CHICAGO–(BUSINESS WIRE)–Coeur Mining, Inc. (“Coeur” or the “Company”) (NYSE: CDE) today reported full-year 2017 net income of $10.9 million, or $0.06 per share, and cash flow from operating activities of $197.2 million, an increase of over 100% compared to 2016. Adjusted EBITDA1 rose 4% year-over-year to $203.3 million, and free cash flow1 increased $85.5 million to $60.4 million.
In the fourth quarter, the Company generated net income of $14.3 million, or $0.08 per share, and cash flow from operating activities more than doubled quarter-over-quarter, increasing $54.5 million to $91.8 million. Adjusted EBITDA1 and free cash flow1 of $77.0 million and $44.8 million, respectively, increased approximately fivefold compared to the prior quarter.
Strong fourth quarter and full-year financial results were driven by record silver equivalent1 production of 10.8 million ounces (11.7 million ounces including discontinued operations) and 35.1 million ounces (39.4 million ounces including discontinued operations), respectively, lower costs from the Company’s continuing operations, and decreases in working capital. Lower average debt levels and interest rates led to a 56% reduction in full-year interest expense, which also contributed to improved full-year financial results.
On December 22, 2017, the Company entered into an agreement to sell its wholly-owned Bolivian subsidiary, which owns and operates the San Bartolomé mine. The transaction is expected to close in the first quarter. As a result, the mine is presented as a discontinued operation and excluded from consolidated operating statistics and financial results for all periods presented unless otherwise noted. In 2017, San Bartolomé produced 4.3 million ounces of silver at adjusted costs applicable to sales (“CAS”) per silver ounce1 of $17.17.
“Coeur’s robust operating performance during the fourth quarter led to strong financial results for the quarter and full year. Our multi-year strategic initiatives are generating higher-quality ounces and strong cash flow from our well-balanced portfolio of North American-based assets,” said Mitchell J. Krebs, Coeur’s President and Chief Executive Officer.
“During 2017, we successfully repositioned and strengthened the Company on multiple fronts. We upgraded our portfolio and pipeline of assets to reflect a North American focus with the acquisition of the high-grade Silvertip mine in Canada, our announced divestiture of our highest cost mine in Bolivia and the sales of nine non-core assets. We repositioned our balance sheet to provide greater financial flexibility and materially reduce annual interest expense. By allocating additional capital to near-mine exploration, we expanded our reserve and resource base by double digit percentage increases, which we anticipate will lead to high-return, long-term value for our stockholders.”
- Record fourth quarter and full-year silver equivalent1 production – Fourth quarter and full-year production from continuing operations increased 26% quarter-over-quarter and 14% year-over-year, respectively, to 10.8 million and 35.1 million silver equivalent ounces (“AgEqOz”)1. Higher fourth quarter production was driven by 45% and 26% increases in silver equivalent1production at the Rochester and Palmarejo mines, respectively, and a 27% increase in gold production at the Kensington mine. Record full-year production was driven primarily by the Palmarejo mine, where 2017 silver equivalent1 production rose 64% compared to 2016
- Improved cost performance from continuing operations – Companywide adjusted all-in sustaining costs (“AISC”) per average spot AgEqOz1 for the fourth quarter decreased 17% quarter-over-quarter to $12.26 and were relatively flat for the full year at $13.82, despite higher diesel and consumables costs during both periods. Palmarejo’s fourth quarter and full-year adjusted CAS per average spot AgEqOz1 were $6.64 and $8.38, respectively, with fourth quarter unit costs decreasing 24% quarter-over-quarter and 34% year-over-year and full-year unit costs declining 12% compared to 2016
- Solid execution of key capital projects – In 2017, Coeur completed or achieved major milestones on key capital projects at Palmarejo, Rochester and Kensington. At Palmarejo, the Company reached its target mining rate of 4,500 tons per day one quarter ahead of schedule following a multi-year development and ramp-up period. Rochester’s Stage IV leach pad expansion was commissioned on schedule in the third quarter after three years of permitting and ten months of construction. During the third quarter, the Company began mining the high-grade Jualin deposit at Kensington following two years of underground development
- Continued portfolio enhancements – During the fourth quarter, Coeur completed its acquisition of the Silvertip mine, which is expected to provide Coeur with high-margin, low-cost production, near-term cash flow, and long-term exploration potential in a low-risk, mining-friendly jurisdiction. In December 2017, the Company announced it had entered into an agreement to divest the San Bartolomé mine in Bolivia. The Company’s prior acquisition of Wharf in early 2015 has already generated a return on investment of approximately 20%3. Coeur also completed the sale of nine non-core assets during the year for total consideration of approximately $40 million
- Expanded exploration program generating strong returns – Coeur’s total exploration investment increased 66% in 2017 to $41.9 million, including $30.3 million of expensed exploration and $11.6 million of capitalized exploration, and contributed to a 10% increase to silver equivalent1 reserves, net of depletion, from continuing operations compared to year-end 2016. The largest net increases of 36%, 17% and 5% were achieved at Wharf, Palmarejo and Kensington, respectively, with reserves in the United States now accounting for 73% of total reserves. Measured and indicated silver equivalent1 resources increased 42% compared to the prior year, while inferred silver equivalent1 resources increased 45%
- Meaningful balance sheet improvements achieved – The Company accomplished key balance sheet initiatives during 2017 beginning with the successful refinancing of its 7.875% senior notes due 2021 with 5.875% senior notes due 2024. During the third quarter, Coeur also established a four-year $200 million revolving credit facility, under which the Company drew $100 million to partially fund the Silvertip mine acquisition. Full-year interest expense decreased 56% to $16.4 million from $36.9 million in 2016
“As we enter our 90th year of business, we have strong momentum in positioning Coeur as a leading U.S.-based, North America-focused precious metals mining company,” continued Mitchell J. Krebs, Coeur’s President and Chief Executive Officer. “2018 should be another pivotal year as we look to commence production at Silvertip by the end of the first quarter, achieve commercial production at Jualin later in the year and sustain our focus on near-mine exploration. We also expect to publish updated technical reports for Rochester and Kensington in the coming weeks and for Silvertip in the second half of the year. Our team continues to do an outstanding job advancing Coeur’s strategic priorities, and we look forward to delivering strong results in the coming quarters.”
Financial and Operating Highlights (Unaudited)
On December 22, 2017, Coeur announced it had entered into an agreement to divest the San Bartolomé mine through the sale of its 100%-owned Bolivian subsidiary. As a result, San Bartolomé is presented as a discontinued operation and excluded from consolidated operating statistics and financial results for all periods presented unless otherwise noted.
|(Amounts in millions, except per share amounts, gold ounces produced & sold, and per-ounce metrics)||2017||4Q 2017||3Q 2017||2Q 2017||1Q 2017||2016||4Q 2016|
|Costs Applicable to Sales||$||440.3||$||122.0||$||101.6||$||102.2||$||114.5||$||335.4||$||84.9|
|General and Administrative Expenses||$||33.6||$||9.2||$||7.3||$||7.0||$||10.1||$||29.3||$||6.6|
|Net Income (Loss)||$||10.9||$||14.3||$||(11.7||)||$||(10.0||)||$||18.3||$||22.4||$||(10.3||)|
|Net Income (Loss) Per Share||$||0.06||$||0.08||$||(0.06||)||$||(0.05||)||$||0.10||$||0.14||$||(0.06||)|
|Adjusted Net Income (Loss)1||$||4.2||$||14.1||$||(15.3||)||$||(1.3||)||$||6.8||$||15.6||$||0.9|
|Adjusted Net Income (Loss)1 Per Share||$||0.02||$||0.08||$||(0.09||)||$||(0.01||)||$||0.04||$||0.10||$||0.01|
|Weighted Average Shares Outstanding||184.1||187.0||179.3||179.2||183.1||163.5||174.0|
|Cash Flow from Operating Activities||$||197.2||$|
|Free Cash Flow1||$||60.4||$||44.8||$||8.3||$||(13.0||)||$||20.3||$||(25.1||)||$||(6.7||)|
|Cash, Equivalents & Short-Term Investments||$||192.0||$||192.0||$||195.7||$||201.0||$||160.6||$||118.3||$||118.3|
|Average Realized Price Per Ounce – Silver||$||16.96||$||16.57||$||16.86||$||16.95||$||17.49||$||17.08||$||16.72|
|Average Realized Price Per Ounce – Gold||$||1,204||$||1,224||$||1,240||$||1,206||$||1,149||$||1,230||$||1,170|
|Silver Ounces Produced||12.1||3.7||3.0||2.7||2.7||9.4||2.6|
|Gold Ounces Produced||383,086||118,756||93,293||82,819||88,218||358,170||102,500|
|Silver Equivalent Ounces Produced1||35.1||10.8||8.6||7.7||8.0||30.8||8.7|
|Silver Ounces Sold||12.7||3.8||2.9||2.7||3.3||8.9||2.2|
|Gold Ounces Sold||410,604||123,564||89,972||86,194||110,874||338,131||87,108|
|Silver Equivalent Ounces Sold1||37.3||11.1||8.3||7.9||10.0||29.2||7.4|
|Silver Equivalent Ounces Sold (Average Spot)1||43.0||13.2||9.7||9.0||11.1||33.6||8.4|
|Adjusted CAS per AgEqOz1||$||10.62||$||9.43||$||11.05||$||12.02||$||10.60||$||11.12||$||11.45|
|Adjusted CAS per Average Spot AgEqOz1||$||9.59||$||8.35||$||9.90||$||10.96||$||9.79||$||10.19||$||10.59|
|Adjusted CAS per AuEqOz1||$||822||$||800||$||843||$||860||$||791||$||688||$||676|
|Adjusted AISC per AgEqOz1||$||15.90||$||14.45||$||17.35||$||17.81||$||14.78||$||15.97||$||16.13|
|Adjusted AISC per Average Spot AgEqOz1||$||13.82||$||12.26||$||14.79||$||15.58||$||13.30||$||13.88||$||14.29|
Fourth quarter revenue of $214.6 million increased 34% compared to the prior quarter. Silver sales contributed 30% of revenue during the period and gold sales contributed 70% based on average realized prices of $16.57 and $1,224 per ounce, respectively. For the full year, the Company generated revenue of $709.6 million, 24% higher than in 2016 with silver sales contributing 30% and gold 70%. Averaged realized silver and gold prices for the full year were $16.96 and $1,204 per ounce, respectively, marginally declining compared to 2016. The Company’s U.S. operations accounted for approximately 60% of both fourth quarter and full-year revenue.
Average realized gold prices during the fourth quarter and full year reflect the sale of 13,740 and 52,124 gold ounces, respectively, pursuant to Palmarejo’s gold stream agreement at a price of $800 per ounce.
Costs applicable to sales were $122.0 million and $440.3 million for the fourth quarter and full year, respectively, representing period-over-period increases of 20% and 31%. These increases were primarily the result of increased ounces sold as well as higher diesel and consumables costs. General and administrative expenses of $9.2 million in the fourth quarter and $33.6 million for the full year were 26% higher quarter-over-quarter and 15% higher year-over-year, respectively, due to higher employee-related expenses and professional service costs.
Fourth quarter interest expense, net of capitalized interest, increased 53% from the third quarter to $5.5 million as a result of incremental interest related to the Company’s $200 million revolving credit facility (the “Facility”), under which $100 million was drawn to partially fund the Silvertip acquisition in October 2017. For the full year, interest expense, net of capitalized interest, decreased 56% to $16.4 million, due primarily to lower average debt levels compared to 2016 and a lower interest rate on the Company’s senior notes, which were refinanced in the second quarter of 2017.
Expensed exploration was $7.5 million for the fourth quarter, bringing full-year expensed exploration to $30.3 million, an increase of $17.4 million, or 135%, year-over-year.
Fourth quarter and full-year capital expenditures increased 62% quarter-over-quarter and 45% year-over-year, respectively, to $47.1 million and $136.7 million, primarily due to $17.7 million of investments made at Silvertip on underground development drilling, mill and infrastructure upgrades and the purchase of new equipment. Full-year capital expenditures were also higher than 2016 levels due to final construction and commissioning of the Stage IV leach pad expansion at Rochester.
The acquisition of Silvertip also drove higher fourth quarter and full-year pre-development, reclamation, and other expenses of $6.0 million and $18.9 million, respectively.
Fourth quarter free cash flow1 was $44.8 million, bringing full-year 2017 free cash flow1 to $60.4 million. This increase of $85.5 million compared to 2016 was driven by record production and sales, improved companywide unit costs, a significant decrease in working capital, and lower interest expense.
Fourth quarter and full-year 2017 results for each of the Company’s operations are provided below.
|(Dollars in millions, except per ounce amounts)||2017||4Q 2017||3Q 2017||2Q 2017||1Q 2017||2016||4Q 2016|
|Average silver grade (oz/t)||5.62||6.92||5.53||4.98||4.91||4.66||4.95|
|Average gold grade (oz/t)||0.09||0.10||0.08||0.08||0.09||0.08||0.09|
|Average recovery rate – Ag||86.0%||87.0%||83.6%||87.3%||86.5%||88.4%||89.1%|
|Average recovery rate – Au||90.0%||92.0%||83.1%||91.1%||93.7%||86.5%||90.4%|
|Silver ounces produced (000’s)||7,242||2,346||1,908||1,457||1,531||4,442||1,269|
|Gold ounces produced||121,569||37,537||28,948||24,292||30,792||73,913||23,906|
|Silver equivalent ounces produced1 (000’s)||14,536||4,600||3,644||2,914||3,378||8,877||2,703|
|Silver ounces sold (000’s)||7,586||2,343||1,794||1,484||1,965||3,993||937|
|Gold ounces sold||131,743||38,953||26,554||25,191||41,045||59,081||15,558|
|Silver equivalent ounces sold1 (000’s)||15,491||4,681||3,387||2,996||4,427||7,538||1,872|
|Silver equivalent ounces sold1 (average spot) (000’s)||17,301||5,331||3,809||3,324||4,837||8,305||2,042|
|Costs applicable to sales||$146.2||$36.0||$33.3||$33.9||$43.0||$80.8||$20.9|
|Adjusted CAS per AgEqOz1||$9.36||$7.54||$9.76||$11.21||$9.68||$10.55||$11.01|
|Adjusted CAS per average spot AgEqOz1||$8.38||$6.64||$8.68||$10.11||$8.87||$9.57||$10.11|
|Cash flow from operating activities||$139.9||$52.1||$18.5||$18.8||$50.5||$26.7||$(1.7)|
|Sustaining capital expenditures (excludes capital lease payments)||$22.5||$4.9||$6.5||$6.1||$5.0||$22.7||$3.9|
|Development capital expenditures||$7.4||$2.1||$(1.0)||$5.1||$1.2||$13.1||$4.2|
|Total capital expenditures||$29.9||$7.0||$5.5||$11.2||$6.2||$35.8||$8.1|
|Free cash flow (before royalties)||$110.0||$45.1||$13.0||$7.6||$44.3||$(9.1)||$(9.8)|
|Gold production royalty payments||$—||$—||$—||$—||$—||$27.2||$—|
|Free cash flow1||$110.0||$45.1||$13.0||$7.6||$44.3||$(36.3)||$(9.8)|
- Fourth quarter silver equivalent1 production increased 26% quarter-over-quarter and 70% year-over-year to 4.6 million ounces. Full-year 2017 silver equivalent1 production of 14.5 million ounces was above the high-end of the Company’s guidance range and represented an increase of 64% over 2016
- Increased silver and gold grades during the fourth quarter and full-year resulted from the mining of higher-grade zones at Independencia. Grades are expected to decrease gradually during 2018
- Fourth quarter sales of 4.7 million silver equivalent1 ounces were in-line with production and up 38% quarter-over-quarter, while full-year sales of 15.5 million silver equivalent1 ounces more than doubled year-over-year due to a reduction in inventory carried over from the fourth quarter of 2016
- Fourth quarter adjusted CAS per average spot AgEqOz1 of $6.64 were 24% and 34% lower quarter-over-quarter and year-over-year, respectively, bringing full-year adjusted CAS per average spot AgEqOz1 to $8.38, below the Company’s guidance range of $9.00-$9.50 per average spot AgEqOz1
- Full year free cash flow1 of $110.0 million represented a year-over-year increase of $146.3 million and was driven by higher production, lower unit costs, a reduction in inventory carried over from 2016 and lower development capital expenditures
- Throughout the year, Palmarejo’s exploration program was expanded following positive drill results and the discovery of several new veins. As a consequence, exploration expense of $11.9 million in 2017 more than doubled compared to 2016
- Full-year 2018 production is expected to be 6.5 – 7.1 million ounces of silver and 110,000 – 115,000 ounces of gold, or 13.1 – 14.0 million silver equivalent1 ounces. CAS per AgEqOz1 is expected to be $10.50 – $11.00 on a 60:1 silver equivalent basis and $9.25 – $9.75 on an average spot equivalent basis
- With mining rates now at steady-state levels of approximately 4,500 tons per day, 2018 capital expenditures, including capitalized exploration, are expected to be approximately $30 – $35 million
|(Dollars in millions, except per ounce amounts)||2017||4Q 2017||3Q 2017||2Q 2017||1Q 2017||2016||4Q 2016|
|Ore tons placed||16,440,270||4,171,451||4,262,011||4,493,100||3,513,708||19,555,998||3,878,487|
|Average silver grade (oz/t)||0.53||0.50||0.53||0.53||0.58||0.57||0.57|
|Average gold grade (oz/t)||0.003||0.003||0.004||0.003||0.002||0.003||0.002|
|Silver ounces produced (000’s)||4,714||1,361||1,070||1,156||1,127||4,564||1,277|
|Gold ounces produced||51,051||18,995||10,955||10,745||10,356||50,751||14,231|
|Silver equivalent ounces produced1 (000’s)||7,777||2,500||1,727||1,801||1,749||7,609||2,131|
|Silver ounces sold (000’s)||4,931||1,457||1,050||1,135||1,289||4,584||1,205|
|Gold ounces sold||54,642||20,002||10,390||10,658||13,592||49,320||12,988|
|Silver equivalent ounces sold1 (000’s)||8,210||2,658||1,674||1,774||2,104||7,543||1,984|
|Silver equivalent ounces sold1 (average spot) (000’s)||8,961||2,969||1,839||1,913||2,240||8,183||2,128|
|Costs applicable to sales||$107.9||$34.0||$23.3||$24.2||$26.4||$89.7||$23.7|
|Adjusted CAS per AgEqOz1||$13.08||$12.77||$13.69||$13.54||$12.57||$11.86||$11.99|
|Adjusted CAS per average spot AgEqOz1||$11.97||$11.37||$12.46||$12.56||$11.81||$10.93||$11.16|
|Cash flow from operating activities||$32.3||$26.1||$1.6||$(1.1)||$5.7||$28.4||$7.6|
|Sustaining capital expenditures (excludes capital lease payments)||$2.7||$0.9||$0.5||$1.1||$0.2||$7.8||$1.5|
|Development capital expenditures||$38.2||$5.9||$9.2||$12.7||$10.4||$8.6||$4.3|
|Total capital expenditures||$40.9||$6.8||$9.7||$13.8||$10.6||$16.4||$5.8|
|Free cash flow1||$(8.6)||$19.3||$(8.1)||$(14.9)||$(4.9)||$12.0||$1.8|
- Fourth quarter silver equivalent1 production increased 45% quarter-over-quarter to 2.5 million ounces, driven by concurrent leaching of the Stage III and Stage IV pads, timing of recoveries from the newly-expanded Stage IV leach pad, and placement of higher gold grade ore during the third and early fourth quarters. Full-year silver equivalent1 production of 7.8 million ounces was relatively unchanged year-over-year and was near the high-end of the Company’s guidance range
- Adjusted CAS per average spot AgEqOz1 for the fourth quarter was $11.37, 9% lower quarter-over-quarter, while adjusted CAS per average spot AgEqOz1 for the full-year increased 10% to $11.97. Unit costs were higher compared to 2016 primarily due to pre-stripping activity conducted to access higher-grade ore during the second and third quarters and higher diesel prices compared to 2016
- Fourth quarter free cash flow1 of $19.3 million reflected higher production and lower development capital expenditures. For the full year, the mine generated negative free cash flow1 of $8.6 million, which reflected higher capital expenditures in 2017 of $40.9 million related to the Stage IV leach pad expansion project
- Full-year 2018 production is expected to be 4.2 – 4.7 million ounces of silver and 45,000 – 50,000 ounces of gold, or 6.9 – 7.7 million silver equivalent1 ounces, at CAS per AgEqOz1 of $13.25 – $13.75 on a 60:1 silver equivalent basis and $12.00 – $12.50 on an average spot equivalent basis
- Development capital expenditures in 2017 totaled $38.2 million and were predominantly related to the Stage IV leach pad expansion, which was completed and commissioned during the third quarter. As a result, Rochester is expected to generate strong free cash flow1 in 2018, with capital expenditures of approximately $7 – $15 million
Wharf, South Dakota
|(Dollars in millions, except per ounce amounts)||2017||4Q 2017||3Q 2017||2Q 2017||1Q 2017||2016||4Q 2016|
|Ore tons placed||4,560,441||1,124,785||1,150,308||993,167||1,292,181||4,268,105||1,178,803|
|Average gold grade (oz/t)||0.027||0.029||0.029||0.024||0.027||0.032||0.027|
|Gold ounces produced||95,372||27,292||25,849||21,358||20,873||109,175||30,675|
|Silver ounces produced (000’s)||64||16||15||13||20||105||32|
|Gold equivalent ounces produced1||96,431||27,560||26,096||21,568||21,207||110,927||31,202|
|Silver ounces sold (000’s)||74||16||14||11||33||95||30|
|Gold ounces sold||98,237||28,975||23,855||21,314||24,093||108,042||29,698|
|Gold equivalent ounces sold1||99,472||29,256||24,085||21,495||24,636||109,620||30,204|
|Costs applicable to sales||$69.3||$19.9||$17.3||$15.8||$16.3||$66.4||$16.9|
|Adjusted CAS per AuEqOz1||$700||$682||$719||$737||$670||$575||$556|
|Cash flow from operating activities||$49.6||$17.2||$15.0||$8.8||$8.6||$62.4||$15.4|
|Sustaining capital expenditures (excludes capital lease payments)||$5.8||$1.6||$1.8||$1.5||$0.9||$4.8||$1.3|
|Development capital expenditures||$3.0||$1.7||$1.3||$—||$—||$—||$—|
|Total capital expenditures||$8.8||$3.3||$3.1||$1.5||$0.9||$4.8||$1.3|
|Free cash flow1||$40.8||$13.9||$11.9||$7.3||$7.7||$57.6||$14.1|
- Gold production in the fourth quarter increased 6% quarter-over-quarter to 27,292 ounces, attributable primarily to higher sustained crushing rates and gold grades
- Full-year gold production of 95,372 ounces was slightly higher than the Company’s guidance range. The 13% year-over-year decline resulted from lower grades following completion of mining at the higher-grade Golden Reward deposit during the third quarter, which was mined for an abbreviated season relative to prior years
- Tons placed in 2017 reached 4.6 million, up from 4.3 million in 2016 and 3.6 million in 2015
- Adjusted CAS per AuEqOz1 declined 5% quarter-over-quarter while full-year adjusted CAS per AuEqOz1 were $700, at the low end of the Company’s guidance range
- Wharf generated $13.9 million of free cash flow1 during the quarter, bringing full-year free cash flow1 to $40.8 million. Since acquiring the operation in February 2015 for $99 million, Wharf has generated $127.2 million of free cash flow1
- In 2018, Coeur expects gold production to be 85,000 – 90,000 ounces at CAS per AuEqOz1 of $850 – $900
- Capital expenditures for 2018 are expected to be approximately $4 – $7 million
|(Dollars in millions, except per ounce amounts)||2017||4Q 2017||3Q 2017||2Q 2017||1Q 2017||2016||4Q 2016|
|Average gold grade (oz/t)||0.18||0.22||0.17||0.17||0.17||0.21||0.22|
|Average recovery rate||93.5%||92.8%||94.1%||93.2%||94.0%||94.7%||94.4%|
|Gold ounces produced||115,094||34,932||27,541||26,424||26,197||124,331||33,688|
|Gold ounces sold||125,982||35,634||29,173||29,031||32,144||121,688||28,864|
|Costs applicable to sales||$116.1||$32.0||$27.7||$28.0||$28.4||$96.7||$23.0|
|Adjusted CAS per AuOz1||$920||$896||$946||$952||$884||$790||$801|
|Cash flow from operating activities||$37.6||$16.8||$9.3||$7.0||$4.5||$50.8||$11.4|
|Sustaining capital expenditures (excludes capital lease payments)||$20.7||$8.0||$6.5||$3.7||$2.5||$22.8||$8.9|
|Development capital expenditures||$15.5||$4.0||$3.6||$4.9||$3.0||$14.0||$3.7|
|Total capital expenditures||$36.2||$12.0||$10.1||$8.6||$5.5||$36.8||$12.6|
|Free cash flow1||$1.4||$4.8||$(0.8)||$(1.6)||$(1.0)||$14.0||$(1.2)|
- Fourth quarter gold production increased 27% quarter-over-quarter to 34,932 ounces, Kensington’s highest quarterly production since the fourth quarter of 2013. This resulted primarily from mining the higher-grade Raven zone, which drove average grades 29% higher to 0.22 oz/ton
- Full-year production of 115,094 ounces was below the Company guidance range due to lower-than-expected grades throughout the first nine months of the year. Full-year gold sales exceeded production due to reductions in inventory throughout the year, particularly during the first quarter
- Adjusted CAS per AuOz1 declined 5% quarter-over-quarter to $896 per ounce. Adjusted CAS per AuOz1 for the full year increased 16% compared to the prior year to $920 due to lower grades and production levels. Higher diesel and consumables costs also contributed to the year-over-year increase
- Exploration expense was $8.6 million for the full year, a $5.1 million increase compared to 2016. During the year, Kensington’s exploration program focused on resource conversion and expansion of the Jualin deposit as well as the expansion of higher-grade areas, such as Raven, which is expected to remain a supplemental source of higher-grade material throughout 2018
- Mining of development ore continued at Jualin during the fourth quarter, where production is expected to accelerate throughout 2018 as the Company dewaters the mine area to facilitate more efficient drilling, development, and mining activities
- Free cash flow1 during the quarter was $4.8 million due to higher production. For the full year, free cash flow1 was $1.4 million, down $12.6 million compared to 2016
- Production for the full-year 2018 is expected to total 115,000 – 120,000 ounces of gold at CAS per AuOz1 of $900 – $950
- Kensington’s capital expenditures in 2018 are expected to total $35 – $40 million
During the fourth quarter, Coeur focused on refining its geologic models and establishing early priorities for its 2018 exploration program. Exploration at Wharf and Rochester ceased during the quarter due to weather conditions, while drilling at Kensington, Palmarejo, and Silvertip continued at reduced pace with three drill rigs active at Palmarejo, three at Kensington, and one at Silvertip. As of early February 2018, there were three rigs active at Silvertip, with a fourth expected later during the month.
Companywide exploration expense and capitalized exploration for the quarter were $7.5 million and $1.9 million, respectively, declining 23% and 62% quarter-over-quarter. Exploration expense for the full year totaled $30.3 million, $17.4 million higher compared to 2016, while capitalized exploration totaled $11.6 million, compared to $12.4 million the prior year.
On December 13, 2017, the Company provided an update of its Palmarejo and Kensington exploration programs, which were expanded throughout the year following encouraging drill results. At Palmarejo, expansion of the Nación-Dana, La Bavisa, and Zapata veins remain a priority with two drill rigs active at Nación-Dana as of year-end. Underground drifting was also underway in anticipation of drilling the newly-discovered Portales and Jacobo veins, east of Guadalupe, as well as the Zapata and Madero veins, west of Guadalupe. The Company’s year-end 2017 reserves and resources include initial reserve estimates at Nación and new inferred resources at Zapata and La Bavisa.
Exploration at Kensington continued to target expansion of the Raven vein, lower Kensington Main Block L, and lower Jualin Vein #4 during the quarter. An initial reserve estimate at Jualin is expected to be included in Kensington’s updated technical report anticipated late in the first quarter of 2018.
At Silvertip, underground development drilling began early during the fourth quarter and targeted resource conversion, while underground access was undergoing preparation for multiple drill rigs in 2018. Results of the planned infill and expansion drill programs are expected to be included in an updated technical report anticipated in the second half of 2018.
2018 Production Outlook
As published on January 8, 2018, the Company’s full-year 2018 production guidance reflects the anticipated commencement of production at Silvertip by the end of the first quarter.
|(K oz)||(oz)||(K lbs)||(K lbs)||(K oz)|
|Palmarejo||6,500 – 7,100||110,000 – 115,000||—||—||13,100 – 14,000|
|Rochester||4,200 – 4,700||45,000 – 50,000||—||—||6,900 – 7,700|
|Kensington||—||115,000 – 120,000||—||—||6,900 – 7,200|
|Wharf||—||85,000 – 90,000||—||—||5,100 – 5,400|
|Silvertip||1,500 – 2,000||—||23,000 – 28,000||23,000 – 28,000||4,030 – 5,080|
|Total||12,200 – 13,800||355,000 – 375,000||23,000 – 28,000||23,000 – 28,000||36,030 – 39,380|
|Total (including discontinued operations)||12,800 – 14,400||355,000 – 375,000||23,000 – 28,000||23,000 – 28,000||36,630 – 39,980|
2017 Cost Performance and 2018 Outlook
The Company’s spot guidance is based on recent observed equivalences and assumes silver-to-gold, -zinc and -lead ratios of 75:1, 0.09:1 and 0.07:1, respectively.
|2018 Guidance||2017 Results|
|(dollars in millions, except per ounce amounts)||60:1||Spot||60:1||Average Spot|
|CAS per AgEqOz1 – Palmarejo||$10.50 – $11.00||$9.25 -$9.75||$9.36||$8.38|
|CAS per AgEqOz1 – Rochester||$13.25 – $13.75||$12.00 – $12.50||$13.08||$11.97|
|CAS per AuOz1 – Kensington||$900 – $950||$920|
|CAS per AuEqOz1 – Wharf||$850 – $900||$700|
|CAS per AgEqOz1 – Silvertip||$15.00 – $15.50||$12.00 – $12.50||—||—|
|Capital Expenditures||$120 – $140||$136.7|
|General and Administrative Expenses||$32 – $34||$33.6|
|Exploration Expense||$20 – $25||$30.3|
|AISC per AgEqOz1 from continuing operations||$17.50 – $18.00||$15.00 – $15.50||$15.90||$13.82|
Financial Results and Conference Call
Coeur will host a conference call to discuss its fourth quarter and full-year 2017 financial results on February 8, 2018 at 11:00 a.m. Eastern Time.
|Dial-In Numbers:||(855) 560-2581 (U.S.)|
|(855) 669-9657 (Canada)|
|(412) 542-4166 (International)|
|Conference ID:||Coeur Mining|
Hosting the call will be Mitchell J. Krebs, President and Chief Executive Officer of Coeur, who will be joined by Peter C. Mitchell, Senior Vice President and Chief Financial Officer, Frank L. Hanagarne, Jr., Senior Vice President and Chief Operating Officer, Hans Rasmussen, Senior Vice President of Exploration, and other members of management. A replay of the call will be available through February 22, 2018.
|Replay numbers:||(877) 344-7529 (U.S.)|
|(855) 669-9658 (Canada)|
(412) 317-0088 (International)
|Conference ID:||101 15 644|
Coeur Mining, Inc. is a well-diversified, growing precious metals producer with six mines in the Americas employing approximately 2,300 people. Coeur’s wholly-owned continuing operations include the Palmarejo silver-gold complex in Mexico, the Silvertip silver-zinc-lead mine in British Columbia, the Rochester silver-gold mine in Nevada, the Kensington gold mine in Alaska, and the Wharf gold mine in South Dakota. In addition, the Company owns the La Preciosa project in Mexico, a silver-gold exploration stage project. Coeur conducts exploration activities in North America.
This news release contains forward-looking statements within the meaning of securities legislation in the United States and Canada, including statements regarding anticipated production, costs, expenses, expectations regarding Silvertip including but not limited to expected commencement of production at Silvertip, grades, exploration and development efforts, expectations regarding the planned sale of San Bartolomé and the timing thereof, expectations regarding production from the Jualin deposit at Kensington, expected free cash flow at Rochester, expectations regarding reserve and resource estimates and the timing of filing of technical reports, spot prices, returns, value and results. 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 expectations regarding Silvertip including the timing of commencement of production and obtaining necessary permits are not realized, the risk that the expected sale of San Bartolomé does not occur when expected or at all, the risk that commercial production is delayed at the Jualin deposit, the risk that anticipated production, cost, expense, and free cash flow levels are not attained, the risks and hazards inherent in the mining business (including risks inherent in developing large-scale mining projects, environmental hazards, industrial accidents, weather or geologically related conditions), changes in the market prices of gold and silver and a sustained lower price environment, the uncertainties inherent in Coeur’s production, exploratory and developmental activities, including risks relating to permitting and regulatory delays, ground conditions, grade variability, any future labor disputes or work stoppages, the uncertainties inherent in the estimation of gold and silver reserves, changes that could result from Coeur’s future acquisition of new mining properties or businesses, 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, the political risks and uncertainties associated with operations in Bolivia, Coeur’s ability to raise additional financing necessary to conduct its business, make payments or refinance its debt, as well as other uncertainties and risk factors set out in filings made from time to time with the United States Securities and Exchange Commission, and the Canadian securities regulators, including, without limitation, Coeur’s most recent report on Form 10-K. Actual results, developments and timetables could vary significantly from the estimates presented. Readers are cautioned not to put undue reliance on forward-looking statements. Coeur disclaims any intent or obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, Coeur undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of Coeur, its financial or operating results or its securities.
Christopher Pascoe, Coeur’s Director, Technical Services and a qualified person under Canadian National Instrument 43-101, approved the scientific and technical information concerning Coeur’s mineral projects in this news release. For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources, as well as data verification procedures and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors, Canadian investors should refer to the Technical Reports for each of Coeur’s properties as filed on SEDAR at www.sedar.com.
Non-U.S. GAAP Measures
We supplement the reporting of our financial information determined under United States generally accepted accounting principles (U.S. GAAP) with certain non-U.S. GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted net income (loss), costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce or per average spot silver equivalent ounce), adjusted costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce or per average spot silver equivalent ounce), adjusted costs applicable to sales per silver ounce (or per gold ounce), all-in sustaining costs, and adjusted all-in sustaining costs. We believe that these adjusted measures provide meaningful information to assist management, investors and analysts in understanding our financial results and assessing our prospects for future performance. We believe these adjusted financial measures are important indicators of our recurring operations because they exclude items that may not be indicative of, or are unrelated to our core operating results, and provide a better baseline for analyzing trends in our underlying businesses. We believe EBITDA, adjusted EBITDA, adjusted net income (loss), costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce or per average spot silver equivalent ounce), adjusted costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce or per average spot silver equivalent ounce), adjusted costs applicable to sales per silver ounce (or per gold ounce), all-in sustaining costs, and adjusted all-in sustaining costs are important measures in assessing the Company’s overall financial performance. For additional explanation regarding our use of non-U.S. GAAP financial measures, please refer to our Form 10-K for the year ended December 31, 2017.
1. EBITDA, adjusted EBITDA, adjusted net income (loss), costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce or per average spot silver equivalent ounce), adjusted costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce or per average spot silver equivalent ounce), adjusted costs applicable to sales per silver ounce (or per gold ounce), all-in sustaining costs, and adjusted all-in sustaining costs are non-GAAP measures. Please see tables in the Appendix for the reconciliation to U.S. GAAP. Free cash flow is defined as cash flow from operating activities less capital expenditures and gold production royalty payments. Please see table in Appendix for the calculation of consolidated free cash flow. Silver and gold equivalence assumes a 60:1 silver-to-gold ratio, except where noted as average spot prices. Please see the table below for average applicable spot prices and corresponding ratios. Silver and zinc equivalence assumes a 0.06:1 silver-to-zinc ratio. Silver and lead equivalence assumes a 0.05:1 silver-to-lead ratio.
2. Includes capital leases. Net of debt issuance costs and premium received.
3. Return on investment determined based on final acquisition cost of $99.5 million in February 2015 and free cash flows of $28.8 million, $57.6 million and $40.8 million in 2015, 2016 and 2017, respectively. Mid-period convention was used in calculating the return on investment.