CHICAGO, IL, Feb 19, 2015 - (ACN Newswire) - Coeur Mining, Inc. (the "Company" or "Coeur") (NYSE: CDE) reported 2014 revenue of $635.7 million, adjusted EBITDA[1] of $86.7 million, adjusted costs applicable to sales per silver equivalent ounce[1] of $14.18, and adjusted all-in sustaining costs of $19.27 per silver equivalent ounce[1]. The Company realized average prices of $18.87 per silver ounce and $1,252 per gold ounce during 2014, decreases of 21% and 6% respectively, compared to 2013.
Fourth quarter revenue was $140.6 million, adjusted EBITDA[1] was $7.8 million, adjusted costs applicable to sales per silver equivalent[1] ounce of $14.43, and adjusted all-in sustaining costs were $19.25 per silver equivalent ounce[1]. Coeur realized average prices of $16.40 per silver ounce and $1,186 per gold ounce during the fourth quarter, decreases of 16% and 6%, respectively, compared to the third quarter of 2014.
"In 2014 we set out to achieve improved operating consistency, to reduce our costs, improve the long-term certainty and visibility of our existing mines, and thereby enhance the quality of the Company's portfolio of assets," said Mitchell J. Krebs, Coeur's President and Chief Executive Officer. "Despite the challenges confronted in 2014, we largely achieved these objectives. I believe Coeur is well-positioned to successfully execute our strategy to reposition our existing assets to achieve higher grades, better efficiencies, and lower costs, while maintaining a liquid balance sheet with a long-term capital structure. Our acquisition of the Wharf gold mine from Goldcorp is expected to close six weeks ahead of our original estimate, accelerating its contribution to our 2015 production and cash flow.
"In terms of our major assets, Kensington demonstrated strong fourth quarter production of 33,533 ounces of gold, up 32% from the first quarter, and costs applicable to sales of $845 per gold ounce[1], a decline of 16% compared to the first quarter. Rochester established during 2014 that it is capable of being a significant producer of silver, gold, and cash flow for many years to come. At Palmarejo we developed and began mining from Guadalupe, we successfully renegotiated the Franco-Nevada agreement, and we announced in December the proposed acquisition of Paramount Gold and Silver that will allow us to combine Palmarejo with Paramount's high-grade San Miguel property to unlock substantial value over many years to come."
Fourth Quarter 2014 Highlights
- Silver production was 4.3 million ounces and gold production was 64,534 ounces, or 8.2 million silver equivalent[1] ounces as previously announced on January 15, 2015
- Adjusted all-in sustaining costs were $19.25 per silver equivalent ounce[1]
- Adjusted costs applicable to sales per silver equivalent ounce[1] were $14.43
- Costs applicable to sales per gold ounce[1] at Kensington were $845, the lowest level in a year
- Announced acquisition of Paramount, which is expected to close in the second quarter
- Non-cash impairment charge of $1.5 billion ($1.0 billion net of tax) was recorded to reflect the current pricing environment
Full-Year 2014 Highlights
- Silver equivalent[1] production totaled 32.2 million ounces, at the high-end of Company guidance. Silver production was 17.2 million ounces, in-line with Company guidance. Gold production was 249,384 ounces, above Company guidance
- Adjusted all-in sustaining costs were $19.27 per silver equivalent ounce[1]
- Adjusted costs applicable to sales per silver equivalent ounce[1] were $14.18
- Costs applicable to sales per gold ounce[1] at Kensington were $951
- Costs applicable to sales were $477.9 million, in-line with Company guidance and up slightly compared to 2013 due to a 20% increase in mining rates at Rochester
- Capital expenditures were $64.2 million, below Company guidance and down 36% compared to 2013
- Exploration expense was $21.7 million and capitalized exploration was $8.9 million for a total spend of $30.6 million, in-line with Company guidance and down 10% compared to 2013
- General and administrative expenses were $40.8 million, in-line with Company guidance and down 26% compared to 2013
- Amortization was $162.4 million, below Company guidance and down 29% compared to 2013
- Cash, cash equivalents, and short-term investments were $270.9 million at December 31, 2014, up 31% compared to year-end 2013
Full-Year 2015 Outlook
- Production is expected to be 14.8 - 16.0 million ounces of silver and 294,000 - 323,000 ounces of gold, or 32.4 - 35.4 million silver equivalent ounces[1]. This assumes the acquisition of the Wharf[4] gold mine from Goldcorp, Inc. closes on February 20, 2015
- Costs applicable to sales per silver equivalent ounce[1] are expected to be $16.25 - $17.75 at Palmarejo, $13.50 - $15.00 at San Bartolome, and $12.50 - $14.00 at Rochester
- Costs applicable to sales per gold ounce are expected to be $900 - $975 at Kensington and $750 - $825 per gold equivalent ounce[1] at Wharf[4]
- All-in sustaining costs are expected to be $17.50 - $18.50 per silver equivalent ounce[1]
- Capital expenditures are expected to be $85 - $95 million, including $57 - $64 million of sustaining capital
- General and administrative expenses are expected to be $36 - $39 million
- Expensed exploration is expected to be $10 - $12 million for the Company's existing assets and is expected to be revised upward once the proposed Paramount acquisition is closed
Financial Results
Fourth quarter revenue decreased $30.3 million, or 18%, compared with the third quarter to $140.6 million due to lower metal prices and a 24% decline in gold ounces sold, partially offset by a 7% increase in silver ounces sold. An ongoing labor dispute at ports on the western coast of the United States resulted in a delay which caused approximately 11,600 gold ounces to be excluded from fourth quarter sales. Silver contributed 55% of metal sales and gold contributed 45% during the fourth quarter. For the full year, silver contributed 52% of metal sales and gold contributed 48%.
General and administrative expenses of $9.0 million in the fourth quarter increased 6% compared to the third quarter but were lower than the first two quarters of 2014. Capital expenditures of $20.1 million in the fourth quarter increased 20% compared to the third quarter due to higher spending at Palmarejo related to Guadalupe development and a tailings dam expansion.
Net loss was $1,079 million in the fourth quarter, or $10.53 per share, which included an after-tax non-cash impairment charge of $1,022 million to reduce asset carrying values due to lower silver and gold prices. Adjusted net loss was $37.5 million, or $0.37 per share, in the fourth quarter, compared to $18.5 million, or $0.18 per share, in the third quarter mainly due to lower metal prices and fewer ounces sold.
Operations
Highlights of the fourth quarter and full-year 2014 results for each of the Company's operating segments are provided below.
Palmarejo, Mexico
- Adjusted costs applicable to sales per silver equivalent ounce[1] was $15.70 in the fourth quarter 2014, 9% higher than the third quarter due to a decline in grade and recovery rates
- Underground mining rates at Guadalupe continue to increase, averaging approximately 500 ore tons per day year-to-date in 2015 and are expected to reach 1,500 ore tons per day by the third quarter of 2015
- Increased oxide ore from the Tucson area of the open-pit caused a decline in fourth quarter recovery rates. Recent modifications to the processing plant are expected to result in improved recovery rates going forward. Specifically, the flowsheet was modified in late 2014 to enable the oxide ore to bypass the flotation circuit and flow directly to the agitated leach circuit
- Open-pit operations are expected to end mid-2015
- Underground mining in the original Palmarejo zones is expected to be completed by year-end
- Mining activity is expected to reach the Don Ese deposit by year-end assuming the previously announced acquisition of Paramount closes
- In 2015, Palmarejo is expected to produce 3.9 - 4.3 million ounces of silver and 55,000 - 65,000 ounces of gold at costs applicable to sales per silver equivalent ounce[1] of $16.25 - $17.75
Rochester, Nevada
- Fourth quarter silver equivalent production increased 14% from the third quarter and full-year silver equivalent production increased 48% compared to 2013
- Fourth quarter costs applicable to sales per silver equivalent ounce[1] were $14.27, down 4% from the third quarter due to lower crushing and leaching costs
- Free cash flow[3] of $7.5 million in the fourth quarter was the highest since 2012
- Approval for POA 10 (expansion of Stage 4 leach pad and construction of new Stage 5 leach pad) is expected by year-end with construction planned to begin in the second quarter of 2016
- Coeur plans to crush more than 16.5 million tons at Rochester in 2015, which is expected to reduce unit costs and enable double-digit percentage increases in both silver and gold production
- In 2015, Rochester is expected to produce 4.7 - 5.0 million ounces of silver and 55,000 - 65,000 ounces of gold at costs applicable to sales per silver equivalent ounce[1] of $12.50 - $14.00
Kensington, Alaska
- Tons milled reached a record 167,417 in the fourth quarter (1,820 tons per day). Strong throughput combined with robust grade and recovery performance caused costs applicable to sales per gold ounce1 to decline 10% to $845 in the fourth quarter, the lowest level in 2014
- Gold ounces sold of 22,399 in the fourth quarter were 33% lower than ounces produced due to an ongoing labor dispute at the ports on the West Coast of the United States. This resulted in the delay of approximately 11,600 ounces that were excluded from fourth quarter sales
- Production and cost performance in 2015 is expected to be similar to 2014 at Kensington
- Announced inferred resource at Jualin as of year-end 2014. The permitting process has begun for underground development at Jualin, with drilling in Vein 4 expected to continue in 2015 and 2016, and initial production expected in 2017
- In 2015, Kensington is expected to produce 110,000 - 115,000 ounces of gold at costs applicable to sales per gold ounce1 of $900 - $975
San Bartolome, Bolivia
- Production, grades, recovery rates, and costs remain relatively stable at San Bartolome
- Cash flow from operating activities of $2.3 million in the fourth quarter declined from $12.3 million in the third quarter mainly due to changes in working capital. The third quarter benefited from an $8.3 million decrease in working capital while the fourth quarter experienced a $5.2 million increase in working capital
- In 2015, San Bartolome is expected to produce 5.8 - 6.1 million ounces of silver at costs applicable to sales per silver equivalent ounce[1] of $13.50 - $15.00
Coeur Capital
- There are four cash-flowing royalties and streams, five non-cash-flowing royalties, and nine investments in junior mining companies held in Coeur Capital or its affiliates. One of the non-cash-flowing royalties is an 80% interest in a 2.5% royalty on Newmont Mining Corporation's Correnso mine in New Zealand, which recently began production and is expected to begin making royalty payments in 2015
- Coeur Capital's largest source of cash flow is the silver stream on the Endeavor mine in New South Wales, Australia in which the Company owns 100% of the silver up to a total of 20.0 million payable ounces. At December 31, 2014, the Company has received 5.5 million ounces, or 27.5% of the total
Exploration
Costs associated with exploration activities for the fourth quarter of 2014 were $5.7 million (expensed) for discovery of new silver and gold mineralization and $2.9 million (capitalized) for definition and expansion of mineralized material, for a total of $8.6 million. Coeur's exploration program used nine drill rigs during the fourth quarter: three drills at Palmarejo, four at Kensington, and two in Nevada at Rochester and the Wonder project. This work resulted in completion of over 78,777 feet (24,011 meters) of combined core and reverse circulation drilling.
For the full-year 2014, total exploration expenditures were $30.6 million, 10% lower than 2013. Exploration expenses at the Company's current assets are expected to total $10 - $12 million in 2015, with additional capital allocated to resource conversion. Coeur will continue to use a success-based approach to evaluate exploration needs on an ongoing basis. The Company expects to update 2015 exploration guidance for the San Miguel project upon closing of the Paramount acquisition.
Wharf Transaction Update
The previously announced acquisition of the Wharf gold mine from Goldcorp, Inc. is expected to close on February 20, 2015, subject to satisfaction of remaining closing conditions.
2015 Outlook
Coeur's 2015 total silver and gold production guidance is shown below and includes pro-rata production from the acquisition of the Wharf[4] assuming a February 20, 2015 closing date.
2015 Production Outlook
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Palmarejo 3,900 - 4,300 55,000 - 65,000 7,200 - 8,200
San Bartolome 5,800 - 6,100 - 5,800 - 6,100
Rochester 4,700 - 5,000 55,000 - 65,000 8,000 - 8,900
Endeavor 400 - 600 - 400 - 600
Kensington - 110,000 - 115,000 6,600 - 6,900
Wharf - 74,000 - 78,000 4,440 - 4,680
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Total 14,800 - 16,000 294,000 - 323,000 32,440 - 35,380
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As previously indicated, the cost projections below assume the acquisition of the Wharf[4] gold mine from Goldcorp, Inc. closes on February 20, 2015 and do not reflect closing of the Paramount acquisition.
2015 Cost Outlook
(dollars in millions, except per ounce amounts)
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2015 Guidance 2014 Result
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Costs Applicable to Sales per Silver Equivalent Ounce[1] - Palmarejo
$16.25 - $17.75 $15.40
Costs Applicable to Sales per Silver Equivalent Ounce[1] - San Bartolome
$13.50 - $15.00 $14.29
Costs Applicable to Sales per Silver Equivalent Ounce[1] - Rochester
$12.50 - $14.00 $14.49
Costs Applicable to Sales per Gold Ounce[1] - Kensington
$900 - 975 $951
Costs Applicable to Sales per Gold Equivalent Ounce[1] - Wharf
$750 - $825 N/A
Capital Expenditures $85 - $95 $64
General and Administrative Expenses $36 - $39 $41
Exploration Expense $10 - $12 $22
All-in Sustaining Costs per Silver Equivalent Ounce[1]
$17.50 - $18.50 $19.72
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Downside Price Protection
The Company's downside metal price protection program uses put spreads to protect a portion 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 settled during the fourth quarter 2014 generated cash flow of $2.1 million, with $1.4 million received during the fourth quarter and the remaining $0.7 million received in January 2015. Intra-quarter calls sold garnered an additional $0.2 million in cash flow during the fourth quarter.
Put spreads for the first quarter of 2015 cover 1,250,000 ounces of expected silver production ($18 per ounce and $16 per ounce strike prices) and 24,000 ounces of expected gold production ($1,200 per ounce and $1,050 per ounce strike prices). Put spreads for the second quarter of 2015 cover 900,000 ounces of expected silver production with strike prices of $17 per ounce on options purchased and $15 per ounce on options sold. Premiums paid for put spreads in the first and second quarter of 2015 were $1.1 million and $1.4 million, respectively.
Conference Call Information
Coeur will conduct a conference call and webcast at www.coeur.com to discuss the Company's fourth quarter and full-year 2014 results on February 19, 2015 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 78 103
A replay of the call will be available on Coeur's website through March 5 2015.
- Replay Numbers: (855) 859-2056 (U.S. and Canada), +1-404-537-3406 (International)
- Conference ID: 716 78 103
About Coeur
Coeur Mining is the largest U.S.-based silver producer and a significant gold producer with four precious metals mines in the Americas employing approximately 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 royalties on the Cerro Bayo mine in Chile, the El Gallo complex in Mexico, the Zaruma mine in Ecuador, and a royalty on the Correnso mine in New Zealand. 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, crushing rates, drilling activity, recovery rates, capital expenditures, the Wharf acquisition, the Paramount acquisition, Guadalupe underground mining rates, POA 10 approval at Rochester, open-pit and underground mining operations at Palmarejo, anticipated royalty payments, development of the Jualin deposit at the Kensington mine, and initiatives to achieve higher-grade production, efficiencies, lower costs, maintain a liquid balance sheet, and a long-term capital structure, and minimize exposure to declining metal prices. 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 the Wharf and Paramount transactions will not be consummated at all or within the timeframes currently anticipated as stated in this release, the risk that anticipated production and cost 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 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(which, for greater certainty, does not include any of Paramount's properties or Wharf). 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. 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 adjusted EBITDA, adjusted net income (loss), costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce), adjusted costs applicable to sales per silver equivalent 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 adjusted EBITDA, adjusted net income (loss), costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce), adjusted costs applicable to sales per silver equivalent ounce, all-in sustaining costs, and adjusted all-in sustaining costs are important measures in assessing the Company's overall financial performance.
Notes
[1] Adjusted EBITDA, adjusted net income (loss), all-in sustaining costs, adjusted all-in sustaining costs, costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce), and adjusted 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. For purposes of silver and gold equivalence, 60:1 silver to gold ratio.
[2] Includes capital leases. Net of debt discount.
[3] Free cash flow is defined as cash flow from operating activities less capital expenditures and royalty payments.
[4] Wharf is expected to produce 85,000 - 90,000 ounces of gold at all-in sustaining costs of $800 - $875 per gold ounce in 2015 based on guidance provided by Goldcorp on January 12, 2015.
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://investors.coeur.com/file.aspx?IID=4349317&FID=27793909
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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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