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EX-32.2 - EXHIBIT 32.2 - Coeur Mining, Inc.cde-12311610kaex322.htm
EX-32.1 - EXHIBIT 32.1 - Coeur Mining, Inc.cde-12311610kaex321.htm
EX-31.2 - EXHIBIT 31.2 - Coeur Mining, Inc.cde-12311610kaex312.htm
EX-31.1 - EXHIBIT 31.1 - Coeur Mining, Inc.cde-12311610kaex311.htm
EX-23.2 - EXHIBIT 23.2 - Coeur Mining, Inc.cde-12311610kaex232.htm
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
(Amendment No. 1)
(Mark One)
 
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2016
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from          to          
Commission File Number 1-8641
coeurlogoa34.jpg
COEUR MINING, INC.
(Exact name of registrant as specified in its charter)
Delaware
82-0109423
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
104 S. Michigan Ave. Suite 900
 Chicago, IL
(Address of principal executive offices)
60603
 (Zip Code)
Registrant’s telephone number, including area code: (312) 489-5800
Securities Registered pursuant to Section 12(b) of the Act:
Title of each class
 
Name of each exchange on which registered
Common Stock, par value $0.01 per share
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.  Yes  x No ¨  
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes ¨  No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x    No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company)
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨     No x
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.
$1,707,877,264

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
As of February 6, 2017, 181,055,852 shares of Common Stock, par value $0.01 per share




Explanatory Note

This Amendment No. 1 on Form 10-K/A (the “Amendment”) amends Coeur Mining, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (the “Form 10-K”), as filed with the Securities and Exchange Commission on February 9, 2017, and is being filed solely to amend the report prepared by KPMG LLP contained in Item 8 of the Form 10-K (the “Audit Report”) to correct a typographical error in the date of the Audit Report from February 8, 2017 to February 10, 2016. Pursuant to Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended, we have repeated the entire text of Item 8 of the Form 10-K in this Amendment. However, there have been no changes to the text of such item other than the change stated in the immediately preceding sentence. This Amendment includes a new consent of KPMG LLP as Exhibit 23.2 hereto and new certifications by our Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 as Exhibits 31.1, 31.2, 32.1 and 32.2 hereto.
 
Except as expressly set forth above, this Amendment does not, and does not purport to, amend, update or restate the information in any other item of the Form 10-K or reflect any events that have occurred after the filing of the original Form 10-K.



    



COEUR MINING, INC.

FORM 10-K/A
INDEX



3


PART II

Item 8.        Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Coeur Mining, Inc.

We have audited the accompanying consolidated balance sheet of Coeur Mining, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2016, and the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity, and cash flows for the year ended December 31, 2016. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Coeur Mining, Inc. and subsidiaries as of December 31, 2016, and the results of their operations and their cash flows for the year ended December 31, 2016 in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2016, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 10, 2017 expressed an unqualified opinion.

/s/ GRANT THORNTON LLP
Chicago, Illinois
February 8, 2017

4


Report of Independent Registered Public Accounting Firm


The Board of Directors and Stockholders
Coeur Mining, Inc.
We have audited the internal control over financial reporting of Coeur Mining, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2016, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on criteria established in the 2013 Internal Control-Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of the Company as of and for the year ended December 31, 2016, and our report dated February 8, 2017 expressed an unqualified opinion on those consolidated financial statements.

/s/ GRANT THORNTON LLP
Chicago, Illinois
February 8, 2017













5


Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Coeur Mining, Inc.:

We have audited the accompanying consolidated balance sheet of Coeur Mining, Inc. and subsidiaries (the Company) as of December 31, 2015, and the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the two‑year period ended December 31, 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Coeur Mining, Inc. and subsidiaries as of December 31, 2015, and the results of their operations and their cash flows for each of the years in the two‑year period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.


/s/ KPMG LLP
Chicago, Illinois
February 10, 2016


6


COEUR MINING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
 
 
Year ended December 31,
 
 
2016
 
2015
 
2014
 
Notes
In thousands, except share data
Revenue
3
$
665,777

 
$
646,086

 
$
635,742

COSTS AND EXPENSES
 
 
 
 
 
 
Costs applicable to sales(1)
3
409,541

 
479,654

 
477,945

Amortization
 
123,161

 
143,751

 
162,436

General and administrative
 
29,376

 
32,834

 
40,845

Exploration
 
12,930

 
11,647

 
21,740

Write-downs
 
4,446

 
313,337

 
1,472,721

Pre-development, reclamation, and other
 
17,219

 
17,793

 
26,037

Total costs and expenses
 
596,673

 
999,016


2,201,724

OTHER INCOME (EXPENSE), NET
 
 
 
 
 
 
Gain (loss) on debt extinguishment
 
(21,365
)
 
15,916

 

Fair value adjustments, net
11
(11,581
)
 
5,202

 
3,618

Interest expense, net of capitalized interest
19
(36,920
)
 
(45,703
)
 
(47,546
)
Other, net
8
1,875

 
(15,931
)
 
(5,218
)
Total other income (expense), net
 
(67,991
)
 
(40,516
)

(49,146
)
Income (loss) before income and mining taxes
 
1,113

 
(393,446
)

(1,615,128
)
Income and mining tax (expense) benefit
9
54,239

 
26,263

 
428,254

NET INCOME (LOSS)
 
$
55,352

 
$
(367,183
)

$
(1,186,874
)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
 
 
 
 
 
 
Unrealized gain (loss) on equity securities, net of tax of $(767) and $1,446 for the years ended December 31, 2016, and 2014, respectively
 
3,222

 
(4,154
)
 
(2,290
)
Reclassification adjustments for impairment of equity securities, net of tax of $(2,552) for the year ended December 31, 2014
 
703

 
2,346

 
4,042

Reclassification adjustments for realized (gain) loss on sale of equity securities, net of tax of $(219) for the year ended December 31, 2014
 
(2,691
)
 
894

 
346

Other comprehensive income (loss)
 
1,234

 
(914
)

2,098

COMPREHENSIVE INCOME (LOSS)
 
$
56,586

 
$
(368,097
)

$
(1,184,776
)
 
 
 
 
 
 
 
NET INCOME (LOSS) PER SHARE
10
 
 
 
 
 
Basic
 
$
0.35

 
$
(2.83
)
 
$
(11.59
)
 
 
 
 
 
 
 
Diluted
 
$
0.34

 
$
(2.83
)
 
$
(11.59
)
(1) Excludes amortization.
The accompanying notes are an integral part of these consolidated financial statements.


7


COEUR MINING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
Year ended December 31,
 
 
2016
 
2015
 
2014
 
Notes
In thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
Net income (loss)
 
$
55,352

 
(367,183
)
 
(1,186,874
)
Adjustments:
 
 
 
 
 
 
Amortization
 
123,161

 
143,751

 
162,436

Accretion
 
10,248

 
14,149

 
16,246

Deferred income taxes
 
(71,350
)
 
(40,838
)
 
(448,905
)
Loss on termination of revolving credit facility

 

 

 
3,035

(Gain) Loss on extinguishment of debt
 
21,365

 
(15,916
)
 

Fair value adjustments, net
11
11,581

 
(5,202
)
 
(3,618
)
Stock-based compensation
6
9,715

 
9,272

 
9,288

Impairment of equity securities
14
703

 
2,346

 
6,593

Write-downs
4
4,446

 
313,337

 
1,472,721

Other
 
(1,067
)
 
16,303

 
124

Changes in operating assets and liabilities:
 
 
 
 
 
 
Receivables
 
9,011

 
17,560

 
(11,611
)
Prepaid expenses and other current assets
 
(826
)
 
(3,063
)
 
5,635

Inventory and ore on leach pads
 
(35,591
)
 
19,573

 
12,971

Accounts payable and accrued liabilities
 
(10,931
)
 
9,453

 
15,507

CASH PROVIDED BY OPERATING ACTIVITIES
 
125,817

 
113,542


53,548

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
Capital expenditures
 
(101,013
)
 
(95,193
)
 
(64,244
)
Acquisitions, net
13
(1,417
)
 
(110,846
)
 
(21,329
)
Proceeds from the sale of assets
 
16,296

 
607

 
329

Purchase of investments
 
(178
)
 
(1,880
)
 
(50,513
)
Sales and maturities of investments
 
7,077

 
605

 
54,344

Other
 
(4,208
)
 
(4,586
)
 
(321
)
CASH USED IN INVESTING ACTIVITIES
 
(83,443
)
 
(211,293
)

(81,734
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
Issuance of common stock
 
269,556

 

 

Issuance of notes and bank borrowings
19

 
153,500

 
167,784

Payments on debt, capital leases, and associated costs
 
(322,801
)
 
(84,715
)
 
(25,902
)
Gold production royalty payments
 
(27,155
)
 
(39,235
)
 
(48,395
)
Other
 
172

 
(542
)
 
(509
)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
 
(80,228
)
 
29,008


92,978

Effect of exchange rate changes on cash and cash equivalents
 
(678
)
 
(1,404
)
 
(621
)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
 
(38,532
)
 
(70,147
)

64,171

Cash and cash equivalents at beginning of period
 
200,714

 
270,861

 
206,690

Cash and cash equivalents at end of period
 
$
162,182

 
$
200,714

 
$
270,861


The accompanying notes are an integral part of these consolidated financial statements.

8


COEUR MINING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
 
December 31, 2016
 
December 31, 2015
ASSETS
Notes
In thousands, except share data
CURRENT ASSETS
 
 
 
 
Cash and cash equivalents
 
$
162,182

 
$
200,714

Receivables
15
60,431

 
85,992

Inventory
16
106,026

 
81,711

Ore on leach pads
16
64,167

 
67,329

Prepaid expenses and other
 
17,981

 
10,942

 
 
410,787

 
446,688

NON-CURRENT ASSETS
 
 
 
 
Property, plant and equipment, net
17
216,796

 
195,999

Mining properties, net
18
558,455

 
589,219

Ore on leach pads
16
67,231

 
44,582

Restricted assets

17,597

 
11,633

Equity securities
14
4,488

 
2,766

Receivables
15
30,951

 
24,768

Deferred tax assets

191

 
1,942

Other
 
12,413

 
14,892

TOTAL ASSETS
 
$
1,318,909

 
$
1,332,489

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
Accounts payable
 
$
53,335

 
$
52,153

Accrued liabilities and other
 
42,743

 
50,532

Debt
19
12,039

 
10,431

Royalty obligations
11
4,995

 
24,893

Reclamation
5
3,522

 
2,071

 
 
116,634

 
140,080

NON-CURRENT LIABILITIES
 
 
 
 
Debt
19
198,857

 
479,979

Royalty obligations
11
4,292

 
4,864

Reclamation
5
95,804

 
83,197

Deferred tax liabilities

74,798

 
147,132

Other long-term liabilities
 
60,037

 
55,761

 
 
433,788

 
770,933

STOCKHOLDERS’ EQUITY
 
 
 
 
Common stock, par value $0.01 per share; authorized 300,000,000 shares, issued and outstanding 180,933,287 at December 31, 2016 and 151,339,136 at December 31, 2015
 
1,809

 
1,513

Additional paid-in capital
 
3,314,590

 
3,024,461

Accumulated other comprehensive income (loss)
 
(2,488
)
 
(3,722
)
Accumulated deficit
 
(2,545,424
)
 
(2,600,776
)
 
 
768,487

 
421,476

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 
$
1,318,909

 
$
1,332,489


The accompanying notes are an integral part of these consolidated financial statements.


9


COEUR MINING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
In thousands
Common
Stock
Shares
 
Common
Stock Par
Value
 
Additional
Paid-In Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
Balances at December 31, 2013
102,843

 
$
1,028

 
$
2,781,164

 
$
(1,046,719
)
 
$
(4,906
)
 
$
1,730,567

Net income (loss)

 

 

 
(1,186,874
)
 

 
(1,186,874
)
Other comprehensive income

 

 

 

 
2,098

 
2,098

Common stock issued under long-term incentive plans, net
541

 
6

 
8,531

 

 

 
8,537

Balances at December 31, 2014
103,384

 
$
1,034

 
$
2,789,695

 
$
(2,233,593
)
 
$
(2,808
)
 
$
554,328

Net income (loss)

 

 

 
(367,183
)
 

 
(367,183
)
Other comprehensive income (loss)

 

 

 

 
(914
)
 
(914
)
Common stock issued for the acquisition of Paramount Gold and Silver Corp.
32,667

 
327

 
188,490

 

 

 
188,817

Common stock issued for the extinguishment of Senior Notes
14,365

 
144

 
38,379

 

 

 
38,523

Common stock issued under stock-based compensation plans, net
923

 
8

 
7,897

 

 

 
7,905

Balances at December 31, 2015
151,339

 
$
1,513

 
$
3,024,461

 
$
(2,600,776
)
 
$
(3,722
)
 
$
421,476

Net income (loss)

 

 

 
55,352

 

 
55,352

Other comprehensive income (loss)

 

 

 

 
1,234

 
1,234

Common stock issued for the extinguishment of Senior Notes
739

 
7

 
11,806

 

 

 
11,813

Issuance of common stock
26,944

 
270

 
269,286

 

 

 
269,556

Common stock issued under stock-based compensation plans, net
1,911

 
19

 
9,037

 

 

 
9,056

Balances at December 31, 2016
180,933

 
$
1,809

 
$
3,314,590

 
$
(2,545,424
)
 
$
(2,488
)
 
$
768,487

The accompanying notes are an integral part of these consolidated financial statements.

10

Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements


NOTE 1 - THE COMPANY
Coeur Mining, Inc. (“Coeur” or “the Company”) is a gold and silver producer with mines located in the United States,
Mexico, and Bolivia and exploration projects in Mexico and Argentina. The Company operates the Palmarejo complex, Kensington, Rochester, Wharf, and San Bartolomé mines, and owns Coeur Capital, which is primarily comprised of the Endeavor silver stream. The cash flow and profitability of the Company's operations are significantly impacted by the market price of gold and silver. The prices of gold and silver are affected by numerous factors beyond the Company's control.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The Company's Consolidated Financial Statements have been prepared in accordance with United States Generally
Accepted Accounting Principles. The preparation of the Company's Consolidated Financial Statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to metal prices and mineral reserves that are the basis for future cash flow estimates utilized in impairment calculations and units-of production amortization calculations, environmental, reclamation and closure obligations, estimates of recoverable silver and gold in leach pad inventories, estimates of fair value for certain reporting units and asset impairments, valuation allowances for deferred tax assets, and the fair value and accounting treatment of financial instruments, equity securities, and derivative instruments. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results will differ from the amounts estimated in these financial statements.
Principles of Consolidation
The Consolidated Financial Statements include the wholly-owned subsidiaries of the Company, the most significant of
which are Coeur Mexicana S.A. de C.V., Coeur Rochester, Inc., Coeur Alaska, Inc., Wharf Resources (U.S.A.), Empresa Minera Manquiri S.A., and Coeur Capital, Inc. All intercompany balances and transactions have been eliminated. The Company's investments in entities in which it has less than 20% ownership interest are accounted for using the cost method.
Cash and Cash Equivalents
Cash and cash equivalents include all highly-liquid investments with an original maturity of three months or less. The Company minimizes its credit risk by investing its cash and cash equivalents with major U.S. and international banks and financial institutions located principally in the United States with a minimum credit rating of A1, as defined by Standard & Poor’s. The Company’s management believes that no concentration of credit risk exists with respect to the investment of its cash and cash equivalents.
Receivables
Trade receivables and other receivable balances are reported at outstanding principal amounts, net of an allowance for doubtful accounts, if deemed necessary. Management evaluates the collectability of receivable account balances to determine the allowance, if any. Management considers the other party's credit risk and financial condition, as well as current and projected economic and market conditions, in determining the amount of the allowance. Receivable balances are written off when management determines that the balance is uncollectible.

Ore on Leach Pads
The heap leach process extracts silver and gold by placing ore on an impermeable pad and applying a diluted cyanide solution that dissolves a portion of the contained silver and gold, which are then recovered in metallurgical processes.
The Company uses several integrated steps to scientifically measure the metal content of ore placed on the leach pads. As the ore body is drilled in preparation for the blasting process, samples are taken of the drill residue which are assayed to determine estimated quantities of contained metal. The Company estimates the quantity of ore by utilizing global positioning satellite survey techniques. The Company then processes the ore through crushing facilities where the output is again weighed and sampled for assaying. A metallurgical reconciliation with the data collected from the mining operation is completed with appropriate adjustments made to previous estimates. The crushed ore is then transported to the leach pad for application of the leaching solution. As the leach solution is collected from the leach pads, it is continuously sampled for assaying. The quantity of leach solution is measured by flow meters throughout the leaching and precipitation process. After precipitation, the product is converted to doré at the Rochester mine and a form of gold concentrate at the Wharf mine, representing the final product produced by each mine. The inventory is stated at lower of cost or market, with cost being determined using a weighted average cost method.

11

Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

The historical cost of metal expected to be extracted within twelve months is classified as current and the historical cost of metals contained within the broken ore expected to be extracted beyond twelve months is classified as non-current. Ore on leach pads is valued based on actual production costs incurred to produce and place ore on the leach pad, less costs allocated to minerals recovered through the leach process.
The estimate of both the ultimate recovery expected over time and the quantity of metal that may be extracted relative to the time the leach process occurs requires the use of estimates, which are inherently inaccurate due to the nature of the leaching process. The quantities of metal contained in the ore are based upon actual weights and assay analysis. The rate at which the leach process extracts gold and silver from the crushed ore is based upon laboratory testing and actual experience of more than twenty years of leach pad operations at the Rochester mine and thirty years of leach pad operations at the Wharf mine. The assumptions used by the Company to measure metal content during each stage of the inventory conversion process includes estimated recovery rates based on laboratory testing and assaying. The Company periodically reviews its estimates compared to actual experience and revises its estimates when appropriate. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis.
Metal and Other Inventory
Inventories include concentrate, doré, and operating materials and supplies. The classification of inventory is determined by the stage at which the ore is in the production process. All inventories are stated at the lower of cost or market, with cost being determined using a weighted average cost method. Concentrate and doré inventory includes product at the mine site and product held by refineries. Metal inventory costs include direct labor, materials, depreciation, depletion and amortization as well as overhead costs relating to mining activities.
Property, Plant, and Equipment
Expenditures for new facilities, assets acquired pursuant to capital leases, new assets or expenditures that extend the
useful lives of existing facilities are capitalized and depreciated using the straight-line method at rates sufficient to depreciate such costs over the shorter of estimated productive lives of such facilities, lease term, or the useful life of the individual assets. Productive lives range from 7 to 30 years for buildings and improvements and 3 to 10 years for machinery and equipment. Certain mining equipment is depreciated using the units-of-production method based upon estimated total proven and probable reserves.
Mining Properties and Mine Development
Capitalization of mine development costs begins once all operating permits have been secured, mineralization is classified as proven and probable reserves and a final feasibility study has been completed. Mine development costs include engineering and metallurgical studies, drilling and other related costs to delineate an ore body, the removal of overburden to initially expose an ore body at open pit surface mines and the building of access ways, shafts, lateral access, drifts, ramps and other infrastructure at underground mines. Costs incurred before mineralization are classified as proven and probable reserves are expensed and classified as exploration or pre-development expense. Mine development costs are amortized using the units of production method over the estimated life of the ore body based on recoverable ounces to be mined from proven and probable reserves. Interest expense allocable to the cost of developing mining properties and to construct new facilities is capitalized until assets are ready for their intended use.
Drilling and related costs incurred at the Company’s operating mines are expensed as incurred in Exploration, unless the Company can conclude with a high degree of confidence, prior to the commencement of a drilling program, that the drilling costs will result in the conversion of a mineral resource into proven and probable reserves. The Company’s assessment is based on the following factors: results from previous drill programs; results from geological models; results from a mine scoping study confirming economic viability of the resource; and preliminary estimates of mine inventory, ore grade, cash flow and mine life.
In addition, the Company must have all permitting and/or contractual requirements necessary to have the right to and/or control
of the future benefit from the targeted ore body. The costs of a drilling program that meet these criteria are capitalized as mine
development costs. Drilling and related costs of approximately $12.9 million and $6.0 million at December 31, 2016 and 2015, respectively, were capitalized.
The cost of removing overburden and waste materials to access the ore body at an open pit mine prior to the production phase are referred to as “pre-stripping costs.” Pre-stripping costs are capitalized during the development of an open pit mine. Stripping costs incurred during the production phase of a mine are variable production costs that are included as a component of inventory to be recognized in Costs applicable to sales in the same period as the revenue from the sale of inventory.
Mineral Interests
Significant payments related to the acquisition of land and mineral rights are capitalized. Prior to acquiring such land or mineral rights, the Company generally makes a preliminary evaluation to determine that the property has significant potential to develop an economic ore body. The time between initial acquisition and full evaluation of a property’s potential is variable and is determined by many factors including: location relative to existing infrastructure, the property’s stage of development, geological

12

Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

controls and metal prices. If a mineable ore body is discovered, such costs are amortized when production begins using the units of- production method based on recoverable ounces to be mined from proven and probable reserves. If no mineable ore body is discovered, such costs are expensed in the period in which it is determined the property has no future economic value.
Write-downs
We review and evaluate our long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Asset impairment is considered to exist if the total estimated undiscounted pretax future cash flows are less than the carrying amount of the asset. In estimating future cash flows, assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of future cash flows from other asset groups. An impairment loss is measured by discounted estimated future cash flows, and recorded by reducing the asset's carrying amount to fair value. Future cash flows are estimated based on estimated quantities of recoverable minerals, expected silver and gold prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans. During 2016, 2015, and 2014, we recorded impairments of $4.4 million, $313.3 million, and $1,472.7 million, respectively, to reduce the carrying value of mining properties and property, plant and equipment as part of Write-downs.
Existing proven and probable reserves and value beyond proven and probable reserves, including mineralization other than proven and probable reserves are included when determining the fair value of mine site asset groups at acquisition and, subsequently, in determining whether the assets are impaired. The term “recoverable minerals” refers to the estimated amount of silver and gold that will be obtained after taking into account losses during ore processing and treatment. Estimates of recoverable minerals from exploration stage mineral interests are risk adjusted based on management’s relative confidence in such materials. The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those risk factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material could ultimately be mined economically. Assets classified as exploration potential have the highest level of risk that the carrying value of the asset can be ultimately realized, due to the still lower level of geological confidence and economic modeling.
Silver and gold prices are volatile and affected by many factors beyond the Company’s control, including prevailing interest rates and returns on other asset classes, expectations regarding inflation, speculation, currency values, governmental decisions regarding precious metals stockpiles, global and regional demand and production, political and economic conditions and other factors may affect the key assumptions used in the Company’s impairment testing. Various factors could impact our ability to achieve forecasted production levels from proven and probable reserves. Additionally, production, capital and reclamation costs could differ from the assumptions used in the cash flow models used to assess impairment. Actual results may vary from the Company’s estimates and result in additional Write-downs.
Restricted Assets
The Company, under the terms of its self-insurance and bonding agreements with certain banks, lending institutions and regulatory agencies, is required to collateralize certain portions of its obligations. The Company has collateralized these obligations by assigning certificates of deposit that have maturity dates ranging from three months to a year, to the respective institutions or agencies. At December 31, 2016 and 2015, the Company held certificates of deposit and cash under these agreements of $17.6 million and $11.6 million, respectively. The ultimate timing of the release of the collateralized amounts is dependent on the timing and closure of each mine and repayment of the facility. In order to release the collateral, the Company must seek approval from certain government agencies responsible for monitoring the mine closure status. Collateral could also be released to the extent the Company is able to secure alternative financial assurance satisfactory to the regulatory agencies. The Company believes there is a reasonable probability that the collateral will remain in place beyond a twelve-month period and has therefore classified these
investments as long-term.
Reclamation
The Company recognizes obligations for the expected future retirement of tangible long-lived assets and other associated asset retirement costs. The fair value of a liability for an asset retirement obligation will be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. An accretion cost, representing the increase over time in the present value of the liability, is recorded each period in Pre-development, reclamation, and other. As reclamation work is performed or liabilities are otherwise settled, the recorded amount of the liability is reduced. Future remediation costs for inactive mines are accrued based on management’s best estimate at the end of each period of the discounted costs expected to be incurred at the site. Such cost estimates include, where applicable, ongoing care and maintenance and monitoring costs. Changes in estimates are reflected prospectively in the period an estimate is revised.
    

13

Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

Revenue Recognition
Revenue is recognized, net of treatment and refining charges, when persuasive evidence of an arrangement exists, delivery
has occurred, the price is fixed or determinable, no obligations remain, and collection is probable.
Under the Company’s concentrate sales contracts with third-party smelters, gold and silver prices are set on a specified future quotational period, typically one to three months, after the shipment date based on market prices. Revenue and Costs Applicable to Sales are recorded on a gross basis under these contracts at the time title passes to the buyer based on the forward price for the expected settlement period. The contracts, in general, provide for provisional payment based upon provisional assays and forward metal prices. Final settlement is based on the average applicable price for the specified future quotational period and generally occurs from three to six months after shipment. The Company’s provisionally priced sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of concentrates measured at the forward price at the time of sale. The embedded derivative does not qualify for hedge accounting and is adjusted to fair value through revenue each period until the date of final gold and silver settlement.
Foreign Currency
The assets and liabilities of the Company’s foreign subsidiaries are measured using U.S. dollars as their functional currency. Revenues and expenses are translated at the average exchange rate for the period. Foreign currency gains and losses are included in the determination of net income or loss.
Derivative Financial Instruments
Company recognizes all derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value. Changes in the value of derivative instruments are recorded each period in the Consolidated Statement of Comprehensive Income (Loss) in Fair value adjustments, net. Management applies judgment in estimating the fair value of instruments that are highly sensitive to assumptions regarding commodity prices, market volatilities, and foreign currency exchange rates.
Stock-based Compensation
The Company estimates the fair value of stock options using the Black-Scholes option pricing model and stock appreciation rights (“SARs”) awards using market comparison. Stock options granted are accounted for as equity-based awards and SARs are accounted for as liability-based awards. The value of the SARs is remeasured at each reporting date. The Company estimates forfeitures of stock-based awards based on historical data and periodically adjusts the forfeiture rate. The adjustment of the forfeiture rate is recorded as a cumulative adjustment in the period the forfeiture estimate is changed. Compensation costs related to stock based compensation are included in General and administrative expenses, Costs applicable to sales, and Property, plant, and equipment, net as deemed appropriate.
The fair value of restricted stock based on the Company's stock price on the date of grant. The fair value of performance leverage stock units (“PSUs”) with market conditions is determined using a Monte Carlo simulation model. Stock based compensation expense related to awards with a market or performance condition is generally recognized over the vesting period of the award utilizing the graded vesting method, while all other awards are recognized on a straight-line basis. The Company's estimates may be impacted by certain variables including, but not limited to, stock price volatility, employee stock option exercise behaviors, additional stock option grants, estimates of forfeitures, the Company's performance, and related tax impacts.
Income and Mining Taxes
The Company uses an asset and liability approach which results in the recognition of deferred tax liabilities and assets for the expected future tax consequences or benefits of temporary differences between the financial reporting basis and the tax basis of assets and liabilities, as well as operating loss and tax credit carryforwards, using enacted tax rates in effect in the years in which the differences are expected to reverse.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some
portion or all of its deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities,
projected future taxable income and tax planning strategies in making this assessment. A valuation allowance has been provided
for the portion of the Company’s net deferred tax assets for which it is more likely than not that they will not be realized.

14

Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

Recent Accounting Standards
In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230) - Restricted Cash,” which will require entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. These changes become effective for the Company's fiscal year beginning January 1, 2018. The Company is currently evaluating the potential impact of implementing these changes on the Company's consolidated financial position, results of operations, and cash flows.
In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments,” which provides guidance on presentation and classification of certain cash receipts and payments in the statement of cash flows. These changes become effective for the Company's fiscal year beginning January 1, 2018. The Company is currently evaluating this standard and does not expect this ASU to materially impact the Company's consolidated net income, financial position or cash flows.
In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which amends several aspects of the accounting for share-based payment transaction, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. These changes become effective for the Company's fiscal year beginning January 1, 2017. The Company is currently evaluating this standard and does not expect this ASU to impact the Company's consolidated net income, financial position or cash flows.    
In February 2016, the FASB issued ASU 2016-02, “Leases,” which will require lessees to recognize assets and liabilities for the rights and obligations created by most leases on the balance sheet. These changes become effective for the Company's fiscal year beginning January 1, 2019. Modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, is required with an option to use certain transition relief. The Company is currently evaluating the potential impact of implementing these changes on the Company's consolidated financial position, results of operations, and cash flows.
In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes,” which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as non-current. The updated guidance became effective upon early adoption January 1, 2015, and resulted in a reclassification of amounts from Current deferred tax assets to Non-current deferred tax assets and Current deferred tax liabilities to Non-current deferred tax liabilities in the current and prior periods.
In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments,” which eliminates the requirement for an acquirer to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. These changes were effective January 1, 2016. The Company's adoption had no impact on the Company's consolidated financial position, results of operations, and cash flows.
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers, which has subsequently been amended several times. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. These changes become effective for the Company's fiscal year beginning January 1, 2018. The Company has substantially completed its analysis of the new standard and reviewed potential impacts from timing of when control is transferred to customers, variable consideration on concentrate sales and classification of refining fees.  The Company does not expect this ASU to materially impact the Company's consolidated net income, financial position or cash flows.    
In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory, which provides a revised, simpler measurement for inventory to be measured at the lower of cost and net realizable value. These changes become effective for the Company's fiscal year beginning January 1, 2018. The Company is currently evaluating the potential impact of implementing these changes on the Company's consolidated financial position, results of operations, and cash flows.
In February 2015, the FASB issued ASU 2015-02, “Amendments to the Consolidation Analysis, which amends the consolidation requirements in ASC 810. These changes were effective January 1, 2016. The Company's adoption had no impact on the Company's consolidated financial position, results of operations, and cash flows.


15

Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

NOTE 3 – SEGMENT REPORTING
The Company’s operating segments include Palmarejo, Rochester, Kensington, Wharf, San Bartolomé mines, and Coeur Capital. All operating segments are engaged in the discovery and mining of gold and silver and generate the majority of their revenues from the sale of these precious metals with the exception of Coeur Capital, which primarily holds the Endeavor silver stream. Other includes the La Preciosa project, Joaquin project, corporate office, elimination of intersegment transactions, and other items necessary to reconcile to consolidated amounts.
Financial information relating to the Company’s segments is as follows (in thousands):
Year ended December 31, 2016
Palmarejo
 
Rochester
 
Kensington
 
Wharf
 
San Bartolomé
 
Coeur Capital
 
Other
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Metal sales
$
141,273

 
$
139,945

 
$
146,593

 
$
136,678

 
$
93,880

 
$
4,128

 
$

 
$
662,497

Royalties

 

 

 

 

 
3,280

 

 
3,280

 
141,273


139,945


146,593


136,678


93,880


7,408



 
665,777

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Costs applicable to sales(1)
80,820

 
89,726

 
96,731

 
66,379

 
74,166

 
1,719

 

 
409,541

Amortization
36,599

 
21,838

 
34,787

 
20,621

 
6,633

 
1,117

 
1,566

 
123,161

Exploration
5,063

 
841

 
3,487

 
2

 

 
1,797

 
1,740

 
12,930

Write-downs

 

 

 

 

 
4,446

 

 
4,446

Other operating expenses
1,213

 
2,801

 
1,038

 
2,238

 
2,909

 
226

 
36,170

 
46,595

Other income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain (Loss) on debt extinguishments

 

 

 

 

 

 
(21,365
)
 
(21,365
)
Fair value adjustments, net
(5,814
)
 
(4,133
)
 

 

 

 

 
(1,634
)
 
(11,581
)
Interest expense, net
(1,187
)
 
(664
)
 
(128
)
 
(69
)
 
(24
)
 
(34
)
 
(34,814
)
 
(36,920
)
Other, net
(12,125
)
 
(3,859
)
 
(25
)
 
17

 
1,590

 
6,014

 
10,263

 
1,875

Income and mining tax (expense) benefit
45,085

 
(2,785
)
 

 
(4,293
)
 
6,252

 
(2,504
)
 
12,484

 
54,239

Net income (loss)
$
43,537


$
13,298


$
10,397


$
43,093


$
17,990


$
1,579


$
(74,542
)

$
55,352

Segment assets(2)
$
436,642

 
$
219,009

 
$
199,232

 
$
105,901

 
$
76,317

 
$
9,285

 
$
75,652

 
$
1,122,038

Capital expenditures
$
35,810

 
$
16,446

 
$
36,826

 
$
4,812

 
$
6,631

 
$

 
$
488

 
$
101,013

(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interest

16

Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

Year ended December 31, 2015
Palmarejo
 
Rochester
 
Kensington
 
Wharf
 
San Bartolomé
 
Coeur Capital
 
Other
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Metal sales
$
169,133

 
$
143,930

 
$
148,710

 
$
84,052

 
$
84,679

 
$
8,732

 
$

 
$
639,236

Royalties

 

 

 

 

 
6,850

 

 
6,850

 
169,133


143,930


148,710


84,052


84,679


15,582



 
646,086

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs applicable to sales(1)
138,476

 
103,994

 
105,640

 
52,197

 
75,827

 
3,520

 

 
479,654

Amortization
32,423

 
23,906

 
42,240

 
16,378

 
17,798

 
9,010

 
1,996

 
143,751

Exploration
4,533

 
1,324

 
2,596

 
134

 
126

 
(124
)
 
3,058

 
11,647

Write-downs
224,507

 

 

 

 
66,712

 
22,118

 

 
313,337

Other operating expenses
1,293

 
2,948

 
1,301

 
1,717

 
1,787

 
33

 
41,548

 
50,627

Other income (expense)
 
 
 
 
 
 
 
 
 
 
 
 


 
 
Gain (Loss) on debt extinguishments

 

 

 

 

 

 
15,916

 
15,916

Fair value adjustments, net
3,160

 
818

 

 

 

 

 
1,224

 
5,202

Interest expense, net
(4,269
)
 
(748
)
 
(218
)
 

 
(725
)
 

 
(39,743
)
 
(45,703
)
Other, net
(10,968
)
 
(13
)
 
7

 
143

 
1,557

 
(3,182
)
 
(3,475
)
 
(15,931
)
Income and mining tax (expense) benefit
37,597

 
(1,497
)
 

 
(857
)
 
(5,154
)
 
5,542

 
(9,368
)
 
26,263

Net income (loss)
$
(206,579
)

$
10,318


$
(3,278
)

$
12,912


$
(81,893
)

$
(16,615
)

$
(82,048
)
 
$
(367,183
)
Segment assets(2)
$
406,648

 
$
190,714

 
$
197,873

 
$
113,305

 
$
91,141

 
$
27,892

 
$
75,737

 
$
1,103,310

Capital expenditures
$
35,991

 
$
25,330

 
$
23,834

 
$
3,211

 
$
6,220

 
$

 
$
607

 
$
95,193

(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests

Year ended December 31, 2014
Palmarejo
 
Rochester
 
Kensington
 
San Bartolomé
 
Coeur Capital
 
Other
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Metal sales
$
244,003

 
$
123,768

 
$
136,960

 
$
117,749

 
$
10,046

 
$

 
$
632,526

Royalties

 

 

 

 
3,216

 

 
3,216

 
244,003

 
123,768

 
136,960

 
117,749

 
13,262

 

 
635,742

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs applicable to sales(1)
187,276

 
91,462

 
105,342

 
89,659

 
4,206

 

 
477,945

Amortization
69,431

 
20,790

 
43,619

 
19,423

 
7,015

 
2,158

 
162,436

Exploration
6,671

 
2,636

 
8,005

 
120

 
515

 
3,793

 
21,740

Write-downs
784,038

 

 
107,832

 
118,754

 
6,202

 
455,895

 
1,472,721

Other operating expenses
620

 
2,813

 
796

 
(251
)
 
938

 
61,966

 
66,882

Other income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value adjustments, net
(1,847
)
 
3,653

 

 

 

 
1,812

 
3,618

Interest expense, net
(9,320
)
 
(679
)
 
(214
)
 
(52
)
 
(1
)
 
(37,280
)
 
(47,546
)
Other, net
131

 
105

 
(22
)
 
2,461

 
(7,141
)
 
(752
)
 
(5,218
)
Income and mining tax (expense) benefit
251,840

 
(2,224
)
 

 
18,114

 
2,067

 
158,457

 
428,254

Net income (loss)
$
(563,229
)
 
$
6,922

 
$
(128,870
)
 
$
(89,433
)
 
$
(10,689
)
 
$
(401,575
)
 
$
(1,186,874
)
Segment assets(2)
$
332,369

 
$
196,765

 
$
215,973

 
$
188,616

 
$
59,848

 
$
81,688

 
$
1,075,259

Capital expenditures
$
26,084

 
$
11,898

 
$
16,220

 
$
7,937

 
$

 
$
2,105

 
$
64,244

(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests

Assets
December 31, 2016

December 31, 2015
Total assets for reportable segments
$
1,122,038

 
$
1,103,310

Cash and cash equivalents
162,182

 
200,714

Other assets
34,689


28,465

Total consolidated assets
$
1,318,909


$
1,332,489


17

Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

Geographic Information
Long-Lived Assets
December 31, 2016

December 31, 2015
Mexico
$
397,697

 
$
390,694

United States
338,897

 
336,210

Bolivia
31,539

 
35,201

Australia
2,983

 
5,952

Argentina
10,228

 
10,871

Other
5,564

 
9,058

Total
$
786,908


$
787,986

 
Revenue
Year ended December 31,
2016
 
2015
 
2014
United States
$
423,216

 
$
376,692

 
$
260,728

Mexico
142,198

 
171,911

 
245,493

Bolivia
93,880

 
84,679

 
117,749

Australia
4,128

 
8,732

 
10,046

Other
2,355

 
4,072

 
1,726

Total
$
665,777


$
646,086


$
635,742

The Company's doré, as well as the concentrate produced by the Wharf mine, is refined into gold and silver bullion according to benchmark standards set by the LBMA, which regulates the acceptable requirements for bullion traded in the London precious metals markets. The Company sells its silver and gold bullion to multi-national banks, bullion trading houses, and refiners across the globe. The Company has eleven trading counterparties at December 31, 2016. The Company's sales of doré and concentrate product produced by the Wharf mine amounted to approximately 77%, 74%, and 63% of total metal sales for the years ended December 31, 2016, 2015, and 2014, respectively. Generally, the loss of a single bullion trading counterparty would not adversely affect the Company due to the liquidity of the markets and availability of alternative trading counterparties.
The Company's concentrate produced by the Kensington mine is sold to smelters under purchase and sale agreements, and the smelters pay the Company for the gold and silver recovered from the concentrates. The concentrate was sold to two smelters at December 31, 2016. The Company's sales of concentrate produced by the Kensington mine amounted to approximately 23%, 26%, and 37% of total metal sales for the years ended December 31, 2016, 2015, and 2014, respectively. While the loss of a smelter may have a material adverse effect if alternate smelters are not available or if the failure to engage a new smelter results in a delay in the sale or purchase of Kensington concentrate, the Company believes that there is sufficient global capacity available to address the loss of a smelter.
The following table indicates customers that represent 10% or more of total sales of metal for at least one of the years December 31, 2016, 2015, and 2014 (in millions):

 
 
Year ended December 31,
 
 
Customer
 
2016
 
2015
 
2014
 
Segments reporting revenue
China National Gold
 
$
126.6

 
$
126.2

 
$
86.8

 
Kensington
Ohio Precious Metals
 
98.4

 
37.3

 
8.3

 
Palmarejo, San Bartolomé,
Republic Metal Corporation
 
93.3

 
47.7

 
4.0

 
Palmarejo, San Bartolomé, Wharf
INTL Commodities
 
76.7

 
33.1

 
22.4

 
Palmarejo, San Bartolomé, Rochester, Wharf
Asahi (formerly Johnson Matthey)
 
62.6

 
84.2

 
71.8

 
Wharf, Rochester, San Bartolomé
Standard Bank
 
29.0

 
34.7

 
87.5

 
Palmarejo, Rochester
TD Securities
 
15.5

 
81.3

 
106.7

 
Palmarejo, Rochester
Mitsui & Co.
 

 
137.7

 
133.8

 
Palmarejo, Rochester


18

Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

NOTE 4 – WRITE-DOWNS
 
 
Year ended December 31,
 
 
2016
 
2015
 
2014
Mining properties
 
 
 
 
 
 
Palmarejo
 
$

 
$
205,803

 
$
668,803

San Bartolomé
 

 
16,690

 
32,328

Kensington
 

 

 
67,671

La Preciosa
 

 

 
371,411

Joaquin
 

 

 
83,429

Coeur Capital
 
4,446

 
22,118

 
6,202

 
 
4,446

 
244,611

 
1,229,844

 
 
 
 
 
 
 
Property, plant, and equipment
 
 
 
 
 
 
Palmarejo
 
$

 
$
18,704

 
$
115,235

San Bartolomé
 

 
50,022

 
86,426

Kensington
 

 

 
40,161

La Preciosa
 

 

 
1,055

 
 

 
68,726

 
242,877

 
 
 
 
 
 
 
Total
 
$
4,446

 
$
313,337

 
$
1,472,721


The 2016 write-down of $4.4 million ($3.9 million net of tax) was due to the impairment of Coeur Capital assets. The operator of the Endeavor mine in Australia, on which the Company holds a 100% silver stream, announced in early 2016 a significant curtailment of production due to low lead and zinc prices. As a result, Coeur recorded a $2.5 million write-down of the mineral interest associated with the Endeavor silver stream at March 31, 2016. In April 2016, Coeur sold its tiered NSR royalty on the El Gallo mine to the operator, a subsidiary of McEwen Mining Inc., for total consideration of approximately $6.3 million, including $1 million in contingent consideration. In anticipation of this sale, the Company recorded a $1.9 million write-down of the mineral interest at March 31, 2016.
The 2015 write-down of $313.3 million ($276.5 million net of tax) was due to a $224.5 million impairment of the Palmarejo
complex ($193.5 million net of tax), a $66.7 million impairment of the San Bartolomé mine, and a $22.1 million impairment
($16.3 million net of tax) of certain Coeur Capital assets, including the Endeavor silver stream and other royalties. The non-cash
impairment charges were largely driven by significant decreases in long-term metal price assumptions and revised mine plans in
the fourth quarter. For purposes of this evaluation, estimates of future cash flows of the individual reporting units were used to
determine fair value. The estimated cash flows were derived from life-of-mine plans, developed using long-term pricing reflective
of the current price environment and management’s projections for operating costs.
The 2014 write-down of $1,472.7 million ($1,021.8 million net of tax) was primarily due to a $784.0 million impairment
of the Palmarejo complex ($504.5 million net of tax) and a $372.5 million impairment of the La Preciosa project ($244.9 million
net of tax) due to a decrease in the Company's long-term silver and gold price assumptions reflective of the current silver and gold
price environment and revised mine plans.


19

Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

NOTE 5 – RECLAMATION
Reclamation and mine closure costs are based principally on legal and regulatory requirements. Management estimates costs associated with reclamation of mining properties. On an ongoing basis, management evaluates its estimates and assumptions, and future expenditures could differ from current estimates.
Changes to the Company’s asset retirement obligations for operating sites are as follows:
 
Year ended December 31,
In thousands
2016
 
2015
Asset retirement obligation - Beginning
$
82,072

 
$
67,214

Accretion
8,136

 
7,738

Additions and changes in estimates
8,688

 
11,939

Settlements
(1,516
)
 
(4,819
)
Asset retirement obligation - Ending
$
97,380


$
82,072

The Company has accrued $1.9 million and $3.2 million at December 31, 2016 and December 31, 2015, respectively, for reclamation liabilities related to former mining activities, which are included in Reclamation.

NOTE 6 – STOCK-BASED COMPENSATION
The Company has stock incentive plans for executives and eligible employees. Stock awards include stock options, restricted stock, and performance shares. Stock-based compensation expense for the years ended December 31, 2016, 2015, and 2014 was $9.7 million, $9.3 million and $9.3 million, respectively. At December 31, 2016, there was $6.3 million of unrecognized stock-based compensation cost which is expected to be recognized over a weighted-average remaining vesting period of 1.4 years.
Stock Options and Stock Appreciation Rights
Stock options and stock appreciation rights (SARs) granted under the Company’s incentive plans vest over three years and are exercisable over a period not to exceed ten years from the grant date. The exercise price of stock options is equal to the fair market value of the shares on the date of the grant. The value of each stock option award is estimated using the Black-Scholes option pricing model. Stock options are accounted for as equity awards and SARs are accounted for as liability awards and remeasured at each reporting date. SARs, when vested, provide the participant the right to receive cash equal to the excess of the market price of the shares over the exercise price when exercised.
The following table sets forth the weighted average fair value of stock options and the assumptions used to estimate the fair value of the stock options using the Black-Scholes option valuation model:
 
2016
 
2015
 
2014
Weighted average fair value of stock options granted
$
1.06

 
$
2.65

 
$
3.79

Volatility
61.75
%
 
55.71
%
 
50.93
%
Expected life in years
3.99

 
4.75

 
3.92

Risk-free interest rate
1.50
%
 
1.51
%
 
1.25
%
Dividend yield

 

 


20

Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

The following table summarizes stock option and SAR activity for the years ended December 31, 2016, 2015, and 2014:
 
Stock Options
 
SARs
 
Shares
 
Weighted
Average
Exercise
Price
 
Shares
 
Weighted
Average
Exercise
Price
Outstanding at December 31, 2013
415,570

 
$
27.36

 
50,209

 
$
14.15

Granted
415,172

 
9.45

 

 

Canceled/forfeited
(232,396
)
 
23.94

 
(3,637
)
 
15.40

Outstanding at December 31, 2014
598,346

 
16.26

 
46,572

 
14.06

Granted
310,028

 
5.57

 

 

Canceled/forfeited
(238,365
)
 
12.69

 

 

Outstanding at December 31, 2015
670,009

 
12.58

 
46,572

 
14.06

Granted
183,251

 
2.19

 

 

Exercised
(170,897
)
 
7.81

 

 

Canceled/forfeited
(25,752
)
 
16.76

 
(4,420
)
 
13.31

Outstanding at December 31, 2016
656,611

 
$
10.76

 
42,152

 
$
14.14

The following table summarizes outstanding stock options as of December 31, 2016.
Range of
Exercise Price
Number
Outstanding
 
Weighted Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life (Years)
 
Aggregate Intrinsic Value (in thousands)
$ 0.00-$10.00
455,578

 
$
5.32

 
8.19
 
 
$10.00-$20.00
52,616

 
13.33

 
6.64
 
 
$20.00-$30.00
141,947

 
25.73

 
5.26
 
 
$30.00-$40.00
3,134

 
39.90

 
0.22
 
 
$40.00-$50.00
3,336

 
48.50

 
1.03
 
 
Outstanding
656,611

 
$
10.76

 
7.36
 
$
1,753

Vested and expected to vest
618,870

 
$
11.20

 
7.27
 
$
1,555

Exercisable
292,524

 
$
18.31

 
5.97
 
$
118

At December 31, 2016, there was $0.2 million of unrecognized compensation cost related to non-vested stock options to be recognized over a weighted average period of 1.1 years.
The total intrinsic value of options exercised for the year ended December 31, 2016 was $1.1 million. Cash received from options exercised for the year ended December 31, 2016 was $1.3 million for which there was no related tax benefit.The grant date fair value for stock options vested during the years ended December 31, 2016, 2015 and 2014 was $1.0 million, $1.4 million and $1.3 million, respectively.
    









21

Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

Restricted Stock
Restricted stock granted under the Company’s incentive plans are accounted for based on the market value of the underlying shares on the date of grant and vest in equal installments annually over three years. Restricted stock awards are accounted for as equity awards. Holders of restricted stock are entitled to vote the shares and to receive any dividends declared on the shares.
The following table summarizes restricted stock activity for the years ended December 31, 2016, 2015, and 2014:
 
Restricted Stock
 
Number of
Shares
 
Weighted
Average
Grant Date
Fair Value
Outstanding at December 31, 2013
613,086

 
$
16.68

Granted
695,897

 
9.83

Vested
(234,103
)
 
17.16

Cancelled/Forfeited
(172,881
)
 
11.87

Outstanding at December 31, 2014
901,999

 
12.19

Granted
1,180,384

 
5.49

Vested
(317,122
)
 
13.38

Cancelled/Forfeited
(257,849
)
 
7.59

Outstanding at December 31, 2015
1,507,412

 
7.49

Granted
1,768,746

 
3.72

Vested
(681,829
)
 
8.51

Cancelled/Forfeited
(160,414
)
 
7.16

Outstanding at December 31, 2016
2,433,915

 
$
4.48

At December 31, 2016, there was $3.4 million of unrecognized compensation cost related to restricted stock awards to be recognized over a weighted-average period of 1.4 years.
    

















22

Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

Performance Shares
Performance shares granted under the Company’s incentive plans are accounted for at fair value using a Monte Carlo simulation valuation model on the date of grant. Performance share awards are accounted for as equity awards. The performance shares vest at the end of a three-year service period if relative stockholder return and internal performance metrics are met. The existence of a market condition requires recognition of compensation cost for the performance share awards over the requisite period regardless of whether the relative stockholder return metric is met.
The following table summarizes performance shares activity for the years ended December 31, 2016, 2015, and 2014:
 
Performance Shares
 
Number of
Shares
 
Weighted
Average
Grant Date
Fair Value
Outstanding at December 31, 2013
210,395

 
$
28.04

Granted
358,398

 
12.21

Vested
(34,611
)
 
27.18

Cancelled/Forfeited
(17,352
)
 
27.15

Outstanding at December 31, 2014
516,830

 
17.61

Granted
809,293

 
6.97

Cancelled/Forfeited
(190,988
)
 
15.62

Outstanding at December 31, 2015
1,135,135

 
10.35

Granted
1,437,077

 
1.79

Cancelled/Forfeited
(199,580
)
 
17.98

Outstanding at December 31, 2016
2,372,632

 
$
4.53

At December 31, 2016, there was $2.8 million of unrecognized compensation cost related to performance shares to be recognized over a weighted average period of 1.5 years.
Supplemental Incentive Plan
In 2014, the Company adopted a supplemental incentive plan under which benefits were payable upon achievement of certain performance and market conditions. The maximum potential incentive payout under the plan was $3.8 million, of which $3.0 million was settled in cash in 2016. No additional amounts are payable under the plan.  

NOTE 7 – RETIREMENT SAVINGS PLAN
The Company has a 401(k) retirement savings plan that covers all eligible U.S. employees. Eligible employees may elect to contribute up to 75% of base salary, subject to ERISA limitations. In addition, the Company has a deferred compensation plan for employees whose benefits under the 401(k) plan are limited by federal regulations. The Company generally makes matching contributions equal to 100% of the employee’s contribution up to 4% of the employee's salary. The Company may also provide an additional contribution based on an eligible employee's salary. Total plan expenses recognized for the years ended December 31, 2016, 2015, and 2014 were $5.4 million, $2.9 million, and $2.6 million, respectively.

NOTE 8 - OTHER, NET
Other, net consists of the following:
 
Year ended December 31,
In thousands
2016
 
2015
 
2014
Foreign exchange gain (loss)
$
(10,720
)
 
$
(15,769
)
 
$
470

Gain on sale of assets and investments
11,334

 
(352
)
 
(530
)
Impairment of equity securities
(703
)
 
(2,346
)
 
(6,593
)
Other
1,964

 
2,536


1,435

Other, net
$
1,875

 
$
(15,931
)
 
$
(5,218
)


23

Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

NOTE 9 – INCOME AND MINING TAXES
The components of Income (loss) before income taxes are below:
 
Year ended December 31,
In thousands
2016
 
2015
 
2014
United States
$
(13,112
)
 
$
(43,924
)
 
$
(213,883
)
Foreign
14,225

 
(349,522
)
 
(1,401,245
)
Total
$
1,113

 
$
(393,446
)
 
$
(1,615,128
)
The components of the consolidated Income and mining tax (expense) benefit from continuing operations are below:
 
Year ended December 31,
In thousands
2016
 
2015
 
2014
Current:
 

 
 

 
 

United States
$

 
$
49

 
$
904

United States — State mining taxes
(7,826
)
 
(4,305
)
 
(879
)
United States — Foreign withholding tax
(4,263
)
 

 
(6,250
)
Argentina
10

 
715

 
(71
)
Australia
14

 
130

 

Bolivia
6,252

 
(5,154
)
 
(4,008
)
Canada
(1,841
)
 
(516
)
 
(145