CHICAGO, IL, Aug 7, 2014 - (ACN Newswire) - Coeur Mining, Inc. (the "Company" or "Coeur") (NYSE: CDE) reported second quarter 2014 revenue of $164.6 million, adjusted net loss[1] of $31.6 million, and cash flow from operating activities of $30.5 million, the highest level in a year. The Company realized average metal prices of $19.60 per silver ounce and $1,277 per gold ounce during the quarter, which were 3% lower and roughly flat, respectively, compared to the first quarter of 2014.
The Company is reducing its full-year costs applicable to sales[1] guidance range from $500 - $530 million to $490 - $510 million due to its successful ongoing cost reduction initiatives. Coeur is narrowing its 2014 production guidance to 17.0 - 18.0 million silver ounces and 225,000 - 240,000 gold ounces and is maintaining its full-year guidance for exploration ($23 - $28 million including capitalized drilling), general and administrative expenses ($43 - $48 million), amortization ($190 million), and capital expenditures ($65 - $80 million).
Second Quarter Highlights
- Silver production totaled 4.5 million ounces, a 10% increase compared to the first quarter
- Gold production totaled 61,025 ounces, a 4% increase compared to the first quarter
- Rochester produced 1.7 million silver equivalent ounces[1], a 34% increase compared to the first quarter. Cash flow from operating activities of $4.3 million at Rochester in the second quarter is expected to increase during the second half of 2014 as production levels continue to rise
- Cash flow from operating activities was $30.5 million in the second quarter, compared to $(9.6) million in the first quarter
- Mine-level free cash flow[2] of $22.5 million increased from $(4.4) million in the first quarter, reaching the highest level in a year
- Costs applicable to sales at Coeur's primary silver mines increased 8% from the first quarter but declined 4% from last year's second quarter to $14.31 per silver equivalent ounce[1]
- All-in sustaining costs per silver equivalent ounce[1] increased 4% from the first quarter but declined 6% from last year's second quarter to $19.89
- General and administrative expenses were $9.4 million in the second quarter, down 32% from the first quarter
- Net loss was $43.1 million, or $0.42 per share
- Adjusted net loss[1] was $31.6 million, or $0.31 per share
- Cash, cash equivalents, and short-term investments totaled $316.8 million at June 30, 2014, nearly unchanged from the first quarter
- Coeur announced a re-scoping of its Palmarejo mine, including plans to complete development of the Guadalupe underground mine at Palmarejo and terms for a new gold stream agreement with Franco-Nevada, which is expected to significantly improve the mine's cash flow profile
"Our second quarter results demonstrate improved or consistent performance across our portfolio. Our costs are tracking below initial expectations as we make further progress increasing the efficiency of our operations," said Mitchell J. Krebs, Coeur's President and Chief Executive Officer.
"In recent weeks, we made important decisions regarding the long-term plan for our Palmarejo mine and La Preciosa silver-gold project in Mexico. Our re-scoped mine plan for Palmarejo and deferral of mine construction at La Preciosa demonstrate our commitment to disciplined capital deployment with the intent to maximize free cash flow and stockholder returns."
Financial Highlights (Unaudited)
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(Amounts in millions, except per share amounts, average realized
prices, gold ounces produced & sold, and per-ounce metrics)
Quarter
2Q 2014 1Q 2014 Variance 4Q 2013 3Q 2013 2Q 2013
Revenue $ 164.6 $ 159.6 3% $ 168.8 $ 200.8 $ 204.5
Costs Applicable to Sales[1]
$ 118.7 $ 106.9 11% $ 101.4 $ 131.8 $ 142.4
Net Income (Loss) $ (43.1) $ (37.2) (16%) $(581.5) $ (46.3) $ (35.0)
Earnings Per Share $ (0.42) $ (0.36) (17%) $ (5.77) $ (0.46) $ (0.35)
Adjusted Net Income (Loss)[1]
$ (31.6) $ (19.5) (62%) $ (17.0) $ (29.3) $ (29.8)
Adjusted Net Income (Loss)[1] Per Share
$ (0.31) $ (0.19) (63%) $ (0.17) $ (0.29) $ (0.30)
Weighted Average Shares
102.4 102.4 -% 100.7 100.8 99.8
Cash Flow From Operating Activities
$ 30.5 $ (9.6) 418% $ 10.4 $ 26.8 $ 63.3
Capital Expenditures
$ 15.4 $ 11.9 29% $ 28.1 $ 32.7 $ 27.2
Cash, Cash Equivalents & Short-Term Investments
$ 316.8 $ 318.6 (1%) $ 206.7 $ 211.4 $ 249.5
Total Debt[3] $ 480.1 $ 464.2 3% $ 308.6 $ 310.2 $ 312.1
Average Realized Price Per Ounce - Silver
$ 19.60 $ 20.28 (3%) $ 20.50 $ 21.11 $ 22.73
Average Realized Price Per Ounce - Gold
$ 1,277 $ 1,279 -% $ 1,206 $ 1,300 $ 1,356
Silver Ounces Produced 4.5 4.1 10% 4.3 4.2 4.6
Gold Ounces Produced 61,025 58,836 4% 79,845 63,040 60,178
Silver Equivalent Ounces Produced[1]
8.1 7.6 7% 9.1 8.0 8.2
Silver Ounces Sold 4.6 3.9 19% 4.0 4.9 5.2
Gold Ounces Sold 57,751 62,578 (8%) 72,215 75,677 63,523
Silver Equivalent Ounces Sold[1]
8.1 7.6 7% 8.3 9.4 9.0
Costs Applicable to Sales per Silver Equivalent Oz[1]
$ 14.31 $ 13.22 8% $ 12.49 $ 13.82 $ 14.88
All-in Sustaining Costs per Silver Equivalent Oz[1]
$ 19.89 $ 19.09 4% $ 17.94 $ 19.97 $ 21.22
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Financial Results
Second quarter revenue increased by $5.0 million, or 3%, compared to the first quarter to $164.6 million due to an increase in silver ounces sold, partially offset by fewer gold ounces sold and lower average realized silver and gold prices. The Company sold 4.6 million ounces of silver and 57,751 ounces of gold, compared to sales of 3.9 million ounces of silver and 62,578 ounces of gold in the first quarter. The Company realized average silver and gold prices of $19.60 per ounce and $1,277 per ounce, respectively, compared with realized average prices of $20.28 per ounce and $1,279 per ounce, respectively. Silver contributed 55% of metal sales and gold contributed 45% during the second quarter.
General and administrative expenses were $9.4 million in the second quarter, down 32% from the first quarter. Cash flow from operating activities was $30.5 million in the second quarter, compared to $(9.6) million in the first quarter. Capital expenditures of $15.4 million were 29% higher than the first quarter but 43% below the second quarter of 2013 and continue to track significantly below 2013 levels. Capital expenditures for the first half of the year were mainly for underground development at Palmarejo and Kensington, plant improvements at San Bartolome, and resource definition at Rochester. In the second half of 2014, underground development at Guadalupe and Kensington and construction of the tailings dam at San Bartolome are expected to comprise the majority of Coeur's capital spending.
Coeur's adjusted net loss[1] was $31.6 million, or $0.31 per share, in the second quarter 2014, compared with an adjusted net loss[1] of $19.5 million, or $0.19 per share, in the first quarter. The second quarter adjusted net loss[1] excludes a $6.5 million negative fair value adjustment, $2.3 million in stock-based compensation, and a $1.7 million accretion of the Palmarejo royalty obligation. 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 $43.1 million or $0.42 per share, in the second quarter 2014.
Downside Price Protection
The Company extended its downside metal price protection program during the second quarter, using put spreads to protect 25% - 40% of expected future 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. Put spreads through the end of 2014 cover 1.25 million ounces of expected quarterly silver production and 25,000 ounces of expected quarterly gold production. Put spreads in the first quarter of 2015 cover 1.25 million ounces of expected silver production and 24,000 ounces of expected gold production. All put options purchased have a strike price of $18/ounce and $1,200/ounce for silver and gold, respectively. All put options sold have a strike price of $16/ounce and $1,050/ounce for silver and gold, respectively.
Operations
Highlights of the second quarter 2014 results for each of the Company's mining operations are provided below.
Palmarejo, Mexico
- On July 20, Coeur announced a re-scoped mine plan for Palmarejo, reflecting the mining of a portion of current mineral reserves and a portion of high-grade inferred material located at the Guadalupe deposit. The mine plan provided the expected long-term operational and financial profile of the mine, which included the anticipated economics of the Guadalupe development plan and new gold stream agreement with Franco-Nevada, which were both announced on June 23
- The re-scoped mine plan forecasts lower throughput for 2014 - 2021 but at higher grades, higher recovery rates, and lower unit costs than achieved in recent quarters as Coeur transitions the mine to a higher-margin, underground operation. Coeur plans to update the mine plan at year end to incorporate drilling results from the second half of 2013 and first half of 2014
- Cash flow from operating activities of $27.4 million in the second quarter was significantly higher than $10.2 million in the first quarter mainly due to higher ounces sold and lower working capital
- Capital expenditures of $5.6 million in the second quarter were up from $3.7 million in the first quarter but continue to track meaningfully below 2013 levels
- Coeur expects higher recovery rates and proportionally fewer open-pit tons mined in the second half of 2014. In line with the re-scoped mine plan, total production at Palmarejo in 2014 is expected to be 6.7 - 7.0 million ounces of silver and 84,000 - 90,000 ounces of gold
Rochester, Nevada
- Production of 1.1 million ounces of silver and 9,230 ounces of gold in the second quarter increased 48% and 13%, respectively, compared to the first quarter and reached the highest level since 2007
- Second quarter costs applicable to sales per silver equivalent ounce[1] were $15.79, higher than $12.67 in the first quarter due to higher crushing, royalty, and leaching costs. The Company expects costs applicable to sales per silver equivalent ounce[1] in the second half of 2014 to be in line with the first half
- Cash flow from operating activities of $4.3 million reached the highest level in more than a year and revenue increased 29% from the first quarter as the ramp up in production from the Stage III leach pad has accelerated
- Capital expenditures were $4.0 million during the second quarter, tracking significantly below year-ago levels
- Rochester received a favorable ruling regarding an appeal of Rochester's Plan of Operations Amendment ("POA") 8, an expansion project that had been approved by the Bureau of Land Management in 2010. This decision comes just days after the Notice of Intent for Rochester's POA 10 was published in the Federal Register. POA 10 includes plans for an expansion of the Stage IV heap leach pad and construction of the Stage V leach pad, which together are expected to add approximately 120 million tons of pad capacity. Permits for POA 10 are expected to be received during the second half of 2016
San Bartolome, Bolivia
- Silver production of approximately 1.5 million ounces was 9% higher than the first quarter due to increased throughput
- Cash flow from operating activities of $18.9 million reached its highest level in a year
- Stable production, grades, and costs are expected for the remainder of 2014
Kensington, Alaska
- Gold production increased 10% compared to the first quarter due to higher grades and milling rates. Gold grades are expected to be slightly above the second quarter for the remainder of the year due to the mining of high-grade stopes from the main section of the mine and from the high-grade Raven deposit
- Costs applicable to sales per gold ounce[1] were $1,008 during the second quarter, nearly unchanged from the first quarter, and are expected to decline in the second half of 2014 due to higher grades
- Cash flow from operating activities of $(0.6) million was below the $13.9 million generated in the first quarter due to timing of concentrate shipments
Endeavor, Australia
- Silver production decreased 24% from the first quarter due to lower tons milled, grades, and recovery rates
- Costs applicable to sales per silver equivalent ounce declined to $7.94
- Coeur owns all silver production and reserves at Endeavor up to a total of 20.0 million payable ounces. At June 30, 2014, the Company has received 5.1 million ounces
Exploration
Costs associated with exploration activities for the second quarter 2014 were $5.2 million (expensed) for discovery of new silver and gold mineralization and $3.9 million (capitalized) for definition and expansion of mineralized material, for a total of $9.1 million. Coeur's exploration program used ten drill rigs during the second quarter: four drills at Palmarejo, four at Kensington, and two at Rochester. This work resulted in completion of over 165,146 feet (50,335 meters) of combined core and reverse circulation drilling.
2014 Production Outlook
Coeur's 2014 total silver and gold production guidance is shown below. The Company has slightly narrowed the range, with higher than planned gold production from Rochester expected to offset lower gold production from Palmarejo, in line with Coeur's re-scoped mine plan and strategy to transition the mine to a higher-margin, lower tonnage operation.
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(silver and silver equivalent ounces in thousands)
Silver Gold Silver Equivalent[1]
Palmarejo, Mexico 6,700 - 7,000 84,000 - 90,000 11,740 - 12,400
San Bartolome, Bolivia
5,700 - 6,000 - 5,700 - 6,000
Rochester, Nevada 4,100 - 4,400 34,000 - 38,000 6,140 - 6,680
Endeavor, Australia 500 - 600 - 500 - 600
Kensington, Alaska - 107,000-112,000 6,420 - 6,720
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Total 17,000 - 18,000 225,000-240,000 30,500 - 32,400
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Conference Call Information
Coeur will conduct a conference call and webcast at www.coeur.com to discuss the Company's second quarter results on August 7, 2014 at 11:00 a.m. Eastern time.
Dial-In Numbers:
(877) 768-0708 (U.S. and Canada)
+1-660-422-4718 (International)
Conference ID: 716 78 100
A replay of the call will be available on Coeur's website through August 21, 2014.
Replay Numbers:
(855) 859-2056 (U.S. and Canada)
+1-404-537-3406 (International)
Conference ID: 716 78 100
About Coeur
Coeur Mining is the largest U.S.-based primary silver producer and a significant gold producer with four precious metals mines in the Americas employing nearly 2,000 people. Coeur produces from its wholly owned operations: the Palmarejo silver-gold mine in Mexico, the San Bartolome silver mine in Bolivia, the Rochester silver-gold mine in Nevada and the Kensington gold mine in Alaska. The Company also has a non-operating interest in the Endeavor mine in Australia in addition to net smelter royalties on the Cerro Bayo mine in Chile, the El Gallo complex in Mexico, and the Zaruma mine in Ecuador. In addition, the Company has two silver-gold feasibility stage projects - the La Preciosa project in Mexico and the Joaquin project in Argentina. The Company also conducts ongoing exploration activities in Alaska, Argentina, Bolivia, Mexico, and Nevada. The Company owns strategic investment positions in several silver and gold development companies with projects in North and South America.
Cautionary Statement
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, capital and exploration expenditures, amortization, exploration and development efforts, the longer-term operational and financial profile of Palmarejo, the new gold stream agreement with Franco-Nevada, recovery rates, grades, throughput, margins, permits, leach pad capacity, and initiatives to increase efficiency, minimize exposure to declining metal prices, and maximize free cash flow and returns. 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 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 and resources, changes that could result from Coeur's future acquisition of new mining properties or businesses, reliance on third parties to operate certain mines where Coeur owns silver production and reserves and the absence of control over mining operations in which Coeur or its subsidiaries hold royalty or streaming interests and risks related to these mining operations including results of mining and exploration activities, environmental, economic and political risks of the jurisdiction in which the mining operations are located, the loss of access to any third-party smelter to which Coeur markets silver and gold, the effects of environmental and other governmental regulations, the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries, Coeur's ability to raise additional financing necessary to conduct its business, make payments or refinance its debt, as well as other uncertainties and risk factors set out in filings made from time to time with the United States Securities and Exchange Commission, and the Canadian securities regulators, including, without limitation, Coeur's most recent reports on Form 10-K and Form 10-Q. Actual results, developments and timetables could vary significantly from the estimates presented. Readers are cautioned not to put undue reliance on forward-looking statements. Coeur disclaims any intent or obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, Coeur undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of Coeur, its financial or operating results or its securities.
W. David Tyler, Coeur's Vice President, Technical Services and a qualified person under Canadian National Instrument 43-101, supervised the preparation of the scientific and technical information concerning Coeur's mineral projects in this news release. Mineral resources are in addition to mineral reserves and do not have demonstrated economic viability. Inferred mineral resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be considered for estimation of mineral reserves, and there is no certainty that the inferred mineral resources will be realized. Insofar as the re-scoped Palmarejo mine plan referenced herein is a preliminary economic assessment that is based, in part, on inferred mineral resources, the re-scoped mine plan does not have as high a level of certainty as would a plan that was based solely on proven and probable reserves. For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources, as well as data verification procedures and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors, please see the Technical Reports for each of Coeur's properties as filed on SEDAR at www.sedar.com and the new Technical Report for the La Preciosa feasibility study to be filed on www.sedar.com no later than September 14, 2014.
Cautionary Note to U.S. Investors
The United States Securities and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We may use certain terms in public disclosures, such as "measured," "indicated," "inferred" and "resources," that are recognized by Canadian regulations, but that SEC guidelines generally prohibit U.S. registered companies from including in their filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K which may be secured from us, or from the SEC's website at http://www.sec.gov.
Non-U.S. GAAP Measures
We supplement the reporting of our financial information determined under United States generally accepted accounting principles (U.S. GAAP) with certain non-U.S. GAAP financial measures, including adjusted net income (loss), costs applicable to sales per silver equivalent ounce, and 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 adjusted net income (loss), costs applicable to sales per silver equivalent ounce, and all-in sustaining costs are important measures in assessing the Company's overall financial performance.
Notes
[1] Adjusted net income (loss), all-in sustaining costs, and costs applicable to sales per silver equivalent ounce are non-GAAP measures. Please see tables in the Appendix for the reconciliation to U.S. GAAP. Silver equivalence calculated using a 60:1 silver to gold ratio.
[2] Free cash flow is defined as cash flow from operating activities less capital expenditures and royalty payments. Mine-level free cash flow is the sum of free cash flow generated by Palmarejo, Rochester, San Bartolom, Kensington, and Endeavor.
[3] Includes capital leases. Net of debt discount.
For Additional Information:
Bridget Freas, Director, Investor Relations
+1-312-489-5819
Donna Mirandola, Director, Corporate Communications
+1-312-489-5842
www.coeur.com
Full press release: http://bit.ly/1zVOsyP
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The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Coeur Mining, Inc. via Globenewswire
Topic: Earnings
Source: Coeur Mining, Inc.
https://www.acnnewswire.com
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