Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Coeur Mining, Inc. | q22013earningsrelease8-k.htm |
NEWS RELEASE 
Coeur Reports Second Quarter 2013 Results
Operating Performance Improves
Chicago, Illinois - August 8, 2013 - Coeur Mining, Inc. (the “Company” or “Coeur”) (NYSE: CDE, TSX: CDM) reported metal sales of $204.5 million, cash flow from operating activities of $63.3 million, or $0.63 per share, and capital expenditures of $27.2 million during the second quarter 2013.
The Company produced 4.6 million ounces of silver and 60,757 ounces of gold during the second quarter 2013, representing increases of 21% and 7%, respectively, over the first quarter 2013. Silver and gold production at the Palmarejo mine in Mexico increased 24% and 23%, respectively, compared to the first quarter. Companywide cash operating costs were $8.86 per silver ounce1 and were $1,115 per gold ounce1 at the Company's Kensington gold mine during the second quarter.
The Company reaffirmed its 2013 full-year production guidance of 18.0-19.5 million ounces of silver and 250,000-265,000 ounces of gold. Despite lower gold prices used to calculate by-product credits, Coeur is maintaining its full-year cash operating cost1 guidance of $9.50 - $10.50 per silver ounce, which reflects the effects of the Company's ongoing cost reduction efforts. Although the Company anticipates Kensington's second half cash operating costs per gold ounce1 to be approximately 20% lower than the first half of the year, full-year 2013 cost guidance for Kensington is being revised upward slightly to $950 - $1,000 (compared to prior guidance of $900 - $950). Coeur will provide a three-year production outlook for each of its operations during the second half of 2013.
Second Quarter 2013 Highlights
• | Metal production increased to 4.6 million silver ounces and 60,757 gold ounces, an increase of 21% and 7%, respectively, from the first quarter 2013. |
• | Metal sold increased to 5.2 million silver ounces and 63,389 gold ounces from 3.1 million silver ounces and 51,926 gold ounces in the first quarter 2013. |
• | Net metal sales were $204.5 million, up 19% compared to the first quarter 2013 despite average realized prices of $22.86 per silver ounce and $1,416 per gold ounce, which were 25% and 13% lower, respectively, than the first quarter 2013. |
• | Cash flow from operating activities was $63.3 million, or $0.63 per share, in the second quarter compared to $12.9 million, or $0.14 per share, during the first quarter 2013. Net loss for the second quarter 2013 was $35.0 million, or $0.35 per share, compared with net income of $12.3 million, or $0.14 per share, in the first quarter 2013. Adjusted earnings1 were $(34.6) million, or $(0.35) per share, compared with $6.8 million, or $0.08 per share, in the first quarter 2013. |
• | Cash, cash equivalents, and short-term investments were $249.5 million at June 30, 2013, compared with $332.8 million at March 31, 2013. On April 16, 2013, $99.1 million was used as part of the consideration to acquire Orko Silver Corporation. The Company's $100 million revolving credit facility remains undrawn. |
• | Effective June 27, 2013, Coeur settled the outstanding claims dispute at Rochester. |
Mitchell J. Krebs, Coeur's President and Chief Executive Officer, said, “Our second quarter operating performance improved significantly compared to this year's first quarter and last year's fourth quarter. Palmarejo is now performing quite consistently from month-to-month. Our operations and technical teams deserve tremendous credit for the improvements at Palmarejo since late last year. Continued robust silver production from San Bartolomé and higher than planned gold production from Palmarejo are expected to offset lower than expected production levels at Rochester, which encountered poor crusher performance in the first half of the year. We remain enthusiastic about the expansion initiatives underway at Rochester, which we believe can make this long-running operation our largest cash flow generator in the next five years. The Kensington gold mine in Alaska is now demonstrating its ability to operate more
1. | Adjusted earnings and cash operating costs are non-GAAP measures. Please see tables in the Appendix for the reconciliation to U.S. GAAP. Total debt includes short and long-term indebtedness and excludes capital leases and royalty obligations. |
1
consistently as planned. We expect production from Kensington to increase and unit costs to decrease significantly during the second half of the year due to higher grades. Finally, we are beginning a feasibility study on the La Preciosa project in Mexico, which is expected to be completed in mid-2014, and we will be focusing our efforts on optimizing the results of the PEA to improve the project's economics,” Mr. Krebs added.
“Since late last year, Coeur has been actively pursuing a four-pronged strategy designed to maximize the Company's net cash flow: (1) identifying and implementing revenue enhancement opportunities at existing operations; (2) reducing operating and non-operating costs; (3) reducing capital spending, completing expansion projects at two of our mines, and targeting significantly lower capital expenditures in 2014; and (4) effectively managing working capital. I am pleased with the results of these initiatives and the targets we have established, which are summarized below and support our expectation to remain net cash flow positive at current price levels:
Revenue Enhancements:
• | Process recovery enhancements at Palmarejo expected to boost silver and gold recovery rates by 5%-10% by year-end, which are expected to result in approximately $30 million of incremental annual metal sales (assuming $20 per ounce silver and $1,300 per ounce gold prices). |
• | Re-sequencing of higher-grade stopes at Kensington containing expected 10% higher grade during the second half of 2013, which is anticipated to increase production by approximately 25% and decrease unit operating costs by 20% compared to the first half of 2013. |
• | Completion of the $15.1 million process plant expansion project at San Bartolomé by the end of the year, which is expected to increase silver production by 10%-15%, resulting in $11-$17 million of incremental annual metal sales (assuming a $20 per ounce silver price). |
Cost Reductions:
• | $19 million of cash operating cost savings versus plan realized during the first half of 2013. |
• | $8-$9 million of further cash operating cost reductions targeted during the remainder of the year. The projected cost savings are lower than in the first half due to higher than planned production levels in the second half of 2013. |
• | Reducing exploration expense by 17%, or approximately $3 million during the remainder of 2013, and reallocating an additional $3 million of reductions to the La Preciosa project. |
Capital Spending Reductions:
• | Eliminated or deferred $24 million of capital projects scheduled for 2013 resulting in full-year expected capital expenditures of $100-$110 million, an 18% decrease compared to prior guidance of $125-$140 million. |
• | Targeting 2014 total capital expenditures of less than $80 million in order to maximize company-wide net cash flow. |
• | On-track to complete the San Bartolomé process plant expansion project 20%, or $3.7 million, below budget. |
Working Capital Improvements:
• | Reduced supplies and materials inventory by $12 million in the first half of 2013. |
• | Targeting $30 million of additional working capital reductions during the remainder of 2013 in order to maximize net cash flow. |
“After a difficult period for commodity prices since mid-April, silver and gold prices appear to be finding a bottom recently, although we expect continued volatility throughout the remainder of the year. We are seeing modest increases in industrial demand for silver and we believe the overarching rationale for investment demand for silver and gold remains intact. Looking ahead, we anticipate supplies of both silver and gold will tighten as a result of project deferrals, difficult capital markets, reduced exploration expenditures, and greater geopolitical and community-related challenges. Supply from scrap has already shown signs of significant decline, all of which should be supportive of stronger prices over the long-term."
1. | Adjusted earnings and cash operating costs are non-GAAP measures. Please see tables in the Appendix for the reconciliation to U.S. GAAP. Total debt includes short and long-term indebtedness and excludes capital leases and royalty obligations. |
2
Table 1: Financial Highlights (Unaudited)
(All amounts in millions, except per share amounts, average realized prices and gold ounces sold) | 2Q 2013 | 1Q 2013 | Quarter Variance | 4Q 2012 | 3Q 2012 | 2Q 2012 | ||||||||||||||
Sales of Metal | $ | 204.5 | $ | 171.8 | 19 | % | $ | 205.9 | $ | 230.6 | $ | 254.4 | ||||||||
Production Costs | $ | 142.9 | $ | 88.8 | 61 | % | $ | 107.4 | $ | 125.0 | 131.8 | |||||||||
Adjusted Earnings (1) | $ | (34.6 | ) | $ | 6.8 | (609 | %) | $ | 26.2 | $ | 25.8 | 28.0 | ||||||||
Adjusted Earnings Per Share(1) | $ | (0.35 | ) | $ | 0.08 | (538 | %) | $ | 0.29 | $ | 0.29 | $ | 0.31 | |||||||
Net Income | $ | (35.0 | ) | $ | 12.3 | (385 | %) | $ | 37.6 | $ | (15.8 | ) | 23.0 | |||||||
Earnings Per Share | $ | (0.35 | ) | $ | 0.14 | (350 | %) | $ | 0.42 | $ | (0.18 | ) | $ | 0.26 | ||||||
Cash Flow From Operating Activities | $ | 63.3 | $ | 12.9 | 391 | % | $ | 61.7 | $ | 79.7 | $ | 113.2 | ||||||||
Capital Expenditures | $ | 27.2 | $ | 12.8 | 113 | % | $ | 21.8 | $ | 30.0 | 32.2 | |||||||||
Cash, Cash Equivalents & Short-Term Investments | $ | 249.5 | $ | 332.8 | (25 | %) | $ | 126.4 | $ | 143.6 | 200.3 | |||||||||
Total Debt (net of debt discount) | $ | 305.3 | $ | 305.3 | — | % | $ | 48.1 | $ | 47.4 | 118.8 | |||||||||
Weighted Average Shares | 99.8 | 89.9 | 11 | % | 89.1 | 89.4 | 89.6 | |||||||||||||
Average Realized Price Per Ounce - Silver | $ | 22.86 | $ | 30.30 | (25 | %) | $ | 32.52 | $ | 30.09 | $ | 29.28 | ||||||||
Average Realized Price Per Ounce - Gold | $ | 1,416 | $ | 1,630 | (13 | %) | $ | 1,709 | $ | 1,654 | $ | 1,610 | ||||||||
Silver Ounces Sold | 5.2 | 3.1 | 68 | % | 3.6 | 4.5 | 5.6 | |||||||||||||
Gold Ounces Sold | 63,389 | 51,926 | 22 | % | 55,565 | 59,156 | 59,579 | |||||||||||||
Included in second quarter net loss was a $32 million one-time charge ($22 million non-cash) for the settlement of the Rochester claims dispute litigation and a $17.2 million non-cash writedown of the Company's strategic investments. Both of these non-recurring items were excluded from Coeur's non-U.S. GAAP metric of adjusted earnings1. Adjusted earnings1 were $(34.6) million, or $(0.35) per share, in the second quarter 2013, compared with $28.0 million, or $0.31 per share, in the second quarter 2012 and $6.8 million or $0.08 per share in the first quarter 2013.
On a U.S. GAAP basis, the Company realized a net loss of $35.0 million, or $0.35 per share, in the second quarter 2013 compared with net income of $23.0 million, or $0.26 per share, in the second quarter 2012 and $12.3 million, or $0.14 per share, in the first quarter 2013. Net income for the second quarter 2013 included a positive non-cash fair value adjustment of $66.8 million. The positive fair value adjustment in the second quarter 2012 was $16.0 million. Fair value adjustments are driven primarily by lower or higher gold prices, which decrease or increase, respectively, the estimated future liabilities related to a gold royalty obligation at Palmarejo.
Table 2: Operational Highlights: Production
(silver ounces in thousands) | 2Q 2013 | 1Q 2013 | Quarter Variance | Q4 2012 | Q3 2012 | Q2 2012 | |||||||||||||||||||
Silver | Gold | Silver | Gold | Silver | Gold | Silver | Gold | Silver | Gold | Silver | Gold | ||||||||||||||
Palmarejo | 2,045 | 28,191 | 1,646 | 22,965 | 24 | % | 23 | % | 1,554 | 19,998 | 1,833 | 23,702 | 2,366 | 31,258 | |||||||||||
San Bartolomé | 1,523 | — | 1,391 | — | 9 | % | n.a. | 1,343 | — | 1,526 | — | 1,470 | — | ||||||||||||
Rochester | 844 | 9,404 | 648 | 8,742 | 30 | % | 8 | % | 828 | 12,055 | 819 | 10,599 | 713 | 10,120 | |||||||||||
Martha | — | — | — | — | n.a. | n.a. | — | — | 93 | 76 | 108 | 97 | |||||||||||||
Kensington | — | 23,162 | — | 25,206 | n.a. | (8 | %) | — | 28,717 | — | 24,391 | — | 21,572 | ||||||||||||
Endeavor | 221 | — | 150 | — | 47 | % | n.a. | 106 | — | 140 | — | 240 | — | ||||||||||||
Total | 4,633 | 60,757 | 3,835 | 56,913 | 21 | % | 7 | % | 3,831 | 60,770 | 4,411 | 58,768 | 4,897 | 63,047 | |||||||||||
1. | Adjusted earnings and cash operating costs are non-GAAP measures. Please see tables in the Appendix for the reconciliation to U.S. GAAP. Total debt includes short and long-term indebtedness and excludes capital leases and royalty obligations. |
3
Table 3: Operational Highlights: Cash Operating Costs Per Ounce 1
2Q 2013 | 1Q 2013 | Quarter Variance | Q4 2012 | Q3 2102 | Q2 2012 | ||||||||||||||||
Palmarejo | $ | 3.25 | $ | 2.20 | (48 | %) | $ | 7.55 | $ | 3.75 | $ | (0.85 | ) | ||||||||
San Bartolomé | 12.89 | 13.27 | (3 | %) | 13.97 | 12.13 | 11.05 | ||||||||||||||
Rochester | 14.75 | 13.54 | 9 | % | 2.17 | 9.58 | 9.83 | ||||||||||||||
Martha | — | — | n.a | — | 48.12 | 55.07 | |||||||||||||||
Endeavor | 10.62 | 17.30 | (39 | %) | 19.92 | 15.97 | 17.50 | ||||||||||||||
Total | $ | 8.86 | $ | 8.73 | 1 | % | $ | 8.97 | $ | 9.05 | $ | 6.41 | |||||||||
Kensington | $ | 1,115 | $ | 1,055 | 6 | % | $ | 1,065 | $ | 1,298 | $ | 1,348 | |||||||||
Palmarejo, Mexico - Rebounding Production Due to Higher Grades; Expected Recovery Rate Improvements
• | Palmarejo produced 2.0 million ounces of silver and 28,191 ounces of gold at cash operating costs of $3.25 per silver ounce1 for the second quarter. In the first quarter of 2013, Palmarejo produced 1.6 million ounces of silver and 22,965 ounces of gold at cash operating costs of $2.20 per silver ounce1. |
• | Silver and gold ore grades from both the open pit and from underground operations improved compared to the first quarter 2013, and these grades are expected to be maintained throughout the remainder of the year. Recovery rates are expected to increase 5%-10% by the end of the year. |
• | Ongoing cost reduction initiatives at Palmarejo have lowered cash operating costs in the first half of 2013 compared to plan. The initiatives include reductions in outside services, contract services, reagent and consumable consumption, as well as more favorable pricing on key consumables, shorter waste haul distance, and greater cost efficiency within the maintenance systems. |
• | The acquisition of the La Curra property potentially adds value as an on-strike extension of Las Animas, part of the Guadalupe system, outside the property boundary subject to the Franco-Nevada gold production royalty. Mine modeling of Las Animas as an open pit operation continues with further drilling planned for the remainder of the year. |
• | Guadalupe underground development has now reached the ore horizon. A vent raise to connect the upper and lower parts of the mine is planned for 2014. |
• | Mining is ongoing in the upper ore zones in 76 Clavo. Mining in 108 Clavo continues to produce strong silver grade and higher gold grades in 2013. Open pit expansion into the Tucson/Chapotillo is progressing and open pit ore grade material from this new area is being modeled for mining in early 2014. |
• | Sales and cash flow from operating activities totaled $86.2 million and $37.2 million, respectively, in the second quarter 2013. |
• | Capital expenditures of $9.2 million were incurred at Palmarejo in the second quarter on underground mining equipment and for underground mine development at Palmarejo and Guadalupe. |
San Bartolomé, Bolivia - Consistent Performance; Mill Expansion On-Track
• | San Bartolomé produced 1.5 million ounces of silver at cash operating costs of $12.89 per silver ounce1. In the first quarter of 2013, San Bartolomé produced 1.4 million ounces of silver at cash operating costs of $13.27 per silver ounce1. |
• | The Company is in the process of increasing processing capacity approximately 10%-15% during 2013. This expansion is expected to have a less than two-year payback and increase the mine's annual production to over 6.0 million ounces of silver for the next several years. This expansion project remains on-schedule for completion by the end of the year and is expected to be completed 20% below budgeted levels. |
• | Sales and cash flow from operating activities totaled $49.2 million and $32.8 million, respectively, in the second quarter 2013. |
• | Capital expenditures were $3.2 million during the second quarter and consisted primarily of the tailings and process plant expansion project. |
1. | Adjusted earnings and cash operating costs are non-GAAP measures. Please see tables in the Appendix for the reconciliation to U.S. GAAP. Total debt includes short and long-term indebtedness and excludes capital leases and royalty obligations. |
4
Rochester, Nevada - Slow First Half of 2013; Anticipate Expansion Announcement by Year-End
• | Rochester produced 843,845 ounces of silver and 9,404 ounces of gold, up 30% and 8% respectively, over the first quarter 2013. This was a smaller rebound than expected due to poor crusher performance during the second quarter. |
• | Cash operating costs per silver ounce1 were $14.75, which were 9% higher than the first quarter 2013. |
• | Ongoing cost reductions at Rochester include reductions in reagent and consumable consumption, contract services, and power, as well as shorter haul distances. Year-to-date, Rochester's operating costs remain below planned levels. Cash operating costs per silver ounce1 have been negatively impacted by the lower than planned production levels. |
• | The Company is investing approximately $4.0 million during 2013 to expand the capacity of the primary crusher from 9.0 million tons to 14.0 million tons. Monthly crusher throughput is expected to accelerate in the second half of 2013, leading to higher anticipated silver and gold production in the second half of 2013. |
• | In addition, the Company is expanding the mine's heap leach capacity to approximately 67.0 million tons at an estimated capital cost of approximately $15.0 million. This planned expansion is designed to accommodate sustained higher production rates driven by the processing of ore contained in historic stockpiles. These stockpiles were created during the mine's 26 year operating history when gold and silver prices were significantly lower than current market prices. Coeur expects further reserve increases from this and its ongoing exploration efforts on the stockpiles, and intends to announce future expansion plans at Rochester later in 2013. |
• | Effective June 27, 2013, Coeur settled the outstanding claims dispute at Rochester. In connection with the settlement, Coeur acquired the disputed mining claims for $10 million in cash plus a 3.4% net smelter returns royalty covering 39.4 million silver equivalent ounces beginning January 1, 2014. |
• | In July, Rochester was recognized for outstanding achievement in safety by the Nevada Mining Association, which will present Rochester with its 2013 1st Place Safety Award for the Surface Operations, Medium Mine category. |
• | Sales totaled $34.9 million in the second quarter compared to $39.5 million in the first quarter. Cash flow from operating activities of $(3.4) million in the second quarter 2013 declined from $5.6 million in the first quarter due to the $10 million cash portion of the disputed claims settlement, an increase in ore placed on the leach pad (the related costs of which are added to inventory and subsequently expensed as ounces are recovered from the leach pad), and also due to lower metal prices. |
• | Capital expenditures of $6.6 million during the quarter were spent on process plant equipment, the Stage III leach pad expansion, and equipment related to the crusher expansion. |
Kensington, Alaska - Improving Gold Grade Expected in Second Half of 2013
• | Kensington produced 23,162 ounces of gold, a decrease of 8% from the first quarter 2013. Cash operating costs per ounce1were $1,115, compared to $1,055 in the first quarter 2013. |
• | Average mill head grade of 0.18 oz/t was 10% lower than the first quarter 2013 due to the processing of lower-grade stockpile ore. The gold grade is expected to gradually improve during the second half of 2013 as higher-grade stopes are mined and processed, which we expect will lower unit operating costs 20% compared to the first half of the year. |
• | Additional cost reductions targeted for the second half of the year include reductions in contract services and lower underground backfill costs due to lower prices for backfill material. |
• | Sales and cash flow from operating activities totaled $30.9 million and $7.6 million, respectively, for the second quarter 2013. |
• | Capital expenditures of $7.4 million in the second quarter were spent primarily on underground capital development and reserve category drilling. |
1. | Adjusted earnings and cash operating costs are non-GAAP measures. Please see tables in the Appendix for the reconciliation to U.S. GAAP. Total debt includes short and long-term indebtedness and excludes capital leases and royalty obligations. |
5
La Preciosa, Mexico - PEA Completed and Feasibility Work to Begin
• | The results of the PEA provide a solid foundation from which the Company will seek to enhance the project's economics given current silver and gold prices. The PEA indicated an estimated mine life of 17 years, initial capital expenditures of $348 million, and an average annual production rate of 9.1 million ounces over the first 14 years. |
• | Coeur will now commence a full feasibility study, along with infill and development drilling. Upon completion of this work in mid-2014, the Company and its Board will evaluate the economics of the optimized project, assess the silver and gold market, and determine whether to proceed with construction. |
• | A strong development team continues to be established at the corporate office and in Durango, Mexico. |
• | Expenditures in the second half of 2013 are expected to be approximately $15 million, with $3 million for exploration and $12 million for sustainability projects within the community, engineering, access road, and land acquisitions. |
Exploration Update
During the second quarter, the Company invested $6.8 million in expensed exploration for discovery of new mineralization and $3.0 million in capitalized exploration for definition of new mineralization.
Coeur's exploration program utilized up to 11 drill rigs: five drills at Palmarejo, three at Kensington (including one drill devoted to definition drilling), two in Argentina (Joaquin and Lejano projects), and one at Rochester.
Palmarejo, Mexico
• | Exploration for discovery of new mineralization was conducted around the Palmarejo surface and underground mine area on new targets generated in 2012 and early 2013. Significant results were obtained from this work, notably hole T4DH-002 from drilling of open pit targets and hole TTDH-003 from drilling of underground targets, which intersected 8.1 meters (true width) grading 352 grams per metric ton (g/t) of silver and 3.4 g/t of gold, and 2.5 meters true grading 720 g/t silver and 5.7 g/t gold, respectively. In addition, drilling underground in the 108 and Interclavos zones, part of the long La Blanca structure, returned favorable results and is expected to contribute to the expansion of Palmarejo's underground-minable reserves. |
• | New drilling was completed at El Salto, bordering the Las Animas surface minable reserves, with positive initial results. A phase 2 drilling program is underway and the Company has commenced evaluation of the new La Curra property situated nearby to the southeast. Favorable results from this exploration would have a positive impact on the surface-minable Las Animas portion of the more than 2.6 kilometer-long (1.6 miles) Guadalupe vein system. Notable results include hole TDGH-563 with 3.8 meters true width mineralization grading 478 g/t of silver and 1.29 g/t of gold. |
• | The first drilling from underground positions started on Guadalupe Norte. Assays are pending and drilling will continue as this part of the Guadalupe mine is developed. |
Kensington, Alaska
• | Exploration work to discover new mineralization continued in the second quarter. As part of this work, surface drilling began on the Jualin area (a historic mine south of main Kensington). This drilling targeted the number 4 vein, a zone of auriferous quartz and sulfide veining situated about 1,500 feet (460 meters) due south of the mill facility. Targets selected to discover and define new mineralization are focusing on those, like Jualin and Raven, with the potential to be higher-grade than the current reserves. |
• | Exploration to define and expand known mineralized zones and help expand reserves focused on the southern margins of lower Zone 10 and Zone 50 in main Kensington as well as the northern extent of lower Zone 10. Initial results from widely-spaced drilling have shown new gold mineralization extends more than 200 feet from the south limits of the current mineral reserves. |
• | In addition, underground drilling was conducted on the Ann target and the upper extension of Zone 10 at main Kensington. |
1. | Adjusted earnings and cash operating costs are non-GAAP measures. Please see tables in the Appendix for the reconciliation to U.S. GAAP. Total debt includes short and long-term indebtedness and excludes capital leases and royalty obligations. |
6
Rochester, Nevada
• | Drilling was performed to expand and define grades and tons of existing stockpiled material in the second quarter. The drilling returned favorable results from the Limerick, South, and North areas. Results from 23 new drill holes were received this quarter. Results from hole LMD13-061 with 120 feet grading 0.67 ounces per short ton (oz/t) of silver and 40 feet of 1.52 oz/t of silver from Limerick and SRD13-109 in the South stockpile which returned 70 feet grading 0.38 oz/t silver and 150 feet grading 0.56 oz/t of silver. |
Coeur is reducing its exploration spending by 17%, or approximately $3 million during the remainder of 2013, and reallocating an additional $3 million of reductions to the La Preciosa project.
2013 Outlook
Coeur's estimated 2013 consolidated silver and gold production guidance remains unchanged as shown in Table 4 below, and compares to 2012 silver production of 18.0 million ounces and gold production of 226,486 ounces.
Coeur has maintained its full-year 2013 projected cash operating costs of $9.50 - $10.50 per silver ounce1, which reflects ongoing cost reduction efforts that are expected to offset lower gold prices used to calculate by-product credits. Although the Company anticipates Kensington's second half cash operating costs per gold ounce1 to be 20% lower than the first half of the year, full-year 2013 guidance for Kensington is being revised upward slightly to $950 - $1,000 (compared to prior guidance of $900 - $950). The midpoint of this range is 32% below 2012 cash operating costs per gold ounce1 of $1,358 at Kensington.
Table 4: 2013 Production Outlook
(silver ounces in thousands) | Country | Silver | Gold |
Palmarejo | Mexico | 7,700-8,300 | 104,000-109,000 |
San Bartolomé | Bolivia | 5,600-5,900 | — |
Rochester | Nevada, USA | 4,100-4,500 | 38,000-42,000 |
Endeavor | Australia | 600-800 | — |
Kensington | Alaska, USA | — | 108,000-114,000 |
Total | 18,000-19,500 | 250,000-265,000 | |
Conference Call Information
Coeur will hold a conference call and webcast at www.coeur.com to discuss the Company's second quarter 2013 results at 1 p.m. Eastern time on August 8, 2013.
Dial-In Numbers: (855) 546-8317 (U.S. and Canada)
(660) 422-4718 (International)
Conference ID: 217 88 354
A replay of the call will be available on Coeur's website through August 22, 2013.
Replay number: (855) 859-2056 (US and Canada)
International replay: (404) 537-3406 (International)
Conference ID: 217 88 354
1. | Adjusted earnings and cash operating costs are non-GAAP measures. Please see tables in the Appendix for the reconciliation to U.S. GAAP. Total debt includes short and long-term indebtedness and excludes capital leases and royalty obligations. |
7
About Coeur
Coeur Mining, Inc. is the largest U.S.-based primary silver producer and a growing gold producer. The Company has four precious metals mines in the Americas generating strong production, sales, and cash flow. Coeur produces from its wholly owned operations: the Palmarejo silver-gold mine in Mexico, the San Bartolomé silver mine in Bolivia, the Rochester silver-gold mine in Nevada and the Kensington gold mine in Alaska. Coeur has a non-operating interest in the Endeavor silver-gold mine in Australia. The Company has two feasibility stage projects, the Joaquin silver project in Argentina and the La Preciosa silver-gold project in Mexico. In addition, Coeur conducts ongoing exploration activities in Mexico, Argentina, Nevada, Alaska and Bolivia. The Company owns strategic investment positions in eight silver and gold development companies with projects in North and South America.
Cautionary Statements
This news release contains forward-looking statements within the meaning of securities legislation in the United States and Canada, including statements regarding anticipated operating results, production levels, operating costs, exploration results, and expected results of initiatives to reduce costs and capital expenditures, enhance revenue, maximize net cash flow, and manage working capital, continued volatility in gold and silver prices, industrial demand, and supply levels. 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 permits necessary for the planned Rochester expansion may not be obtained, 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, the uncertainties inherent in the estimation of gold and silver ore reserves, changes that could result from Coeur's future acquisition of new mining properties or businesses, reliance on third parties to operate certain mines where Coeur owns silver production and reserves, the loss of 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, 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 Form 10-K and Form 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.
The PEA referenced in this news release is preliminary in nature and it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be characterized as mineral reserves and there is no certainty that the results reflected in the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral resource estimates do not account for minability, selectivity, mining loss and dilution. There is no certainty that the inferred mineral resources will be converted to the measured and indicated categories or that the measured and indicated mineral resources will be converted to the proven and probable mineral reserve categories.
Donald J. Birak, Coeur's Senior Vice President of Exploration and a qualified person under Canadian National Instrument 43-101, reviewed and approved the scientific and technical disclosures concerning Coeur's mineral projects contained herein. 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, please see the Technical Reports for each of Coeur's properties as filed on SEDAR at www.sedar.com.
Cautionary Note to U.S. Investors-The United States Securities and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and
8
legally extract or produce. We may use certain terms in public disclosures, such as "measured," "indicated," "inferred” and “resources," that are recognized by Canadian regulations, but that SEC guidelines generally prohibit U.S. registered companies from including in their filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K which may be secured from us, or from the SEC's website at http://www.sec.gov.
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 adjusted earnings and cash operating 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 adjusted earnings and cash operating costs are important measures in assessing the Company's overall financial performance.
For Additional Information:
Bridget Freas, Director, Investor Relations
(312) 268-5784
www.coeur.com
9
Table 5: Operating Statistics from Continuing Operations - (Unaudited):
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Silver Operations: | |||||||||||||||
Palmarejo | |||||||||||||||
Tons milled | 570,322 | 489,924 | 1,143,492 | 1,018,467 | |||||||||||
Ore grade/Ag oz | 4.69 | 5.74 | 4.17 | 5.94 | |||||||||||
Ore grade/Au oz | 0.06 | 0.07 | 0.05 | 0.07 | |||||||||||
Recovery/Ag oz | 76.5 | % | 84.2 | % | 77.5 | % | 80.2 | % | |||||||
Recovery/Au oz | 81.2 | % | 92.0 | % | 84.9 | % | 92.6 | % | |||||||
Silver production ounces | 2,044,967 | 2,365,484 | 3,691,365 | 4,848,298 | |||||||||||
Gold production ounces | 28,191 | 31,258 | 51,157 | 62,338 | |||||||||||
Cash operating cost/oz | $ | 3.25 | $ | (0.85 | ) | $ | 2.78 | $ | (1.58 | ) | |||||
Cash cost/oz | $ | 3.25 | $ | (0.85 | ) | $ | 2.78 | $ | (1.58 | ) | |||||
Total production cost/oz | $ | 20.63 | $ | 17.28 | $ | 20.41 | $ | 15.10 | |||||||
San Bartolomé | |||||||||||||||
Tons milled | 424,310 | 391,005 | 799,295 | 769,109 | |||||||||||
Ore grade/Ag oz | 3.98 | 4.26 | 4.03 | 4.43 | |||||||||||
Recovery/Ag oz | 90.3 | % | 88.3 | % | 90.5 | % | 89.8 | % | |||||||
Silver production ounces | 1,523,262 | 1,470,342 | 2,914,361 | 3,061,634 | |||||||||||
Cash operating cost/oz | $ | 12.89 | $ | 11.05 | $ | 13.07 | $ | 10.62 | |||||||
Cash cost/oz | $ | 13.80 | $ | 12.04 | $ | 14.05 | $ | 11.76 | |||||||
Total production cost/oz | $ | 17.21 | $ | 14.89 | $ | 17.65 | $ | 14.44 | |||||||
Martha | |||||||||||||||
Tons milled | — | 39,199 | — | 73,268 | |||||||||||
Ore grade/Ag oz | — | 3.52 | — | 3.94 | |||||||||||
Ore grade/Au oz | — | — | — | — | |||||||||||
Recovery/Ag oz | — | % | 78.2 | % | — | % | 79.8 | % | |||||||
Recovery/Au oz | — | % | 72.4 | % | — | % | 68.6 | % | |||||||
Silver production ounces | — | 107,895 | — | 230,688 | |||||||||||
Gold production ounces | — | 97 | — | 181 | |||||||||||
Cash operating cost/oz | $ | — | $ | 55.07 | $ | — | $ | 50.50 | |||||||
Cash cost/oz | $ | — | $ | 56.21 | $ | — | $ | 51.39 | |||||||
Total production cost/oz | $ | — | $ | 62.30 | $ | — | $ | 56.74 | |||||||
Rochester | |||||||||||||||
Tons milled | 2,457,423 | 2,268,896 | 4,897,180 | 4,278,414 | |||||||||||
Ore grade/Ag oz | 0.58 | 0.63 | 0.5488 | — | |||||||||||
Ore grade/Au oz | 0.003 | 0.005 | 0.003 | 0.005 | |||||||||||
Recovery/Ag oz | 59.7 | % | 49.8 | % | 55.5 | % | 45.7 | % | |||||||
Recovery/Au oz | 141.4 | % | 84.0 | % | 123.5 | % | 74.9 | % | |||||||
Silver production ounces | 843,845 | 712,706 | 1,491,434 | 1,154,043 | |||||||||||
Gold production ounces | 9,404 | 10,120 | 18,146 | 15,412 | |||||||||||
Cash operating cost/oz | $ | 14.75 | $ | 9.83 | $ | 14.23 | $ | 15.00 | |||||||
Cash cost/oz | $ | 15.39 | $ | 11.45 | $ | 15.76 | $ | 16.54 | |||||||
Total production cost/oz | $ | 18.15 | $ | 14.66 | $ | 18.78 | $ | 20.02 | |||||||
10
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Endeavor | |||||||||||||||
Tons milled | 198,517 | 201,057 | 393,035 | 396,903 | |||||||||||
Ore grade/Ag oz | 2.73 | 3.31 | 2.17 | 3.33 | |||||||||||
Recovery/Ag oz | 40.9 | % | 36.1 | % | 43.4 | % | 36.9 | % | |||||||
Silver production ounces | 221,268 | 240,168 | 371,012 | 488,126 | |||||||||||
Cash operating cost/oz | $ | 10.62 | $ | 17.50 | $ | 13.31 | 17.07 | ||||||||
Cash cost/oz | $ | 10.62 | $ | 17.50 | $ | 13.31 | 17.07 | ||||||||
Total production cost/oz | $ | 16.13 | $ | 24.13 | $ | 18.82 | 23.70 | ||||||||
Gold Operation: | |||||||||||||||
Kensington | |||||||||||||||
Tons milled | 127,987 | 97,794 | 257,044 | 141,730 | |||||||||||
Ore grade/Au oz | 0.18 | 0.23 | 0.19 | 0.22 | |||||||||||
Recovery/Au oz | 98.2 | % | 94.2 | % | 97.1 | % | 94.0 | % | |||||||
Gold production ounces | 23,162 | 21,572 | 48,368 | 29,016 | |||||||||||
Cash operating cost/oz | $ | 1,115 | $ | 1,348 | $ | 1,083 | $ | 1,697 | |||||||
Cash cost/oz | $ | 1,115 | $ | 1,348 | $ | 1,083 | $ | 1,697 | |||||||
Total production cost/oz | $ | 1,687 | $ | 1,799 | $ | 1,634 | $ | 2,260 | |||||||
CONSOLIDATED PRODUCTION TOTALS | |||||||||||||||
Total silver ounces | 4,633,342 | 4,896,595 | 8,468,172 | 9,782,789 | |||||||||||
Total gold ounces | 60,757 | 63,047 | 117,671 | 106,947 | |||||||||||
Silver Operations: | |||||||||||||||
Cash operating cost per oz - silver | $ | 8.86 | $ | 6.41 | $ | 8.80 | $ | 6.35 | |||||||
Cash cost per oz - silver | $ | 9.28 | $ | 6.97 | $ | 9.41 | $ | 6.91 | |||||||
Total production cost oz - silver | $ | 18.84 | $ | 17.51 | $ | 19.11 | $ | 16.88 | |||||||
Gold Operation: | |||||||||||||||
Cash operating cost per oz - gold | $ | 1,115 | $ | 1,348 | $ | 1,083 | $ | 1,697 | |||||||
Cash cost per oz - gold | $ | 1,115 | $ | 1,348 | $ | 1,083 | $ | 1,697 | |||||||
Total production cost per oz - gold | $ | 1,687 | $ | 1,799 | $ | 1,634 | $ | 2,260 | |||||||
CONSOLIDATED SALES TOTALS | |||||||||||||||
Silver ounces sold | 5,228,270 | 5,601,953 | 8,304,805 | 9,892,001 | |||||||||||
Gold ounces sold | 63,389 | 59,579 | 115,315 | 98,464 | |||||||||||
Realized price per silver ounce | $ | 22.86 | $ | 29.28 | $ | 25.61 | $ | 30.72 | |||||||
Realized price per gold ounce | $ | 1,416 | $ | 1,610 | $ | 1,512 | $ | 1,646 | |||||||
11
Table 6:
COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
June 30, 2013 | December 31, 2012 | ||||||
ASSETS | (In thousands, except share data) | ||||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | $ | 249,531 | $ | 125,440 | |||
Investments | — | 999 | |||||
Receivables | 64,607 | 62,438 | |||||
Ore on leach pad | 28,880 | 22,991 | |||||
Metal and other inventory | 148,286 | 170,670 | |||||
Deferred tax assets | 2,620 | 2,458 | |||||
Restricted assets | 660 | 396 | |||||
Prepaid expenses and other | 17,945 | 20,790 | |||||
512,529 | 406,182 | ||||||
NON-CURRENT ASSETS | |||||||
Property, plant and equipment, net | 660,333 | 683,860 | |||||
Mining properties, net | 2,357,689 | 1,991,951 | |||||
Ore on leach pad | 26,861 | 21,356 | |||||
Restricted assets | 24,468 | 24,970 | |||||
Marketable securities | 16,008 | 27,065 | |||||
Receivables | 38,539 | 48,767 | |||||
Debt issuance costs, net | 11,890 | 3,713 | |||||
Deferred tax assets | 969 | 955 | |||||
Other | 17,430 | 12,582 | |||||
TOTAL ASSETS | $ | 3,666,716 | $ | 3,221,401 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES | |||||||
Accounts payable | $ | 57,446 | $ | 57,482 | |||
Accrued liabilities and other | 9,369 | 10,002 | |||||
Accrued income taxes | 8,662 | 27,108 | |||||
Accrued payroll and related benefits | 15,576 | 21,306 | |||||
Accrued interest payable | 10,237 | 478 | |||||
Debt and capital leases | 5,485 | 55,983 | |||||
Royalty obligations | 44,605 | 65,104 | |||||
Reclamation and mine closure | 473 | 668 | |||||
Deferred tax liabilities | 121 | 121 | |||||
151,974 | 238,252 | ||||||
NON-CURRENT LIABILITIES | |||||||
Debt and capital leases | 306,578 | 3,460 | |||||
Royalty obligations | 86,304 | 141,879 | |||||
Reclamation and mine closure | 35,708 | 34,670 | |||||
Deferred tax liabilities | 711,550 | 577,488 | |||||
Other long-term liabilities | 23,110 | 27,372 | |||||
1,163,250 | 784,869 | ||||||
COMMITMENTS AND CONTINGENCIES (Notes 11, 12, 13, 16, 17 and 20) | |||||||
STOCKHOLDERS’ EQUITY | |||||||
Common stock, par value $0.01 per share; authorized 150,000,000 shares, issued and outstanding 101,567,355 at June 30, 2013 and 90,342,338 at December 31, 2012 | 1,016 | 903 | |||||
Additional paid-in capital | 2,770,953 | 2,601,254 | |||||
Accumulated deficit | (418,926 | ) | (396,156 | ) | |||
Accumulated other comprehensive loss | (1,551 | ) | (7,721 | ) | |||
2,351,492 | 2,198,280 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 3,666,716 | $ | 3,221,401 | |||
12
Table 7:
COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In thousands, except share data) | |||||||||||||||
Sales of metal | $ | 204,525 | $ | 254,406 | $ | 376,322 | $ | 458,970 | |||||||
Production costs applicable to sales | (142,924 | ) | (131,823 | ) | (231,708 | ) | (224,377 | ) | |||||||
Depreciation, depletion and amortization | (57,653 | ) | (61,024 | ) | (108,089 | ) | (113,616 | ) | |||||||
Gross profit | 3,948 | 61,559 | 36,525 | 120,977 | |||||||||||
COSTS AND EXPENSES | |||||||||||||||
General and administrative | 15,026 | 8,594 | 25,253 | 16,190 | |||||||||||
Exploration | 6,774 | 6,305 | 13,615 | 12,872 | |||||||||||
Litigation settlement | 32,046 | — | 32,046 | — | |||||||||||
Loss on impairment and other | 86 | 4,813 | 205 | 4,813 | |||||||||||
Pre-development, care, maintenance and other | 973 | 273 | 5,458 | 1,341 | |||||||||||
Total cost and expenses | 54,905 | 19,985 | 76,577 | 35,216 | |||||||||||
OPERATING INCOME (LOSS) | (50,957 | ) | 41,574 | (40,052 | ) | 85,761 | |||||||||
OTHER INCOME AND EXPENSE | |||||||||||||||
Fair value adjustments, net | 66,754 | 16,039 | 84,550 | (7,074 | ) | ||||||||||
Other than temporary impairment of marketable securities | (17,192 | ) | — | (17,227 | ) | — | |||||||||
Interest income and other, net | 419 | (3,221 | ) | 4,275 | 1,786 | ||||||||||
Interest expense, net of capitalized interest | (10,930 | ) | (7,557 | ) | (20,662 | ) | (14,227 | ) | |||||||
Total other income and expense, net | 39,051 | 5,261 | 50,936 | (19,515 | ) | ||||||||||
Income (loss) before income taxes | (11,906 | ) | 46,835 | 10,884 | 66,246 | ||||||||||
Income tax provision | (23,134 | ) | (23,862 | ) | (33,654 | ) | (39,298 | ) | |||||||
NET INCOME (LOSS) | $ | (35,040 | ) | $ | 22,973 | $ | (22,770 | ) | $ | 26,948 | |||||
INCOME (LOSS) PER SHARE | |||||||||||||||
Basic | $ | (0.35 | ) | $ | 0.26 | $ | (0.24 | ) | $ | 0.30 | |||||
Diluted | $ | (0.35 | ) | $ | 0.26 | $ | (0.24 | ) | $ | 0.30 | |||||
Weighted average number of shares | |||||||||||||||
Basic | 99,833 | 89,631 | 94,918 | 89,611 | |||||||||||
Diluted | 99,833 | 89,733 | 94,918 | 89,777 | |||||||||||
13
Table 8:
COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In thousands) | (In thousands) | ||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||
Net income (loss) | $ | (35,040 | ) | $ | 22,973 | $ | (22,770 | ) | $ | 26,948 | |||||
Add (deduct) non-cash items | |||||||||||||||
Depreciation, depletion and amortization | 57,653 | 61,024 | 108,089 | 113,616 | |||||||||||
Accretion of discount on debt and other assets, net | 484 | 808 | 1,531 | 1,605 | |||||||||||
Accretion of royalty obligation | 4,139 | 5,492 | 7,809 | 10,072 | |||||||||||
Deferred income taxes | 12,123 | 9,690 | 19,548 | 17,368 | |||||||||||
Fair value adjustments, net | (65,754 | ) | (17,759 | ) | (81,795 | ) | 4,018 | ||||||||
Loss on foreign currency transactions | 148 | 70 | (317 | ) | 369 | ||||||||||
Litigation settlement | 22,046 | — | 22,046 | — | |||||||||||
Share-based compensation | 1,617 | 1,033 | 2,713 | 3,170 | |||||||||||
Loss on sale of assets | (264 | ) | 264 | (1,132 | ) | 264 | |||||||||
Other than temporary impairment of marketable securities | 17,192 | — | 17,227 | — | |||||||||||
Loss on impairment | 86 | 4,813 | 205 | 4,813 | |||||||||||
Other non-cash charges | — | (40 | ) | — | (40 | ) | |||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Receivables and other current assets | 4,401 | 10,319 | 8,647 | 7,365 | |||||||||||
Prepaid expenses and other | 2,930 | (2,857 | ) | 411 | 1,916 | ||||||||||
Inventories | 31,483 | 3,097 | 10,990 | (21,625 | ) | ||||||||||
Accounts payable and accrued liabilities | 10,094 | 14,276 | (16,930 | ) | (39,655 | ) | |||||||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 63,338 | 113,203 | 76,272 | 130,204 | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||
Purchase of short term investments and marketable securities | (683 | ) | (6,831 | ) | (5,332 | ) | (7,866 | ) | |||||||
Proceeds from sales and maturities of short term investments | 1,522 | 683 | 6,344 | 20,701 | |||||||||||
Capital expenditures | (27,201 | ) | (32,238 | ) | (40,028 | ) | (63,885 | ) | |||||||
Acquisition of Orko Silver Corporation | (101,648 | ) | — | (113,214 | ) | — | |||||||||
Other | 254 | 995 | 1,209 | 1,180 | |||||||||||
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | (127,756 | ) | (37,391 | ) | (151,021 | ) | (49,870 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||
Proceeds from issuance of notes and bank borrowings | — | — | 300,000 | — | |||||||||||
Payments on long-term debt, capital leases, and associated costs | (1,857 | ) | (8,794 | ) | (57,197 | ) | (14,244 | ) | |||||||
Payments on gold production royalty | (15,480 | ) | (19,287 | ) | (30,929 | ) | (40,660 | ) | |||||||
Share repurchases | — | — | (12,557 | ) | — | ||||||||||
Other | (25 | ) | (217 | ) | (477 | ) | (1,045 | ) | |||||||
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (17,362 | ) | (28,298 | ) | 198,840 | (55,949 | ) | ||||||||
INCREASE IN CASH AND CASH EQUIVALENTS | (81,780 | ) | 47,514 | 124,091 | 24,385 | ||||||||||
Cash and cash equivalents at beginning of period | 331,311 | 151,883 | 125,440 | 175,012 | |||||||||||
Cash and cash equivalents at end of period | $ | 249,531 | $ | 199,397 | $ | 249,531 | $ | 199,397 | |||||||
14
Table 9:
Adjusted Earnings Reconciliation - (Unaudited)
(in thousands) | 2Q 2013 | 1Q 2013 | 4Q 2012 | 3Q 2012 | 2Q 2012 | ||||||||||
Net income (loss) | $ | (35,040 | ) | $ | 12,270 | $ | 37,550 | $ | (15,821 | ) | $ | 22,973 | |||
Share based compensation | 1,617 | 1,096 | 1,476 | 3,364 | 1,033 | ||||||||||
Deferred income tax provision | 12,123 | 7,425 | 3,738 | (4,942 | ) | 9,690 | |||||||||
Accretion of royalty obligation | 4,139 | 3,670 | 3,946 | 4,276 | 5,492 | ||||||||||
Fair value adjustments, net | (66,754 | ) | (17,796 | ) | (21,235 | ) | 37,648 | (16,039 | ) | ||||||
Litigation settlement | 32,046 | — | — | — | — | ||||||||||
Other than temporary impairment of marketable securities | 17,192 | — | — | — | — | ||||||||||
Loss on impairment | 86 | 119 | (281 | ) | 1,293 | 4,813 | |||||||||
Loss on debt extinguishments | — | — | 1,036 | — | — | ||||||||||
Adjusted Earnings | $ | (34,591 | ) | $ | 6,784 | $ | 26,230 | $ | 25,818 | $ | 27,962 | ||||
Table 10:
Results of Operations by Mine - Palmarejo - (Unaudited)
in millions of US$ | 2Q 2013 | 1Q 2013 | 4Q 2012 | 3Q 2012 | 2Q 2012 |
Sales of metal | $86.2 | $57.4 | $79.4 | $102.6 | $136.4 |
Production costs | $55.2 | $26.7 | $40.4 | $48.7 | $62.5 |
Operating income | $(7.7) | $(0.2) | $4.5 | $17.7 | $29.5 |
Cash flow from operating activities | $37.2 | $10.1 | $22.9 | $58.2 | $90.5 |
Capital expenditures | $9.2 | $5.3 | $8.8 | $11.3 | $11.2 |
Gross profit | $(4.6) | $1.8 | $6.8 | $20.0 | $31.1 |
Gross margin | (5.3)% | 3.1% | 8.7% | 19.5% | 22.8% |
2Q 2013 | 1Q 2013 | 4Q 2012 | 3Q 2012 | 2Q 2012 | |
Underground Operations: | |||||
Tons mined | 183,267 | 151,232 | 139,925 | 143,747 | 162,820 |
Average silver grade (oz/t) | 4.59 | 4.22 | 4.70 | 6.13 | 8.91 |
Average gold grade (oz/t) | 0.11 | 0.09 | 0.08 | 0.09 | 0.14 |
Surface Operations: | |||||
Tons mined | 363,758 | 388,651 | 465,498 | 424,380 | 321,758 |
Average silver grade (oz/t) | 4.95 | 3.45 | 2.62 | 2.79 | 4.14 |
Average gold grade (oz/t) | 0.04 | 0.03 | 0.02 | 0.03 | 0.04 |
Processing: | |||||
Total tons milled | 570,322 | 573,170 | 563,123 | 532,775 | 489,924 |
Average recovery rate – Ag | 76.5% | 78.8% | 84.2% | 90.0% | 84.2% |
Average recovery rate – Au | 81.2% | 90.1% | 91.4% | 102.5% | 92.0% |
Silver production - oz (000's) | 2,045 | 1,646 | 1,555 | 1,833 | 2,365 |
Gold production - oz | 28,191 | 22,965 | 19,998 | 23,702 | 31,258 |
Cash operating costs/Ag Oz | $3.25 | $2.20 | $7.55 | $3.75 | $(0.85) |
15
Table 11:
Results of Operations by Mine - San Bartolomé - (Unaudited)
in millions of US$ | 2Q 2013 | 1Q 2013 | 4Q 2012 | 3Q 2012 | 2Q 2012 | |
Sales of metal | $49.2 | $33.1 | $37.0 | $46.2 | $53.4 | |
Production costs | $32.8 | $15.7 | $15.1 | $19.9 | $22.8 | |
Operating income | $11.5 | $8.9 | $17.5 | $22.0 | $26.6 | |
Cash flow from operating activities | $32.8 | $(5.4) | $9.5 | $19.8 | $31.0 | |
Capital expenditures | $3.2 | $0.5 | $3.3 | $4.4 | $7.8 | |
Gross profit | $11.5 | $12.7 | $17.6 | $22.1 | $26.5 | |
Gross margin | 23.3 | % | 38.4% | 47.7% | 47.8% | 49.6% |
2Q 2013 | 1Q 2013 | 4Q 2012 | 3Q 2012 | 1Q 2012 | ||
Tons milled | 424,310 | 374,985 | 363,813 | 344,349 | 391,005 | |
Average silver grade (oz/t) | 4.0 | 4.1 | 4.2 | 4.9 | 4.3 | |
Average recovery rate | 90.3% | 90.6% | 88% | 90.3% | 88.3% | |
Silver production (000's) | 1,523 | 1,391 | 1,343 | 1,526 | 1,470 | |
Cash operating costs/Ag Oz | $12.89 | $13.27 | $13.97 | $12.13 | $11.05 | |
Table 12:
Results of Operations by Mine - Kensington - (Unaudited)
in millions of US$ | 2Q 2013 | 1Q 2013 | 4Q 2012 | 3Q 2012 | 2Q 2012 |
Sales of metal | $30.9 | $39.3 | $43.0 | $36.5 | $21.1 |
Production costs | $30.2 | $23.6 | $27.0 | $26.9 | $16.1 |
Operating income | $(13.3) | $1.6 | $0.9 | $(3.5) | $(5.0) |
Cash flow from operating activities | $7.6 | $11.7 | $16.5 | $5.0 | $(12.5) |
Capital expenditures | $7.4 | $3.3 | $7.8 | $9.0 | $9.3 |
Gross profit/ | $(12.6) | $2.3 | $2.2 | $(1.9) | $(4.7) |
Gross margin | (40.7)% | 5.9% | 5.1% | (5.2)% | (22.3)% |
2Q 2013 | 1Q 2013 | 4Q 2012 | 3Q 2012 | 2Q 2012 | |
Tons mined | 135,123 | 116,747 | 140,626 | 113,770 | 84,632 |
Tons milled | 127,987 | 129,057 | 129,622 | 123,428 | 97,794 |
Average gold grade (oz/t) | 0.18 | 0.20 | 0.23 | 0.21 | 0.23 |
Average recovery rate | 98.2% | 96.2% | 96.9% | 95.9% | 94.2% |
Gold production | 23,162 | 25,206 | 28,718 | 24,391 | 21,572 |
Cash operating costs/Ag Oz | $1,115 | $1,055 | $1,065 | $1,298 | $1,348 |
16
Table 13:
Results of Operations by Mine - Rochester - (Unaudited)
in millions of US$ | 2Q 2013 | 1Q 2013 | 4Q 2012 | 3Q 2012 | 2Q 2012 | ||||
Sales of metal | $34.9 | $39.5 | $43.2 | $36.2 | $34.2 | ||||
Production costs | $23.1 | $21.5 | $22.9 | $21.0 | $20.8 | ||||
Operating income | $(25.2) | $15.2 | $19.2 | $10.9 | $9.5 | ||||
Cash flow from operating activities | $(3.4) | $5.6 | $18.2 | $7.3 | $10.1 | ||||
Capital expenditures | $6.6 | $3.3 | $1.5 | $4.8 | $2.9 | ||||
Gross profit | $9.5 | $15.8 | $18.0 | $13.2 | $11.3 | ||||
Gross margin | 27.3% | 40.0% | 41.7% | 36.5% | 33.0% | ||||
2Q 2013 | 1Q 2013 | 4Q 2012 | 3Q 2012 | 2Q 2012 | |||||
Tons mined | 2,667,639 | 2,924,472 | 3,031,428 | 3,170,129 | 2,585,914 | ||||
Average silver grade (oz/t) | 0.58 | 0.52 | 0.51 | 0.52 | 0.63 | ||||
Average gold grade (oz/t) | 0.003 | 0.003 | 0.005 | 0.004 | 0.005 | ||||
Silver production (000's) | 844 | 648 | 828 | 819 | 713 | ||||
Gold production | 9,404 | 8,742 | 12,055 | 10,599 | 10,120 | ||||
Cash operating costs/Ag Oz | $14.75 | $13.54 | $2.17 | $9.58 | $9.83 | ||||
Table 14:
Results of Operations by Mine - Endeavor - (Unaudited)
in millions of US$ | 2Q 2013 | 1Q 2013 | 4Q 2012 | 3Q 2012 | 2Q 2012 |
Sales of metal | $3.5 | $3.0 | $2.8 | $4.1 | $5.2 |
Production costs | $1.7 | $1.3 | $1.6 | $2.0 | $2.6 |
Operating income | $0.6 | $0.8 | $0.8 | $1.3 | $1.1 |
Cash flow from operating activities | $1.2 | $1.6 | $1.6 | $1.5 | $3.6 |
Capital expenditures | $— | $— | $— | $— | $— |
Gross profit | $0.6 | $0.8 | $0.8 | $1.3 | $1.1 |
Gross margin | 17.1% | 26.7% | 28.6% | 31.7% | 21.2% |
2Q 2013 | 1Q 2013 | 4Q 2012 | 3Q 2012 | 2Q 2012 | |
Silver Production (000's) | 221 | 150 | 105 | 140 | 240 |
Cash operating costs/Ag Oz | $10.62 | $17.30 | $19.92 | $15.97 | $17.50 |
17
Table 15:
Reconciliation of Non-U.S. GAAP Cash Costs to U.S. GAAP Production Costs
Three months ended June 30, 2013
(In thousands except ounces and per ounce costs) | Palmarejo | San Bartolomé | Kensington | Rochester | Martha | Endeavor | Total | |||||||||||||||||||||
Total cash operating cost (Non-U.S. GAAP) | $ | 6,639 | $ | 19,636 | $ | 25,819 | $ | 12,450 | $ | (16 | ) | $ | 2,350 | $ | 66,878 | |||||||||||||
Royalties | — | 1,383 | — | — | — | — | 1,383 | |||||||||||||||||||||
Production taxes | — | — | — | 538 | — | — | 538 | |||||||||||||||||||||
Total cash costs (Non-U.S. GAAP) | $ | 6,639 | $ | 21,019 | $ | 25,819 | $ | 12,988 | $ | (16 | ) | $ | 2,350 | $ | 68,799 | |||||||||||||
Add/Subtract: | ||||||||||||||||||||||||||||
Third party smelting costs | — | — | (2,449 | ) | — | 16 | (831 | ) | (3,264 | ) | ||||||||||||||||||
By-product credit | 39,828 | — | — | 13,391 | — | — | 53,219 | |||||||||||||||||||||
Other adjustments | 7 | 256 | — | — | — | — | 263 | |||||||||||||||||||||
Change in inventory | 8,735 | 11,541 | 6,784 | (3,325 | ) | — | 164 | 23,899 | ||||||||||||||||||||
Depreciation, depletion and amortization | 35,543 | 4,941 | 13,261 | 2,325 | — | 1,220 | 57,290 | |||||||||||||||||||||
Production costs applicable to sales, including depreciation, depletion and amortization (U.S. GAAP) | $ | 90,752 | $ | 37,757 | $ | 43,415 | $ | 25,379 | $ | — | $ | 2,903 | $ | 200,206 | ||||||||||||||
Production of silver (ounces) | 2,044,967 | 1,523,262 | — | 843,845 | — | 221,268 | 4,633,342 | |||||||||||||||||||||
Cash operating cost per silver ounce | $ | 3.25 | $ | 12.89 | $ | — | $ | 14.75 | $ | — | $ | 10.62 | $ | 8.86 | ||||||||||||||
Cash costs per silver ounce | $ | 3.25 | $ | 13.80 | $ | — | $ | 15.39 | $ | — | $ | 10.62 | $ | 9.28 | ||||||||||||||
Production of gold (ounces) | — | — | 23,162 | — | — | — | 23,162 | |||||||||||||||||||||
Cash operating cost per gold ounce | $ | — | $ | — | $ | 1,115 | $ | — | $ | — | $ | — | $ | 1,115 | ||||||||||||||
Cash cost per gold ounce | $ | — | $ | — | $ | 1,115 | $ | — | $ | — | $ | — | $ | 1,115 | ||||||||||||||
Table 16:
Reconciliation of Non-U.S. GAAP Cash Costs to U.S. GAAP Production Costs
Three months ended June 30, 2012
(In thousands except ounces and per ounce costs) | Palmarejo | San Bartolomé | Kensington | Rochester | Martha | Endeavor | Total | |||||||||||||||||||||
Total cash operating cost (Non-U.S. GAAP) | $ | (2,009 | ) | $ | 16,249 | $ | 29,083 | $ | 7,008 | $ | 5,942 | $ | 4,204 | $ | 60,477 | |||||||||||||
Royalties | — | 1,457 | — | 510 | 124 | — | 2,091 | |||||||||||||||||||||
Production taxes | — | — | — | 641 | — | — | 641 | |||||||||||||||||||||
Total cash costs (Non-U.S. GAAP) | $ | (2,009 | ) | $ | 17,706 | $ | 29,083 | $ | 8,159 | $ | 6,066 | $ | 4,204 | $ | 63,209 | |||||||||||||
Add/Subtract: | ||||||||||||||||||||||||||||
Third party smelting costs | — | — | (2,820 | ) | — | (1,444 | ) | (1,449 | ) | (5,713 | ) | |||||||||||||||||
By-product credit | 50,363 | — | — | 16,295 | 157 | — | 66,815 | |||||||||||||||||||||
Other adjustments | 124 | 117 | 7 | 229 | 26 | — | 503 | |||||||||||||||||||||
Change in inventory | 14,060 | 4,950 | (10,165 | ) | (3,931 | ) | 2,297 | (202 | ) | 7,009 | ||||||||||||||||||
Depreciation, depletion and amortization | 42,741 | 4,070 | 9,719 | 2,060 | 631 | 1,592 | 60,813 | |||||||||||||||||||||
Production costs applicable to sales, including depreciation, depletion and amortization (U.S. GAAP) | $ | 105,279 | $ | 26,843 | $ | 25,824 | $ | 22,812 | $ | 7,733 | $ | 4,145 | $ | 192,636 | ||||||||||||||
Production of silver (ounces) | 2,365,484 | 1,470,342 | — | 712,706 | 107,895 | 240,168 | 4,896,595 | |||||||||||||||||||||
Cash operating cost per silver ounce | $ | (0.85 | ) | $ | 11.05 | $ | — | $ | 9.83 | $ | 55.07 | $ | 17.50 | $ | 6.41 | |||||||||||||
Cash costs per silver ounce | $ | (0.85 | ) | $ | 12.04 | $ | — | $ | 11.45 | $ | 56.21 | $ | 17.50 | $ | 6.97 | |||||||||||||
Production of gold (ounces) | — | — | 21,572 | — | — | — | 21,572 | |||||||||||||||||||||
Cash operating cost per gold ounce | $ | — | $ | — | $ | 1,348 | $ | — | $ | — | $ | — | $ | 1,348 | ||||||||||||||
Cash cost per gold ounce | $ | — | $ | — | $ | 1,348 | $ | — | $ | — | $ | — | $ | 1,348 | ||||||||||||||
18
Table 17:
Reconciliation of Non-U.S. GAAP Cash Costs to U.S. GAAP Production Costs
Six months ended June 30, 2013
(In thousands except ounces and per ounce costs) | Palmarejo | San Bartolomé | Kensington | Rochester | Martha | Endeavor | Total | |||||||||||||||||||||
Total cash operating cost (Non-U.S. GAAP) | $ | 10,257 | $ | 38,101 | $ | 52,401 | $ | 21,219 | $ | 17 | $ | 4,938 | $ | 126,933 | ||||||||||||||
Royalties | — | 2,835 | — | 1,025 | — | — | 3,860 | |||||||||||||||||||||
Production taxes | — | — | — | 1,264 | — | — | 1,264 | |||||||||||||||||||||
Total cash costs (Non-U.S. GAAP) | $ | 10,257 | $ | 40,936 | $ | 52,401 | $ | 23,508 | $ | 17 | $ | 4,938 | $ | 132,057 | ||||||||||||||
Add/Subtract: | ||||||||||||||||||||||||||||
Third party smelting costs | — | — | (5,715 | ) | — | (17 | ) | (1,751 | ) | (7,483 | ) | |||||||||||||||||
By-product credit | 77,092 | — | — | 27,679 | — | — | 104,771 | |||||||||||||||||||||
Other adjustments | 611 | 810 | — | — | — | — | 1,421 | |||||||||||||||||||||
Change in inventory | (6,031 | ) | 6,746 | 7,032 | (6,630 | ) | — | (183 | ) | 934 | ||||||||||||||||||
Depreciation, depletion and amortization | 64,478 | 9,697 | 26,647 | 4,505 | — | 2,044 | 107,371 | |||||||||||||||||||||
Production costs applicable to sales, including depreciation, depletion and amortization (U.S. GAAP) | $ | 146,407 | $ | 58,189 | $ | 80,365 | $ | 49,062 | $ | — | $ | 5,048 | $ | 339,071 | ||||||||||||||
Production of silver (ounces) | 3,691,365 | 2,914,361 | — | 1,491,434 | — | 371,012 | 8,468,172 | |||||||||||||||||||||
Cash operating cost per silver ounce | $ | 2.78 | $ | 13.07 | $ | — | $ | 14.23 | $ | — | $ | 13.31 | $ | 8.80 | ||||||||||||||
Cash costs per silver ounce | $ | 2.78 | $ | 14.05 | $ | — | $ | 15.76 | $ | — | $ | 13.31 | $ | 9.41 | ||||||||||||||
Production of gold (ounces) | — | — | 48,368 | — | — | — | 48,368 | |||||||||||||||||||||
Cash operating cost per gold ounce | $ | — | $ | — | $ | 1,083 | $ | — | $ | — | $ | — | $ | 1,083 | ||||||||||||||
Cash cost per gold ounce | $ | — | $ | — | $ | 1,083 | $ | — | $ | — | $ | — | $ | 1,083 | ||||||||||||||
Table 18:
Reconciliation of Non-U.S. GAAP Cash Costs to U.S. GAAP Production Costs
Six months ended June 30, 2012
(In thousands except ounces and per ounce costs) | Palmarejo | San Bartolomé | Kensington | Rochester | Martha | Endeavor | Total | |||||||||||||||||||||
Total cash operating cost (Non-U.S. GAAP) | $ | (7,652 | ) | $ | 32,502 | $ | 49,251 | $ | 17,311 | $ | 11,649 | $ | 8,331 | $ | 111,392 | |||||||||||||
Royalties | — | 3,493 | — | 1,119 | 206 | — | 4,818 | |||||||||||||||||||||
Production taxes | — | — | — | 653 | — | — | 653 | |||||||||||||||||||||
Total cash costs (Non-U.S. GAAP) | $ | (7,652 | ) | $ | 35,995 | $ | 49,251 | $ | 19,083 | $ | 11,855 | $ | 8,331 | $ | 116,863 | |||||||||||||
Add/Subtract: | ||||||||||||||||||||||||||||
Third party smelting costs | — | — | (3,903 | ) | — | (3,418 | ) | (2,238 | ) | (9,559 | ) | |||||||||||||||||
By-product credit | 102,889 | — | — | 25,252 | 298 | — | 128,439 | |||||||||||||||||||||
Other adjustments | 368 | (77 | ) | 14 | 316 | 83 | — | 704 | ||||||||||||||||||||
Change in inventory | 12,793 | 463 | (12,166 | ) | (14,335 | ) | 1,977 | (803 | ) | (12,071 | ) | |||||||||||||||||
Depreciation, depletion and amortization | 80,501 | 8,289 | 16,324 | 3,702 | 1,151 | 3,236 | 113,203 | |||||||||||||||||||||
Production costs applicable to sales, including depreciation, depletion and amortization (U.S. GAAP) | $ | 188,899 | $ | 44,670 | $ | 49,520 | $ | 34,018 | $ | 11,946 | $ | 8,526 | $ | 337,579 | ||||||||||||||
Production of silver (ounces) | 4,848,298 | 3,061,634 | — | 1,154,043 | 230,688 | 488,126 | 9,782,789 | |||||||||||||||||||||
Cash operating cost per silver ounce | $ | (1.58 | ) | $ | 10.62 | $ | — | $ | 15.00 | $ | 50.50 | $ | 17.07 | $ | 6.35 | |||||||||||||
Cash costs per silver ounce | $ | (1.58 | ) | $ | 11.76 | $ | — | $ | 16.54 | $ | 51.39 | $ | 17.07 | $ | 6.91 | |||||||||||||
Production of gold (ounces) | — | — | 29,016 | — | — | — | 29,016 | |||||||||||||||||||||
Cash operating cost per gold ounce | $ | — | $ | — | $ | 1,697 | $ | — | $ | — | $ | — | $ | 1,697 | ||||||||||||||
Cash cost per gold ounce | $ | — | $ | — | $ | 1,697 | $ | — | $ | — | $ | — | $ | 1,697 | ||||||||||||||
19
Table 19:
Co-Product Cash Cost Per Ounce for Three and Six months ended June 30, 2013 - (Unaudited)
Three months ended June 30, 2013 | Six months ended June 30, 2013 | |||||||||||
Palmarejo | Rochester | Palmarejo | Rochester | |||||||||
Total cash operating costs | $46,467 | $25,841 | $87,348 | $48,898 | ||||||||
Total cash costs | $46,467 | $26,379 | $87,348 | $51,187 | ||||||||
Revenue | ||||||||||||
Silver | 54% | 55% | 56% | 55% | ||||||||
Gold | 46% | 45% | 44% | 45% | ||||||||
Ounces produced | ||||||||||||
Silver | 2,044,967 | 843,845 | 3,691,365 | 1,491,434 | ||||||||
Gold | 28,191 | 9,404 | 51,157 | 18,146 | ||||||||
Total cash operating costs per ounce | ||||||||||||
Silver | $12.24 | $16.99 | $13.22 | $18.06 | ||||||||
Gold | $761 | $1,223 | $753 | $1,210 | ||||||||
Total cash costs per ounce | ||||||||||||
Silver | $12.24 | $17.34 | $13.22 | $18.91 | ||||||||
Gold | $761 | $1,249 | $753 | $1,267 | ||||||||
Table 20:
Co-Product Cash Cost Per Ounce for Three and Six months ended June 30, 2012 - (Unaudited)
Three months ended June 30, 2012 | Six months ended June 30, 2012 | |||||||||||||||
Palmarejo | Rochester | Palmarejo | Rochester | |||||||||||||
Total cash operating costs | $ | 48,354 | $ | 23,303 | $ | 95,237 | $ | 42,564 | ||||||||
Total cash costs | $ | 48,354 | $ | 24,454 | $ | 95,237 | $ | 44,336 | ||||||||
Revenue | ||||||||||||||||
Silver | 58% | 55% | 59% | 61% | ||||||||||||
Gold | 42% | 45% | 41% | 39% | ||||||||||||
Ounces produced | ||||||||||||||||
Silver | 2,365,484 | 712,706 | 4,848,298 | 1,154,043 | ||||||||||||
Gold | 31,258 | 10,120 | 62,338 | 15,412 | ||||||||||||
Total cash operating costs per ounce | ||||||||||||||||
Silver | $11.89 | $17.99 | $11.61 | $22.40 | ||||||||||||
Gold | $647 | $1,036 | $625 | $1,084 | ||||||||||||
Total cash costs per ounce | ||||||||||||||||
Silver | $11.89 | $18.87 | $11.61 | $23.34 | ||||||||||||
Gold | $647 | $1,087 | $625 | $1,129 | ||||||||||||
20