Coeur Mining, Inc. (the "Company" or "Coeur") (NYSE: CDE) reported third quarter 2016 revenue of $176.2 million, net income of $69.6 million, or $0.42 per share, and adjusted net income 1 of $38.6 million, or $0.23 per share.

Cash flow from operating activities was $47.8 million, a 4% quarter-over-quarter increase. Free cash flow 1 totaled $14.6 million in the third quarter, 20% higher than the second quarter.

The Company raised its 2016 full-year production guidance on October 6 and is now reducing its full-year cost guidance at three of its five operations as outlined in the Full-Year 2016 Outlook section of this release.

Highlights
  • Silver and gold production were 3.5 million ounces and 84,871 ounces, respectively, or 8.6 million silver equivalent ounces 1, representing a 10% decrease over the second quarter
  • Silver and gold sales were 3.4 million ounces and 83,389 ounces, respectively, or 8.4 million silver equivalent ounces 1, representing a 10% decrease over the second quarter
  • Average realized prices per ounce of silver and gold were $19.61 and $1,317, respectively, representing increases of 13% and 5%, respectively, compared to the prior quarter
  • For Coeur's primary silver operations, CAS and adjusted CAS were $11.96 and $11.69, respectively, per realized AgEqOz 1. Using a 60:1 equivalence ratio, CAS and adjusted CAS were $12.38 and $12.10 per AgEqOz 1
  • For Coeur's primary gold operations, CAS and adjusted CAS per AuEqOz 1 were $767 and $712, respectively
  • Companywide AISC and adjusted AISC were $15.89 and $15.37 per realized AgEqOz 1, respectively. Using a 60:1 equivalence ratio, companywide AISC and adjusted AISC were $17.02 and $16.46 per AgEqOz 1, respectively
  • Net income and adjusted net income 1 were $69.6 million and $38.6 million, or $0.42 and $0.23 per share, respectively. Net income increased nearly four times compared to the second quarter and adjusted net income more than doubled quarter-over-quarter
  • EBITDA 1 and adjusted EBITDA 1 were $50.9 million and $62.7 million, respectively, with both nearly doubling compared to the same quarter last year. LTM adjusted EBITDA 1 rose 18% quarter-over-quarter to $201.7 million
  • Cash and equivalents were $222.5 million at September 30, 2016
  • Total debt declined $109.3 million, or 21%, during the quarter. Together with rising adjusted EBITDA 1, the Company's total debt to LTM adjusted EBITDA 1 declined to 2.0x, which is 64% lower than it was a year ago (net debt to LTM adjusted EBITDA 1 is now 0.9x)
  • Interest expense declined 26% quarter-over-quarter and 35% year-over-year
  • The minimum ounce obligation on the old Franco-Nevada royalty was satisfied in July, triggering a shift to a new gold stream with more favorable terms that are expected to result in a significant increase in free cash flow 1 at Palmarejo (previously announced June 23, 2014)
  • Announced a $200 million "at-the-market" (ATM) stock offering on September 9, 2016. As of October 25, the Company sold 7.6 million shares under the offering, generating net proceeds of approximately $90 million. The Company intends to use these proceeds to further reduce remaining debt levels

"We achieved a number of significant milestones during the third quarter despite lower production relative to the second quarter. Our quarterly earnings more than doubled, free cash flow increased 20% quarter-over-quarter and LTM adjusted EBITDA has now risen above $200 million - up from $96 million just 15 months ago. Importantly, we are well-positioned for a strong fourth quarter at each of our five operations," said Mitchell J. Krebs, Coeur's President and Chief Executive Officer.

"We made great progress repositioning our balance sheet to be conservative, flexible and supportive of the Company's future growth initiatives. Our total debt declined by 21% since the end of June, interest expense dropped by 26%, and our total debt to LTM adjusted EBITDA ratio has now dropped to 2.0x - down 65% from 5.7x just fifteen months ago. With cash and equivalents of over $220 million and rising due to our positive free cash flow and the expected completion of our ongoing ATM stock offering, we anticipate further balance sheet strengthening to take place during the remainder of this year.

"We increased our full-year 2016 production guidance earlier this month and are now reducing our full-year 2016 cost guidance, which reflects the significant operational improvements we have made over the last several years. As we focus on longer-term growth in production and cash flow, we are excited about the high-grade exploration results we are generating from several of our existing operations and our revitalized earlier-stage exploration initiatives. In addition, we look forward to conducting confirmation drilling in early 2017 with the goal of assessing a lower capex, higher grade, lower tonnage development and operating plan for our La Preciosa project in Mexico." (See "Non- U.S. GAAP Measures")

Financial and Operating Highlights (Unaudited)
(Amounts in millions, except per share amounts, gold ounces produced & sold, and per-ounce metrics)   3Q 2016   2Q 2016   1Q 2016   4Q 2015   3Q 2015
Revenue $ 176.2   $ 182.0   $ 148.4   $ 164.2   $ 162.6
Costs Applicable to Sales $ 105.4 $ 100.5 $ 101.6 $ 125.3 $ 120.2
General and Administrative Expenses $ 7.1 $ 7.4 $ 8.3 $ 8.8 $ 6.7
Net Income (Loss) $ 69.6 $ 14.5 $ (20.4 ) $ (303.0 ) $ (14.2 )
Net Income (Loss) Per Share $ 0.42 $ 0.09 $ (0.14 ) $ (2.28 ) $ (0.11 )
Adjusted Net Income (Loss) 1 $ 38.6 $ 16.9 $ (10.5 ) $ (44.0 ) $ (19.5 )
Adjusted Net Income (Loss) 1 Per Share $ 0.23 $ 0.11 $ (0.06 ) $ (0.31 ) $ (0.14 )
Weighted Average Shares 161.0 157.9 150.2 145.0 135.5
EBITDA 1 $ 50.9 $ 62.1 $ 20.8 $ (272.9 ) $ 25.5
Adjusted EBITDA 1 $ 62.7 $ 72.0 $ 37.4 $ 32.9 $ 33.7
Cash Flow from Operating Activities $ 47.8 $ 45.9 $ 6.6 $ 43.2 $ 36.8
Capital Expenditures $ 25.6 $ 23.3 $ 22.2 $ 30.0 $ 23.9
Free Cash Flow 1 $ 14.6 $ 12.2 $ (24.7 ) $ 4.2 $ 2.8
Cash, Equivalents & Short-Term Investments $ 222.5 $ 257.6 $ 173.4 $ 200.7 $ 205.7
Total Debt 2 $ 401.7 $ 511.1 $ 511.1 $ 490.4 $ 546.0
Average Realized Price Per Ounce - Silver $ 19.61 $ 17.38 $ 15.16 $ 14.27 $ 14.66
Average Realized Price Per Ounce - Gold $ 1,317 $ 1,255 $ 1,178 $ 1,093 $ 1,116
Silver Ounces Produced 3.5 4.0 3.4 4.0 3.8
Gold Ounces Produced 84,871 92,727 78,072 91,551 85,769
Silver Equivalent Ounces Produced 1 8.6 9.6 8.1 9.5 9.0
Silver Ounces Sold 3.4 4.0 3.5 4.4 4.0
Gold Ounces Sold 83,389 88,543 79,091 92,032 91,118
Silver Equivalent Ounces Sold 1 8.4 9.3 8.3 9.9 9.5
Silver Equivalent Ounces Sold (Realized) 1 9.0 10.4 9.7 11.3 10.9
Adjusted CAS per AgEqOz 1 $ 12.10 $ 10.71 $ 12.05 $ 12.65 $ 12.07
Adjusted CAS per Realized AgEqOz 1 $ 11.69 $ 10.05 $ 11.08 $ 11.71 $ 11.00
Adjusted CAS per AuEqOz 1 $ 712 $ 644 $ 721 $ 663 $ 783
Adjusted AISC per AgEqOz 1 $ 16.46 $ 14.82 $ 16.05 $ 15.66 $ 15.17
Adjusted AISC per Realized AgEqOz 1 $ 15.37 $ 13.27 $ 13.73 $ 13.55 $ 13.14
 

Financial Results

Third quarter revenue decreased 3% quarter-over-quarter and increased 8% year-over-year to $176.2 million. Average realized silver and gold prices during the quarter were $19.61 and $1,317, respectively. Silver contributed 38% of metal sales and gold contributed 62% during the third quarter. Costs applicable to sales increased 5% quarter-over-quarter and decreased 12% year-over-year to $105.4 million.

Third quarter general and administrative expenses were $7.1 million, a 4% quarter-over-quarter decrease and a 6% year-over-year increase. For the first nine months of 2016, general and administrative expenses were $22.8 million, a decline of 5% from the same period in 2015. Third quarter capital expenditures of $25.6 million were 10% higher quarter-over-quarter and 7% higher year-over-year, driven by development of the high-grade Jualin deposit at Kensington and the Guadalupe and Independencia deposits at Palmarejo. Capital expenditures totaled $71.1 million for the first nine months of 2016, a 9% increase compared with the same period in 2015.

Net income was $69.6 million, or $0.42 per share, during the third quarter, compared to net income of $14.5 million, or $0.09 per share, in the second quarter, and a net loss of $14.2 million, or $0.11 per share, in the third quarter 2015. Adjusted net income 1 was $38.6 million, or $0.23 per share, compared to adjusted net income 1 of $16.9 million, or $0.11 per share, in the second quarter and a net loss of $19.5 million, or $0.14 per share, in the third quarter 2015. Adjusted net income for the third quarter primarily excluded loss on debt extinguishments, gains on the sale of assets, and various tax effects (including a $40.8 million deferred tax benefit related to reorganization activities to integrate recent acquisitions). Third quarter cash flow from operating activities was $47.8 million, resulting from higher average realized metal prices and a $10.3 million decrease in working capital.

Third quarter adjusted EBITDA 1 was $62.7 million, a decrease of 13% quarter-over-quarter and nearly double the third quarter 2015. At September 30, LTM adjusted EBITDA 1 totaled $201.7 million, an 18% quarter-over-quarter increase and more than double the same period last year.

Operations

Highlights of third quarter 2016 results for each of the Company's operating segments are provided below.

Palmarejo, Mexico

(Dollars in millions, except per ounce amounts)   3Q 2016   2Q 2016   1Q 2016   4Q 2015   3Q 2015
Underground Operations:        
Tons mined 253,681 283,971 215,642 189,383 190,399
Average silver grade (oz/t) 3.96 5.40 4.21 3.96 4.11
Average gold grade (oz/t) 0.08 0.08 0.07 0.06 0.10
Surface Operations:
Tons mined 1,695 35,211 102,018 247,071
Average silver grade (oz/t) 7.77 4.18 3.86 3.56
Average gold grade (oz/t) 0.07 0.04 0.03 0.03
Processing:
Total tons milled 274,644 270,142 246,533 301,274 427,635
Average recovery rate - Ag 85.5% 89.5% 89.1% 95.4% 87.9%
Average recovery rate - Au 77.7% 86.4% 92.1% 88.8% 84.7%
Silver ounces produced (000's) 933 1,307 933 1,126 1,422
Gold ounces produced 16,608 18,731 14,668 14,326 22,974
Silver equivalent ounces produced 1 (000's) 1,930 2,431 1,813 1,985 2,800
Silver ounces sold (000's) 778 1,350 928 1,465 1,425
Gold ounces sold 11,410 19,214 12,899 18,719 25,000
Silver equivalent ounces sold 1 (000's) 1,462 2,502 1,702 2,588 2,925
Silver equivalent ounces sold 1 (realized) (000's) 1,544 2,737 1,930 2,840 3,325
Metal sales $30.7 $48.3 $29.8 $41.6 $49.2
Costs applicable to sales $16.0 $22.9 $21.0 $39.8 $34.1
Adjusted CAS per AgEqOz 1 $10.70 $9.02 $11.54 $13.48 $11.40
Adjusted CAS per realized AgEqOz 1 $10.14 $8.24 $10.18 $12.04 $10.01
Exploration expense $1.3 $0.6 $0.8 $0.5 $1.1
Cash flow from operating activities $13.7 $11.3 $3.4 $20.3 $22.9
Sustaining capital expenditures $6.7 $5.5 $6.6 $(1.4) $1.1
Development capital expenditures $3.3 $3.4 $2.2 $7.0 $9.4
Total capital expenditures $10.0 $8.9 $8.8 $5.6 $10.5
Gold production royalty payments $7.6 $10.5 $9.1 $9.0 $10.2
Free cash flow 1 $(3.9) $(8.1) $(14.5) $5.7 $2.2
  • On schedule transition to lower-tonnage, higher-grade, higher-margin underground operations with Guadalupe mining nearly 2,300 tons per day during the quarter
  • Development of Independencia remains on-track to achieve a mining rate of 1,000 tons per day by year-end
  • Silver equivalent 1 production decreased 21% quarter-over-quarter mostly due to the planned installation of improvements to the Merrill-Crowe processing circuits during the quarter. Process plant recovery rates, grades, and tons mined are all expected to increase in the fourth quarter
  • Metal sales of $30.7 million decreased 36% quarter-over-quarter and 38% year-over-year
  • Adjusted CAS per realized AgEqOz 1 were $10.14 and adjusted CAS per AgEqOz 1 (60:1 equivalence) were $10.70, representing increases of 23% and 19%, respectively, compared to the second quarter due to lower production rates
  • The 400,000 ounce minimum royalty obligation with Franco-Nevada was achieved in July 2016, resulting in the new, more favorable gold stream agreement becoming effective, which is expected to significantly improve Palmarejo's cash flows going forward
  • The Company has increased full-year 2016 production guidance to 4.1 - 4.6 million silver ounces from 3.9 - 4.4 million silver ounces and 70,000 - 75,000 gold ounces from 67,000 - 72,000 gold ounces
  • The Company is reducing cost guidance to $10.50 - $11.00 per AgEqOz 1 (60:1 equivalence) or $9.75 - $10.25 per realized AgEqOz 1 from $12.50 - $13.50 per AgEqOz 1 (60:1 equivalence)

Rochester, Nevada
(Dollars in millions, except per ounce amounts)   3Q 2016   2Q 2016   1Q 2016   4Q 2015   3Q 2015
Ore tons placed 4,901,039   6,402,013   4,374,459   4,411,590   4,128,868
Average silver grade (oz/t) 0.54 0.54 0.64 0.60 0.59
Average gold grade (oz/t) 0.003 0.003 0.004 0.003 0.003
Silver ounces produced (000's) 1,161 1,197 929 1,107 1,086
Gold ounces produced 12,120 13,940 10,460 11,564 10,892
Silver equivalent ounces produced 1 (000's) 1,888 2,033 1,557 1,800 1,740
Silver ounces sold (000's) 1,163 1,137 1,079 1,125 1,304
Gold ounces sold 11,751 12,909 11,672 11,587 13,537
Silver equivalent ounces sold 1 (000's) 1,868 1,912 1,779 1,821 2,116
Silver equivalent ounces sold 1 (realized) (000's) 1,952 2,070 1,986 2,004 2,333
Metal sales $37.9 $35.8 $30.0 $29.0 $34.6
Costs applicable to sales $21.8 $21.7 $22.5 $22.8 $25.4
Adjusted CAS per AgEqOz 1 $11.56 $11.30 $12.61 $12.37 $12.01
Adjusted CAS per realized AgEqOz 1 $11.07 $10.43 $11.29 $11.19 $10.89
Exploration expense $0.1 $0.2 $0.1 $0.1 $—
Cash flow from operating activities $9.5 $9.2 $2.1 $0.4 $6.5
Sustaining capital expenditures $1.2 $2.6 $2.5 $5.3 $1.8
Development capital expenditures $2.2 $1.3 $0.8 $5.5 $3.5
Total capital expenditures $3.4 $3.9 $3.3 $10.8 $5.3
Free cash flow 1 $6.1 $5.3 $(1.2) $(10.4) $1.2
  • Silver equivalent 1 production decreased 7% quarter-over-quarter due to longer-than-expected recovery time from the Stage III leach pad
  • Metal sales of $37.9 million increased 6% quarter-over-quarter and increased 10% year-over-year
  • $6.1 million of free cash flow 1 was generated, which represents the highest level of free cash flow since the first quarter of 2015
  • Adjusted CAS per realized AgEqOz 1 were $11.07 and adjusted CAS per AgEqOz 1 (60:1 equivalence) were $11.56, representing increases of 6% and 2%, respectively, compared to the prior quarter
  • Crushing rates remained strong while tons placed moderated in the third quarter due to fewer run-of-mine tons placed
  • Construction of the Stage IV leach pad expansion commenced in July 2016 and is expected to be complete in mid-2017 for a total estimated cost of approximately $40 million ($30 million of which is anticipated to be spent in 2017)
  • The Company revised full-year 2016 silver production guidance down to 4.5 - 5.0 million ounces from 4.8 - 5.3 million ounces and is maintaining gold production guidance of 48,000 - 55,000 ounces
  • Full-year 2016 cost guidance remains unchanged at $11.25 - $12.25 per AgEqOz 1 (60:1 equivalence) or $10.40 - $11.35 per realized AgEqOz 1

Kensington, Alaska
(Dollars in millions, except per ounce amounts)   3Q 2016   2Q 2016   1Q 2016   4Q 2015   3Q 2015
Tons milled 140,322   157,117   159,360   159,666   165,198
Average gold grade (oz/t) 0.20 0.22 0.21 0.22 0.19
Average recovery rate 94.8% 94.1% 95.8% 96.0% 93.9%
Gold ounces produced 26,459 32,210 31,974 33,713 28,799
Gold ounces sold 30,998 30,178 31,648 29,989 28,084
Metal sales $40.2 $36.5 $35.7 $31.7 $30.5
Costs applicable to sales $26.7 $22.6 $24.4 $23.7 $25.0
Adjusted CAS per AuOz 1 $859 $740 $761 $777 $842
Exploration expense $1.2 $1.0 $— $0.3 $0.2
Cash flow from operating activities $18.0 $7.7 $13.7 $4.5 $8.9
Sustaining capital expenditures $5.2 $4.3 $4.4 $5.5 $1.0
Development capital expenditures $3.4 $3.2 $3.7 $4.0 $4.5
Total capital expenditures $8.6 $7.5 $8.1 $9.5 $5.5
Free cash flow 1 $9.4 $0.2 $5.6 $(5.0) $3.4
  • Gold production decreased 18% quarter-over-quarter due to mill downtime at the end of the quarter relating to a blocked tailings line. The blockage has been cleared and the mill has resumed operations at full capacity
  • CAS per AuOz 1 of $859 increased 16% compared to the prior quarter due mostly to the mill downtime experienced during the quarter
  • Metal sales of $40.2 million increased 10% quarter-over-quarter and increased 32% year-over-year due to more ounces sold and higher averaged realized gold prices
  • Free cash flow 1 of $9.4 million represents the highest level in two years
  • Development of the Jualin decline continues to advance. Initial production is expected in the second half of 2017
  • The Company has raised the low-end of full-year 2016 production guidance to 120,000 - 125,000 gold ounces from 115,000 - 125,000 gold ounces previously and is reducing full-year 2016 cost guidance to $775 - $825 per AuOz 1 from $825 - $875

Wharf, South Dakota
(Dollars in millions, except per ounce amounts)   3Q 2016   2Q 2016   1Q 2016   4Q 2015   3Q 2015
Ore tons placed 1,199,008   915,631   974,663   1,147,130   1,149,744
Average silver grade (oz/t) 0.24 0.28 0.30 0.21 0.21
Average gold grade (oz/t) 0.033 0.037 0.031 0.032 0.035
Average plant recovery rate - Au 95.5% 89.6% 96.6% 97.3% 92.8%
Gold ounces produced 29,684 27,846 20,970 31,947 23,104
Silver ounces produced (000's) 25 35 13 18 19
Gold equivalent ounces produced 1 30,106 28,433 21,186 32,231 23,427
Silver ounces sold (000's) 17 33 15 17 19
Gold ounces sold 29,230 26,242 22,872 31,202 24,815
Gold equivalent ounces sold 1 29,508 26,786 23,122 31,485 25,132
Metal sales $39.3 $34.0 $27.9 $35.7 $28.0
Costs applicable to sales $19.7 $14.3 $15.5 $17.8 $17.8
Adjusted CAS per AuEqOz 1 $559 $534 $667 $556 $716
Exploration expense $— $— $— $0.1 $—
Cash flow from operating activities $21.1 $16.2 $9.7 $18.1 $12.9
Sustaining capital expenditures $0.6 $1.5 $1.4 $1.2 $0.7
Development capital expenditures $— $— $— $— $—
Total capital expenditures $0.6 $1.5 $1.4 $1.2 $0.7
Free cash flow 1 $20.5 $14.7 $8.3 $16.9 $12.2
  • Gold equivalent 1 production remained strong during the third quarter, increasing 6% quarter-over-quarter largely due to a 31% increase in tons placed as well as a return to higher plant recovery rates
  • Metal sales of $39.3 million increased 16% quarter-over-quarter and 40% year-over-year
  • Costs applicable to sales increased by $5.4 million quarter-over-quarter, primarily due to a $3.7 million inventory write-down related to lower recoveries from a leach pad
  • Adjusted CAS per AuEqOz 1 of $559 increased 5% quarter-over-quarter and decreased 22% year-over-year
  • Free cash flow 1 of $20.5 million represents the highest quarter of free cash flow since Coeur acquired the operation in February 2015 for $99 million. Since that time, Wharf has generated total free cash flow of $72.3 million
  • The Company has increased full-year 2016 production guidance to 95,000 - 100,000 gold ounces from 90,000 - 95,000 gold ounces and is reducing full-year cost guidance to $600 - $650 per AuEqOz 1 from $650 - $750

San Bartolomé, Bolivia
(Dollars in millions, except per ounce amounts)   3Q 2016   2Q 2016   1Q 2016   4Q 2015   3Q 2015
Tons milled 450,409   440,441   407,806   475,695   373,201
Average silver grade (oz/t) 3.43 3.79 3.64 3.84 3.76
Average recovery rate 88.7% 87.4% 93.1% 84.9% 84.0%
Silver ounces produced (000's) 1,370 1,458 1,382 1,550 1,178
Silver ounces sold (000's) 1,391 1,418 1,384 1,564 1,202
Metal sales $27.5 $25.2 $21.3 $22.4 $17.4
Costs applicable to sales $20.8 $18.6 $17.5 $20.0 $17.5
Adjusted CAS per AgOz 1 $14.40 $12.97 $12.56 $12.48 $14.41
Exploration expense $— $— $— $— $0.1
Cash flow from operating activities $8.6 $11.2 $5.5 $10.0 $5.7
Sustaining capital expenditures $3.0 $1.3 $0.5 $2.5 $1.8
Development capital expenditures $— $— $— $— $—
Total capital expenditures $3.0 $1.3 $0.5 $2.5 $1.8
Free cash flow 1 $5.6 $9.9 $5.0 $7.5 $3.9
  • Silver production decreased 6% quarter-over-quarter. While civil unrest in Bolivia during the quarter did not impact mining operations, it hindered shipments of purchased ore to San Bartolomé's processing facilities. This led to a lower contribution of purchased ore to total production of 27%, down from approximately one-third in the second quarter
  • Adjusted CAS per AgOz 1 were $14.40, 11% higher quarter-over-quarter and in-line with the same quarter last year due to fewer third-party ore purchases
  • Metal sales of $27.5 million increased 9% quarter-over-quarter and 58% year-over-year
  • Year-to-date free cash flow 1 of $20.5 million
  • The Company has revised its full-year 2016 production guidance to 5.5 - 5.8 million silver ounces from 5.8 - 6.1 million silver ounces and is maintaining cost guidance of $13.50 - $14.25 per AgOz 1

Coeur Capital
(Dollars in millions, except per ounce amounts)   3Q 2016   2Q 2016   1Q 2016   4Q 2015   3Q 2015
Tons milled 42,335   37,521   86,863   198,927   191,913
Average silver grade (oz/t) 2.28 1.66 3.17 2.05 1.39
Average recovery rate 58.2% 52.5% 41.9% 42.1% 45.4%
Silver ounces produced (000's) 56 33 115 171 121
Silver ounces sold (000's) 46 35 123 193 95
Metal sales $0.8 $0.5 $1.9 $2.4 $1.3
Royalty revenue $(0.1) $1.8 $1.8 $1.5 $1.6
Costs applicable to sales (Endeavor silver stream) $0.4 $0.3 $1.0 $1.0 $0.5
CAS per AgOz 1 $8.10 $7.94 $5.35 $5.50 $4.99
Cash flow from operating activities $0.4 $(3.2) $0.8 $0.8 $3.1
Free cash flow 1 $0.4 $(3.2) $0.8 $0.8 $3.1
  • Completed the sale of a 2.5% net smelter returns royalty on the Correnso mine in New Zealand in July 2016 bringing total consideration for non-core asset sales to $21.0 million year-to-date
  • Coeur Capital's primary remaining asset is a silver stream on the Endeavor mine in New South Wales, Australia
  • Silver production received from the stream on the Endeavor mine continued to be depressed in the third quarter compared to historical levels following a curtailment of production by the operator due to lower lead and zinc prices
  • Coeur increased its revised 2016 production guidance for Endeavor to 215,000 - 235,000 silver ounces from 175,000 - 200,000 silver ounces

Exploration

Costs associated with exploration in the third quarter totaled $7.0 million, including $3.7 million (expensed) for exploration targeting the discovery of new silver and gold mineralization and $3.3 million (capitalized) for definition and expansion of mineralized material. For the first nine months of 2016, exploration costs totaled $15.8 million, including $7.7 million (expensed) and $8.1 million (capitalized). Coeur's exploration program ramped up to 12 active drill rigs in the third quarter: six at Palmarejo, four at Kensington, and two at Rochester. A total of 146,284 feet (44,588 meters) of combined core and reverse circulation drilling was completed during the quarter.

On October 10th, the Company provided an update on its expanded exploration initiatives at three of its five operating mines. The focus of the Company's exploration program continues to be upgrading existing, higher-grade resources to reserves and the discovery of new, higher-grade resources located near existing infrastructure that have the potential to further grow the Company's production and cash flow, reduce unit costs, and extend expected mine lives.

The Company expects to invest a total of $30 - $34 million in exploration during 2016, including $14 - $16 million for expensed exploration and $16 - $18 million for capitalized exploration. This represents an 82% increase over 2015 exploration spending. Of the $30 - $34 million expanded exploration budget, approximately 85% is expected to be allocated to drilling at or near the Company's existing operations and about 35% is expected to be invested at the Company's Palmarejo underground silver-gold mine in Mexico.

Coeur has also ramped up its early stage exploration program, which includes several projects in the U.S. and Mexico. In the third quarter, two holes, totaling 2,046 feet were completed at the Quito property in central Nevada, where Coeur has an earn-in agreement with owner Bravada Gold Corporation. Drilling is expected to commence at several other early stage projects during the remainder of 2016, including the Klondyke project in the Tonopah District in Nevada and the Todos Los Santos project near Chihuahua, Mexico.

In addition, Coeur recently entered into an exploration and option agreement with Eurasian Minerals for the Mineral Hill gold-copper property in Wyoming, which is located approximately 15 miles west of the Company's Wharf operation. Target generation is expected to advance in the fourth quarter with drilling expected to commence in late 2017.

Full-Year 2016 Outlook

Full-year 2016 production guidance remains unchanged from the revised guidance published on October 6, 2016, which reflected a slight overall increase in expected 2016 production levels - particularly at Palmarejo. The revised full-year 2016 cost guidance is show in the table below, which reflects lower cost expectations for full-year 2016 at Palmarejo, Kensington, and Wharf.

2016 Production Outlook

(silver and silver equivalent ounces in thousands)   Silver   Gold   Silver Equivalent 1
Palmarejo   4,100 - 4,600   70,000 - 75,000   8,300 - 9,100
Rochester 4,500 - 5,000 48,000 - 55,000 7,380 - 8,300
San Bartolomé 5,500 - 5,800 5,500 - 5,800
Endeavor 215 - 235 215 - 235
Kensington 120,000 - 125,000 7,200 - 7,500
Wharf   80 - 100   95,000 - 100,000   5,780 - 6,100
Total   14,395 - 15,735   333,000 - 355,000   34,375 - 37,035
 

2016 Cost Outlook
  Original Guidance   Updated Guidance
(dollars in millions, except per ounce amounts)     Based on 60:1 Ratio  

Based on Average Realized Prices 1
CAS per AgEqOz 1 - Palmarejo $12.50 - $13.50 $10.50 - $11.00   $9.75 - $10.25
CAS per AgEqOz 1 - Rochester $11.25 - $12.25 $11.25 - $12.25 $10.40 - $11.35
CAS per AgOz 1 - San Bartolomé $13.50 - $14.25 $13.50 - $14.25 $13.50 - $14.25
CAS per AuOz 1 - Kensington $825 - $875 $775 - $825 $775 - $825
CAS per AuEqOz 1 - Wharf $650 - $750 $600 - $650 $600 - $650
Capital Expenditures $90 - $100 $105 - $115 $105 - $115
General and Administrative Expenses $28 - $32 $28 - $32 $28 - $32
Exploration Expense $11 - $13 $14 - $16 $14 - $16
AISC per AgEqOz 1 $16.00 - $17.25 $15.75 - $16.25 $14.25 - $14.75
 

Conference Call Information

Coeur will report its full operational and financial results for third quarter 2016 on October 26, 2016 after the New York Stock Exchange closes for trading. There will be a conference call on October 27, 2016 at 11:00 a.m. Eastern time.
    Dial-In Numbers:   (855) 560-2581 (US)
(855) 669-9657 (Canada)
(412) 542-4166 (International)
 
Conference ID: Coeur Mining
 

A replay of the call will be available through November 10, 2016.
    Replay numbers:   (877) 344-7529 (US)
(855) 669-9658 (Canada)
(412) 317-0088 (International)
 
Conference ID: 100 94 273
 

About Coeur

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

Cautionary Statement

This news release contains forward-looking statements within the meaning of securities legislation in the United States and Canada, including statements regarding Coeur's focus on low-risk, high-return opportunities, opportunities for reinvestment, anticipated cash flow, production, costs, capital expenditures, expenses, mining rates, recovery rates, mine lives, unit costs, operations at Palmarejo, development activity at Palmarejo and Kensington, expansion at Rochester, completion of the $200 million at-the-market stock offering, debt reduction, improved economics of the La Preciosa project, and exploration efforts including efforts to upgrade resources to reserves and discover new high-grade resources. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause Coeur's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the risk that anticipated production, cost and expense levels are not attained, the risks and hazards inherent in the mining business (including risks inherent in developing large-scale mining projects, environmental hazards, industrial accidents, weather or geologically related conditions), changes in the market prices of gold and silver and a sustained lower price environment, the uncertainties inherent in Coeur's production, exploratory and developmental activities, including risks relating to permitting and regulatory delays, ground conditions, grade variability, any future labor disputes or work stoppages (including those involving third parties), the uncertainties inherent in the estimation of gold and silver reserves and resources, changes that could result from Coeur's future acquisition of new mining properties or businesses, the absence of control over and reliance on third parties to operate mining operations in which Coeur or its subsidiaries hold royalty or streaming interests and risks related to these mining operations including results of mining and exploration activities, environmental, economic and political risks of the jurisdiction in which the mining operations are located, the loss of access to any third-party smelter to which Coeur markets silver and gold, the effects of environmental and other governmental regulations, the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries, the political risks and uncertainties associated with recent developments in Bolivia, Coeur's ability to raise additional financing necessary to conduct its business, make payments or refinance its debt, as well as other uncertainties and risk factors set out in filings made from time to time with the United States Securities and Exchange Commission, and the Canadian securities regulators, including, without limitation, Coeur's most recent reports on Forms 10-K and 10-Q. Actual results, developments and timetables could vary significantly from the estimates presented. Readers are cautioned not to put undue reliance on forward-looking statements. Coeur disclaims any intent or obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, Coeur undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of Coeur, its financial or operating results or its securities.

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

Non-U.S. GAAP Measures

We supplement the reporting of our financial information determined under United States generally accepted accounting principles (U.S. GAAP) with certain non-U.S. GAAP financial measures, including EBITDA, adjusted EBITDA, total debt to LTM adjusted EBITDA, net debt to LTM adjusted EBITDA, adjusted net income (loss), costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce), adjusted costs applicable to sales per silver equivalent ounce, all-in sustaining costs, and adjusted all-in sustaining costs. We believe that these adjusted measures provide meaningful information to assist management, investors and analysts in understanding our financial results and assessing our prospects for future performance. We believe these adjusted financial measures are important indicators of our recurring operations because they exclude items that may not be indicative of, or are unrelated to our core operating results, and provide a better baseline for analyzing trends in our underlying businesses. We believe EBITDA, adjusted EBITDA, total debt to LTM adjusted EBITDA, net debt to LTM adjusted EBITDA, adjusted net income (loss), costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce), adjusted costs applicable to sales per silver equivalent ounce, all-in sustaining costs, and adjusted all-in sustaining costs are important measures in assessing the Company's overall financial performance. For additional explanation regarding our use of non-U.S. GAAP financial measures, please refer to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.

Notes

1. EBITDA, adjusted EBITDA, adjusted net income (loss), all-in sustaining costs, adjusted all-in sustaining costs, costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce), and adjusted costs applicable to sales per silver equivalent ounce are non-GAAP measures. Please see tables in the Appendix for the reconciliation to U.S. GAAP. For purposes of silver and gold equivalence, a 60:1 silver to gold ratio is assumed except where noted as average realized prices. Free cash flow is defined as cash flow from operating activities less capital expenditures and gold production royalty payments. Please see table in Appendix for the calculation of consolidated free cash flow. Cost guidance reflecting average realized prices reflects year-to-date average realized prices and uses $17.50 per silver ounce and $1,251 per gold ounce for the remainder of the year.

2. Includes capital leases. Net of debt issuance costs and premium received.
 
Coeur Mining, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
 
  Three months ended   Nine months ended
September 30, September 30,
2016   2015   2016   2015
In thousands, except share data
Revenue $ 176,247   $ 162,552 $ 506,641   $ 481,770
COSTS AND EXPENSES
Costs applicable to sales(1) 105,408 120,237 307,428 354,397
Amortization 27,763 35,497 93,232 107,560
General and administrative 7,113 6,694 22,789 23,979
Exploration 3,706 2,112 7,669 9,957
Write-downs 4,446
Pre-development, reclamation, and other 4,491   4,938   13,059   13,968  
Total costs and expenses 148,481 169,478 448,623 509,861
OTHER INCOME (EXPENSE), NET
Fair value adjustments, net (961 ) 5,786 (13,235 ) 3,657
Interest expense, net of capitalized interest (8,068 ) (12,446 ) (30,063 ) (33,945 )
Other, net (3,635 ) (8,893 ) (4,178 ) (14,257 )
Total other income (expense), net (12,664 ) (15,553 ) (47,476 ) (44,545 )
Income (loss) before income and mining taxes 15,102 (22,479 ) 10,542 (72,636 )
Income and mining tax (expense) benefit 54,455   8,260   53,118   8,451  
NET INCOME (LOSS) $ 69,557   $ (14,219 ) $ 63,660   $ (64,185 )
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Unrealized gain (loss) on equity securities, net of tax of $997 and $(1,177) for the three and nine months ended September 30, 2016, respectively 1,387 (931 ) 4,533 (3,744 )
Reclassification adjustments for impairment of equity securities 483 20 2,028
Reclassification adjustments for realized (gain) loss on sale of equity securities (2,965 )   (2,691 ) 904  
Other comprehensive income (loss) (1,578 ) (448 ) 1,862   (812 )
COMPREHENSIVE INCOME (LOSS) $ 67,979   $ (14,667 ) $ 65,522   $ (64,997 )
 
NET INCOME (LOSS) PER SHARE
Basic $ 0.43   $ (0.11 ) $ 0.41   $ (0.52 )
 
Diluted $ 0.42   $ (0.11 ) $ 0.40   $ (0.52 )
 
Coeur Mining, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
 
  Three months ended   Nine months ended
September 30, September 30,
2016   2015 2016   2015
In thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 69,557 $ (14,219 ) $ 63,660 (64,185 )
Adjustments:
Amortization 27,763 35,497 93,232 107,560
Accretion 2,184 3,629 8,201 10,305
Deferred income taxes (49,463 ) (1,233 ) (66,738 ) (8,470 )
Loss on extinguishment of debt 10,040 10,040 524
Fair value adjustments, net 961 (5,786 ) 13,235 (3,657 )
Stock-based compensation 2,312 1,639 7,534 6,393
Impairment of equity securities 483 20 2,028
Write-downs 4,446
Other (5,236 ) 8,541 (4,763 ) 13,321
Changes in operating assets and liabilities:
Receivables 19,672 11,011 10,751 11,225
Prepaid expenses and other current assets (2,816 ) (2,055 ) (2,435 ) (3,222 )
Inventory and ore on leach pads (8,900 ) 5,380 (24,408 ) 10,713
Accounts payable and accrued liabilities (18,262 ) (6,117 ) (12,407 ) (12,210 )
CASH PROVIDED BY OPERATING ACTIVITIES 47,812   36,770   100,368   70,325  
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (25,627 ) (23,861 ) (71,087 ) (65,158 )
Acquisitions, net (1,427 ) (122 ) (1,427 ) (111,290 )
Proceeds from the sale assets 4,802 333 16,104 498
Purchase of investments (21 ) (3 ) (120 ) (1,876 )
Sales and maturities of investments 5,432 60 7,077 529
Other (1,299 ) 7   (4,218 ) (1,836 )
CASH USED IN INVESTING ACTIVITIES (18,140 ) (23,586 ) (53,671 ) (179,133 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 49,513 122,584
Issuance of notes and bank borrowings 153,500
Payments on debt, capital leases, and associated costs (107,868 ) (2,618 ) (120,551 ) (77,838 )
Gold production royalty payments (7,563 ) (10,159 ) (27,155 ) (30,281 )
Other 1,051   (34 ) 323   (529 )
CASH PROVIDED (USED IN) BY FINANCING ACTIVITIES (64,867 ) (12,811 ) (24,799 ) 44,852  
Effect of exchange rate changes on cash and cash equivalents 121   (533 ) (95 ) (1,197 )
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (35,074 ) (160 ) 21,803 (65,153 )
Cash and cash equivalents at beginning of period 257,591   205,868   200,714   270,861  
Cash and cash equivalents at end of period $ 222,517   $ 205,708   $ 222,517   $ 205,708  
 
Coeur Mining, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
 
  September 30,   December 31,
2016 2015
ASSETS In thousands, except share data
CURRENT ASSETS
Cash and cash equivalents $ 222,517 $ 200,714
Receivables 67,662 85,992
Inventory 89,761 81,711
Ore on leach pads 70,446 67,329
Prepaid expenses and other 17,125   10,942  
467,511 446,688
NON-CURRENT ASSETS
Property, plant and equipment, net 217,401 195,999
Mining properties, net 552,054 589,219
Ore on leach pads 63,034 44,582
Restricted assets 17,740 11,633
Equity securities 6,208 2,766
Receivables 32,427 24,768
Deferred tax assets 1,854 1,942
Other 12,713   14,892  
TOTAL ASSETS $ 1,370,942   $ 1,332,489  
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 49,972 $ 48,732
Accrued liabilities and other 43,569 53,953
Debt 12,512 10,431
Royalty obligations 5,722 24,893
Reclamation 1,432   2,071  
113,207 140,080
NON-CURRENT LIABILITIES
Debt 389,233 479,979
Royalty obligations 6,556 4,864
Reclamation 87,277 83,197
Deferred tax liabilities 81,484 147,132
Other long-term liabilities 60,854   55,761  
625,404 770,933
STOCKHOLDERS' EQUITY
Common stock, par value $0.01 per share; authorized 300,000,000 shares, issued and outstanding 167,565,649 at September 30, 2016 and 151,339,136 at December 31, 2015 1,676 1,513
Additional paid-in capital 3,169,631 3,024,461
Accumulated other comprehensive income (loss) (1,860 ) (3,722 )
Accumulated deficit (2,537,116 ) (2,600,776 )
632,331   421,476  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,370,942   $ 1,332,489  
 

Adjusted EBITDA Reconciliation
 
(Dollars in thousands except per share amounts)  

LTM 3Q 2016
  3Q 2016  

LTM 2Q 2016
  2Q 2016   1Q 2016   4Q 2015  

LTM 3Q 2015
  3Q 2015  

LTM 2Q 2015
Net income (loss) $ (239,342 ) $ 69,557 $ (323,118 )   $ 14,497   $ (20,396 )   $ (303,000 )   $ (1,174,213 )   $ (14,219 )   $ (1,156,528 )
Interest expense, net of capitalized interest 41,821 8,068 46,199 10,875 11,120 11,758 44,511 12,446 43,680
Income tax provision (benefit) (70,928 ) (54,455 ) (24,733 ) (768 ) 2,106 (17,811 ) (418,055 ) (8,260 ) (426,378 )
Amortization 129,422   27,763     137,156     37,505     27,964     36,190     146,162     35,497     152,651  
EBITDA (139,027 ) 50,933 (164,496 ) 62,109 20,794 (272,863 ) (1,401,595 ) 25,464 (1,386,575 )
Fair value adjustments, net 11,689 961 4,942 3,579 8,695 (1,546 ) (10,885 ) (5,786 ) (21,205 )
Impairment of equity securities 337 820 20 317 4,008 483 4,617
Foreign exchange loss 9,882 1,466 17,326 5,655 164 2,597 10,934 8,910 2,935
(Gain) loss on sale of assets (9,129 ) (4,498 ) (4,964 ) (2,812 ) (1,673 ) (146 ) (561 ) (333 ) (320 )
(Gain) loss on debt extinguishment (6,147 ) 10,040 (16,187 ) (16,187 ) (155 ) (155 )
(Gain) loss on sale of securities (2,712 ) (2,964 ) 263 (314 ) 588 (22 ) 1,094 11 1,434
Corporate reorganization costs 133 647 133 514 514
Transaction-related costs 1,297 26 1,271 792 380 99 2,013 2,013
Asset retirement obligation accretion 8,510 2,096 8,530 2,066 2,060 2,288 7,288 2,116 6,610
Inventory adjustments and write-downs 9,083 4,665 5,208 946 1,944 4,901 14,337 2,280 13,640
Write-downs 317,783       317,783         4,446     313,337     1,472,721         1,472,721  
Adjusted EBITDA $ 201,699   $ 62,725     $ 171,143     $ 72,041     $ 37,398     $ 32,908     $ 99,713     $ 33,659     $ 95,715  
 

Adjusted Net Income (Loss) Reconciliation
 
(Dollars in thousands except per share amounts)   3Q 2016   2Q 2016   1Q 2016   4Q 2015   3Q 2015
Net income (loss) $ 69,557 $ 14,497 $ (20,396 ) $ (303,000 ) $ (14,219 )
Fair value adjustments, net 961 3,579 8,695 (1,546 ) (5,786 )
Impairment of equity securities 20 317 483
Write-downs 4,446 313,337
Inventory write-downs 3,689
(Gain) loss on sale of assets (4,498 ) (2,812 ) (1,673 ) (146 ) (333 )
(Gain) loss on debt extinguishments 10,040 (16,187 )
(Gain) loss on sale of securities (2,964 ) (314 ) 588 (22 ) 11
Corporate reorganization costs 133 514
Transaction-related costs 26 792 380 99
Tax valuation allowance release (40,767 )

 
Foreign exchange (gain) loss 2,549 (2,810 ) (1,124 ) 753 (1,182 )
Tax effect of adjustments (38 ) $ 3,996   $ (1,375 ) $ (37,727 ) $ 1,042  
Adjusted net income (loss) $ 38,555   $ 16,948   $ (10,459 ) $ (43,989 ) $ (19,470 )
 
Adjusted net income (loss) per share - Basic $ 0.24 $ 0.11 $ (0.06 ) $ (0.31 ) $ (0.14 )
Adjusted net income (loss) per share - Diluted $ 0.23 $ 0.11 $ (0.06 ) $ (0.31 ) $ (0.14 )
 

Consolidated Net Debt Reconciliation
 
(Dollars in thousands)  

LTM 3Q 2016
 

LTM 2Q 2016
 

LTM 3Q 2015
 

LTM 2Q 2015
Cash and cash equivalents $ 222,517 $ 257,591 $ 205,708 $ 205,868
Total debt 401,745 511,066 545,986 547,710
Net debt 179,228 253,475 340,278 341,842
LTM adjusted EBITDA 201,699 171,143 99,713 95,715
Total debt / LTM adjusted EBITDA 2.0x 3.0x 5.5x 5.7x
Net debt / LTM adjusted EBITDA 0.9x 1.5x 3.4x 3.6x
 

Consolidated Free Cash Flow Reconciliation
 
(Dollars in thousands)   3Q 2016   2Q 2016   1Q 2016   4Q 2015   3Q 2015
Cash flow from operating activities $ 47,812 $ 45,939 $ 6,617 $ 43,217 $ 36,770
Capital expenditures (25,627 ) (23,288 ) (22,172 ) (30,035 ) (23,861 )
Gold production royalty payments (7,563 )   (10,461 ) (9,131 ) (8,954 ) (10,159 )
Free cash flow 14,622     12,190   (24,686 ) 4,228   2,750  
 
Reconciliation of All-in Sustaining Costs per Silver Equivalent Ounce
for Three Months Ended September 30, 2016
 
  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) $ 21,794   $ 27,027   $ 22,536   $ 486   $ 71,843 $ 34,755 $ 26,158 $ 60,913 $ 132,756
Amortization 5,761   5,244   1,723   113   12,841   8,046   6,461   14,507   27,348  
Costs applicable to sales $ 16,033 $ 21,783 $ 20,813 $ 373 $ 59,002 $ 26,709 $ 19,697 $ 46,406 $ 105,408
Silver equivalent ounces sold 1,462,401 1,868,085 1,390,552 46,069 4,767,107 8,397,467
Gold equivalent ounces sold           30,998   29,508   60,506    
Costs applicable to sales per ounce $ 10.96 $ 11.66 $ 14.97 $ 8.10 $ 12.38 $ 862 $ 668 $ 767 $ 12.55
Inventory adjustments (0.26 ) (0.10 ) (0.57 )   (0.28 ) (3 ) (109 ) (55 ) (0.56 )
Adjusted costs applicable to sales per ounce $ 10.70 $ 11.56 $ 14.40 $ 8.10 $ 12.10   $ 859 $ 559 $ 712 $ 11.99  
 
Costs applicable to sales per realized ounce $ 10.38 $ 11.16 $ 11.96 $ 11.72
Inventory adjustments (0.24 ) (0.09 ) (0.27 ) (0.52 )
Adjusted costs applicable to sales per realized ounce $ 10.14 $ 11.07 $ 11.69   $ 11.20  
 
Costs applicable to sales $ 105,408
Treatment and refining costs 761
Sustaining capital 19,762
General and administrative 7,113
Exploration 3,706
Reclamation 4,036
Project/pre-development costs 2,133  
All-in sustaining costs $ 142,919
Silver equivalent ounces sold 4,767,107
Kensington and Wharf silver equivalent ounces sold 3,630,360  
Consolidated silver equivalent ounces sold 8,397,467  
All-in sustaining costs per silver equivalent ounce $ 17.02  
Inventory adjustments $ (0.56 )
Adjusted all-in sustaining costs per silver equivalent ounce $ 16.46  
 
All-in sustaining costs per realized silver equivalent ounce $ 15.89  
Inventory adjustments $ (0.52 )
Adjusted all-in sustaining costs per realized silver equivalent ounce $ 15.37  
 
Reconciliation of All-in Sustaining Costs per Silver Equivalent Ounce
for Three Months Ended June 30, 2016
 
  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) $ 37,630   $ 27,158   $ 20,498   $ 365   $ 85,651 $ 32,419 $ 19,470 $ 51,889 $ 137,540
Amortization 14,765   5,437   1,853   84   22,139   9,808   5,128   14,936   37,075  
Costs applicable to sales $ 22,865 $ 21,721 $ 18,645 $ 281 $ 63,512 $ 22,611 $ 14,342 $ 36,953 $ 100,465
Silver equivalent ounces sold 2,502,442 1,911,885 1,418,455 35,411 5,868,193 9,286,033
Gold equivalent ounces sold           30,178   26,786   56,964    
Costs applicable to sales per ounce $ 9.14 $ 11.36 $ 13.14 $ 7.94 $ 10.82 $ 749 $ 535 $ 649 $ 10.82
Inventory adjustments (0.12 ) (0.06 ) (0.17 )   (0.11 ) (9 ) (1 ) (5 ) (0.10 )
Adjusted costs applicable to sales per ounce $ 9.02 $ 11.30 $ 12.97 $ 7.94 $ 10.71   $ 740 $ 534 $ 644 $ 10.72  
 
Costs applicable to sales per realized ounce $ 8.35 $ 10.49 $ 10.15 $ 9.69
Inventory adjustments (0.11 ) (0.06 ) (0.10 ) (0.09 )
Adjusted costs applicable to sales per realized ounce $ 8.24 $ 10.43 $ 10.05   $ 9.60  
 
Costs applicable to sales $ 100,465
Treatment and refining costs 1,128
Sustaining capital 21,019
General and administrative 7,400
Exploration 2,233
Reclamation 4,170
Project/pre-development costs 2,098  
All-in sustaining costs $ 138,513
Silver equivalent ounces sold 5,868,193
Kensington and Wharf silver equivalent ounces sold 3,417,840  
Consolidated silver equivalent ounces sold 9,286,033  
All-in sustaining costs per silver equivalent ounce $ 14.92  
Inventory adjustments $ (0.10 )
Adjusted all-in sustaining costs per silver equivalent ounce $ 14.82  
 
All-in sustaining costs per realized silver equivalent ounce $ 13.36  
Inventory adjustments $ (0.09 )
Adjusted all-in sustaining costs per realized silver equivalent ounce $ 13.27  
 
Reconciliation of All-in Sustaining Costs per Silver Equivalent Ounce
for Three Months Ended March 31, 2016
 
  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) $ 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
Inventory adjustments (0.82 ) (0.03 ) (0.08 )   (0.31 ) (11 ) (2 ) (7 ) (0.23 )
Adjusted costs applicable to sales per ounce $ 11.54 $ 12.61 $ 12.56 $ 5.35 $ 12.05   $ 761 $ 667 $ 721 $ 12.04  
 
Costs applicable to sales per realized ounce $ 10.90 $ 11.32 $ 11.37 $ 10.50
Inventory adjustments (0.72 ) (0.03 ) (0.29 ) (0.20 )
Adjusted costs applicable to sales per realized ounce $ 10.18 $ 11.29 $ 11.08   $ 10.30  
 
Costs applicable to sales $ 101,555
Treatment and refining costs 1,158
Sustaining capital 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  
Inventory adjustments $ (0.23 )
Adjusted all-in sustaining costs per silver equivalent ounce $ 16.05  
 
All-in sustaining costs per realized silver equivalent ounce $ 13.93  
Inventory adjustments $ (0.20 )
Adjusted all-in sustaining costs per realized silver equivalent ounce $ 13.73  
 
Reconciliation of All-in Sustaining Costs per Silver Equivalent Ounce
for Three Months Ended December 31, 2015
 
  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) $ 47,207   $ 27,716   $ 24,372   $ 2,579   $ 101,874 $ 33,298 $ 25,033 $ 58,331 $ 160,205
Amortization 7,426   4,944   4,311   1,519   18,200   9,503   7,246   16,749   34,949  
Costs applicable to sales $ 39,781 $ 22,772 $ 20,061 $ 1,060 $ 83,674 $ 23,795 $ 17,787 $ 41,582 $ 125,256
Silver equivalent ounces sold 2,588,185 1,820,471 1,564,155 192,768 6,165,579 9,885,699
Gold equivalent ounces sold           29,988   32,014   62,002    
Costs applicable to sales per ounce $ 15.37 $ 12.51 $ 12.83 $ 5.50 $ 13.57 $ 793 $ 556 $ 671 $ 12.67
Inventory adjustments (1.89 ) (0.14 ) (0.35 )   (0.92 ) (16 )   (8 ) (0.62 )
Adjusted costs applicable to sales per ounce $ 13.48 $ 12.37 $ 12.48 $ 5.50 $ 12.65   $ 777 $ 556 $ 663 $ 12.05  
 
Costs applicable to sales per realized ounce $ 13.73 $ 11.32 $ 12.56 $ 10.98
Inventory adjustments (1.69 ) (0.13 ) (0.85 ) (0.54 )
Adjusted costs applicable to sales per realized ounce $ 12.04 $ 11.19 $ 11.71   $ 10.44  
 
Costs applicable to sales $ 125,256
Treatment and refining costs 964
Sustaining capital 16,567
General and administrative 8,855
Exploration 1,689
Reclamation 4,963
Project/pre-development costs 2,691  
All-in sustaining costs $ 160,985
Silver equivalent ounces sold 6,165,579
Kensington and Wharf silver equivalent ounces sold 3,720,120  
Consolidated silver equivalent ounces sold 9,885,699  
All-in sustaining costs per silver equivalent ounce $ 16.28  
Inventory adjustments $ (0.62 )
Adjusted all-in sustaining costs per silver equivalent ounce $ 15.66  
 
All-in sustaining costs per realized silver equivalent ounce $ 14.09  
Inventory adjustments $ (0.54 )
Adjusted all-in sustaining costs per realized silver equivalent ounce $ 13.55  
 
Reconciliation of All-in Sustaining Costs per Silver Equivalent Ounce
for Three Months Ended September 30, 2015
 
  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) $ 42,710   $ 32,167   $ 21,009   $ 1,384   $ 97,270 $ 33,472 $ 23,419 $ 56,891 $ 154,161
Amortization 8,617   6,731   3,526   909   19,783   8,499   5,642   14,141   33,924  
Costs applicable to sales $ 34,093 $ 25,436 $ 17,483 $ 475 $ 77,487 $ 24,973 $ 17,777 $ 42,750 $ 120,237
Silver equivalent ounces sold 2,924,947 2,116,353 1,201,959 95,260 6,338,519 9,512,459
Gold equivalent ounces sold           28,084   24,815   52,899    
Costs applicable to sales per ounce $ 11.66 $ 12.02 $ 14.55 $ 4.99 $ 12.22 $ 889 $ 716 $ 808 $ 12.64
Inventory adjustments (0.26 ) (0.01 ) (0.14 )   (0.15 ) (47 )   (25 ) (0.24 )
Adjusted costs applicable to sales per ounce $ 11.40 $ 12.01 $ 14.41 $ 4.99 $ 12.07   $ 842 $ 716 $ 783 $ 12.40  
 
Costs applicable to sales per realized ounce $ 10.25 $ 10.90 $ 11.14 $ 10.95
Inventory adjustments (0.24 ) (0.01 ) (0.14 ) (0.21 )
Adjusted costs applicable to sales per realized ounce $ 10.01 $ 10.89 $ 11.00   $ 10.74  
 
Costs applicable to sales $ 120,237
Treatment and refining costs 820
Sustaining capital 8,565
General and administrative 6,694
Exploration 2,112
Reclamation 4,493
Project/pre-development costs 3,648  
All-in sustaining costs $ 146,569
Silver equivalent ounces sold 6,338,519
Kensington and Wharf silver equivalent ounces sold 3,173,940  
Consolidated silver equivalent ounces sold 9,512,459  
All-in sustaining costs per silver equivalent ounce $ 15.41  
Inventory adjustments $ (0.24 )
Adjusted all-in sustaining costs per silver equivalent ounce $ 15.17  
 
All-in sustaining costs per realized silver equivalent ounce $ 13.35  
Inventory adjustments $ (0.21 )
Adjusted all-in sustaining costs per realized silver equivalent ounce $ 13.14  
 
Reconciliation of All-in Sustaining Costs per Silver Equivalent Ounce
for 2016 Guidance
 
  Silver   Gold  
In thousands except per ounce amounts Palmarejo   Rochester   San Bartolomé   Endeavor   Total Silver   Kensington   Wharf   Total Gold   Total Combined
Costs applicable to sales, including amortization (U.S. GAAP) $ 130,000   $ 120,000   $ 87,000   $ 2,500   $ 339,500   $ 137,000   $ 82,000   $ 219,000   $ 558,500
Amortization 40,000   28,000   7,000   1,000   76,000   37,000   20,000   57,000   133,000
Costs applicable to sales $ 90,000 $ 92,000 $ 80,000 $ 1,500 $ 263,500 $ 100,000 $ 62,000 $ 162,000 $ 425,500
Silver equivalent ounces sold 8,400,000 7,890,000 5,700,000 220,000 22,210,000 35,710,000
Gold equivalent ounces sold                     125,000   100,000   225,000    
Costs applicable to sales per ounce guidance $10.50-$11.00 $11.25-$12.25 $13.50-$14.25 $775-$825 $600-$650
 
 
Costs applicable to sales $ 425,500
Treatment and refining costs 4,500
Sustaining capital, including capital lease payments 75,000
General and administrative 30,000
Exploration 15,000
Reclamation 16,000
Project/pre-development costs 5,000
All-in sustaining costs $ 571,000
Silver equivalent ounces sold 22,210,000
Kensington and Wharf silver equivalent ounces sold 13,500,000
Consolidated silver equivalent ounces sold 35,710,000
All-in sustaining costs per silver equivalent ounce guidance $15.75-$16.25
 
Reconciliation of All-in Sustaining Costs per Realized Silver Equivalent Ounce
for 2016 Guidance
 
  Silver   Gold  
In thousands except per ounce amounts Palmarejo   Rochester   San Bartolomé   Endeavor   Total Silver   Kensington   Wharf   Total Gold   Total Combined
Costs applicable to sales, including amortization (U.S. GAAP) $ 130,000   $ 120,000   $ 87,000   $ 2,500   $ 339,500   $ 137,000   $ 82,000   $ 219,000   $ 558,500
Amortization 40,000   28,000   7,000   1,000   76,000   37,000   20,000   57,000   133,000
Costs applicable to sales $ 90,000 $ 92,000 $ 80,000 $ 1,500 $ 263,500 $ 100,000 $ 62,000 $ 162,000 $ 425,500
Silver equivalent ounces sold 9,105,000 8,430,000 5,700,000 220,000 23,455,000 36,955,000
Gold equivalent ounces sold                     125,000   100,000   225,000    
Costs applicable to sales per ounce guidance $9.75-$10.25 $10.40-$11.35 $13.50-$14.25 $775-$825 $600-$650
 
 
Costs applicable to sales $ 425,500
Treatment and refining costs 4,500
Sustaining capital, including capital lease payments 75,000
General and administrative 30,000
Exploration 15,000
Reclamation 16,000
Project/pre-development costs 5,000
All-in sustaining costs $ 571,000
Silver equivalent ounces sold 23,455,000
Kensington and Wharf silver equivalent ounces sold 16,085,250
Consolidated silver equivalent ounces sold 39,540,250
All-in sustaining costs per silver equivalent ounce guidance $14.25-$14.75
 

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