Coeur d'Alene Mines - Increasing Production & Cash Flow

5 Silver, 1 Gold mine(s) operating - Reserves of: Silver 500m oz, Gold 5m oz

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Coeur Reports First Quarter 2014 Results

May 07, 2014More Sharing Services

Unit costs decline at Coeur's primary silver mines; 24% decrease in unit costs at Rochester

Chicago, Illinois - May 7, 2014 - Coeur Mining, Inc. (the “Company” or “Coeur”) (NYSE: CDE) reported first quarter 2014 revenue of $159.6 million, adjusted net loss1 of $19.5 million, and cash flow from operating activities of $(9.6) million ($14.9 million before changes in operating assets and liabilities). The Company realized average metal prices of $20.29 per silver ounce and $1,298 per gold ounce during the quarter, which were 33% and 20% lower, respectively, than during the first quarter of 2013.

Coeur is maintaining its 2014 production guidance of 17.0 - 18.2 million silver ounces and 220,000 - 238,000 gold ounces and is also maintaining its costs applicable to sales guidance1 for 2014 of $500 - $530 million. Coeur is maintaining its full-year guidance for exploration ($23 - $28 million including capitalized drilling), general and administrative expenses ($43 - $48 million), and capital expenditures ($65 - $80 million). 2014 amortization is expected to be approximately $190 million, which is higher than prior guidance due primarily to a revised estimate of the impact of the impairment charge recorded in the fourth quarter 2013.

First Quarter Highlights

  • Silver production totaled 4.1 million ounces, a 7% increase compared to last year's first quarter
  • Gold production totaled 58,836 ounces, a 3% increase compared to last year's first quarter
  • Costs applicable to sales at Coeur's primary silver mines declined 6% from last year's first quarter to $13.25 per silver equivalent ounce1
  • Costs applicable to sales per silver equivalent ounce1 were $12.67 at Rochester, down 24% from the fourth quarter and the lowest in over two years
  • All-in sustaining costs per silver equivalent ounce1 declined 4% from last year's first quarter to $19.12
  • Kensington's quarterly free cash flow of $9.2 million was its highest in three years
  • Revenue of $159.6 million was down 7% year-over-year due to lower average realized prices
  • Net loss was $37.2 million, or $0.36 per share
  • Adjusted net loss1 was $19.5 million, or $0.19 per share
  • Cash, cash equivalents, and short-term investments totaled $318.6 million at March 31, 2014

“I am pleased with the Company’s performance through April. Our production levels are on target and our costs are at the low end of guidance, which reflects our organization’s improved ability to establish and execute reliable, well-engineered plans,” said Mitchell J. Krebs, Coeur's President and Chief Executive Officer. “As we enter the mid-point of 2014, we look forward to demonstrating Rochester’s continuing production growth and declining cost profile and to providing the anticipated longer-term profile of our Palmarejo operation during the second quarter. By the third quarter, we expect to complete the feasibility study for the La Preciosa silver-gold project in Mexico and plan to make a disciplined decision on how to proceed.”

“In the meantime, we remain focused on improvements in the efficiency and consistency of our existing operations,” Mr. Krebs concluded.

Financial Highlights (Unaudited)

(Amounts in millions, except per share amounts, average realized prices, gold ounces produced & sold, and per-ounce metrics)

1Q 2014

4Q 2013

Quarter Variance

3Q 2013

2Q 2013

1Q 2013

Revenue

$

159.6

$

168.8

(5

%)

$

200.8

$

204.5

$

171.8

Costs Applicable to Sales1

$

106.9

$

101.4

5

%

$

131.8

$

142.4

$

88.1

Net Income (Loss)

$

(37.2

)

$

(581.5

)

94

%

$

(46.3

)

$

(35.0

)

$

12.3

Earnings Per Share

$

(0.36

)

$

(5.77

)

94

%

$

(0.46

)

$

(0.35

)

$

0.14

Adjusted Net Income (Loss)1

$

(19.5

)

$

(17.0

)

(15

%)

$

(29.3

)

$

(28.9

)

$

2.6

Adjusted Net Income (Loss)1 Per Share

$

(0.19

)

$

(0.17

)

(12

%)

$

(0.29

)

$

(0.29

)

$

0.03

Weighted Average Shares

102.4

100.7

(2

%)

100.8

99.8

90.0

Cash Flow From Operating Activities

$

(9.6

)

$

10.4

(192

%)

$

26.8

$

63.3

$

12.9

Capital Expenditures

$

11.9

$

28.1

(57

%)

$

32.7

$

27.2

$

12.8

Cash, Cash Equivalents & Short-Term Investments

$

318.6

$

206.7

54

%

$

211.4

$

249.5

$

332.8

Total Debt (net of debt discount)

$

464.2

$

308.6

50

%

$

310.2

$

305.3

$

305.3

Average Realized Price Per Ounce - Silver

$

20.29

$

20.54

(1

%)

$

21.06

$

22.86

$

30.30

Average Realized Price Per Ounce - Gold

$

1,298

$

1,249

4

%

$

1,329

$

1,416

$

1,630

Silver Ounces Produced

4.1

4.3

(5

%)

4.2

4.6

3.8

Gold Ounces Produced

58,836

80,780

(27

%)

63,766

60,757

56,913

Silver Ounces Sold

3.9

4.0

(4

%)

4.9

5.2

3.1

Gold Ounces Sold

62,578

72,712

(14

%)

76,466

63,389

51,926

Silver Equivalent Ounces Sold

7.6

8.4

(10

%)

9.5

9.0

6.2

Costs Applicable to Sales per Silver Equivalent Oz1

$

13.25

$

12.49

6

%

$

13.82

$

14.88

$

14.07

All-in Sustaining Costs per Silver Equivalent Oz1

$

19.12

$

17.73

8

%

$

19.85

$

21.01

$

19.85


Financial Results

Coeur's adjusted net loss1 was $19.5 million, or $0.19 per share, in the first quarter 2014, compared with $17.0 million, or $0.17 per share, in the fourth quarter 2013. First quarter adjusted net loss1 excludes a $7.8 million negative fair value adjustment, a $3.0 million write-off of capitalized costs associated with the terminated revolving credit facility, and a $2.6 million impairment of marketable securities. Fair value adjustments are primarily driven by changes to gold and silver prices, which adjust the estimated future liabilities for the Palmarejo gold production royalty and the Rochester 3.4% net smelter returns royalty.

The Company realized a net loss of $37.2 million or $0.36 per share, in the first quarter 2014. Cash flow from operating activities was $(9.6) million in the first quarter, compared to $10.4 million in the fourth quarter 2013 due primarily to a $12.4 million increase in ore added to the leach pads at Rochester.

Downside Price Protection

The Company extended its downside metal price protection program during the first quarter, using put spreads to protect a portion of expected production against a sharp decrease in metal prices while selling intra-quarter, out-of-the-money call options when appropriate to offset the net cost of the put spreads. Instruments currently outstanding include put spreads covering 1.25 million ounces of expected quarterly silver production and 25,000 ounces of expected quarterly gold production for each remaining quarter of 2014. Put options purchased have a strike price of $18/ounce and $1,200/ounce for silver and gold, respectively. Put options sold have a strike price of $16/ounce and $1,050/ounce for silver and gold, respectively.

Operations

Highlights of the first quarter 2014 results for each of the Company's mining operations are provided below.

Palmarejo, Mexico

(Dollars in millions, expect per ounce amounts)

1Q 2014

4Q 2013

3Q 2013

2Q 2013

1Q 2013

Underground Operations:

Tons mined

209,854

237,384

219,909

183,267

151,232

Average silver grade (oz/t)

5.95

6.00

4.73

4.59

4.22

Average gold grade (oz/t)

0.11

0.14

0.11

0.11

0.09

Surface Operations:

Tons mined

358,222

361,493

385,379

363,758

388,651

Average silver grade (oz/t)

3.50

3.49

3.49

4.95

3.45

Average gold grade (oz/t)

0.03

0.03

0.03

0.04

0.03

Processing:

Total tons milled

571,345

595,803

583,365

570,322

573,170

Average recovery rate – Ag

73.3%

74.5%

81.8%

76.5%

78.8%

Average recovery rate – Au

78.0%

80.6%

87.6%

81.2%

90.1%

Silver ounces produced (000's)

1,820

1,994

1,918

2,045

1,646

Gold ounces produced

25,216

35,487

29,893

28,191

22,965

Silver ounces sold (000's)

1,677

1,768

2,592

2,007

1,125

Gold ounces sold

26,422

31,360

38,385

28,025

14,500

Revenues

$68.0

$75.9

$104.5

$86.2

$57.4

Costs applicable to sales1

$43.6

$39.9

$66.8

$55.2

$26.7

Costs applicable to sales per silver equivalent ounce1

$13.36

$10.90

$13.66

$14.97

$13.39

Exploration expense

$1.0

$1.1

$0.9

$3.2

$2.0

Cash flow from operations

$10.2

$16.6

$50.8

$37.2

$10.1

Sustaining capital expenditures

$3.7

$4.6

$7.1

$5.4

$2.6

Development capital expenditures

$—

$4.3

$3.2

$3.8

$2.7

Total capital expenditures

$3.7

$8.9

$10.3

$9.2

$5.3

Free cash flow (before royalties)

$6.5

$7.7

$40.5

$28.0

$4.8

Royalties paid (credited)

$14.7

$13.5

$12.6

$15.5

$15.4

Free cash flow (after royalties)

$(8.2)

$(5.8)

$27.9

$12.5

$(10.6)
  • Tons milled per day at Palmarejo declined 2% compared to the fourth quarter, but included a higher proportion of tonnage from the underground operations as Coeur transitions the mine to a higher-grade, higher-margin operation
  • Recovery rates decreased compared to the fourth quarter 2013; higher recoveries are expected for the balance of 2014 as a result of ore blending improvements and commissioning an expanded Merrill Crowe plant
  • Capital expenditures of $3.7 million in the first quarter were down significantly from $8.9 million in the fourth quarter 2013

San Bartolomé, Bolivia

(Dollars in millions, expect per ounce amounts)

1Q 2014

4Q 2013

3Q 2013

2Q 2013

1Q 2013

Tons milled

385,375

451,660

428,884

424,310

374,985

Average silver grade (oz/t)

3.88

3.79

3.89

3.98

4.09

Average recovery rate

90.5%

87.6%

91.5%

90.3%

90.6%

Silver ounces produced (000's)

1,355

1,499

1,528

1,523

1,391

Silver ounces sold (000's)

1,357

1,485

1,334

2,151

1,109

Revenues

$27.6

$30.6

$28.8

$49.2

$33.1

Costs applicable to sales1

$18.9

$20.6

$17.7

$32.8

$15.7

Costs applicable to sales per silver equivalent ounce1

$13.93

$13.91

$13.25

$15.26

$14.14

Exploration expense

$—

$—

$—

$—

$—

Cash flow from operations

$4.5

$8.9

$7.6

$32.8

$(5.4)

Sustaining capital expenditures

$1.4

$1.8

$3.0

$1.4

$—

Development capital expenditures

$—

$2.0

$1.2

$1.8

$—

Total capital expenditures

$1.4

$3.8

$4.2

$3.2

$—

Free cash flow

$3.1

$6.5

$2.1

$29.5

$(5.9)
  • San Bartolomé produced approximately 1.4 million ounces of silver, 10% below the fourth quarter due to reduced mill throughput in order to implement tailings facility improvements. Higher production is expected at San Bartolomé for the remainder of 2014

Kensington, Alaska

(Dollars in millions, expect per ounce amounts)

1Q 2014

4Q 2013

3Q 2013

2Q 2013

1Q 2013

Tons milled

159,697

149,246

147,427

127,987

129,057

Average gold grade (oz/t)

0.17

0.26

0.20

0.18

0.20

Average recovery rate

94.5%

96.0%

96.5%

98.2%

96.2%

Gold ounces produced

25,428

37,404

29,049

23,162

25,206

Gold ounces sold

28,386

35,029

31,542

24,439

26,490

Revenues

$36.1

$39.7

$38.9

$30.9

$39.3

Costs applicable to sales1

$28.5

$23.4

$27.5

$30.2

$23.6

Costs applicable to sales per gold ounce1

$1,005

$667

$871

$1,234

$890

Exploration expense

$1.0

$1.5

$1.5

$0.6

$0.7

Cash flow from operations

$13.9

$11.3

$1.9

$7.6

$11.7

Sustaining capital expenditures

$4.7

$5.7

$4.9

$7.4

$3.3

Development capital expenditures

$—

$—

$—

$—

$—

Total capital expenditures

$4.7

$5.7

$4.9

$7.4

$3.3

Free cash flow

$9.2

$5.0

$(3.7)

$(0.3)

$7.4
  • Kensington milled approximately 1,800 tons per day, up 11% from the fourth quarter at an average gold grade of 0.17, significantly below fourth quarter average grade but more in line with the mine's average reserve grade
  • Costs applicable to sales per gold ounce1 were $1,005, higher than $667 in the fourth quarter 2013 due to lower gold grades and production levels
  • Cash flow from operations of $13.9 million was above the $11.3 million generated in the fourth quarter due to a reduction in working capital

Rochester, Nevada

(Dollars in millions, expect per ounce amounts)

1Q 2014

4Q 2013

3Q 2013

2Q 2013

1Q 2013

Ore tons placed

3,640,861

4,569,588

2,678,906

2,457,423

2,606,001

Silver ounces produced (000's)

750

712

595

844

648

Gold ounces produced

8,192

7,890

4,824

9,404

8,742

Silver ounces sold (000's)

695

621

741

851

715

Gold ounces sold

7,770

6,323

6,539

10,925

10,936

Revenues

$24.2

$20.6

$24.3

$34.9

$39.5

Costs applicable to sales1

$14.7

$16.6

$17.9

$22.5

$20.8

Costs applicable to sales per silver equivalent ounce1

$12.67

$16.63

$15.83

$14.95

$15.15

Exploration expense

$1.2

$1.0

$0.6

$0.5

$0.5

Cash flow from operating activities

$(9.0)

$(9.7)

$(3.6)

$(3.4)

$5.6

Sustaining capital expenditures

$1.0

$7.2

$12.3

$6.6

$3.3

Development capital expenditures

$—

$—

$—

$—

$—

Total capital expenditures

$1.0

$7.2

$12.3

$6.6

$3.3

Royalties paid (credited)

$0.5

$(2.5)

$—

$—

$1.0

Free cash flow (after royalties)

$(10.5)

$(14.4)

$(15.9)

$(10.0)

$1.3
  • Rochester produced 750,362 ounces of silver and 8,192 ounces of gold in the first quarter, increases of 5% and 4%, respectively, compared to the fourth quarter 2013
  • Costs applicable to sales per silver equivalent ounce1 were $12.67, 24% lower than the fourth quarter 2013
  • Rochester is expected to substantially increase production levels during the remainder of 2014 at unit costs below 2013
  • Cash flow from operating activities of $(9.0) million was only slightly improved from $(9.7) million in the fourth quarter 2013 due to a $12.4 million increase in ore under leach at end of the first quarter
  • Capital expenditures were $1.0 million during the first quarter, significantly below the fourth quarter 2013

Endeavor, Australia

(Dollars in millions, expect per ounce amounts)

1Q 2014

4Q 2013

3Q 2013

2Q 2013

1Q 2013

Tons milled

193,219

200,843

197,237

198,517

194,519

Average silver grade (oz/t)

1.65

1.37

1.71

2.73

1.61

Average recovery rate

52.7%

48.2%

48.2%

40.9%

47.8%

Silver ounces produced (000's)

168

135

162

221

150

Silver ounces sold (000's)

133

135

207

219

109

Revenues

$2.9

$2.1

$4.3

$3.5

$3.0

Costs applicable to sales1

$1.2

$0.9

$1.9

$1.7

$1.3

Costs applicable to sales per silver equivalent ounce1

$8.90

$8.32

$10.09

$8.48

$12.13

Cash flow from operating activities

$1.5

$1.3

$1.2

$1.2

$1.6

Free cash flow

$1.5

$1.3

$1.2

$1.2

$1.6
  • Higher silver grade and recovery rates in the first quarter resulted in a 9% increase in silver production
  • Coeur owns all silver production and reserves at Endeavor up to a total of 20.0 million payable ounces. At March 31, 2014, the Company has received 5.0 million payable ounces

La Preciosa, Mexico

  • Coeur is continuing work on the feasibility study which is expected to be completed in mid-2014. The Company will then evaluate the economics of the project and determine whether to proceed with construction
  • Feasibility work in 2014 indicates further progress in improving the project's expected economics compared to those reflected in the preliminary economic assessment
  • The Company spent $6.1 million during the first quarter 2014 and remains on budget to spend a total of $25 million for the feasibility work, including exploration activities, engineering and design, land purchases, and sustainability projects within the community

Exploration

Costs associated with exploration activities for the first quarter 2014 were $4.2 million (expensed) for discovery of new silver and gold mineralization and $1.1 million (capitalized) for definition and expansion of discoveries, for a total of $5.3 million. Coeur's exploration program used up to ten drill rigs during the first quarter: four drills at Palmarejo, four at Kensington, and two at Rochester. This work resulted in completion of over 76,703 feet (23,379 meters) of combined core and reverse circulation drilling.

2014 Production Outlook

Coeur's 2014 silver and gold production guidance remains unchanged as shown below.

(silver and silver equivalent ounces in thousands)

Silver

Gold

Silver Equivalent

Palmarejo, Mexico

6,700 - 7,200

87,000 - 95,000

11,920 - 12,900

San Bartolomé, Bolivia

5,700 - 6,000

—

5,700 - 6,000

Rochester, Nevada

4,100 - 4,400

28,000 - 31,000

5,780 - 6,260

Endeavor, Australia

500 - 600

—

500 - 600

Kensington, Alaska

—

105,000 - 112,000

6,300 - 6,720

Total

17,000-18,200

220,000-238,000

30,200 - 32,480

1. Adjusted net income (loss), all-in sustaining costs, and costs applicable to sales are non-GAAP measures. Please see tables in the Appendix for the reconciliation to U.S. GAAP. Silver equivalence calculated using a 60:1 silver to gold ratio.

Conference Call Information

Coeur will conduct a conference call and webcast at www.coeur.com to discuss the Company's first quarter results on May 8, 2014 at 11:00 a.m. Eastern time.

Dial-In Numbers:
(877) 768-0708 (U.S. and Canada)
(660) 422-4718 (International)
Conference ID: 255 26 141

A replay of the call will be available on Coeur's website through May 22, 2014.

Replay Numbers:(855) 859-2056 (U.S. and Canada)
(404) 537-3406 (International)
Conference ID: 255 26 141

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