19 – COMMITMENTS AND CONTINGENCIES
Labor Union Contract
The Company maintains a labor agreement with Sindicato de Trabajadores Mineros de la Empresa Manquiri S.A. at the San Bartolomé mine in Bolivia. The San Bartolomé mine labor agreement, which became effective January 28, 2010, is currently active and does not have a fixed term. At
March 31, 2017
, approximately
10%
of the Company’s global labor force was covered by this collective bargaining agreement. The Company cannot predict whether this agreement will be renewed on similar terms or at all, whether future labor disruptions will occur or, if disruptions do occur, how long they will last.
Rochester Production Royalty
Effective January 2014, Coeur Rochester is obligated to pay a
3.4%
net smelter returns royalty on up to
39.4 million
silver equivalent ounces produced and sold from a portion of the Rochester mine, payable on a quarterly basis. For each calendar quarter, the royalty is payable on the actual sales prices received, less refining and related costs, of gold and silver produced and sold from the applicable portions of the Rochester mine. Changes in silver and gold prices and the Company’s mine plan result in the recognition of mark-to-market gains or losses in
Fair value adjustments, net
. At
March 31, 2017
, a total of
15.9 million
silver equivalent ounces remain outstanding under the obligation.
Palmarejo Gold Stream
Effective August 2016, Coeur Mexicana sells
50%
of Palmarejo gold production (excluding production from the recently acquired Paramount properties) to a subsidiary of Franco-Nevada Corporation under a gold stream agreement for the lesser of
$800
or spot price per ounce. Previously, Coeur Mexicana received a
$22.0 million
deposit toward future deliveries under the gold stream agreement.
Bolivian Temporary Restriction on Mining above
4,400
Meters
In October 2009, the Bolivian state-owned mining organization, COMIBOL, announced by resolution that it was temporarily suspending mining activities above the elevation of
4,400
meters above sea level while stability studies of Cerro Rico mountain are undertaken. The Company holds rights to mine above this elevation under valid contracts with COMIBOL. The stability studies have been completed and officially submitted to the Bolivian mining technical authorities. Accordingly, the COMIBOL suspension has expired in accordance with the terms of the resolution. The Company is not currently mining above the 4,400 meter level.
If COMIBOL decides to affirmatively adopt a new resolution to restrict access above the 4,400 meter level, the Company may need to further write down the carrying value of the asset. While a portion of the Company’s proven and probable reserves relate to material above the 4,400 meter level at San Bartolomé, so long as operations remain suspended, there is a risk that silver may not be produced from this material at expected levels or at all, particularly given the remaining anticipated mine life of this asset. It is also uncertain if any new mining or investment policies or shifts in political attitude may affect mining in Bolivia.
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis (“MD&A”) provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Coeur Mining, Inc. and its subsidiaries (collectively the “Company”, “our”, or “we”). We use certain non-GAAP financial performance measures in our MD&A. For a detailed description of non-GAAP financial performance measures, please see “Non-GAAP Financial Performance Measures” at the end of this item.
We provide certain operational and financial data on a silver equivalent basis, converting gold to silver at a 60:1 ratio of silver ounces to gold ounces unless otherwise noted. We also provide realized silver equivalent data determined by average spot silver and gold prices during the relevant period.
Overview
We are a gold and silver producer with mines located in the United States, Mexico, and Bolivia and exploration projects in the United States and Mexico. The Palmarejo complex, Rochester, Kensington, Wharf, and San Bartolomé mines constitute our principal sources of revenue. The Company also owns the Endeavor silver stream.
The Company's strategy is to discover, acquire, develop and operate low-cost silver and gold mines that produce long-term cash flow, provide opportunities for growth through continued exploration, and generate superior and sustainable returns for stockholders. Management focuses on maximizing net cash flow through identifying and implementing revenue enhancement opportunities, reducing operating and non-operating costs, exercising consistent capital discipline, and efficient working capital management.
First Quarter Highlights
|
|
•
|
Production of
9.2 million
silver equivalent ounces, consisting of
3.9 million
silver ounces and
88,218
gold ounces
|
|
|
•
|
Sales of
11.1 million
silver equivalent ounces, consisting of
4.5 million
silver ounces and
110,874
gold ounces
|
|
|
•
|
Net income of
$18.7 million
(
$0.10
per share) and adjusted net income of
$7.0 million
(
$0.04
per share) (see “Non-GAAP Financial Performance Measures”)
|
|
|
•
|
Costs applicable to sales were
$11.39
per silver equivalent ounce (
$10.64
per average spot silver equivalent ounce) and
$788
per gold equivalent ounce (see “Non-GAAP Financial Performance Measures”)
|
|
|
•
|
All-in sustaining costs were
$15.01
per silver equivalent ounce (
$13.65
per average spot silver equivalent ounce) (see “Non-GAAP Financial Performance Measures”)
|
|
|
•
|
Operating cash flow of
$55.3 million
and adjusted EBITDA of
$56.6 million
(see “Non-GAAP Financial Performance Measures”)
|
|
|
•
|
Sold the Joaquin silver-gold exploration project for consideration of
$27.4 million
and retained a 2.0% NSR royalty
|
|
|
•
|
Cash and cash equivalents of
$210.0 million
at
March 31, 2017
|
Selected Financial and Operating Results
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
2017
|
|
2016
|
Metal sales
|
$
|
206,138
|
|
|
$
|
146,636
|
|
Net income (loss)
|
$
|
18,663
|
|
|
$
|
(20,396
|
)
|
Net income (loss) per share, diluted
|
$
|
0.10
|
|
|
$
|
(0.14
|
)
|
Adjusted net income (loss)
(1)
|
$
|
6,987
|
|
|
$
|
(10,459
|
)
|
Adjusted net income (loss) per share, diluted
(1)
|
$
|
0.04
|
|
|
$
|
(0.06
|
)
|
EBITDA
(1)
|
$
|
73,399
|
|
|
$
|
20,794
|
|
Adjusted EBITDA
(1)
|
$
|
56,585
|
|
|
$
|
37,398
|
|
Silver ounces produced
|
3,932,376
|
|
|
3,372,475
|
|
Gold ounces produced
|
88,218
|
|
|
78,072
|
|
Silver equivalent ounces produced
|
9,225,456
|
|
|
8,056,795
|
|
Silver ounces sold
|
4,473,712
|
|
|
3,529,502
|
|
Gold ounces sold
|
110,874
|
|
|
79,091
|
|
Silver equivalent ounces sold
|
11,126,126
|
|
|
8,274,952
|
|
Average realized price per silver ounce
|
$
|
17.61
|
|
|
$
|
15.16
|
|
Average realized price per gold ounce
|
$
|
1,149
|
|
|
$
|
1,178
|
|
Costs applicable to sales per silver equivalent ounce
(1)
|
$
|
11.39
|
|
|
$
|
12.36
|
|
Costs applicable to sales per average spot silver equivalent ounce
(1)
|
$
|
10.64
|
|
|
$
|
11.28
|
|
Costs applicable to sales per gold equivalent ounce
(1)
|
$
|
788
|
|
|
$
|
728
|
|
All-in sustaining costs per silver equivalent ounce
(1)
|
$
|
15.01
|
|
|
$
|
16.28
|
|
All-in sustaining costs per average spot silver equivalent ounce
(1)
|
$
|
13.65
|
|
|
$
|
13.71
|
|
|
|
(1)
|
See
“
Non-GAAP Financial Performance Measures.
”
|
Consolidated Financial Results
Three Months Ended March 31, 2017
compared to
Three Months Ended March 31, 2016
Net Income (Loss)
Net
income
was
$18.7 million
(
$0.10
per share) compared to a
Net
loss
of
$20.4 million
(
$0.14
per share). The increase in
Net income
is primarily due to a
$21.1 million
gain on the sale of the Joaquin project, higher silver and gold production, higher average realized silver prices, lower all-in sustaining costs per silver equivalent ounce, and lower interest expense, partially offset by lower average realized gold prices and higher general and administrative and exploration expense.
Revenue
Metal sales
increased
due to higher silver and gold production, a reduction in metal inventory and a
16%
increase
in average realized silver prices. The Company sold
4.5 million
silver ounces and
110,874
gold ounces, compared to sales of
3.5 million
silver ounces and
79,091
gold ounces. Gold contributed
62%
of sales and silver contributed
38%
, compared to
64%
of sales from gold and
36%
from silver. Royalty revenue was lower due to the Company’s divestiture of several non-core royalty assets in 2016.
Costs Applicable to Sales
Costs applicable to sales
increased
due to higher silver and gold ounces sold. For a complete discussion of costs applicable to sales, see
Results of Operations
below.
Amortization
Amortization
increased
$12.1 million
, or
43%
, primarily due to higher silver and gold ounces sold, partially offset by higher amortizable mining properties and equipment at Rochester and Kensington.
Expenses
General and administrative expenses
increased
22%
due to higher compensation and professional service costs.
Exploration expense
increased
$3.5 million
, due to the Company’s expansion of drilling activities at Palmarejo, Kensington and Rochester as well as regional exploration with a focus on projects in Nevada and Chihuahua, Mexico.
Pre-development, reclamation, and other expenses
increased
9%
to
$4.6 million
as a result of additional work at La Preciosa.
Other Income and Expenses
Non-cash fair value adjustments, net, were a
loss
of
$1.2 million
compared to a
loss
of
$8.7 million
,
primarily due to the termination of the Palmarejo gold production royalty (in the third quarter of 2016) and the lesser impact of changes in future metal prices on the Rochester 3.4% NSR royalty obligation.
Interest expense (net of capitalized interest of
$0.4 million
)
decreased
to
$3.6 million
from
$11.1 million
, primarily due to the repayment of the Term Loan, redemption of
$200.8 million
of Senior Notes and termination of the Palmarejo gold production royalty obligation in July 2016.
Other, net
increased
by
$19.8 million
, primarily due to a
$21.1 million
pre-tax gain on the sale of the Joaquin project in Argentina.
Income and Mining Taxes
During the first quarter of 2017, the Company reported estimated income and mining tax
expense
of approximately
$11.0 million
resulting in an effective tax rate of
37.2%
. This compares to estimated income and mining tax
expense
of
$2.1 million
for an effective tax rate of
11.5%
during the first quarter of 2016.
The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
2017
|
|
2016
|
In thousands
|
Income (loss) before tax
|
Tax (expense) benefit
|
|
Income (loss) before tax
|
Tax (expense) benefit
|
United States
|
$
|
20,714
|
|
$
|
(1,964
|
)
|
|
$
|
(9,361
|
)
|
$
|
(532
|
)
|
Argentina
|
(328
|
)
|
1,124
|
|
|
(1,015
|
)
|
1,543
|
|
Mexico
|
8,650
|
|
(9,923
|
)
|
|
(7,509
|
)
|
17
|
|
Bolivia
|
471
|
|
(31
|
)
|
|
2,047
|
|
(1,570
|
)
|
Other jurisdictions
|
202
|
|
(252
|
)
|
|
(2,452
|
)
|
(1,564
|
)
|
|
$
|
29,709
|
|
$
|
(11,046
|
)
|
|
$
|
(18,290
|
)
|
$
|
(2,106
|
)
|
The Company’s effective tax rate is impacted by recurring and nonrecurring items. These items include foreign exchange rates on deferred tax balances, uncertain tax positions, and the full valuation allowance on the deferred tax assets relating to losses in the United States and certain foreign jurisdictions. During the first quarter of 2017, foreign exchange increased income and mining tax expense by
$5.6 million
, predominately due to the strength of the Mexican peso. Additionally, the Company recognized
$1.8 million
income and mining tax expense from the sale of the Joaquin project. Also during the first quarter, favorable operating results at Palmarejo contributed to higher income and mining tax expense. The Company’s consolidated effective income and mining tax rate is a function of the combined effective tax rates and foreign exchange rates in the jurisdictions in which it operates. Variations in the jurisdictional mix of income and loss and foreign exchange rates result in significant fluctuations in our consolidated effective tax rate.
A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related benefits will not be realized. The Company analyzes its deferred tax assets and if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company will ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of risk factors that could impact the Company’s ability to realize its deferred tax assets.
2017 Outlook
The Company is maintaining its full-year 2017 production and related cost guidance. Exploration expense is expected to increase $6 million to $29 - $31 million to accelerate the expansion of Kensington’s Jualin deposit, offset by a $6 million decrease in underground capital development at Kensington, resulting in expected capital expenditures of $109 - $129 million.
Results of Operations
The Company produced
3.9 million
ounces of silver and
88,218
ounces of gold in the
three months ended
March 31, 2017
, compared to
3.4 million
ounces of silver and
78,072
ounces of gold in the
three months ended
March 31, 2016
. Silver production
increased
17%
due to higher mill throughput and grade at Palmarejo and timing of leach pad recoveries at Rochester. Gold production
increased
13%
due to higher mill throughput, grade and recovery at Palmarejo, partially offset by lower grade at Kensington.
Costs applicable to sales were
$11.39
per silver equivalent ounce (
$10.64
per average spot silver equivalent ounce) and
$788
per gold equivalent ounce in the
three months ended
March 31, 2017
compared to
$12.36
per silver equivalent ounce (
$11.28
per average spot silver equivalent ounce) and
$728
per gold equivalent ounce in the
three months ended
March 31, 2016
. Costs applicable to sales per silver equivalent ounce
decreased
8%
in the
three months ended
March 31, 2017
due to lower unit costs at Palmarejo, partially offset by higher unit costs at San Bartolomé. Costs applicable to sales per gold equivalent ounce
increased
8%
in the
three months ended
March 31, 2017
due to higher unit costs at Kensington.
All-in sustaining costs
were
$15.01
per silver equivalent ounce (
$13.65
per average spot silver equivalent ounce) in the
three months ended
March 31, 2017
, compared to
$16.28
per silver equivalent ounce (
$13.71
per average spot silver equivalent ounce) in the
three months ended
March 31, 2016
. The
8%
decrease
in all-in sustaining costs per silver equivalent ounce in 2017 was primarily due to lower costs applicable to sales per consolidated silver equivalent ounce and lower sustaining capital, partially offset by higher general and administrative and exploration expense.
Palmarejo
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
2017
|
|
2016
|
Tons milled
|
360,383
|
|
|
246,533
|
|
Silver ounces produced
|
1,530,541
|
|
|
933,369
|
|
Gold ounces produced
|
30,792
|
|
|
14,668
|
|
Silver equivalent ounces produced
|
3,378,061
|
|
|
1,813,449
|
|
Costs applicable to sales per silver equivalent oz
(1)
|
$
|
9.71
|
|
|
$
|
12.36
|
|
Costs applicable to sales per average spot silver equivalent oz
(1)
|
$
|
8.89
|
|
|
$
|
10.74
|
|
|
|
(1)
|
See Non-GAAP Financial Performance Measures.
|
Three Months Ended March 31, 2017
compared to
Three Months Ended March 31, 2016
Silver equivalent production
increased
86%
due to higher mill throughput, silver and gold grades and gold recoveries. Metal sales were
$77.7 million
, or
38%
of Coeur’s metal sales, compared with
$29.8 million
, or
21%
of Coeur’s metal sales. Costs applicable to sales per ounce
decreased
21%
as a result of higher production, lower waste tons mined and favorable currency exchange rates. Amortization increased to
$20.2 million
compared to
$7.3 million
, primarily due to higher production from Guadalupe and Independencia. Capital expenditures were
$6.2 million
as the Company continues underground development at Guadalupe and Independencia.
Rochester
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
2017
|
|
2016
|
Tons placed
|
3,513,708
|
|
|
4,374,459
|
|
Silver ounces produced
|
1,127,322
|
|
|
928,903
|
|
Gold ounces produced
|
10,356
|
|
|
10,460
|
|
Silver equivalent ounces produced
|
1,748,682
|
|
|
1,556,503
|
|
Costs applicable to sales per silver equivalent oz
(1)
|
$
|
12.56
|
|
|
$
|
12.64
|
|
Costs applicable to sales per average spot silver equivalent oz
(1)
|
$
|
11.80
|
|
|
$
|
11.20
|
|
|
|
(1)
|
See Non-GAAP Financial Performance Measures.
|
Three Months Ended March 31, 2017
compared to
Three Months Ended March 31, 2016
Silver equivalent production
increased
12%
due to timing of recoveries, partially offset by lower tons placed and lower silver and gold grades. Metal sales were
$39.0 million
, or
19%
of Coeur’s metal sales, compared with
$30.0 million
, or
20%
of Coeur’s metal sales. Costs applicable to sales per silver equivalent ounce were generally consistent at
$12.56
per silver equivalent ounce. Amortization increased to
$5.8 million
compared to
$5.3 million
due to higher silver production and amortizable mining properties and equipment. Capital expenditures increased to
$10.6 million
compared to
$3.3 million
due to the stage IV leach pad expansion.
Kensington
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
2017
|
|
2016
|
Tons milled
|
165,895
|
|
|
159,360
|
|
Gold ounces produced
|
26,197
|
|
|
31,974
|
|
Costs applicable to sales/oz
(1)
|
$
|
885
|
|
|
$
|
772
|
|
|
|
(1)
|
See Non-GAAP Financial Performance Measures.
|
Three Months Ended March 31, 2017
compared to
Three Months Ended March 31, 2016
Gold production
decreased
18%
due to lower grades mined as a result of mine sequencing, partially offset by higher mill throughput. Metal sales were
$38.0 million
, or
18%
of Coeur’s metal sales, compared to
$35.7 million
, or
24%
of Coeur’s metal sales. Costs applicable to sales per ounce were
15%
higher
, primarily due to lower production and higher diesel, contract services and other mining costs. Amortization was
$9.2 million
compared to
$8.3 million
due to higher amortizable mining properties and equipment. Capital expenditures decreased to
$5.5 million
compared to
$8.1 million
, due to less underground mine development.
Wharf
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
2017
|
|
2016
|
Tons placed
|
1,292,181
|
|
|
974,663
|
|
Gold ounces produced
|
20,873
|
|
|
20,970
|
|
Silver ounces produced
|
20,065
|
|
|
12,980
|
|
Gold equivalent ounces produced
(1)
|
21,207
|
|
|
21,186
|
|
Costs applicable to sales per gold equivalent oz
(1)
|
$
|
662
|
|
|
$
|
669
|
|
|
|
(1)
|
See Non-GAAP Financial Performance Measures.
|
Three Months Ended March 31, 2017
compared to
Three Months Ended March 31, 2016
Gold equivalent production remained comparable at
21,207
gold equivalent ounces. Metal sales were
$30.3 million
, or
15%
of Coeur’s metal sales, compared to
$27.9 million
, or
19%
of Coeur’s metal sales. Costs applicable to sales per gold equivalent ounce remained comparable at
$662
per gold equivalent ounce. Amortization was
$3.1 million
compared to
$4.1 million
due to higher life of mine reserves. Capital expenditures were
$0.9 million
compared to
$1.4 million
.
San Bartolomé
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
2017
|
|
2016
|
Tons milled
|
384,267
|
|
|
407,806
|
|
Silver ounces produced
|
1,214,507
|
|
|
1,381,913
|
|
Costs applicable to sales/oz
(1)
|
$
|
15.87
|
|
|
$
|
12.64
|
|
|
|
(1)
|
See Non-GAAP Financial Performance Measures.
|
Three Months Ended March 31, 2017
compared to
Three Months Ended March 31, 2016
Silver production
decreased
12%
due to drought conditions. Silver sales were
$20.6 million
, or
10%
of Coeur’s metal sales, compared with
$21.3 million
, or
15%
of Coeur’s metal sales. Costs applicable to sales per ounce
increased
due to lower production and higher mining and processing costs. Amortization was
$1.4 million
compared to
$1.8 million
due to lower production. Capital expenditures were
$0.4 million
compared to
$0.5 million
.
Endeavor Silver Stream
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
2017
|
|
2016
|
Tons milled
|
45,340
|
|
|
86,863
|
|
Silver ounces produced
|
39,941
|
|
|
115,310
|
|
Costs applicable to sales/oz
(1)
|
7.22
|
|
|
5.35
|
|
|
|
(1)
|
See Non-GAAP Financial Performance Measures.
|
Three Months Ended March 31, 2017
compared to
Three Months Ended March 31, 2016
Silver production at Endeavor
decreased
due to lower mining and mill throughput rates. Costs applicable to sales per ounce
increased
due to the impact of higher silver prices on the Company’s silver price sharing agreement with the Endeavor mine operator. Amortization was $0.1 million compared to $0.8 million due to lower production and lower amortizable mining properties.
Liquidity and Capital Resources
Cash Provided by Operating Activities
Net cash provided by operating activities for the
three months ended March 31, 2017 and 2016
was
$55.3 million
and
$6.6 million
, respectively, and was impacted by the following key factors:
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
2017
|
|
2016
|
Consolidated silver equivalent ounces sold
|
11,126,126
|
|
|
8,274,952
|
|
Average realized price per consolidated silver equivalent ounce
(1)
|
$
|
18.53
|
|
|
$
|
17.72
|
|
Costs applicable to sales per consolidated silver equivalent ounce
(1)
|
(11.93
|
)
|
|
(12.27
|
)
|
Operating margin per consolidated silver equivalent ounce
|
$
|
6.60
|
|
|
$
|
5.45
|
|
|
|
(1)
|
See Non-GAAP Financial Performance Measures.
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
In thousands
|
2017
|
|
2016
|
Cash flow before changes in operating assets and liabilities
|
$
|
43,827
|
|
|
$
|
23,253
|
|
Changes in operating assets and liabilities:
|
|
|
|
Receivables
|
13,106
|
|
|
3,481
|
|
Prepaid expenses and other
|
(4,299
|
)
|
|
1,279
|
|
Inventories
|
14,292
|
|
|
(7,822
|
)
|
Accounts payable and accrued liabilities
|
(11,655
|
)
|
|
(13,574
|
)
|
CASH PROVIDED BY OPERATING ACTIVITIES
|
$
|
55,271
|
|
|
$
|
6,617
|
|
Cash
provided by
operating activities
increased
$48.7 million
for the
three months ended March 31, 2017
compared to the
three months ended March 31, 2016
due to
higher
silver equivalent ounces sold,
higher
average realized prices,
lower
costs applicable to sales per consolidated silver equivalent ounce and favorable working capital adjustments. Metal sales for
three months ended March 31, 2017
increased
$59.5 million
,
$53.1 million
due to
higher
silver equivalent ounces sold and
$6.4 million
due to
higher
average realized prices. The
$11.4 million
working capital
decrease
in the
three months ended March 31, 2017
was primarily due to the reduction of precious metal inventory and the collection of accounts receivable, compared to the
$16.6 million
working capital
increase
in the
three months ended March 31, 2016
due to an increase in ore on leach pads and the payment of accrued interest, payroll, and other benefits, partially offset by the collection of accounts receivable.
Cash Used in Investing Activities
Net cash
used in
investing activities in the
three months ended March 31, 2017
was
$1.5 million
compared to
$18.6 million
in the
three months ended March 31, 2016
, primarily due to proceeds from the sale of the Joaquin project, net of a retained 2.0% NSR, and sale of equity securities. The Company had capital expenditures of
$24.0 million
in the
three months ended March 31, 2017
compared with
$22.2 million
in the
three months ended March 31, 2016
. Capital expenditures in both periods primarily related to underground development at Palmarejo and Kensington.
Cash Used in Financing Activities
Net cash
used in
financing activities in the
three months ended March 31, 2017
was
$6.5 million
compared to
$15.4 million
in the
three months ended March 31, 2016
. The Company’s Palmarejo gold production royalty obligation terminated July 2016 and Coeur Mexicana now sells 50% of Palmarejo gold production for the lesser of $800 or spot price per ounce under a gold stream agreement. In addition, the Company had higher tax withholdings on vested stock-based compensation awards during
three months ended March 31, 2017
.
Other Liquidity Matters
We believe that our liquidity and capital resources from U.S. operations are adequate to fund our U.S. operations and corporate activities. The Company has asserted indefinite reinvestment of earnings from its Mexican operations as determined by management’s judgment about and intentions concerning the future operations of the Company. The Company does not believe that the amounts reinvested will have a material impact on liquidity.
In order to reduce future cash interest payments, and/or amounts due at maturity or upon redemption, from time to time we may repurchase certain of our debt securities for cash or in exchange for other securities, which may include secured or
unsecured notes or equity, in each case in open market or privately negotiated transactions. We regularly engage in conversations with our bondholders and evaluate any such transactions in light of prevailing market conditions, liquidity requirements, contractual restrictions, and other factors. The amounts involved may be significant and any such transactions may occur at a substantial discount to the debt securities’ face amount. For additional information, please see the section titled “Risk Factors” included in Item 1A.
Critical Accounting Policies and Accounting Developments
Please see Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contained in the Company’s Form
10-K for the year ended December 31, 2016 (the “2016 10-K”) for the Company’s critical accounting policies and estimates.
Non-GAAP Financial Performance Measures
Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles (“GAAP”). These measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.
Adjusted Net Income (Loss)
Management uses
Adjusted net income (loss)
to evaluate the Company’s operating performance, and to plan and forecast its operations. The Company believes the use of
Adjusted net income (loss)
reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies. Management’s determination of the components of
Adjusted net income (loss
) are evaluated periodically and are based, in part, on a review of non-GAAP financial measures used by mining industry analysts. The tax effect of adjustments are based on statutory tax rates and the Company’s tax attributes, including the impact through the Company’s valuation allowance. The combined effective rate of tax adjustments may not be consistent with the statutory tax rates or the Company’s effective tax rate due to jurisdictional tax attributes and related valuation allowance impacts which may minimize the tax effect of certain adjustments and may not apply to gains and losses equally.
Adjusted net income (loss)
is reconciled to
Net income (loss)
in the table below:
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
In thousands except per share amounts
|
2017
|
|
2016
|
Net income (loss)
|
$
|
18,663
|
|
|
$
|
(20,396
|
)
|
Fair value adjustments
|
1,200
|
|
|
8,695
|
|
Impairment of marketable securities
|
121
|
|
|
—
|
|
Write-downs
|
—
|
|
|
4,446
|
|
Gain on sale of Joaquin project
|
(21,138
|
)
|
|
—
|
|
(Gain) loss on sale of assets and securities
|
2,066
|
|
|
(1,085
|
)
|
Transaction costs
|
—
|
|
|
380
|
|
Foreign exchange loss (gain)
|
4,268
|
|
|
(1,124
|
)
|
Tax effect of adjustments
(1)
|
1,807
|
|
|
(1,375
|
)
|
Adjusted net income (loss)
|
$
|
6,987
|
|
|
$
|
(10,459
|
)
|
|
|
|
|
Adjusted net income (loss) per share - Basic
|
$
|
0.04
|
|
|
$
|
(0.06
|
)
|
Adjusted net income (loss) per share - Diluted
|
$
|
0.04
|
|
|
$
|
(0.06
|
)
|
|
|
(1)
|
For the three months ended March 31, 2017, tax effect of adjustments of
$1.8 million
(14%) is primarily related to a taxable gain on the sale of the Joaquin project. For the three months ended March 31, 2016, tax effect of adjustments of
$1.4 million
(-11%) is primarily related to the tax benefit from fair value adjustments.
|
EBITDA and Adjusted EBITDA
Management uses
EBITDA
to evaluate the Company’s operating performance, to plan and forecast its operations, and assess leverage levels and liquidity measures. The Company believes the use of
EBITDA
reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies.
Adjusted EBITDA
is a measure used in the Company’s Senior Notes indenture to determine our ability to make certain payments and incur additional indebtedness.
EBITDA
and
Adjusted EBITDA
do not represent, and should not be considered an alternative to,
Net income (Loss)
or
Cash Flow from Operations
as determined under GAAP.
Other companies may calculate
Adjusted EBITDA
differently and those calculations may not be comparable to our presentation.
Adjusted EBITDA
is reconciled to
Net income (loss)
in the table below:
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
In thousands except per share amounts
|
2017
|
|
2016
|
Net income (loss)
|
$
|
18,663
|
|
|
$
|
(20,396
|
)
|
Interest expense, net of capitalized interest
|
3,586
|
|
|
11,120
|
|
Income tax provision (benefit)
|
11,046
|
|
|
2,106
|
|
Amortization
|
40,104
|
|
|
27,964
|
|
EBITDA
|
73,399
|
|
|
20,794
|
|
Fair value adjustments, net
|
1,200
|
|
|
8,695
|
|
Impairment of equity securities
|
121
|
|
|
—
|
|
Foreign exchange (gain) loss
|
(1,349
|
)
|
|
164
|
|
Gain on sale of Joaquin project
|
(21,138
|
)
|
|
—
|
|
(Gain) loss on sale of assets and securities
|
2,066
|
|
|
(1,085
|
)
|
Transaction costs
|
—
|
|
|
380
|
|
Asset retirement obligation accretion
|
2,390
|
|
|
2,060
|
|
Inventory adjustments and write-downs
|
(104
|
)
|
|
1,944
|
|
Write-downs
|
—
|
|
|
4,446
|
|
Adjusted EBITDA
|
$
|
56,585
|
|
|
$
|
37,398
|
|
Costs Applicable to Sales and All-in Sustaining Costs
Management uses
Costs applicable to sales
(“CAS”) and
All-in sustaining costs
(“AISC”) to evaluate the Company’s current operating performance and life of mine performance from discovery through reclamation. We believe these measures assist analysts, investors and other stakeholders in understanding the costs associated with producing silver and gold, assessing our operating performance and ability to generate free cash flow from operations and sustaining production. These measures may not be indicative of operating profit or cash flow from operations as determined under GAAP. Management believes converting the benefit from selling gold into silver equivalent ounces best allows management, analysts, investors and other stakeholders to evaluate the operating performance of the Company. Other companies may calculate CAS and AISC differently as a result of reflecting the benefit from selling non-silver metals as a by-product credit rather than converting to silver equivalent ounces, differences in the determination of sustaining capital expenditures, and differences in underlying accounting principles and accounting frameworks such as in International Financial Reporting Standards.
Three Months Ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver
|
|
Gold
|
|
Total
|
In thousands except per ounce amounts
|
|
Palmarejo
|
|
Rochester
|
|
San Bartolomé
|
|
Endeavor
|
|
Total
|
|
Kensington
|
|
Wharf
|
|
Total
|
|
Costs applicable to sales, including amortization (U.S. GAAP)
|
|
$
|
63,151
|
|
|
$
|
32,255
|
|
|
$
|
19,633
|
|
|
$
|
400
|
|
|
$
|
115,439
|
|
|
$
|
37,621
|
|
|
$
|
19,431
|
|
|
$
|
57,052
|
|
|
$
|
172,491
|
|
Amortization
|
|
20,150
|
|
|
5,816
|
|
|
1,411
|
|
|
113
|
|
|
27,490
|
|
|
9,178
|
|
|
3,111
|
|
|
12,289
|
|
|
39,779
|
|
Costs applicable to sales
|
|
$
|
43,001
|
|
|
$
|
26,439
|
|
|
$
|
18,222
|
|
|
$
|
287
|
|
|
$
|
87,949
|
|
|
$
|
28,443
|
|
|
$
|
16,320
|
|
|
$
|
44,763
|
|
|
$
|
132,712
|
|
Silver equivalent ounces sold
|
|
4,427,346
|
|
|
2,104,209
|
|
|
1,148,006
|
|
|
39,765
|
|
|
7,719,326
|
|
|
|
|
|
|
|
|
11,126,126
|
|
Gold equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
32,144
|
|
|
24,636
|
|
|
56,780
|
|
|
|
Costs applicable to sales per ounce
|
|
$
|
9.71
|
|
|
$
|
12.56
|
|
|
$
|
15.87
|
|
|
$
|
7.22
|
|
|
$
|
11.39
|
|
|
$
|
885
|
|
|
$
|
662
|
|
|
$
|
788
|
|
|
$
|
11.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales per average spot ounce
|
|
$
|
8.89
|
|
|
$
|
11.80
|
|
|
|
|
|
|
$
|
10.64
|
|
|
|
|
|
|
|
|
$
|
10.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
132,712
|
|
Treatment and refining costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,616
|
|
Sustaining capital
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,600
|
|
General and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,133
|
|
Exploration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,252
|
|
Reclamation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,818
|
|
Project/pre-development costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,889
|
|
All-in sustaining costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
167,020
|
|
Silver equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,719,326
|
|
Kensington and Wharf silver equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,406,800
|
|
Consolidated silver equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,126,126
|
|
All-in sustaining costs per silver equivalent ounce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
15.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated silver equivalent ounces sold (average spot)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,235,897
|
|
All-in sustaining costs per average spot silver equivalent ounce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13.65
|
|
|
|
(1)
|
Excludes development capital for Jualin, Guadalupe South Portal and Rochester expansion permitting.
|
Three Months Ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver
|
|
Gold
|
|
|
In thousands except per ounce amounts
|
|
Palmarejo
|
|
Rochester
|
|
San Bartolomé
|
|
Endeavor
|
|
Total
|
|
Kensington
|
|
Wharf
|
|
Total
|
|
Total
|
Costs applicable to sales, including amortization (U.S. GAAP)
|
|
$
|
28,327
|
|
|
$
|
27,798
|
|
|
$
|
19,251
|
|
|
$
|
955
|
|
|
$
|
76,331
|
|
|
$
|
32,767
|
|
|
$
|
19,512
|
|
|
$
|
52,279
|
|
|
$
|
128,610
|
|
Amortization
|
|
7,289
|
|
|
5,313
|
|
|
1,754
|
|
|
299
|
|
|
14,655
|
|
|
8,349
|
|
|
4,051
|
|
|
12,400
|
|
|
27,055
|
|
Costs applicable to sales
|
|
$
|
21,038
|
|
|
$
|
22,485
|
|
|
$
|
17,497
|
|
|
$
|
656
|
|
|
$
|
61,676
|
|
|
$
|
24,418
|
|
|
$
|
15,461
|
|
|
$
|
39,879
|
|
|
$
|
101,555
|
|
Silver equivalent ounces sold
|
|
1,702,290
|
|
|
1,779,377
|
|
|
1,384,391
|
|
|
122,694
|
|
|
4,988,752
|
|
|
|
|
|
|
|
|
8,274,952
|
|
Gold equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
31,648
|
|
|
23,122
|
|
|
54,770
|
|
|
|
Costs applicable to sales per ounce
|
|
$
|
12.36
|
|
|
$
|
12.64
|
|
|
$
|
12.64
|
|
|
$
|
5.35
|
|
|
$
|
12.36
|
|
|
$
|
772
|
|
|
$
|
669
|
|
|
$
|
728
|
|
|
$
|
12.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales per average spot ounce
|
|
$
|
10.74
|
|
|
$
|
11.20
|
|
|
|
|
|
|
$
|
11.28
|
|
|
|
|
|
|
|
|
$
|
10.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
101,555
|
|
Treatment and refining costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,158
|
|
Sustaining capital
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,710
|
|
General and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,276
|
|
Exploration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,731
|
|
Reclamation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,759
|
|
Project/pre-development costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,558
|
|
All-in sustaining costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
134,747
|
|
Silver equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,988,752
|
|
Kensington and Wharf silver equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,286,200
|
|
Consolidated silver equivalent ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,274,952
|
|
All-in sustaining costs per silver equivalent ounce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
16.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated silver equivalent ounces sold (average spot)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,828,373
|
|
All-in sustaining costs per average spot silver equivalent ounce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13.71
|
|
|
|
(1)
|
Excludes development capital for Jualin, Guadalupe, Independencia and Rochester crushing capacity expansion.
|
Cautionary Statement Concerning Forward-Looking Statements
This report contains numerous forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) relating to the Company’s gold and silver mining business, including statements regarding strategies to produce long-term cash flow, provide opportunities for growth through continued exploration, and generate superior and sustainable returns for stockholders, maximizing net cash flow, reducing operating and non-operating costs, demonstrating consistent capital discipline, efficient management of working capital, tax positions, anticipated expenses, efforts to mitigate risks associated with gold and silver price and foreign currency fluctuations and the adequacy of liquidity and capital resources. Such forward-looking statements are identified by the use of words such as “believes,” “intends,” “expects,” “hopes,” “may,” “should,” “plan,” “projected,” “contemplates,” “anticipates” or similar words. Actual results could differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ materially from those projected in the forward-looking statements include (i) the risk factors set forth in the “Risk Factors” section of the 2016 10-K, and the risks and uncertainties discussed in this MD&A, (ii) 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), (iii) changes in the market prices of gold and silver and a sustained lower price environment, including any resulting impact on cash flows, (iv) the uncertainties inherent in the Company’s production, exploratory and developmental activities, including risks relating to permitting and regulatory delays, ground conditions and grade variability, (v) any future labor disputes or work stoppages (involving the Company and its subsidiaries or third parties), (vi) the uncertainties inherent in the estimation of gold and silver reserves and mineralized material, (vii) changes that could result from the Company’s future acquisition of new mining properties or businesses, (viii) the loss of access to any third-party smelter to which the Company markets silver and gold, (ix) the effects of environmental and other governmental regulations, (x) the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries, (xi) the political risks and uncertainties associated with operations in Bolivia; and (xii) the Company’s ability to raise additional financing necessary to conduct its business, make payments or refinance its debt. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.