UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
___________________________________________
FORM 10-Q
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þ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended September 30, 2017March 31, 2018
OR
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¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission file number 001-08641
____________________________________________
COEUR MINING, INC.
(Exact name of registrant as specified in its charter)
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Delaware | | 82-0109423 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
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104 S. Michigan Ave., Suite 900 Chicago, Illinois | | 60603 |
(Address of principal executive offices) | | (Zip Code) |
(312) 489-5800
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | | þ | Accelerated filer | | ¨ |
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Non-accelerated filer | | ¨ | Smaller reporting company | | ¨ |
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| | | Emerging growth company | | ¨ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ
The Company has 300,000,000 shares of common stock, par value of $0.01, authorized of which 185,640,359186,116,975 shares were issued and outstanding as of OctoberApril 23, 2017.2018.
COEUR MINING, INC.
INDEX
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Part I. | | |
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| Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) | |
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| Condensed Consolidated Statements of Cash Flows (Unaudited) | |
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| Condensed Consolidated Balance Sheets | |
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| Condensed Consolidated Statement of Changes in Stockholders’ Equity | |
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| Notes to Condensed Consolidated Financial Statements (Unaudited) | |
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| Consolidated Financial Results | |
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| Results of Operations | |
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| Liquidity and Capital Resources | |
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| Non-GAAP Financial Performance Measures | |
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Part II. | | |
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| Item 5. Other Information | |
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Signatures | |
PART I
Item 1.Financial Statements
COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
| | | | Three months ended September 30, | | Nine months ended September 30, | | Three months ended March 31, |
| | 2017 | | 2016 | | 2017 | | 2016 | | 2018 | | 2017 |
| Notes | In thousands, except share data | Notes | In thousands, except share data |
Revenue | 3 | $ | 175,963 |
| | $ | 176,247 |
| | $ | 555,455 |
| | $ | 506,641 |
| 3 | $ | 163,267 |
| | $ | 185,554 |
|
COSTS AND EXPENSES | | | | | | | | | | | | |
Costs applicable to sales(1) | 3 | 118,924 |
| | 105,408 |
| | 377,257 |
| | 307,428 |
| 3 | 99,340 |
| | 114,490 |
|
Amortization | | 33,830 |
| | 27,763 |
| | 106,880 |
| | 93,232 |
| | 30,777 |
| | 38,693 |
|
General and administrative | | 7,412 |
| | 7,113 |
| | 24,587 |
| | 22,789 |
| | 8,804 |
| | 10,125 |
|
Exploration | | 9,814 |
| | 3,706 |
| | 22,879 |
| | 7,669 |
| | 6,683 |
| | 5,252 |
|
Write-downs | | — |
| | — |
| | — |
| | 4,446 |
| |
Pre-development, reclamation, and other | | 7,961 |
| | 4,491 |
| | 16,908 |
| | 13,059 |
| | 4,225 |
| | 3,837 |
|
Total costs and expenses | | 177,941 |
| | 148,481 |
|
| 548,511 |
| | 448,623 |
| | 149,829 |
| | 172,397 |
|
OTHER INCOME (EXPENSE), NET | | | | | | | | | | | | |
Loss on debt extinguishment | 17 | — |
| | (10,040 | ) | | (9,342 | ) | | (10,040 | ) | |
Fair value adjustments, net | 10 | — |
| | (961 | ) | | (864 | ) | | (13,235 | ) | 10 | 4,987 |
| | (1,200 | ) |
Interest expense, net of capitalized interest | 17 | (3,606 | ) | | (8,068 | ) | | (10,941 | ) | | (30,063 | ) | 18 | (5,965 | ) | | (3,579 | ) |
Other, net | 7 | 3,164 |
| | 6,405 |
| | 28,439 |
| | 5,862 |
| 7 | 180 |
| | 20,799 |
|
Total other income (expense), net | | (442 | ) | | (12,664 | ) |
| 7,292 |
| | (47,476 | ) | | (798 | ) | | 16,020 |
|
Income (loss) before income and mining taxes | | (2,420 | ) | | 15,102 |
|
| 14,236 |
| | 10,542 |
| | 12,640 |
| | 29,177 |
|
Income and mining tax (expense) benefit | 8 | (14,232 | ) | | 54,455 |
| | (23,180 | ) | | 53,118 |
| 8 | (11,949 | ) | | (10,878 | ) |
Income (loss) from continuing operations | | | $ | 691 |
| | $ | 18,299 |
|
Income (loss) from discontinued operations | | 21 | 550 |
| | 364 |
|
NET INCOME (LOSS) | | $ | (16,652 | ) | | $ | 69,557 |
|
| $ | (8,944 | ) | | $ | 63,660 |
| | $ | 1,241 |
| | $ | 18,663 |
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax: | | | | | | | | | | | | |
Unrealized gain (loss) on equity securities, net of tax of $997 and ($1,177) for the three and nine months September 30, 2016, respectively | | 1,066 |
| | 1,387 |
| | (1,134 | ) | | 4,533 |
| |
Unrealized gain (loss) on debt and equity securities | | | (278 | ) | | (2,182 | ) |
Reclassification adjustments for impairment of equity securities | | — |
| | — |
| | 426 |
| | 20 |
| | — |
| | 121 |
|
Reclassification adjustments for realized (gain) loss on sale of equity securities | | 32 |
| | (2,965 | ) | | 1,300 |
| | (2,691 | ) | | — |
| | 1,471 |
|
Other comprehensive income (loss) | | 1,098 |
| | (1,578 | ) |
| 592 |
| | 1,862 |
| | (278 | ) | | (590 | ) |
COMPREHENSIVE INCOME (LOSS) | | $ | (15,554 | ) | | $ | 67,979 |
|
| $ | (8,352 | ) | | $ | 65,522 |
| | $ | 963 |
| | $ | 18,073 |
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| | | | | | | | | | | | |
NET INCOME (LOSS) PER SHARE | 9 | | | | | | | | 9 | | | |
Basic | | $ | (0.09 | ) | | $ | 0.43 |
| | $ | (0.05 | ) | | $ | 0.41 |
| |
| | | | | | | | | |
Diluted | | $ | (0.09 | ) | | $ | 0.42 |
| | $ | (0.05 | ) | | $ | 0.40 |
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Basic income (loss) per share: | | | | | |
Net income (loss) from continuing operations | | | $ | 0.00 |
| | $ | 0.10 |
|
Net income (loss) from discontinued operations | | | 0.00 |
| | 0.00 |
|
Basic(2) | | | $ | 0.01 |
| | $ | 0.10 |
|
Diluted income (loss) per share: | | | | | |
Net income (loss) from continuing operations | | | $ | 0.00 |
| | $ | 0.10 |
|
Net income (loss) from discontinued operations | | | 0.00 |
| | 0.00 |
|
Diluted(2) | | | $ | 0.01 |
| | $ | 0.10 |
|
(1) Excludes amortization.
(2) Due to rounding, the sum of net income per share from continuing operations and discontinued operations may not equal net income per share.
The accompanying notes are an integral part of these condensed consolidated financial statements.
COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| | | | Three months ended September 30, | | Nine months ended September 30, | | Three months ended March 31, |
| | 2017 | | 2016 | | 2017 | | 2016 | | 2018 | | 2017 |
| Notes | In thousands | Notes | In thousands |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | |
Net income (loss) | | $ | (16,652 | ) | | $ | 69,557 |
| | (8,944 | ) | | 63,660 |
| | $ | 1,241 |
| | $ | 18,663 |
|
(Income) loss from discontinued operations | | | (550 | ) | | (364 | ) |
Adjustments: | | | | | | | | | | | | |
Amortization | | 33,830 |
| | 27,763 |
| | 106,880 |
| | 93,232 |
| | 30,777 |
| | 38,693 |
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Accretion | | 2,691 |
| | 2,184 |
| | 7,798 |
| | 8,201 |
| | 3,318 |
| | 2,240 |
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Deferred taxes | | 1,940 |
| | (49,463 | ) | | (1,529 | ) | | (66,738 | ) | | 454 |
| | 2,584 |
|
Loss on debt extinguishment | | — |
| | 10,040 |
| | 9,342 |
| | 10,040 |
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Fair value adjustments, net |
| — |
| | 961 |
| | 864 |
| | 13,235 |
| 10 | (4,987 | ) | | 1,200 |
|
Stock-based compensation |
| 2,585 |
| | 2,312 |
| | 8,127 |
| | 7,534 |
| 5 | 2,786 |
| | 3,307 |
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Gain on sale of the Joaquin project | | — |
| | — |
| | (21,138 | ) | | — |
| | — |
| | (21,138 | ) |
Write-downs | | — |
| | — |
| | — |
| | 4,446 |
| |
Other | | (3,157 | ) | | (5,236 | ) | | (8,979 | ) | | (4,743 | ) | | 401 |
| | (1,895 | ) |
Changes in operating assets and liabilities: | | | | | | | | | | | | |
Receivables | | 6,529 |
| | 19,672 |
| | 17,719 |
| | 10,751 |
| | (1,691 | ) | | 5,680 |
|
Prepaid expenses and other current assets | | (3,195 | ) | | (2,816 | ) | | (3,882 | ) | | (2,435 | ) | | (5,635 | ) | | (4,906 | ) |
Inventory and ore on leach pads | | (2,874 | ) | | (8,900 | ) | | 10,421 |
| | (24,408 | ) | | (8,708 | ) | | 15,171 |
|
Accounts payable and accrued liabilities | | 7,735 |
| | (18,262 | ) | | (2,697 | ) | | (12,407 | ) | | (1,865 | ) | | (15,299 | ) |
CASH PROVIDED BY OPERATING ACTIVITIES OF CONTINUING OPERATIONS | | | 15,541 |
| | 43,936 |
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CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES OF DISCONTINUED OPERATIONS | | | (2,690 | ) | | 11,335 |
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CASH PROVIDED BY OPERATING ACTIVITIES | | 29,432 |
|
| 47,812 |
|
| 113,982 |
| | 100,368 |
| | 12,851 |
| | 55,271 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | |
Capital expenditures | | (29,461 | ) | | (25,627 | ) | | (90,922 | ) | | (71,087 | ) | | (42,345 | ) | | (23,591 | ) |
Acquisitions, net | | — |
| | (1,427 | ) | | — |
| | (1,427 | ) | |
Proceeds from the sale of assets | | 1,083 |
| | 4,802 |
| | 16,538 |
| | 16,104 |
| | 60 |
| | 15,019 |
|
Purchase of investments | | (3,595 | ) | | (21 | ) | | (13,559 | ) | | (120 | ) | | (361 | ) | | (1,016 | ) |
Sale of investments | | 403 |
| | 5,432 |
| | 11,321 |
| | 7,077 |
| | 1,619 |
| | 10,020 |
|
Other | | (5,850 | ) | | (1,299 | ) | | (7,457 | ) | | (4,218 | ) | | (65 | ) | | (14 | ) |
CASH USED IN INVESTING ACTIVITIES | | (37,420 | ) |
| (18,140 | ) | | (84,079 | ) |
| (53,671 | ) | |
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES OF CONTINUING OPERATIONS | | | (41,092 | ) | | 418 |
|
CASH USED IN INVESTING ACTIVITIES OF DISCONTINUED OPERATIONS | | | (28,470 | ) | | (388 | ) |
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | | | (69,562 | ) | | 30 |
|
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | |
Issuance of common stock | | — |
| | 49,513 |
| | — |
| | 122,584 |
| |
Issuance of notes and bank borrowings, net of issuance costs | 17 | (2,257 | ) | | — |
| | 242,701 |
| | — |
| 18 | 15,000 |
| | — |
|
Payments on debt, capital leases, and associated costs | 17 | (3,344 | ) | | (107,868 | ) | | (195,501 | ) | | (120,551 | ) | 18 | (18,449 | ) | | (3,206 | ) |
Gold production royalty payments | | — |
| | (7,563 | ) | | — |
| | (27,155 | ) | |
Other | | (6 | ) | | 1,051 |
| | (3,726 | ) | | 323 |
| | (4,606 | ) | | (3,247 | ) |
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES OF CONTINUING OPERATIONS | | | (8,055 | ) | | (6,453 | ) |
CASH USED IN FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS | | | (22 | ) | | (20 | ) |
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | | (5,607 | ) |
| (64,867 | ) |
| 43,474 |
| | (24,799 | ) | | (8,077 | ) | | (6,473 | ) |
Effect of exchange rate changes on cash and cash equivalents | | (222 | ) | | 121 |
| | 662 |
| | (95 | ) | | 557 |
| | 555 |
|
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | (13,817 | ) | | (35,074 | ) |
| 74,039 |
| | 21,803 |
| |
Cash and cash equivalents at beginning of period | | 250,038 |
| | 257,591 |
| | 162,182 |
| | 200,714 |
| |
Cash and cash equivalents at end of period | | $ | 236,221 |
| | $ | 222,517 |
|
| $ | 236,221 |
| | $ | 222,517 |
| |
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | | | (64,231 | ) | | 49,383 |
|
Less net cash provided by (used in) discontinued operations(1) | | | (32,930 | ) | | 5,527 |
|
| | | (31,301 | ) | | 43,856 |
|
Cash, cash equivalents and restricted cash at beginning of period | | | 203,402 |
| | 126,601 |
|
Cash, cash equivalents and restricted cash at end of period | | | $ | 172,101 |
| | $ | 170,457 |
|
(1)Less net cash provided by (used in) discontinued operations includes the following cash transactions: net subsidiary payments to parent company of $1,748 and $5,400 during the three months ended March 31, 2018 and 2017, respectively.
The accompanying notes are an integral part of these condensed consolidated financial statements.
COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| | | | September 30, 2017 (Unaudited) | | December 31, 2016 | | March 31, 2018 (unaudited) | | December 31, 2017 |
ASSETS | Notes | In thousands, except share data | Notes | In thousands, except share data |
CURRENT ASSETS | | | | | | | | |
Cash and cash equivalents | | $ | 236,221 |
| | $ | 162,182 |
| | $ | 159,643 |
| | $ | 192,032 |
|
Receivables | 13 | 66,415 |
| | 60,431 |
| 14 | 35,864 |
| | 19,069 |
|
Inventory | 14 | 72,329 |
| | 106,026 |
| 15 | 61,723 |
| | 58,230 |
|
Ore on leach pads | 14 | 78,801 |
| | 64,167 |
| 15 | 75,584 |
| | 73,752 |
|
Prepaid expenses and other | | 20,360 |
| | 17,981 |
| | 18,203 |
| | 15,053 |
|
Assets held for sale | | 21 | — |
| | 91,421 |
|
| | 474,126 |
| | 410,787 |
| | 351,017 |
| | 449,557 |
|
NON-CURRENT ASSETS | | | | | | | | |
Property, plant and equipment, net | 15 | 235,058 |
| | 216,796 |
| 16 | 266,157 |
| | 254,737 |
|
Mining properties, net | 16 | 536,201 |
| | 558,455 |
| 17 | 843,821 |
| | 829,569 |
|
Ore on leach pads | 14 | 69,805 |
| | 67,231 |
| 15 | 67,430 |
| | 65,393 |
|
Restricted assets | 12 | 20,953 |
| | 17,597 |
| 13 | 22,116 |
| | 20,847 |
|
Equity and debt securities | 12 | 29,125 |
| | 4,488 |
| 13 | 37,317 |
| | 34,837 |
|
Receivables | 13 | 13,461 |
| | 30,951 |
| 14 | 55,428 |
| | 28,750 |
|
Other | | 23,363 |
| | 12,604 |
| | 18,649 |
| | 17,485 |
|
TOTAL ASSETS | | $ | 1,402,092 |
| | $ | 1,318,909 |
| | $ | 1,661,935 |
| | $ | 1,701,175 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
CURRENT LIABILITIES | | | | | | | | |
Accounts payable | | $ | 60,188 |
| | $ | 53,335 |
| | $ | 44,864 |
| | $ | 48,592 |
|
Accrued liabilities and other | | 50,593 |
| | 42,743 |
| 22 | 105,149 |
| | 94,930 |
|
Debt | 17 | 14,375 |
| | 12,039 |
| 18 | 17,040 |
| | 30,753 |
|
Royalty obligations | 10 | — |
| | 4,995 |
| |
Reclamation | 4 | 3,604 |
| | 3,522 |
| 4 | 3,777 |
| | 3,777 |
|
Liabilities held for sale | | 21 | — |
| | 50,677 |
|
| | 128,760 |
| | 116,634 |
| | 170,830 |
| | 228,729 |
|
NON-CURRENT LIABILITIES | | | | | | | | |
Debt | 17 | 274,523 |
| | 198,857 |
| 18 | 396,984 |
| | 380,569 |
|
Royalty obligations | 10 | — |
| | 4,292 |
| |
Reclamation | 4 | 104,505 |
| | 95,804 |
| 4 | 119,154 |
| | 117,055 |
|
Deferred tax liabilities | | 77,190 |
| | 74,798 |
| | 105,224 |
| | 105,148 |
|
Other long-term liabilities | | 52,577 |
| | 60,037 |
| | 55,432 |
| | 54,697 |
|
| | 508,795 |
| | 433,788 |
| | 676,794 |
| | 657,469 |
|
STOCKHOLDERS’ EQUITY | | | | | | | | |
Common stock, par value $0.01 per share; authorized 300,000,000 shares, issued and outstanding 181,428,717 at September 30, 2017 and 180,933,287 at December 31, 2016 | | 1,814 |
| | 1,809 |
| |
Common stock, par value $0.01 per share; authorized 300,000,000 shares, 186,176,237 issued and outstanding at March 31, 2018 and 185,637,724 at December 31, 2017 | | | 1,862 |
| | 1,856 |
|
Additional paid-in capital | | 3,318,987 |
| | 3,314,590 |
| | 3,355,710 |
| | 3,357,345 |
|
Accumulated other comprehensive income (loss) | | (1,896 | ) | | (2,488 | ) | | (363 | ) | | 2,519 |
|
Accumulated deficit | | (2,554,368 | ) | | (2,545,424 | ) | | (2,542,898 | ) | | (2,546,743 | ) |
| | 764,537 |
| | 768,487 |
| | 814,311 |
| | 814,977 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 1,402,092 |
| | $ | 1,318,909 |
| | $ | 1,661,935 |
| | $ | 1,701,175 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
| | In thousands | Common Stock Shares | | Common Stock Par Value | | Additional Paid-In Capital | | Accumulated Deficit | | Accumulated Other Comprehensive Income (Loss) | | Total | Common Stock Shares | | Common Stock Par Value | | Additional Paid-In Capital | | Accumulated Deficit | | Accumulated Other Comprehensive Income (Loss) | | Total |
Balances at December 31, 2016 | 180,933 |
| | $ | 1,809 |
| | $ | 3,314,590 |
| | $ | (2,545,424 | ) | | $ | (2,488 | ) | | $ | 768,487 |
| |
Balances at December 31, 2017 | | 185,638 |
| | $ | 1,856 |
| | $ | 3,357,345 |
| | $ | (2,546,743 | ) | | $ | 2,519 |
| | $ | 814,977 |
|
Net income (loss) | — |
| | — |
| | — |
| | (8,944 | ) | | — |
| | (8,944 | ) | — |
| | — |
| | — |
| | 1,241 |
| | — |
| | 1,241 |
|
Reclassification of unrealized gain (loss) on equity securities for ASU 2016-01 | | — |
| | — |
| | — |
| | 2,604 |
| | (2,604 | ) | | — |
|
Other comprehensive income (loss) | — |
| | — |
| | — |
| | — |
| | 592 |
| | 592 |
| — |
| | — |
| | — |
| | — |
| | (278 | ) | | (278 | ) |
Common stock issued under stock-based compensation plans, net | 496 |
| | 5 |
| | 4,397 |
| | — |
| | — |
| | 4,402 |
| 538 |
| | 6 |
| | (1,635 | ) | | — |
| | — |
| | (1,629 | ) |
Balances at September 30, 2017 (Unaudited) | 181,429 |
| | $ | 1,814 |
| | $ | 3,318,987 |
| | $ | (2,554,368 | ) | | $ | (1,896 | ) | | $ | 764,537 |
| |
Balances at March 31, 2018 (Unaudited) | | 186,176 |
| | $ | 1,862 |
| | $ | 3,355,710 |
| | $ | (2,542,898 | ) | | $ | (363 | ) | | $ | 814,311 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 1 - BASIS OF PRESENTATION
The interim condensed consolidated financial statements of Coeur Mining, Inc. and its subsidiaries (collectively, “Coeur” or the “Company”) are unaudited. In the opinion of management, all adjustments and disclosures necessary for the fair presentation of these interim statements have been included. The results reported in these interim statements may not be indicative of the results which will be reported for the year ending December 31, 2017.2018. The condensed consolidated December 31, 20162017 balance sheet data was derived from audited consolidated financial statements. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2017 (the “2017 10-K”).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
On January 1, 2018, the Company adopted the updated revenue guidance applicable under ASC 606 - Revenue from Contracts with Customers. The new guidance creates a five-step framework to determine revenue recognition:
| |
1. | Identify the contract with the customer |
| |
2. | Identify the performance obligations |
| |
3. | Determine the transaction price |
| |
4. | Allocate the transaction price to the performance obligations |
| |
5. | Recognize revenue when (or as) the entity satisfies a performance obligation |
The Company produces doré and concentrate that is shipped to third-party refiners and smelters, respectively, for processing. The Company enters into contracts to sell its metal to various third-party customers which may include the refiners and smelters that process the doré and concentrate. The Company’s performance obligation in these transactions is generally the transfer of metal to the customer.
In the case of doré shipments, the company generally sells refined metal at market prices agreed upon by both parties. The Company also has the right, but not the obligation, to sell a portion of the anticipated refined metal in advance of being fully refined. When the Company sells refined metal or advanced metal, the performance obligation is satisfied when the metal is delivered to the customer. Revenue and Costs Applicable to Sales are recorded on a gross basis under these contracts at the time the performance obligation is satisfied.
Under the Company’s concentrate sales contracts with third-party smelters, metal prices are set on a specified future quotational period, typically one to three months, after the shipment date based on market prices. When the Company sells gold concentrate to the third-party smelters, the performance obligation is satisfied when the concentrate is loaded onto the third-party shipping vessel. The contracts, in general, provide for provisional payment based upon provisional assays and historical metal prices. Final settlement is based on the applicable price for the specified future quotational period and generally occurs three to six months after shipment. The Company’s provisionally priced sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of concentrates measured at the forward price at the time of sale. The embedded derivative does not qualify for hedge accounting and is adjusted to fair value through revenue each period until the date of final metal settlement.
The Company also sells concentrate under off-take agreements to third-party customers that are responsible for arranging the smelting of the concentrate. Prices are can either be fixed or based on a quotational period. The quotational period varies by contract, but is generally a one-month period following the shipment of the concentrate. The performance obligation is satisfied when the concentrate is loaded onto the third-party shipping vessel. The off-take agreement allows for the Company to sell concentrate in advance of shipment and results in the customer taking ownership of the concentrate prior to shipment.
For doré and off-take sales, the Company may incur a finance charge related to advance sales that is not considered significant and, as such, is not considered a separate performance obligation. In addition, the Company has elected to treat freight costs as a fulfillment cost under ASC 606 and not as a separate performance obligation.
The Company’s streaming agreement with a subsidiary of Franco-Nevada Corporation (“Franco-Nevada”) commenced in 2016 with a $20.0 million deposit paid by Franco-Nevada in exchange for the right and obligation to purchase 50% of a portion of Palmarejo gold production at the lesser of $800 or market price per ounce. Because there is no minimum obligation associated with this deposit, it is not considered financing, and each shipment is considered to be a separate performance obligation. The
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
streaming agreement represents a contract liability under ASC 606, which requires the Company to ratably recognize a portion of the deposit as revenue for each gold ounce delivered to Franco-Nevada.
The following table presents a rollforward of the Franco-Nevada contract liability balance:
|
| | | | | | | |
| Three months ended March 31, |
In thousands | 2018 | | 2017 |
Opening Balance | $ | 14,883 |
| | $ | 19,281 |
|
Revenue Recognized | (543 | ) | | $ | (1,629 | ) |
Closing Balance | $ | 14,340 |
| | $ | 17,652 |
|
Recent Accounting Standards
In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805) - Clarifying the Definition of a Business,” which clarifies the definition of a business to assist entities in the evaluation of acquisitions and disposals of assets or businesses. These changes becomebecame effective for the Company’s fiscal year beginning January 1, 2018. The Company is currently evaluating this standard2018 and doesdid not expect this ASU to materially impact the Company’s consolidated net income, financial position or cash flows.
In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230) - Restricted Cash,” which will require entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. These changes becomebecame effective for the Company’s fiscal year beginning January 1, 2018. The Company is currently evaluating this standard2018 and does not expect this ASU to materially impactresulted in the Company’s consolidated statementinclusion of restricted cash flows.equivalents on the Consolidated Statements of Cash Flows of $12.5 million at March 31, 2018 and $9.8 million at March 31, 2017.
In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments,” which provides guidance on presentation and classification of certain cash receipts and payments in the statement of cash flows. These changes become effective for the Company’s fiscal year beginning January 1, 2018. The Company is currently evaluating this standard and does not expect this ASU to materially impact the Company’s consolidated net income, financial position or cash flows.
In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which amends several aspects of the accounting for share-based payment transaction, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. These changes became effective for the Company’s fiscal year beginning January 1, 2017,2018 and the Company’s adoption had nodid not materially impact on the Company’s consolidated net income, financial position results of operations, andor cash flows.
In February 2016, the FASB issued ASU 2016-02, “Leases,” which will require lessees to recognize assets and liabilities for the rights and obligations created by most leases on the balance sheet. These changes become effective for the Company’s fiscal year beginning January 1, 2019. Modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, is required with an option to use certain transition relief. The Company is currently evaluating the potential impact of implementing these changes on the Company’s consolidated financial position, results of operations, and cash flows.
In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” which requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. This new guidance also updates certain disclosure requirements for these investments. These changes became effective for the Company’s fiscal year beginning January 1, 2018, and resulted in a reclassification of $2.6 million of unrealized holding gains and losses and deferred income taxes related to investments in equity securities from Accumulated other comprehensive income (loss) to Accumulated deficit in the Consolidated Balance Sheets on that date. Unrealized holding gains and losses related to investments in equity securities are now recognized in Fair value adjustments, net in the Consolidated Statements of Comprehensive Income (Loss).
In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which provides a revised, simpler measurement for inventory to be measured at the lower of cost and net realizable value. These changes becomebecame effective for the Company’s fiscal year beginning January 1, 2018. The Company is currently evaluating this standard2018 and doesdid not expect this ASU to materially impact the Company’s consolidated net income, financial position or cash flows.
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, which has subsequently been amended several times.times, to update revenue guidance under the newly-created ASC 606. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. These changes becomebecame effective under the modified retrospective method of adoption for the Company’s fiscal year beginning January 1, 2018. The Company has substantially completed its analysis of the new standard2018 and reviewed potential impacts from timing of when control is transferred to customers, variable consideration on concentrate sales and classification of refining fees. The Company doesdid not expect this ASU to materially impact the Company’s consolidated net income, financial position or cash flows.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 3 – SEGMENT REPORTING
The Company’s operating segments include the Palmarejo complex, and the Rochester, Kensington, Wharf and San BartoloméSilvertip mines. AllExcept for the Silvertip mine, which was acquired in the fourth quarter of 2017, all operating segments are engaged in the discovery, mining, and production of gold and/or silver. Silvertip is engaged in the discovery, mining, and production of silver, zinc and lead. Other includes the La Preciosa project, other mineral interests, strategic equity investments, corporate office, elimination of intersegment transactions, and other items necessary to reconcile to consolidated amounts.
The Company eliminated Coeur Capital asdetermined that the disposition of Empresa Minera Manquiri S.A., a standalone reportable segment inBolivian Sociedad anonima (“Manquiri”), which operates the first quarter of 2017San Bartolomé mine, represents a strategic shift to a North America-focused mining portfolio and has classifieda significant effect on the operating performance, segment assets,entity's results and capital expendituresoperations; therefore, the results of the Endeavor silver stream and other remaining non-core assets in Other. All prior period amounts have been adjusted to conform to the current presentation.operations are presented as discontinued operations for all periods presented.
Financial information relating to the Company’s segments is as follows (in thousands):
| | Three months ended September 30, 2017 | Palmarejo | | Rochester | | Kensington | | Wharf | | San Bartolomé | | Other | | Total | |
Three months ended March 31, 2018 | | Palmarejo | | Rochester | | Silvertip | | Kensington | | Wharf | | Other | | Total |
Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | |
Metal sales | $ | 60,677 |
| | $ | 31,156 |
| | $ | 36,603 |
| | $ | 31,334 |
| | $ | 16,043 |
| | $ | 150 |
| | $ | 175,963 |
| $ | 70,037 |
| | $ | 33,497 |
| | $ | — |
| | $ | 36,300 |
| | $ | 23,433 |
| | $ | — |
| | $ | 163,267 |
|
Costs and Expenses | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Costs applicable to sales(1) | 33,255 |
| | 23,275 |
| | 27,658 |
| | 17,330 |
| | 17,365 |
| | 41 |
| | 118,924 |
| 31,096 |
| | 24,305 |
| | — |
| | 28,630 |
| | 15,309 |
| | — |
| | 99,340 |
|
Amortization | 16,414 |
| | 4,591 |
| | 7,864 |
| | 3,223 |
| | 1,430 |
| | 308 |
| | 33,830 |
| 16,325 |
| | 4,831 |
| | — |
| | 6,717 |
| | 2,657 |
| | 247 |
| | 30,777 |
|
Exploration | 4,517 |
| | 531 |
| | 2,966 |
| | 207 |
| | 23 |
| | 1,570 |
| | 9,814 |
| 3,970 |
| | 33 |
| | — |
| | 1,590 |
| | 10 |
| | 1,080 |
| | 6,683 |
|
Other operating expenses | 319 |
| | 846 |
| | 356 |
| | 648 |
| | 2,998 |
| | 10,206 |
| | 15,373 |
| 731 |
| | 884 |
| | 20 |
| | 321 |
| | 665 |
| | 10,408 |
| | 13,029 |
|
Other income (expense) | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fair value adjustments, net | | — |
| | — |
| | — |
| | — |
| | — |
| | 4,987 |
| | 4,987 |
|
Interest expense, net | (112 | ) | | (136 | ) | | (113 | ) | | (16 | ) | | (11 | ) | | (3,218 | ) | | (3,606 | ) | (119 | ) | | (98 | ) | | (410 | ) | | (243 | ) | | (12 | ) | | (5,083 | ) | | (5,965 | ) |
Other, net | (218 | ) | | (73 | ) | | (28 | ) | | 4 |
| | 754 |
| | 2,725 |
| | 3,164 |
| (2,144 | ) | | (40 | ) | | 362 |
| | (37 | ) | | (21 | ) | | 2,060 |
| | 180 |
|
Income and mining tax (expense) benefit | (7,898 | ) | | 41 |
| | — |
| | (963 | ) | | (518 | ) | | (4,894 | ) | | (14,232 | ) | (12,443 | ) | | (371 | ) | | 835 |
| | — |
| | (639 | ) | | 669 |
| | (11,949 | ) |
Net income (loss) | $ | (2,056 | ) |
| $ | 1,745 |
|
| $ | (2,382 | ) |
| $ | 8,951 |
|
| $ | (5,548 | ) |
| $ | (17,362 | ) |
| $ | (16,652 | ) | |
Income (loss) from continuing operations | | $ | 3,209 |
|
| $ | 2,935 |
| | $ | 767 |
|
| $ | (1,238 | ) |
| $ | 4,120 |
|
| $ | (9,102 | ) |
| $ | 691 |
|
Income (loss) from discontinued operations | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 550 |
| | $ | 550 |
|
Segment assets(2) | $ | 388,044 |
| | $ | 253,477 |
| | $ | 211,052 |
| | $ | 103,843 |
| | $ | 64,463 |
| | $ | 71,551 |
| | $ | 1,092,430 |
| $ | 377,146 |
| | $ | 245,881 |
| | $ | 361,212 |
| | $ | 215,244 |
| | $ | 104,805 |
| | $ | 119,922 |
| | $ | 1,424,210 |
|
Capital expenditures | $ | 5,540 |
| | $ | 9,737 |
| | $ | 10,144 |
| | $ | 3,135 |
| | $ | 479 |
| | $ | 426 |
| | $ | 29,461 |
| $ | 9,293 |
| | $ | 2,633 |
| | $ | 18,629 |
| | $ | 11,364 |
| | $ | 344 |
| | $ | 82 |
| | $ | 42,345 |
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
|
| | | | | | | | | | | | | | | | | | | | | | | |
Three months ended March 31, 2017 | Palmarejo | | Rochester | | Kensington | | Wharf | | Other | | Total |
Revenue | | | | | | | | | | | |
Metal sales | $ | 77,704 |
| | $ | 38,979 |
| | $ | 37,964 |
| | $ | 30,251 |
| | $ | 656 |
| | $ | 185,554 |
|
Costs and Expenses | | | | | | | | | | | |
Costs applicable to sales(1) | 43,001 |
| | 26,439 |
| | 28,443 |
| | 16,320 |
| | 287 |
| | 114,490 |
|
Amortization | 20,150 |
| | 5,816 |
| | 9,178 |
| | 3,111 |
| | 438 |
| | 38,693 |
|
Exploration | 1,631 |
| | 144 |
| | 839 |
| | — |
| | 2,638 |
| | 5,252 |
|
Other operating expenses | 301 |
| | 810 |
| | 345 |
| | 619 |
| | 11,887 |
| | 13,962 |
|
Other income (expense) | | | | | | | | |
|
| | |
Fair value adjustments, net | — |
| | (1,200 | ) | | — |
| | — |
| | — |
| | (1,200 | ) |
Interest expense, net | (125 | ) | | (117 | ) | | (40 | ) | | (19 | ) | | (3,278 | ) | | (3,579 | ) |
Other, net | 1,794 |
| | (32 | ) | | (808 | ) | | 89 |
| | 19,756 |
| | 20,799 |
|
Income and mining tax (expense) benefit | (12,245 | ) | | (498 | ) | | — |
| | (957 | ) | | 2,822 |
| | (10,878 | ) |
Income (loss) from continuing operations | $ | 2,045 |
|
| $ | 3,923 |
|
| $ | (1,689 | ) |
| $ | 9,314 |
|
| $ | 4,706 |
| | $ | 18,299 |
|
Income (loss) from discontinued operations | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 364 |
| | $ | 364 |
|
Segment assets(2) | $ | 401,623 |
| | $ | 227,526 |
| | $ | 204,987 |
| | $ | 104,673 |
| | $ | 84,402 |
| | $ | 1,023,211 |
|
Capital expenditures | $ | 6,230 |
| | $ | 10,568 |
| | $ | 5,521 |
| | $ | 887 |
| | $ | 385 |
| | $ | 23,591 |
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three months ended September 30, 2016 | Palmarejo | | Rochester | | Kensington | | Wharf | | San Bartolomé | | Other | | Total |
Revenue | | | | | | | | | | | | | |
Metal sales | $ | 30,663 |
| | $ | 37,946 |
| | $ | 40,164 |
| | $ | 39,316 |
| | $ | 27,485 |
| | $ | 812 |
| | $ | 176,386 |
|
Royalties | — |
| | — |
| | — |
| | — |
| | — |
| | (139 | ) | | (139 | ) |
| 30,663 |
|
| 37,946 |
|
| 40,164 |
|
| 39,316 |
|
| 27,485 |
|
| 673 |
|
| 176,247 |
|
Costs and Expenses | | | | | | | | | | | | | |
Costs applicable to sales(1) | 16,033 |
| | 21,783 |
| | 26,709 |
| | 19,697 |
| | 20,813 |
| | 373 |
| | 105,408 |
|
Amortization | 5,761 |
| | 5,244 |
| | 8,046 |
| | 6,461 |
| | 1,723 |
| | 528 |
| | 27,763 |
|
Exploration | 1,262 |
| | 129 |
| | 1,208 |
| | 2 |
| | — |
| | 1,105 |
| | 3,706 |
|
Other operating expenses | 305 |
| | 703 |
| | 263 |
| | 521 |
| | 1,165 |
| | 8,647 |
| | 11,604 |
|
Other income (expense) | | | | | | | | | | |
|
| |
|
|
Loss on debt extinguishment | — |
| | — |
| | — |
| | — |
| | — |
| | (10,040 | ) | | (10,040 | ) |
Fair value adjustments, net | (110 | ) | | (851 | ) | | — |
| | — |
| | — |
| | — |
| | (961 | ) |
Interest expense, net | (184 | ) | | (157 | ) | | (30 | ) | | (22 | ) | | (8 | ) | | (7,667 | ) | | (8,068 | ) |
Other, net | (2,223 | ) | | 17 |
| | (7 | ) | | 45 |
| | 549 |
| | 8,024 |
| | 6,405 |
|
Income and mining tax (expense) benefit | 35,671 |
| | 7,844 |
| | — |
| | 30,208 |
| | 5,905 |
| | (25,173 | ) | | 54,455 |
|
Net income (loss) | $ | 40,456 |
|
| $ | 16,940 |
|
| $ | 3,901 |
|
| $ | 42,866 |
|
| $ | 10,230 |
|
| $ | (44,836 | ) |
| $ | 69,557 |
|
Segment assets(2) | $ | 430,716 |
| | $ | 212,477 |
| | $ | 192,204 |
| | $ | 105,456 |
| | $ | 81,704 |
| | $ | 87,353 |
| | $ | 1,109,910 |
|
Capital expenditures | $ | 10,012 |
| | $ | 3,383 |
| | $ | 8,602 |
| | $ | 567 |
| | $ | 3,001 |
| | $ | 62 |
| | $ | 25,627 |
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nine months ended September 30, 2017 | Palmarejo | | Rochester | | Kensington | | Wharf | | San Bartolomé | | Other | | Total |
Revenue | | | | | | | | | | | | | |
Metal sales | $ | 191,616 |
| | $ | 102,926 |
| | $ | 110,134 |
| | $ | 88,598 |
| | $ | 60,441 |
| | $ | 1,740 |
| | $ | 555,455 |
|
Costs and Expenses | | | | | | | | | | | | |
|
|
Costs applicable to sales(1) | 110,150 |
| | 73,875 |
| | 84,089 |
| | 49,418 |
| | 58,979 |
| | 746 |
| | 377,257 |
|
Amortization | 50,995 |
| | 15,345 |
| | 25,389 |
| | 8,883 |
| | 5,053 |
| | 1,215 |
| | 106,880 |
|
Exploration | 9,272 |
| | 990 |
| | 5,785 |
| | 210 |
| | 23 |
| | 6,599 |
| | 22,879 |
|
Other operating expenses | 930 |
| | 2,487 |
| | 1,051 |
| | 1,899 |
| | 4,048 |
| | 31,080 |
| | 41,495 |
|
Other income (expense) | | | | | | | | | | | | | |
Loss on debt extinguishment | — |
| | — |
| | — |
| | — |
| | — |
| | (9,342 | ) | | (9,342 | ) |
Fair value adjustments, net | — |
| | (864 | ) | | — |
| | — |
| | — |
| | — |
| | (864 | ) |
Interest expense, net | (339 | ) | | (386 | ) | | (266 | ) | | (52 | ) | | (23 | ) | | (9,875 | ) | | (10,941 | ) |
Other, net | (345 | ) | | 2,239 |
| | (893 | ) | | 429 |
| | 1,125 |
| | 25,884 |
| | 28,439 |
|
Income and mining tax (expense) benefit | (22,313 | ) | | (413 | ) | | — |
| | (2,980 | ) | | (304 | ) | | 2,830 |
| | (23,180 | ) |
Net income (loss) | $ | (2,728 | ) |
| $ | 10,805 |
|
| $ | (7,339 | ) |
| $ | 25,585 |
|
| $ | (6,864 | ) |
| $ | (28,403 | ) |
| $ | (8,944 | ) |
Segment assets(2) | $ | 388,044 |
| | $ | 253,477 |
| | $ | 211,052 |
| | $ | 103,843 |
| | $ | 64,463 |
| | $ | 71,551 |
| | $ | 1,092,430 |
|
Capital expenditures | $ | 22,972 |
| | $ | 34,121 |
| | $ | 24,314 |
| | $ | 5,493 |
| | $ | 1,242 |
| | $ | 2,780 |
| | $ | 90,922 |
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests |
| | | | | | | |
Assets | March 31, 2018 |
| December 31, 2017 |
Total assets for reportable segments | $ | 1,424,210 |
| | $ | 1,344,553 |
|
Cash and cash equivalents | 159,643 |
| | 192,032 |
|
Other assets | 78,082 |
|
| 164,590 |
|
Total consolidated assets | $ | 1,661,935 |
|
| $ | 1,701,175 |
|
Geographic Information |
| | | | | | | |
Long-Lived Assets | March 31, 2018 |
| December 31, 2017 |
Mexico | $ | 364,047 |
| | $ | 370,188 |
|
United States | 384,578 |
| | 377,768 |
|
Canada | 350,556 |
| | 331,440 |
|
Other | 10,797 |
| | 4,910 |
|
Total | $ | 1,109,978 |
|
| $ | 1,084,306 |
|
|
| | | | | | | |
Revenue | Three months ended March 31, |
2018 | | 2017 |
United States | $ | 93,230 |
| | $ | 107,194 |
|
Mexico | 70,037 |
| | 77,704 |
|
Australia | — |
| | 656 |
|
Total | $ | 163,267 |
|
| $ | 185,554 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nine months ended September 30, 2016 | Palmarejo | | Rochester | | Kensington | | Wharf | | San Bartolomé | | Other | | Total |
Revenue | | | | | | | | | | | | | |
Metal sales | $ | 108,748 |
| | $ | 103,689 |
| | $ | 112,376 |
| | $ | 101,250 |
| | $ | 73,948 |
| | $ | 3,208 |
| | $ | 503,219 |
|
Royalties |
|
| |
|
| |
|
| |
|
| |
|
| | 3,422 |
| | 3,422 |
|
| 108,748 |
|
| 103,689 |
|
| 112,376 |
|
| 101,250 |
|
| 73,948 |
|
| 6,630 |
| | 506,641 |
|
Costs and Expenses | | | | | | | | | | | | | |
Costs applicable to sales(1) | 59,936 |
| | 65,989 |
| | 73,738 |
| | 49,500 |
| | 56,955 |
| | 1,310 |
| | 307,428 |
|
Amortization | 27,815 |
| | 15,994 |
| | 26,203 |
| | 15,640 |
| | 5,330 |
| | 2,250 |
| | 93,232 |
|
Exploration | 2,625 |
| | 426 |
| | 2,138 |
| | 2 |
| | — |
| | 2,478 |
| | 7,669 |
|
Write-downs | — |
| | — |
| | — |
| | — |
| | — |
| | 4,446 |
| | 4,446 |
|
Other operating expenses | 898 |
| | 2,084 |
| | 772 |
| | 1,702 |
| | 2,532 |
| | 27,860 |
| | 35,848 |
|
Other income (expense) | | | | | | | | | | |
|
| | |
Loss on debt extinguishment | — |
| | — |
| | — |
| | — |
| | — |
| | (10,040 | ) | | (10,040 | ) |
Fair value adjustments, net | (5,814 | ) | | (5,787 | ) | | — |
| | — |
| | — |
| | (1,634 | ) | | (13,235 | ) |
Interest expense, net | (1,343 | ) | | (509 | ) | | (107 | ) | | (49 | ) | | (18 | ) | | (28,037 | ) | | (30,063 | ) |
Other, net | (7,818 | ) | | (3,840 | ) | | (26 | ) | | 259 |
| | 1,275 |
| | 16,012 |
| | 5,862 |
|
Income and mining tax (expense) benefit | 38,922 |
| | 7,429 |
| | — |
| | 29,972 |
| | 5,182 |
| | (28,387 | ) | | 53,118 |
|
Net income (loss) | $ | 41,421 |
|
| $ | 16,489 |
|
| $ | 9,392 |
|
| $ | 64,588 |
|
| $ | 15,570 |
|
| $ | (83,800 | ) | | $ | 63,660 |
|
Segment assets(2) | $ | 430,716 |
| | $ | 212,477 |
| | $ | 192,204 |
| | $ | 105,456 |
| | $ | 81,704 |
| | $ | 87,353 |
| | $ | 1,109,910 |
|
Capital expenditures | $ | 27,690 |
| | $ | 10,557 |
| | $ | 24,228 |
| | $ | 3,488 |
| | $ | 4,839 |
| | $ | 285 |
| | $ | 71,087 |
|
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
|
| | | | | | | |
Assets | September 30, 2017 |
| December 31, 2016 |
Total assets for reportable segments | $ | 1,092,430 |
| | $ | 1,122,038 |
|
Cash and cash equivalents | 236,221 |
| | 162,182 |
|
Other assets | 73,441 |
|
| 34,689 |
|
Total consolidated assets | $ | 1,402,092 |
|
| $ | 1,318,909 |
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Geographic Information |
| | | | | | | |
Long-Lived Assets | September 30, 2017 |
| December 31, 2016 |
Mexico | $ | 366,960 |
| | $ | 397,697 |
|
United States | 375,728 |
| | 338,897 |
|
Bolivia | 27,662 |
| | 31,539 |
|
Australia | — |
| | 2,983 |
|
Argentina | 228 |
| | 10,228 |
|
Other | 681 |
| | 5,564 |
|
Total | $ | 771,259 |
|
| $ | 786,908 |
|
|
| | | | | | | | | | | | | | | |
Revenue | Three months ended September 30, | | Nine months ended September 30, |
2017 | | 2016 | | 2017 | | 2016 |
United States | $ | 99,093 |
| | $ | 117,425 |
| | $ | 301,658 |
| | $ | 317,315 |
|
Mexico | 60,677 |
| | 30,663 |
| | 191,616 |
| | 109,674 |
|
Bolivia | 16,043 |
| | 27,485 |
| | 60,441 |
| | 73,948 |
|
Australia | 150 |
| | 812 |
| | 1,740 |
| | 3,207 |
|
Other | — |
|
| (138 | ) | | — |
|
| 2,497 |
|
Total | $ | 175,963 |
| | $ | 176,247 |
| | $ | 555,455 |
|
| $ | 506,641 |
|
NOTE 4 – RECLAMATION
Reclamation and mine closure costs are based principally on legal and regulatory requirements. Management estimates costs associated with reclamation of mining properties. On an ongoing basis, management evaluates its estimates and assumptions, and future expenditures could differ from current estimates.
Changes to the Company’s asset retirement obligations for operating sites are as follows:
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended March 31, |
In thousands | 2017 | | 2016 | | 2017 | | 2016 | 2018 | | 2017 |
Asset retirement obligation - Beginning | $ | 101,127 |
| | $ | 85,545 |
| | $ | 97,380 |
| | $ | 82,072 |
| $ | 118,799 |
| | $ | 86,754 |
|
Accretion | 2,455 |
| | 2,059 |
| | 7,190 |
| | 6,027 |
| 2,545 |
| | 2,064 |
|
Additions and changes in estimates | 3,116 |
| | (239 | ) | | 3,116 |
| | (118 | ) | |
Settlements | (656 | ) | | (183 | ) | | (1,644 | ) | | (799 | ) | (496 | ) | | (421 | ) |
Asset retirement obligation - Ending | $ | 106,042 |
|
| $ | 87,182 |
| | $ | 106,042 |
| | $ | 87,182 |
| $ | 120,848 |
| | $ | 88,397 |
|
The Company has accrued $2.1 million and $1.92.0 million at September 30, 2017March 31, 2018 and December 31, 2016,2017, respectively, for reclamation liabilities related to former mining activities, which are included in Reclamation.
The Company increased the reclamation liability at Rochester by $3.1 million at September 30, 2017 due to leach pad expansion.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 5 – STOCK-BASED COMPENSATION
The Company has stock incentive plans for executives and eligible employees. Stock awards include performance shares, restricted stock and stock options. Stock-based compensation expense for the three and nine months ended September 30,March 31, 2018 and 2017 was $2.6$2.8 million and $8.1$3.3 million, respectively, compared to $2.3 million and $7.5 million for the three and nine months ended September 30, 2016, respectively. At September 30, 2017,March 31, 2018, there was $7.4$4.8 million of unrecognized stock-based compensation cost which is expected to be recognized over a weighted-average remaining vesting period of 1.51.4 years.
The following table summarizes the grants awarded during the ninethree months ended September 30, 2017:March 31, 2018:
|
| | | | | | | | | | | | | | | | | | | | | |
Grant date | | Restricted stock | | Grant date fair value of restricted stock | | Stock options | | Grant date fair value of stock options | | Performance shares | | Grant date fair value of performance shares |
January 18, 2017 | | 236,581 |
| | $ | 11.47 |
| | — |
| | $ | — |
| | 316,213 |
| | $ | 11.58 |
|
March 7, 2017 | | 542,621 |
| | $ | 7.60 |
| | 14,820 |
| | $ | 3.91 |
| | — |
| | $ | — |
|
|
| | | | | | | | | | | | | | | | | | | | | |
Grant date | | Restricted stock | | Grant date fair value of restricted stock | | Stock options | | Grant date fair value of stock options | | Performance shares | | Grant date fair value of performance shares |
March 5, 2018 | | 31,887 |
| | $ | 7.84 |
| | — |
| | $ | — |
| | — |
| | $ | — |
|
The following options and stock appreciation rights were exercisable during the ninethree months ended September 30, 2017:March 31, 2018:
| | Award Type | | Number of Exercised Units | | Weighted Average Exercised Price | | Number of Exercisable Units | | Weighted Average Exercisable Price | | Number of Exercised Units | | Weighted Average Exercised Price | | Number of Exercisable Units | | Weighted Average Exercisable Price |
Stock options | | 26,966 |
| | $ | 3.28 |
| | 427,730 |
| | $ | 13.62 |
| | 93,920 |
| | $ | 1.81 |
| | 397,651 |
| | $ | 14.39 |
|
Stock appreciation rights | | — |
| | $ | — |
| | 42,152 |
| | $ | 14.14 |
| | — |
| | $ | — |
| | 42,152 |
| | $ | 14.14 |
|
NOTE 6 – RETIREMENT SAVINGS PLAN
The Company has a 401(k) retirement savings plan that covers all eligible U.S. employees. Eligible employees may elect to contribute up to 75% of base salary, subject to ERISA limitations. The Company generally makes matching contributions equal to the employee’s contribution up to 4% of the employee’s salary. The Company may also provide an additional contribution based on an eligible employee’s salary. Total plan expenses recognized for the three and nine months ended September 30,March 31, 2018 and 2017 were $1.8$1.2 million and $5.7 million, respectively, compared to $2.3 million and $4.2 million for the three and nine months ended September 30, 2016, respectively.$2.1 million. In addition, the Company has a deferred compensation plan for employees whose benefits under the 401(k) plan are limited by federal regulations.
NOTE 7 - OTHER, NET
Other, net consists of the following:
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended March 31, |
In thousands | 2017 | | 2016 | | 2017 | | 2016 | 2018 | | 2017 |
Foreign exchange gain (loss) | $ | 229 |
| | $ | (1,466 | ) | | $ | 2,578 |
| | $ | (7,286 | ) | $ | (670 | ) | | $ | 1,206 |
|
Gain (loss) on sale of assets and investments | 945 |
| | 7,463 |
| | (607 | ) | | 11,674 |
| |
Loss on sale of assets and investments | | (574 | ) | | (2,066 | ) |
Gain on sale of the Joaquin project | — |
| | — |
| | 21,138 |
| | — |
| — |
| | 21,138 |
|
Gain on repurchase of the Rochester royalty obligation | — |
| | — |
| | 2,332 |
| | — |
| |
Gain on sale of Endeavor stream and other royalties | 1,172 |
| | — |
| | 1,172 |
| | — |
| |
Impairment of equity securities | — |
| | — |
| | (426 | ) | | (20 | ) | |
Other | 818 |
|
| 408 |
|
| 2,252 |
| | 1,494 |
| 1,424 |
| | 521 |
|
Other, net | $ | 3,164 |
| | $ | 6,405 |
| | $ | 28,439 |
| | $ | 5,862 |
| $ | 180 |
| | $ | 20,799 |
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 8 - INCOME AND MINING TAXES
The following table summarizes the components of Income and mining tax (expense) benefit for the three and nine months ended September 30,March 31, 2018 and 2017 and 2016 by significant jurisdiction:
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended March 31, |
| 2017 | | 2016 | | 2017 | | 2016 | 2018 | | 2017 |
In thousands | Income (loss) before tax | Tax (expense) benefit | | Income (loss) before tax | Tax (expense) benefit | | Income (loss) before tax | Tax (expense) benefit | | Income (loss) before tax | Tax (expense) benefit | Income (loss) before tax | Tax (expense) benefit | | Income (loss) before tax | Tax (expense) benefit |
United States | $ | (6,008 | ) | $ | (2,362 | ) | | $ | 3,286 |
| $ | 10,712 |
| | $ | 8,213 |
| $ | (2,739 | ) | | $ | (5,956 | ) | $ | 8,370 |
| $ | 1,187 |
| $ | 517 |
| | $ | 20,653 |
| $ | (1,827 | ) |
Argentina | 738 |
| (366 | ) | | (301 | ) | 67 |
| | 281 |
| 1,704 |
| | 3,137 |
| (183 | ) | 254 |
| 10 |
| | (328 | ) | 1,124 |
|
Mexico | 3,210 |
| (9,057 | ) | | 3,020 |
| 37,821 |
| | 9,665 |
| (23,745 | ) | | (1,136 | ) | 42,155 |
| 13,126 |
| (13,222 | ) | | 8,650 |
| (9,923 | ) |
Bolivia | (5,029 | ) | (518 | ) | | 4,325 |
| 5,904 |
| | (6,559 | ) | (304 | ) | | 10,388 |
| 5,182 |
| |
Other jurisdictions | 4,669 |
| (1,929 | ) |
| 4,772 |
| (49 | ) |
| 2,636 |
| 1,904 |
|
| 4,109 |
| (2,406 | ) | (1,927 | ) | 746 |
|
| 202 |
| (252 | ) |
| $ | (2,420 | ) | $ | (14,232 | ) | | $ | 15,102 |
| $ | 54,455 |
| | $ | 14,236 |
| $ | (23,180 | ) | | $ | 10,542 |
| $ | 53,118 |
| $ | 12,640 |
| $ | (11,949 | ) | | $ | 29,177 |
| $ | (10,878 | ) |
The Company’s effective income and mining tax rate is a function of the combined effective tax rates and foreign exchange rates in the jurisdictions in which it operates. Variations in the jurisdictional mix of income and loss and foreign exchange rates result in significant fluctuations in the consolidated effective tax rate, along with mining taxes, uncertain tax positions, and a full valuation allowance on deferred tax assets related to losses in the United States and certain foreign jurisdictions. Fluctuations in foreign exchange rates on deferred tax balances decreasedincreased income and mining tax expense by $1.4$3.6 million and increased by $7.2$5.6 million for the three and nine months ended September 30,March 31, 2018 and 2017, respectively, predominately due to the strengthening of the Mexican Peso. Also,Additionally, favorable operating results at Palmarejo contributed to higher income and mining tax expense. The three and nine months ended September 30, 2016 benefited from a legal entity reorganization to integrate acquisitions that resultedexpense in a valuation allowance release of $40.8 million and a $15.0 million deferred tax benefit related to unremitted earnings.Mexico.
A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company will ultimately be more likely than not able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of factors that impact the Company’s ability to realize its deferred tax assets. For additional information, please see the sections titled “Risk Factors” set forth in the 20162017 10-K.
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The statute of limitations remains open from 20132014 forward for the U.S. federal jurisdiction and from 20092008 forward for certain other foreign jurisdictions. As a result of statutes of limitation that will begin to expire within the next twelve months in various jurisdictions and possible settlements of audit-related issues with taxing authorities in various jurisdictions with respect to which none of the issues are individually significant, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits will decrease between $1.5 million and $2.5 million in the next twelve months.
At September 30, 2017March 31, 2018 and December 31, 2016,2017, the Company had $17.5$3.9 million and $19.6$4.3 million of total gross unrecognized tax benefits, respectively. Ifrespectively that, if recognized, these unrecognized tax benefits would positively impact the Company’s effective income tax rate. The Company’s continuing practice is to recognize potential interest and/or penalties related to unrecognized tax benefits as part of its income tax expense. At September 30, 2017March 31, 2018 and December 31, 2016,2017, the amount of accrued income-tax-related interest and penalties was $8.7$4.2 million and $8.7$4.8 million, respectively.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 9 – NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.
For the three and nine months ended September 30,March 31, 2018 and 2017, 633,391496,064 and 851,2541,368,685 common stock equivalents, respectively, related to equity-based awards were not included in the diluted earnings per share calculation as the shares would be antidilutive. Similarly, 215,298 and 404,543 common stock equivalents were excluded from the diluted earnings per share calculation for the three and nine months ended September 30, 2016, respectively.
The 3.25% Convertible Senior Notes (“Convertible Notes”) were not included in the computation of diluted net income (loss) per share for the three and nine months ended September 30, 2016 because there is no excess value upon conversion over the principal amount of the Convertible Notes. The outstanding Convertible Notes were redeemed in the third quarter of 2016.
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended March 31, |
In thousands except per share amounts | 2017 | | 2016 | | 2017 | | 2016 | 2018 | | 2017 |
Net income (loss) available to common stockholders | $ | (16,652 | ) | | $ | 69,557 |
| | $ | (8,944 | ) | | $ | 63,660 |
| |
Net income (loss) available to common stockholders: | | | | |
Income (loss) from continuing operations | | $ | 691 |
| | $ | 18,299 |
|
Income (loss) from discontinued operations | | 550 |
| | 364 |
|
| | $ | 1,241 |
| | $ | 18,663 |
|
| | | | |
Weighted average shares: | | | | | | | | | | |
Basic | 179,278 |
| | 161,039 |
| | 179,141 |
| | 155,108 |
| 184,367 |
| | 178,898 |
|
Effect of stock-based compensation plans | — |
| | 4,789 |
| | — |
| | 3,284 |
| 3,254 |
| | 4,170 |
|
Diluted | 179,278 |
|
| 165,828 |
|
| 179,141 |
|
| 158,392 |
| 187,621 |
|
| 183,068 |
|
Income (loss) per share: | | | | | | | | |
Basic | $ | (0.09 | ) | | $ | 0.43 |
| | $ | (0.05 | ) |
| $ | 0.41 |
| |
Diluted | $ | (0.09 | ) | | $ | 0.42 |
| | $ | (0.05 | ) |
| $ | 0.40 |
| |
| | | | |
Basic income (loss) per share: | | | | |
Income (loss) from continuing operations | | $ | 0.00 |
| | $ | 0.10 |
|
Income (loss) from discontinued operations | | 0.00 |
| | 0.00 |
|
Basic(1) | | $ | 0.01 |
|
| $ | 0.10 |
|
| | | | |
Diluted income (loss) per share: | | | | |
Income (loss) from continuing operations | | $ | 0.00 |
| | $ | 0.10 |
|
Income (loss) from discontinued operations | | 0.00 |
| | 0.00 |
|
Diluted(1) | | $ | 0.01 |
|
| $ | 0.10 |
|
(1)Due to rounding, the sum of net income per share from continuing operations and discontinued operations may not equal net income per share.
NOTE 10 – FAIR VALUE MEASUREMENTS
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended March 31, |
In thousands | 2017 | | 2016 | | 2017 | | 2016 | 2018 | | 2017 |
Rochester royalty obligation | $ | — |
| | $ | (851 | ) | | $ | (864 | ) | | $ | (5,787 | ) | $ | — |
| | $ | (1,200 | ) |
Palmarejo royalty obligation embedded derivative | — |
| | (110 | ) | | — |
| | (5,866 | ) | |
Silver and gold options | — |
|
| — |
| | — |
| | (1,582 | ) | |
Unrealized gain (loss) on equity securities | | 4,842 |
| | — |
|
Zinc options | | 145 |
| | — |
|
Fair value adjustments, net | $ | — |
| | $ | (961 | ) | | $ | (864 | ) | | $ | (13,235 | ) | $ | 4,987 |
| | $ | (1,200 | ) |
Accounting standards establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1), secondary priority to quoted prices in inactive markets or observable inputs (Level 2), and the lowest priority to unobservable inputs (Level 3).
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:
| | | Fair Value at September 30, 2017 | Fair Value at March 31, 2018 |
In thousands | Total | | Level 1 | | Level 2 | | Level 3 | Total | | Level 1 | | Level 2 | | Level 3 |
Assets: | | | | | | | | | | | | | | |
Equity and debt securities | $ | 29,125 |
| | $ | 22,194 |
| | $ | — |
| | $ | 6,931 |
| $ | 37,317 |
| | $ | 31,003 |
| | $ | — |
| | $ | 6,314 |
|
Other derivative instruments, net | 44 |
| | — |
| | 44 |
| | — |
| 552 |
| | — |
| | 552 |
| | — |
|
| $ | 29,169 |
| | $ | 22,194 |
| | $ | 44 |
| | $ | 6,931 |
| $ | 37,869 |
| | $ | 31,003 |
| | $ | 552 |
| | $ | 6,314 |
|
Liabilities: | | | | | | | | | | | | | | |
Silvertip contingent consideration | | $ | 48,289 |
| | $ | — |
| | $ | — |
| | $ | 48,289 |
|
Other derivative instruments, net | $ | 255 |
| | $ | — |
| | $ | 255 |
| | $ | — |
| 125 |
| | — |
| | 125 |
| | — |
|
| | $ | 48,414 |
| | $ | — |
| | $ | 125 |
| | $ | 48,289 |
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
| | | Fair Value at December 31, 2016 | Fair Value at December 31, 2017 |
In thousands | Total | | Level 1 | | Level 2 | | Level 3 | Total | | Level 1 | | Level 2 | | Level 3 |
Assets: | | | | | | | | | | | | | | |
Equity securities | $ | 4,488 |
| | $ | 4,209 |
| | $ | — |
| | $ | 279 |
| |
Equity and debt securities | | $ | 34,837 |
| | $ | 27,946 |
| | $ | — |
| | $ | 6,891 |
|
Other derivative instruments, net | | 251 |
| | — |
| | 251 |
| | — |
|
| $ | 4,488 |
| | $ | 4,209 |
| | $ | — |
| | $ | 279 |
| $ | 35,088 |
| | $ | 27,946 |
| | $ | 251 |
| | $ | 6,891 |
|
Liabilities: | | | | | | | | | | | | | | |
Rochester royalty obligation | 9,287 |
| | — |
| | — |
| | 9,287 |
| |
Silvertip contingent consideration | | $ | 47,965 |
| | $ | — |
| | $ | — |
| | $ | 47,965 |
|
Other derivative instruments, net | 762 |
| | — |
| | 762 |
| | — |
| 222 |
| | — |
| | 222 |
| | — |
|
| $ | 10,049 |
| | $ | — |
| | $ | 762 |
| | $ | 9,287 |
| $ | 48,187 |
| | $ | — |
| | $ | 222 |
| | $ | 47,965 |
|
The Company’s investments in equity securities are recorded at fair market value in the financial statements based primarily on quoted market prices. Such instruments are classified within Level 1 of the fair value hierarchy. Quoted market prices are not available for certain debt and equity securities; these securities are valued using pricing models, which require the use of observable and unobservable inputs, and are classified within Level 3 of the fair value hierarchy.
The Company’s other derivative instruments, net, relate toinclude concentrate and certain doré sales contracts, as well as zinc hedges, which are valued using pricing models which requirewith inputs that are derived from observable market data, including contractual terms, forward market prices, yield curves, credit spreads, and other unobservable inputs. The model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.
In May 2017, the Company repurchased the Rochester royalty obligation for $5.0 million, resulting in a pre-tax gain of $2.3 million, which is included in Other, net. The fair value of the Rochester royalty obligation was estimated based on observable market data including contractual terms, forward silver and gold prices, yield curves, and credit spreads, as well as the Company’s current mine plan which is considered a significant unobservable input. Therefore, the Company historically classified this obligation as a Level 3 financial liability.
In July 2017, the Company sold the Endeavor silver streamSilver Stream and remaining non-core royalties to Metalla Royalty & Streaming Ltd. (“Metalla”) for total consideration of $13.0 million, including a $6.7 million convertible debenture. The convertible debenture matures June 30, 2027, bears interest at a rate of 5% payable semi-annually, and is convertible into Metalla shares in connection with future equity financings or asset acquisitions by Metalla at the then-current price to maintain the Company’s approximate 19.9% ownership. The fair value of the convertible debenture is estimated based on observable market data including yield curves and credit spreads. Therefore, the Company classifies the convertible debenture in Level 3 of the fair value hierarchy.
In October 2017, the Company acquired the Silvertip mine from shareholders of JDS Silver Holdings Ltd.The consideration for the Silvertip mine includes two $25.0 million contingent payments, which are payable in cash and common stock upon reaching a future permitting milestone in 2018 and resource declaration milestone in 2019, respectively. The fair value of the Silvertip contingent consideration is estimated based on an estimated discount rate of 2.5% for the contingent permitting payment and 2.9% for the contingent resource declaration payment and is classified within Level 3 of the fair value hierarchy.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
No assets or liabilities were transferred between fair value levels in the ninethree months ended September 30, 2017.March 31, 2018.
The following tables present the changes in the fair value of the Company's Level 3 financial assets and liabilities for the ninethree months ended September 30, 2017:March 31, 2018:
| | | Three Months Ended September 30, 2017 | Three Months Ended March 31, 2018 |
In thousands | Balance at the beginning of the period | | Additions | | Revaluation | | Settlements | | Balance at the end of the period | Balance at the beginning of the period | | Revaluation | | Settlements | | Accretion | | Balance at the end of the period |
Assets: | | | | | | | | | | | | | | | | | | |
Equity and debt securities | $ | 258 |
| | $ | 6,677 |
| | $ | (4 | ) | | $ | — |
| | $ | 6,931 |
| $ | 6,891 |
| | $ | (278 | ) | | $ | (299 | ) | | $ | — |
| | $ | 6,314 |
|
Liabilities: | | | | | | | | | | |
Silvertip contingent consideration | | $ | 47,965 |
| | $ | — |
| | $ | — |
| | $ | 324 |
| | $ | 48,289 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2017 |
In thousands | Balance at the beginning of the period | | Additions | | Revaluation | | Settlements | | Gain on settlement | | Balance at the end of the period |
Assets: | | | | | | | | | | | |
Equity and debt securities | $ | 279 |
| | $ | 6,677 |
| | $ | (25 | ) | | $ | — |
| | $ | — |
| | $ | 6,931 |
|
Liabilities: | | | | | | | | | | | |
Rochester royalty obligation | $ | 9,287 |
| | — |
| | $ | 864 |
| | $ | (7,819 | ) | | (2,332 | ) | | $ | — |
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
The fair value of financial assets and liabilities carried at book value in the financial statements at September 30, 2017March 31, 2018 and December 31, 20162017 is presented in the following table:
|
| | | | | | | | | | | | | | | | | | | |
| March 31, 2018 |
In thousands | Book Value | | Fair Value | | Level 1 | | Level 2 | | Level 3 |
Assets: | | | | | | | | | |
Manquiri Notes Receivable | $ | 39,887 |
| | $ | 39,887 |
| | $ | — |
| | $ | — |
| | $ | 39,887 |
|
Liabilities: | | |
| | | | | | |
5.875% Senior Notes due 2024(1) | $ | 245,280 |
| | $ | 244,520 |
| | $ | — |
| | $ | 244,520 |
| | $ | — |
|
Revolving Credit Facility(2) | $ | 115,000 |
| | $ | 115,000 |
| | $ | — |
| | $ | 115,000 |
| | $ | — |
|
(1) Net of unamortized debt issuance costs of $4.7 million.
(2) Unamortized debt issuance costs of $1.8 million included in Other Non-Current Assets.
|
| | | | | | | | | | | | | | | | | | | |
| September 30, 2017 |
In thousands | Book Value | | Fair Value | | Level 1 | | Level 2 | | Level 3 |
Liabilities: | | |
| | | | | | |
5.875% Senior Notes due 2024(1) | $ | 244,934 |
| | $ | 247,161 |
| | $ | — |
| | $ | 247,161 |
| | $ | — |
|
| |
(1) | Net of unamortized debt issuance costs of $5.1 million. |
|
| | | | | | | | | | | | | | | | | | | |
| December 31, 2017 |
In thousands | Book Value | | Fair Value | | Level 1 | | Level 2 | | Level 3 |
Liabilities: | | | | | | | | | |
5.875% Senior Notes due 2024(1) | $ | 245,088 |
| | $ | 243,913 |
| | $ | — |
| | $ | 243,913 |
| | $ | — |
|
Revolving Credit Facility(2) | $ | 100,000 |
| | $ | 100,000 |
| | $ | — |
| | $ | 100,000 |
| | $ | — |
|
(1) Net of unamortized debt issuance costs of $4.9 million. |
| | | | | | | | | | | | | | | | | |
| December 31, 2016 |
In thousands | Book Value | | Fair Value | | Level 1 | | Level 2 | | Level 3 |
Liabilities: | | | | | | | | | |
7.875% Senior Notes due 2021(1) | $ | 175,991 |
| | $ | 184,373 |
| | — |
| | $ | 184,373 |
| | — |
|
(2) Unamortized debt issuance costs of $1.9 million included in Other Non-Current Assets. | |
(1) | Net of unamortized debt issuance costs and premium received of $2.0 million. |
The fair value of the Manquiri Notes Receivable approximates book value due to no significant change in interest rates since the sale of Manquiri; see Note 21 -- Discontinued Operations for additional detail. The fair value of the 5.875% Senior Notes due 2024 (the “2024 Senior Notes”) and the 7.875% Senior Notes due 2021 (the “2021 Senior Notes”) werewas estimated using quoted market prices. The fair value of the Revolving Credit Facility approximates book value as the liability is secured, has a variable interest rate, and lacks significant credit concerns.
NOTE 11 – DERIVATIVE FINANCIAL INSTRUMENTS
Palmarejo Gold Production Royalty
In January 2009, the Company's subsidiary, Coeur Mexicana, S.A. de C.V. (“Coeur Mexicana”), entered into a gold production royalty agreement with a subsidiary of Franco-Nevada Corporation that covered 50% of the life of mine production from the Palmarejo mine and legacy adjacent properties. The royalty transaction included a minimum obligation of 4,167 gold ounces per month and terminated upon delivery of 400,000 gold ounces, which occurred in July 2016.
The price volatility associated with the minimum royalty obligation was considered an embedded derivative. The Company was required to recognize the change in fair value of the remaining minimum obligation due to changing gold prices. For the three and nine months ended September 30, 2016, the mark-to-market adjustment associated with the change were losses of $0.1 million and $5.9 million, respectively. Payments on the royalty obligation decreased the carrying amount of the minimum obligation and the derivative liability. For the three and nine months ended September 30, 2016, realized losses on settlement of the liabilities were $0.1 million and $5.9 million, respectively. The mark-to-market adjustments and realized losses are included in Fair value adjustments, net.
Provisional Silver and Gold Sales
The Company enters into sales contracts with third-party smelters and refiners which, in some cases, provide for a provisional payment based upon preliminary assays and quoted metal prices. The provisionally priced sales contracts contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable recorded at the forward price at the time of sale. The embedded derivatives do not qualify for hedge accounting and are marked to market through earnings each period until final settlement. Changes in silver and gold prices resulted in provisional pricing mark-to-market lossesgains of $0.1$0.3 million and gains of $0.6$1.2 million in the three and nine months ended September 30,March 31, 2018 and 2017, respectively, compared to lossesrespectively.
Zinc Options
At March 31, 2018, the Company has outstanding Asian (or average value) put and call option contracts in net-zero-cost collar arrangements on a volume of $0.8 million300 metric tons of zinc per month commencing in April 2018 and gainsending in December 2018. The weighted average strike prices on the put and call contracts are $3,000 and $4,050 per metric ton, respectively. The contracts are generally net cash settled and, if the price of $0.4 million inzinc at the threetime of the expiration is between the put and nine months ended September 30, 2016, respectively.call prices, would expire
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
at no cost to the Company. At September 30,March 31, 2018, the fair market value of the put and call zero cost collar contracts was a net asset of $0.1 million.
During the three months ended March 31, 2018, the Company had recorded unrealized gains of $0.1 million related to outstanding options which were included in Fair value adjustments, net. At March 31, 2017, the Company had no outstanding options contracts.
At March 31, 2018, the Company had the following provisionally priced salesderivative instruments that settle as follows:
|
| | | | | | | |
In thousands except average prices and notional ounces | 2017 | | Thereafter |
| | | |
Provisional silver sales contracts | $ | 3,915 |
| | $ | — |
|
Average silver price | $ | 16.86 |
| | $ | — |
|
Notional ounces | 232,200 |
| | — |
|
| | | |
Provisional gold sales contracts | $ | 33,887 |
| | $ | — |
|
Average gold price | $ | 1,299 |
| | $ | — |
|
Notional ounces | 26,087 |
| | — |
|
Silver and Gold Options
During the nine months ended September 30, 2016, the Company had realized losses of $1.6 million, from settled option contracts. At September 30, 2017, the Company had no outstanding gold and silver options contracts. |
| | | | | | | |
In thousands except average prices and notional ounces | 2018 | | Thereafter |
| | | |
Provisional silver sales contracts | $ | 831 |
| | $ | — |
|
Average silver price per ounce | $ | 16.66 |
| | $ | — |
|
Notional ounces | 49,853 |
| | — |
|
| | | |
Provisional gold sales contracts | $ | 59,332 |
| | $ | — |
|
Average gold price per ounce | $ | 1,317 |
| | $ | — |
|
Notional ounces | 45,051 |
| | — |
|
| | | |
Zinc put options purchased | $ | 8,100 |
| | $ | — |
|
Average zinc strike price per metric ton | $ | 3,000 |
| | $ | — |
|
Notional metric tons | 2,700 |
| | — |
|
| | | |
Zinc call options sold | $ | (10,935 | ) | | $ | — |
|
Average zinc strike price per metric ton | $ | 4,050 |
| | $ | — |
|
Notional metric tons | 2,700 |
| | — |
|
The following summarizes the classification of the fair value of the derivative instruments:
| | | September 30, 2017 | March 31, 2018 |
In thousands | Prepaid expenses and other | | Accrued liabilities and other | | Current portion of royalty obligation | | Non-current portion of royalty obligation | Prepaid expenses and other | | Accrued liabilities and other | | Current portion of royalty obligation | | Non-current portion of royalty obligation |
Provisional silver and gold sales contracts | $ | 44 |
| | $ | 255 |
| | $ | — |
| | $ | — |
| $ | 407 |
| | $ | 125 |
| | $ | — |
| | $ | — |
|
Zinc options | | 145 |
| | — |
| | — |
| | — |
|
| | $ | 552 |
| | $ | 125 |
| | $ | — |
| | $ | — |
|
|
| | | | | | | | | | | |
| December 31, 2016 |
In thousands | Prepaid expenses and other | | Accrued liabilities and other | | Current portion of royalty obligation | | Non-current portion of royalty obligation |
Provisional silver and gold sales contracts | — |
| | 762 |
| | — |
| | — |
|
|
| | | | | | | | | | | | | | | |
| December 31, 2017 |
In thousands | Prepaid expenses and other | | Accrued liabilities and other | | Current portion of royalty obligation | | Non-current portion of royalty obligation |
Provisional silver and gold sales contracts | $ | 251 |
| | $ | 222 |
| | $ | — |
| | $ | — |
|
The following represent mark-to-market gains (losses) on derivative instruments for the three and nine months ended September 30,March 31, 2018 and 2017, and 2016respectively (in thousands):
| | | | Three months ended September 30, | | Nine months ended September 30, | | Three months ended March 31, |
Financial statement line | Derivative | 2017 | | 2016 | | 2017 | | 2016 | Derivative | 2018 | | 2017 |
Revenue | Provisional silver and gold sales contracts | $ | (45 | ) | | $ | (784 | ) | | $ | 551 |
| | $ | 378 |
| Provisional silver and gold sales contracts | $ | 253 |
| | $ | 1,212 |
|
Fair value adjustments, net | Palmarejo gold production royalty | — |
| | (110 | ) | | — |
| | (5,866 | ) | Zinc options | 145 |
| | — |
|
Fair value adjustments, net | Silver and gold options | — |
| | — |
| | — |
| | (1,582 | ) | |
| | $ | (45 | ) |
| $ | (894 | ) | | $ | 551 |
| | $ | (7,070 | ) | | $ | 398 |
| | $ | 1,212 |
|
Credit Risk
The credit risk exposure related to any derivative instrument is limited to the unrealized gains, if any, on outstanding contracts based on current market prices. To reduce counter-party credit exposure, the Company enters into contracts with institutions management deems credit-worthy and limits credit exposure to each institution. The Company does not anticipate non-performance by any of its counterparties.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 12 – ACQUISITIONS
In October 2017, the Company completed the acquisition of JDS Silver Holdings Ltd. and its wholly-owned subsidiary JDS Silver Inc. (together, “JDS Silver”) which, following the closing of the acquisition, were amalgamated with a subsidiary of Coeur to form Coeur Silvertip Holdings Ltd., which owns the underground Silvertip silver-zinc-lead mine in northern British Columbia, Canada. JDS Silver was purchased for approximately $153.2 million in cash and $36.0 million in Coeur common stock. In addition, the Company recorded $47.7 million of contingent consideration payable in cash and common stock upon reaching future permitting and resource declaration milestones. The cash consideration was funded with $100.0 million of borrowing under the Facility (as defined in Note 18 -- Debt) and cash on hand. Upon closing, the Company issued approximately 4.2 million Coeur shares to former shareholders of JDS Silver Holdings Ltd. The acquisition aligns with the Company’s strategic shift to a North America-focused mining portfolio.
The transaction was accounted for as a business combination, which requires that assets acquired and liabilities assumed be recognized at their respective fair values at the acquisition date. The acquisition is not significant to the Company’s results of operations, individually or in the aggregate, because the Silvertip mine is in pre-production. As there are no significant differences from the Company’s historical results of operations, no pro forma financial information is provided.
The allocation of purchase price to the acquired assets and liabilities assumed is preliminary as of March 31, 2018 and subsequent adjustments may result in changes to mineral interest and other carrying amounts initially assigned based on the preliminary fair value analysis. The principal remaining items to be valued are property, plant and equipment and mining properties, which will be finalized as management continues to review the valuation methodologies used to estimate the fair value of these assets. The preliminary purchase price allocation is as follows (in thousands):
|
| | | |
Common shares issued (4,191,679 at $8.59) | $ | 36,007 |
|
Cash | 153,194 |
|
Contingent consideration | 47,705 |
|
Total purchase price(1) | $ | 236,906 |
|
Assets: | |
Receivables and other assets | $ | 6,828 |
|
Property, plant, and equipment | 29,943 |
|
Mining properties, net | 288,464 |
|
| 325,235 |
|
Liabilities: | |
Accounts payable and accrued liabilities | 13,077 |
|
Asset retirement obligation | 6,982 |
|
Debt and capital lease | 20,149 |
|
Deferred income taxes | 48,121 |
|
| 88,329 |
|
Net assets acquired | $ | 236,906 |
|
(1) Purchase price has been adjusted for restricted cash acquired due to the adoption of ASU 2016-01.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 13 – INVESTMENTS
Equity and Debt Securities
The Company makes strategic investments in equity and debt securities of silver and gold exploration and development companies. These investments are classified as available-for-sale and are measured at fair value in the financial statements with unrealized gains and losses recorded in Other comprehensive income (loss).
| | | At September 30, 2017 | At March 31, 2018 |
In thousands | Cost | | Gross Unrealized Losses | | Gross Unrealized Gains | | Estimated Fair Value | Cost | | Gross Unrealized Losses | | Gross Unrealized Gains | | Estimated Fair Value |
Equity Securities | | | | | | | | | | | | | | |
Metalla Royalty & Streaming Ltd. | $ | 6,294 |
| | $ | — |
| | $ | 817 |
| | $ | 7,111 |
| $ | 6,294 |
| | $ | — |
| | $ | 2,837 |
| | $ | 9,131 |
|
Corvus Gold Inc. | 3,582 |
| | — |
| | 542 |
| | 4,124 |
| 3,582 |
| | — |
| | 6,844 |
| | 10,426 |
|
Almaden Minerals, Ltd. | 3,125 |
| | — |
| | 102 |
| | 3,227 |
| 2,067 |
| | (727 | ) | | — |
| | 1,340 |
|
Northern Empire Resources Corp. | 2,999 |
| | — |
| | 378 |
| | 3,377 |
| 4,489 |
| | — |
| | 2,999 |
| | 7,488 |
|
Rockhaven Resources, Ltd. | 2,064 |
| | (364 | ) | | — |
| | 1,700 |
| 2,064 |
| | (596 | ) | | — |
| | 1,468 |
|
Kootenay Silver, Inc. | 928 |
| | — |
| | 40 |
| | 968 |
| |
Other | 1,482 |
| | (82 | ) | | 566 |
| | 1,966 |
| 1,190 |
| | (155 | ) | | 115 |
| | 1,150 |
|
Equity securities | $ | 20,474 |
| | $ | (446 | ) | | $ | 2,445 |
| | $ | 22,473 |
| $ | 19,686 |
| | $ | (1,478 | ) | | $ | 12,795 |
| | $ | 31,003 |
|
| | | | | | | | | | | | | | |
Debt Securities | | | | | | | | | | | | | | |
Metalla Royalty & Streaming Ltd. | $ | 6,677 |
| | $ | (25 | ) | | $ | — |
| | $ | 6,652 |
| $ | 6,677 |
| | $ | (363 | ) | | $ | — |
| | $ | 6,314 |
|
| | | | | | | | | | | | | | |
Equity and debt securities | $ | 27,151 |
| | $ | (471 | ) | | $ | 2,445 |
| | $ | 29,125 |
| $ | 26,363 |
| | $ | (1,841 | ) | | $ | 12,795 |
| | $ | 37,317 |
|
| | | At December 31, 2016 | At December 31, 2017 |
In thousands | Cost | | Gross Unrealized Losses | | Gross Unrealized Gains | | Estimated Fair Value | Cost | | Gross Unrealized Losses | | Gross Unrealized Gains | | Estimated Fair Value |
Equity Securities | | | | | | | | |
Metalla Royalty & Streaming Ltd. | | $ | 6,294 |
| | $ | — |
| | $ | 1,354 |
| | $ | 7,648 |
|
Corvus Gold Inc. | | 3,582 |
| | — |
| | 4,518 |
| | 8,100 |
|
Almaden Minerals, Ltd. | | 3,125 |
| | (235 | ) | | — |
| | 2,890 |
|
Northern Empire Resources Corp. | | 4,489 |
| | — |
| | 1,077 |
| | 5,566 |
|
Rockhaven Resources, Ltd. | | 2,064 |
| | (193 | ) | | — |
| | 1,871 |
|
Kootenay Silver, Inc. | $ | 2,645 |
| | $ | — |
| | $ | — |
| | $ | 2,645 |
| 738 |
| | — |
| | 1 |
| | 739 |
|
Silver Bull Resources, Inc. | 233 |
| | — |
| | 783 |
| | 1,016 |
| |
Other | 229 |
| | — |
| | 598 |
| | 827 |
| 1,479 |
| | (453 | ) | | 405 |
| | 1,431 |
|
Equity securities | $ | 3,107 |
| | $ | — |
| | $ | 1,381 |
| | $ | 4,488 |
| $ | 21,771 |
| | $ | (881 | ) | | $ | 7,355 |
| | $ | 28,245 |
|
| | | | | | | | |
Debt Securities | | | | | | | | |
Metalla Royalty & Streaming Ltd. | | $ | 6,677 |
| | $ | (85 | ) | | $ | — |
| | $ | 6,592 |
|
| | | | | | | | |
Equity and debt securities | | $ | 28,448 |
| | $ | (966 | ) | | $ | 7,355 |
| | $ | 34,837 |
|
The following table presents the disaggregated gain (loss) on equity securities recognized in Income (loss) from continuing operations on the Condensed Consolidated Statements of Comprehensive Income:
|
| | | | | | | |
| Three months ended March 31, |
In thousands | 2018 | | 2017 |
Net gain (loss) | $ | 4,529 |
| | $ | (1,471 | ) |
Less: Realized (gain) loss | 313 |
| | 1,471 |
|
Unrealized gain (loss) | $ | 4,842 |
| | $ | — |
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
The Company performs a quarterly assessment on each of its equity and debt securities with unrealized losses to determine if the security issecurities are other than temporarily impaired. The Company recorded no pre-tax other-than-temporary impairment losses in the three months ended September 30, 2017, in Other, net. The Company recorded pre-tax other-than-temporary impairment losses of $0.4 million in the nine months ended September 30, 2017, in Other, net. No impairment losses were recorded in the three and nine months ended September 30, 2016, in Other, net. The following table summarizes unrealized losses on equity and debt securities for which other-than-temporary impairments have not been recognized and the fair values of those securities, aggregated by the length of time the individual securities have been in a continuous unrealized loss position, at September 30, 2017:March 31, 2018:
| | | Less than twelve months | | Twelve months or more | | Total | Less than twelve months | | Twelve months or more | | Total |
In thousands | Unrealized Losses | Fair Value | | Unrealized Losses | Fair Value | | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | | Unrealized Losses | Fair Value | | Unrealized Losses | Fair Value |
Equity securities | $ | 446 |
| $ | 2,046 |
| | $ | — |
| $ | — |
| | $ | 446 |
| $ | 2,046 |
| |
Debt securities | 25 |
| 6,652 |
| | — |
| — |
| | 25 |
| 6,652 |
| 363 |
| 6,314 |
| | — |
| — |
| | 363 |
| 6,314 |
|
Restricted Assets
The Company, under the terms of its self-insurance and bonding agreements with certain banks, lending institutions and regulatory agencies, is required to collateralize certain portions of its asset retirement obligations. The Company has collateralized these obligations by assigning certificates of deposit that have maturity dates ranging from three months to a year to the applicable institutions or agencies. At September 30, 2017March 31, 2018 and December 31, 2016,2017, the Company held certificates of deposit and cash equivalents under
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
these agreements of $21.0$22.1 million and $17.6 million, respectively. The ultimate timing of the release of the collateralized amounts is dependent on the timing and closure of each mine and repayment of the obligation. In order to release the collateral, the Company must seek approval from certain government agencies responsible for monitoring the mine closure status. Collateral could also be released to the extent the Company is able to secure alternative financial assurance satisfactory to the regulatory agencies. The Company believes the collateral will remain in place beyond a twelve-month period and has therefore classified these investments as long-term.
NOTE 1314 – RECEIVABLES
Receivables consist of the following:
| | In thousands | September 30, 2017 | | December 31, 2016 | March 31, 2018 | | December 31, 2017 |
Current receivables: | | | | | | |
Trade receivables | $ | 13,040 |
| | $ | 10,669 |
| $ | 3,840 |
| | $ | 5,883 |
|
Income tax receivable | 220 |
| | 1,038 |
| 48 |
| | 7 |
|
Value added tax receivable | 51,133 |
| | 46,083 |
| 14,482 |
| | 10,982 |
|
Manquiri note receivable | | 15,840 |
| | — |
|
Other | 2,022 |
| | 2,641 |
| 1,654 |
| | 2,197 |
|
| $ | 66,415 |
| | $ | 60,431 |
| $ | 35,864 |
| | $ | 19,069 |
|
Non-current receivables: | | | | | | |
Value added tax receivable | $ | 13,461 |
| | $ | 19,293 |
| $ | 31,381 |
| | $ | 28,750 |
|
Income tax receivable | — |
| | 11,658 |
| |
Manquiri note receivable | | 24,047 |
| | — |
|
| 13,461 |
| | 30,951 |
| 55,428 |
| | 28,750 |
|
Total receivables | $ | 79,876 |
| | $ | 91,382 |
| $ | 91,292 |
| | $ | 47,819 |
|
The increase in receivables is due to the recognition of Manquiri notes receivable as consideration for the sale of San Bartolomé. See Note 21 -- Discontinued Operations for additional detail.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 1415 – INVENTORY AND ORE ON LEACH PADS
Inventory consists of the following:
| | In thousands | September 30, 2017 | | December 31, 2016 | March 31, 2018 | | December 31, 2017 |
Inventory: | | | | | | |
Concentrate | $ | 8,245 |
| | $ | 17,994 |
| $ | 11,062 |
| | $ | 6,831 |
|
Precious metals | 24,537 |
| | 47,228 |
| 17,783 |
| | 18,803 |
|
Supplies | 39,547 |
| | 40,804 |
| 32,878 |
| | 32,596 |
|
| $ | 72,329 |
| | $ | 106,026 |
| 61,723 |
| | 58,230 |
|
Ore on leach pads: | | | | | | |
Current | $ | 78,801 |
| | $ | 64,167 |
| 75,584 |
| | 73,752 |
|
Non-current | 69,805 |
| | 67,231 |
| 67,430 |
| | 65,393 |
|
| $ | 148,606 |
| | $ | 131,398 |
| 143,014 |
| | 139,145 |
|
Total inventory and ore on leach pads | $ | 220,935 |
| | $ | 237,424 |
| $ | 204,737 |
| | $ | 197,375 |
|
NOTE 1516 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
| | In thousands | September 30, 2017 | | December 31, 2016 | March 31, 2018 | | December 31, 2017 |
Land | $ | 9,417 |
| | $ | 7,878 |
| $ | 9,107 |
| | $ | 9,408 |
|
Facilities and equipment | 670,375 |
| | 650,480 |
| 559,276 |
| | 554,160 |
|
Assets under capital leases | 71,624 |
| | 54,968 |
| 88,720 |
| | 82,753 |
|
| 751,416 |
| | 713,326 |
| 657,103 |
| | 646,321 |
|
Accumulated amortization (1) | (546,212 | ) | | (524,806 | ) | (456,374 | ) | | (448,001 | ) |
| 205,204 |
| | 188,520 |
| 200,729 |
| | 198,320 |
|
Construction in progress | 29,854 |
| | 28,276 |
| 65,428 |
| | 56,417 |
|
Property, plant and equipment, net | $ | 235,058 |
| | $ | 216,796 |
| $ | 266,157 |
| | $ | 254,737 |
|
(1) Includes $24.4$29.0 million and $28.2 million of accumulated amortization related to assets under capital leases.leases at March 31, 2018 and December 31, 2017, respectively.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 1617 – MINING PROPERTIES
Mining properties consist of the following (in thousands):
| | September 30, 2017 | Palmarejo | | Rochester | | Kensington | | Wharf | | San Bartolomé | | La Preciosa | | Total | |
March 31, 2018 | | Palmarejo | | Rochester | | Silvertip | | Kensington | | Wharf | | La Preciosa | | Other | | Total |
Mine development | $ | 191,562 |
| | $ | 192,734 |
| | $ | 294,388 |
| | $ | 38,339 |
| | $ | 39,445 |
| | $ | — |
| | $ | 756,468 |
| $ | 220,141 |
| | $ | 194,390 |
| | $ | 70,626 |
| | $ | 307,996 |
| | $ | 40,688 |
| | $ | — |
| | $ | — |
| | $ | 833,841 |
|
Accumulated amortization | (142,262 | ) | | (142,686 | ) | | (170,343 | ) | | (14,984 | ) | | (33,418 | ) | | — |
| | (503,693 | ) | (151,102 | ) | | (146,245 | ) | | — |
| | (182,555 | ) | | (16,456 | ) | | — |
| | — |
| | (496,358 | ) |
| 49,300 |
| | 50,048 |
| | 124,045 |
| | 23,355 |
| | 6,027 |
| | — |
| | 252,775 |
| 69,039 |
| | 48,145 |
| | 70,626 |
| | 125,441 |
| | 24,232 |
| | — |
| | — |
| | 337,483 |
|
Mineral interests | 629,303 |
| | — |
| | — |
| | 45,837 |
| | 12,868 |
| | 49,085 |
| | 737,093 |
| 629,303 |
| | — |
| | 245,116 |
| | — |
| | 45,837 |
| | 49,085 |
| | 7,102 |
| | 976,443 |
|
Accumulated amortization | (418,512 | ) | | — |
| | — |
| | (23,264 | ) | — |
| (11,891 | ) | | — |
| | (453,667 | ) | (445,327 | ) | | — |
| | — |
| | — |
| | (24,655 | ) | — |
| — |
| | (123 | ) | | (470,105 | ) |
| 210,791 |
| | — |
| | — |
| | 22,573 |
| | 977 |
| | 49,085 |
| | 283,426 |
| 183,976 |
| | — |
| | 245,116 |
| | — |
| | 21,182 |
| | 49,085 |
| | 6,979 |
| | 506,338 |
|
Mining properties, net | $ | 260,091 |
| | $ | 50,048 |
| | $ | 124,045 |
| | $ | 45,928 |
| | $ | 7,004 |
| | $ | 49,085 |
| | $ | 536,201 |
| $ | 253,015 |
| | $ | 48,145 |
| | $ | 315,742 |
| | $ | 125,441 |
| | $ | 45,414 |
| | $ | 49,085 |
| | $ | 6,979 |
| | $ | 843,821 |
|
| | December 31, 2016 | Palmarejo | | Rochester | | Kensington | | Wharf | | San Bartolomé | | La Preciosa | | Joaquin | | Other | | Total | |
December 31, 2017 | | Palmarejo | | Rochester | | Silvertip | | Kensington | | Wharf | | La Preciosa | | Total |
Mine development | $ | 174,890 |
| | $ | 165,230 |
| | $ | 271,175 |
| | $ | 37,485 |
| | $ | 39,184 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 687,964 |
| $ | 214,383 |
| | $ | 193,881 |
| | $ | 57,214 |
| | $ | 298,749 |
| | $ | 40,618 |
| | $ | — |
| | $ | 804,845 |
|
Accumulated amortization | (134,995 | ) | | (138,244 | ) | | (154,744 | ) | | (11,699 | ) | | (32,192 | ) | | — |
| |
|
| | — |
| | (471,874 | ) | (146,598 | ) | | (144,390 | ) | | — |
| | (178,632 | ) | | (15,748 | ) | | — |
| | (485,368 | ) |
| 39,895 |
| | 26,986 |
| | 116,431 |
| | 25,786 |
| | 6,992 |
| | — |
| | — |
| | — |
| | 216,090 |
| 67,785 |
| | 49,491 |
| | 57,214 |
| | 120,117 |
| | 24,870 |
| | — |
| | 319,477 |
|
Mineral interests | 629,303 |
| | — |
| | — |
| | 45,837 |
| | 12,868 |
| | 49,085 |
| | 10,000 |
| | 37,272 |
| | 784,365 |
| 629,303 |
| | — |
| | 245,116 |
| | — |
| | 45,837 |
| | 49,085 |
| | 969,341 |
|
Accumulated amortization | (381,686 | ) | | — |
| | — |
| | (19,249 | ) | | (11,695 | ) | | — |
| | — |
| | (29,370 | ) | | (442,000 | ) | (435,215 | ) | | — |
| | — |
| | — |
| | (24,034 | ) | — |
| — |
| | (459,249 | ) |
| 247,617 |
| | — |
| | — |
| | 26,588 |
| | 1,173 |
| | 49,085 |
| | 10,000 |
| | 7,902 |
| | 342,365 |
| 194,088 |
| | — |
| | 245,116 |
| | — |
| | 21,803 |
| | 49,085 |
| | 510,092 |
|
Mining properties, net | $ | 287,512 |
| | $ | 26,986 |
| | $ | 116,431 |
| | $ | 52,374 |
| | $ | 8,165 |
| | $ | 49,085 |
| | $ | 10,000 |
| | $ | 7,902 |
| | $ | 558,455 |
| $ | 261,873 |
| | $ | 49,491 |
| | $ | 302,330 |
| | $ | 120,117 |
| | $ | 46,673 |
| | $ | 49,085 |
| | $ | 829,569 |
|
In February 2017,2018, the Company soldcompleted the Joaquin silver-gold exploration project for considerationsale of $27.4 million andManquiri, which operates the San Bartolomé mine. Pursuant to the terms of the agreement, the Company received, among other things, a 2.0% NSRnet smelter returns royalty. Coeur estimates the value of this net smelter returns royalty on the Joaquin project,to be approximately $7.1 million, which is included in Other. See Note 21 -- Discontinued Operations for additional detail.
The Company recognized a $21.1 million pre-tax gainSilvertip mine is expected to reach commercial production in the second quarter of 2018. The determination of commercial production (or ready for intended use) is based on this sale, included inmany factors requiring the exercise of judgment. Factors that are considered when determining if intended use has been achieved include Other, net onachievement of continuous production or other output, mineral recoveries at or near expected levels, the Consolidated Statementsabsence of Comprehensive Income.routine take-downs of the plant to address commissioning issues and fix problems, and the release of the commissioning team.
In July 2017,Prior to commercial production, costs related to mine development, construction of long-lived assets, and inventory are capitalized; all other costs are expensed in the Company soldperiod incurred. Amortization of mining properties will commence when the Endeavor silver stream and our remaining portfolio of royaltiesmine has been determined to Metalla for total consideration of $13.0 million comprised of $6.3 million of Metalla shares and a $6.7 million convertible debenture. The Company recognized a $1.2 million pre-tax gain, includedbe in Other, net on the Consolidated Statements of Comprehensive Income.commercial production.
NOTE 1718 – DEBT
| | | September 30, 2017 | | December 31, 2016 | March 31, 2018 | | December 31, 2017 |
In thousands | Current | | Non-Current | | Current | | Non-Current | Current | | Non-Current | | Current | | Non-Current |
2024 Senior Notes, net(1) | $ | — |
| | $ | 244,934 |
| | $ | — |
| | $ | — |
| $ | — |
| | $ | 245,280 |
| | $ | — |
| | $ | 245,088 |
|
2021 Senior Notes, net(2) | — |
| | — |
| | — |
| | 175,991 |
| |
Revolving Credit Facility(2) | | — |
| | 115,000 |
| | — |
| | 100,000 |
|
Capital lease obligations | 14,375 |
| | 29,589 |
| | 12,039 |
| | 22,866 |
| 17,040 |
| | 36,704 |
| | 16,559 |
| | 35,481 |
|
Silvertip debt obligation | | — |
| | — |
| | 14,194 |
| | — |
|
| $ | 14,375 |
| | $ | 274,523 |
| | $ | 12,039 |
| | $ | 198,857 |
| $ | 17,040 |
| | $ | 396,984 |
| | $ | 30,753 |
| | $ | 380,569 |
|
(1) Net of unamortized debt issuance costs of $5.1$4.7 million and $4.9 million at September 30, 2017.March 31, 2018 and December 31, 2017, respectively.
(2) Net of unamortizedUnamortized debt issuance costs of $1.8 million and premium received of $2.0$1.9 million at March 31, 2018 and December 31, 2016.2017, respectively, included in
Other Non-Current Assets.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
5.875% Senior Notes due 2024
In May 2017, the Company completed an offering of $250.0 million in aggregate principal amount of 2024 Senior Notes in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, for net proceeds of approximately $245.0 million. The 2024 Senior Notes bear interest at a rate of 5.875% per year from the date of issuance. Interest on the 2024 Senior Notes is payable semi-annually in arrears on June 1 and December 1 of each year. The 2024 Senior Notes will mature on June 1, 2024 and are fully and unconditionally guaranteed by the Guarantors.
Revolving Credit Facility
In September 2017, the Company, as borrower, and certain subsidiaries of the Company, as guarantors, entered into a Credit Agreement (the “Credit Agreement”) with Bank of America, N.A, Royal Bank of Canada, Bank of Montreal, Chicago Branch, and the Bank of Nova Scotia. The Credit Agreement provides for a $200.0 million senior secured revolving credit facility (the “Facility”), which may be increased by up to $50.0 million in incremental loans and commitments subject to the terms of the Credit Agreement. The Facility has a term of four years. Loans under the Facility will bear interest at a rate equal to either a base rate plus a margin ranging from 1.00% to 1.75% or an adjusted LIBOR rate plus a margin ranging from 2.00% to 2.75%, as selected by the Company, in each case, with such margin determined in accordance with a pricing grid based upon the Company’s consolidated net leverage ratio as of the end of the applicable period.
The Facility is secured by substantially all of the assets of the Company and its domestic subsidiaries, including the land, mineral rights and infrastructure at the Kensington, Rochester and Wharf mines, as well as a pledge of the shares of certain of the Company’s subsidiaries. The Credit Agreement contains representations and warranties and affirmative and negative covenants that are usual and customary, including representations, warranties, and covenants that, among other things, restrict the ability of the Company and its subsidiaries to incur additional debt, incur or permit liens on assets, make investments and acquisitions, consolidate or merge with any other company, engage in asset sales and make dividends and distributions. The Credit Agreement contains financial covenants consisting of a consolidated net leverage ratio and a consolidated interest coverage ratio. Obligations under the Credit Agreement may be accelerated upon the occurrence of certain customary events of default. At September 30, 2017,March 31, 2018, the Company had $200.0$73.0 million available under the Facility with no amounts drawn. Issuance costsFacility; $15.0 million was drawn to repay the third-party debt obligation at Silvertip, $100.0 million was drawn to partially fund the Silvertip acquisition in 2017, and $12.0 million currently supports outstanding letters of $1.8 million were recorded as prepaid costs and will be amortized overcredit. At March 31, 2018, the terminterest rate of the Facility. On October 12, 2017, theFacility was 4.1%.
Silvertip Debt Obligation
The Company drew $100.0 million from the Facility at a rate of 3.5%, which was based on the 1-month LIBOR rate plus a margin of 2.25%.
5.875% Senior Notes due 2024
In May 2017, the Company completedassumed an offering of $250.0 million in aggregate principal amount of 2024 Senior Notes in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933,existing third-party debt obligation as amended for net proceeds of approximately $245.0 million. The 2024 Senior Notes are governed by an Indenture dated as of May 31, 2017 (the “Indenture”), among the Company, as issuer, certain of the Company's subsidiaries named therein, as guarantors thereto (the “Guarantors”), and the Bank of New York Mellon, as trustee. In connection with the sale of the 2024 Senior Notes, the Company entered into a Registration Rights Agreement. On August 4, 2017, the Company commenced an exchange offer of registered 2024 Senior Notes for privately-placed 2024 Senior Notes which was completed on September 12, 2017. The 2024 Senior Notes bear interest at a rate of 5.875% per year from the date of issuance. Interest on the 2024 Senior Notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2017. The 2024 Senior Notes will mature on June 1, 2024 and are fully and unconditionally guaranteed by the Guarantors. At any time prior to June 1, 2020, the Company may redeem all or part of the 2024 Senior Notes upon not less than 30 nor more than 60 days’ prior notice at a redemption price equal to the sum of (i) 100% of the principal amount thereof, plus (ii) a make-whole premium as of the date of redemption, plus (iii) accrued and unpaid interest and additional interest, if any, thereon, to the date of redemption.Silvertip acquisition. In addition,February 2018, the Company may redeem some or all of the 2024 Senior Notes on or after June 1, 2020, at redemption prices set forth in the Indenture, together with accruedvoluntarily terminated and unpaid interest. At any time prior to June 1, 2020, the Company may use the proceeds of certain equity offerings to redeem up to 35% of the aggregate principal amount of the 2024 Senior Notes, including any permitted additional 2024 Senior Notes, at a redemption price equal to 105.875% of the principal amount. The Indenture contains covenants that, among other things, limit the Company’s ability under certain circumstances to incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem capital stock, prepay, redeem or repurchase certain debt, make loans and investments, create liens, sell, transfer or otherwise dispose of assets, enter into transactions with affiliates, enter into agreements restricting the Company's subsidiaries' ability to pay dividends and impose conditions on the Company’s ability to engage in mergers, consolidations and sales of all or substantially all of its assets. The Indenture also contains certain “Events of Default” (as defined in the Indenture) customary for indentures of this type.
7.875% Senior Notes due 2021
Concurrent with the offering of the 2024 Senior Notes, the Company commenced a cash tender offer (the “Tender Offer”) to purchase the outstanding $178.0 million in aggregate principal amount of its 2021 Senior Notes. The Tender Offer was made on the terms and subject to the conditions set forth in the Offer to Purchase dated May 19, 2017. Holders of the 2021 Senior Notes who tendered their notes were entitled to receive $1,043.88 per $1,000 principal amount of the Notes, plus accrued and unpaid interest. $118.1 million aggregate principal amount of the Notes were tendered and purchased by the Company on May 31, 2017. In accordance with the terms of the indenture governing the 2021 Senior Notes,repaid the remaining $59.9 million aggregate principal amountdebt obligation of the Notes were redeemed on June 30, 2017 at the redemption price of $1,039.38 per $1,000 principal amount, plus accrued and unpaid interest. The Company recorded a loss of $9.3 million as a result of the extinguishment of the 2021 Senior Notes.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Lines of Credit
At September 30, 2017, the Company’s subsidiary that holds the San Bartolomé mine had an available line of credit for $12.0 million that matures in June 30, 2018, bearing interest at 6.0% per annum, which is secured by machinery and equipment. There was no outstanding balance at September 30, 2017.$12.6 million.
Capital Lease Obligations
From time to time, the Company acquires mining equipment under capital lease agreements. In the ninethree months ended September 30, 2017,March 31, 2018, the Company entered into new lease financing arrangements primarily for diesel generators at Kensington and mining equipment at Palmarejo, Rochester and Kensington. All capital lease obligations are recorded, upon lease inception, at the present value of future minimum lease payments.
Interest Expense
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended March 31, |
In thousands | 2017 | | 2016 | | 2017 | | 2016 | 2018 | | 2017 |
2024 Senior Notes | $ | 3,672 |
| | $ | — |
| | $ | 4,937 |
| | $ | — |
| $ | 3,673 |
| | $ | — |
|
2021 Senior Notes | — |
| | 7,337 |
| | 6,221 |
| | 22,250 |
| — |
| | 3,504 |
|
Term Loan due 2020 | — |
| | 417 |
| | — |
| | 4,939 |
| |
Revolving Credit Facility | | 1,152 |
| | — |
|
Capital lease obligations | 413 |
| | 399 |
| | 1,115 |
| | 1,079 |
| 524 |
| | 306 |
|
Accretion of Palmarejo gold production royalty obligation | — |
| | 49 |
| | — |
| | 1,211 |
| |
Amortization of debt issuance costs | 180 |
| | 388 |
| | 518 |
| | 1,650 |
| 325 |
| | 166 |
|
Accretion of debt premium | — |
| | (90 | ) | | (71 | ) | | (272 | ) | — |
| | (43 | ) |
Accretion of Silvertip contingent consideration | | 324 |
| | — |
|
Other debt obligations | 13 |
|
| 40 |
|
| 30 |
|
| 95 |
| 107 |
|
| 9 |
|
Capitalized interest | (672 | ) | | (472 | ) | | (1,809 | ) | | (889 | ) | (140 | ) | | (363 | ) |
Total interest expense, net of capitalized interest | $ | 3,606 |
| | $ | 8,068 |
| | $ | 10,941 |
| | $ | 30,063 |
| $ | 5,965 |
| | $ | 3,579 |
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 1819 - SUPPLEMENTAL GUARANTOR INFORMATION
The following Consolidating Financial Statements are presented to satisfy disclosure requirements of Rule 3-10 of Regulation S-X resulting from the guarantees by Coeur Alaska, Inc., Coeur Explorations, Inc., Coeur Rochester, Inc., Coeur South America Corp., Wharf Resources (U.S.A.), Inc. and its subsidiaries, and Coeur Capital, Inc. (collectively, the “Subsidiary Guarantors”) of the 2024 Senior Notes. The following schedules present Consolidating Financial Statements of (a) Coeur, the parent company; (b) the Subsidiary Guarantors; and (c) certain wholly-owned domestic and foreign subsidiaries of the Company (collectively, the “Non-Guarantor Subsidiaries”). Each of the Subsidiary Guarantors is 100% owned by Coeur and the guarantees are full and unconditional and joint and several obligations. There are no restrictions on the ability of Coeur to obtain funds from the Subsidiary Guarantors by dividend or loan.
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED MARCH 31, 2018 |
| | | | | | | | | | | | | | | | | | | | |
In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Revenue | | $ | — |
| | $ | 93,230 |
| | $ | 70,037 |
| | $ | — |
| | $ | 163,267 |
|
COSTS AND EXPENSES | | | | | | | | | | |
Costs applicable to sales(1) | | — |
| | 68,245 |
| | 31,095 |
| | — |
| | 99,340 |
|
Amortization | | 246 |
| | 14,205 |
| | 16,326 |
| | — |
| | 30,777 |
|
General and administrative | | 8,797 |
| | 3 |
| | 4 |
| | — |
| | 8,804 |
|
Exploration | | 459 |
| | 2,245 |
| | 3,979 |
| | — |
| | 6,683 |
|
Pre-development, reclamation, and other | | 406 |
| | 1,947 |
| | 1,872 |
| | — |
| | 4,225 |
|
Total costs and expenses | | 9,908 |
| | 86,645 |
| | 53,276 |
| | — |
| | 149,829 |
|
OTHER INCOME (EXPENSE), NET | | | | | | | | | | |
Fair value adjustments, net | | 5,279 |
| | (292 | ) | | — |
| | — |
| | 4,987 |
|
Other, net | | 4,142 |
| | (137 | ) | | (106 | ) | | (3,719 | ) | | 180 |
|
Interest expense, net of capitalized interest | | (5,083 | ) | | (353 | ) | | (4,248 | ) | | 3,719 |
| | (5,965 | ) |
Total other income (expense), net | | 4,338 |
| | (782 | ) | | (4,354 | ) | | — |
| | (798 | ) |
Income (loss) from continuing operations before income and mining taxes | | (5,570 | ) | | 5,803 |
| | 12,407 |
| | — |
| | 12,640 |
|
Income and mining tax (expense) benefit | | 1,638 |
| | (1,120 | ) | | (12,467 | ) | | — |
| | (11,949 | ) |
Income (loss) from continuing operations | | (3,932 | ) | | 4,683 |
| | (60 | ) | | — |
| | 691 |
|
Equity income (loss) in consolidated subsidiaries | | 4,164 |
| | (38 | ) | | (170 | ) | | (3,956 | ) | | — |
|
Income (loss) from discontinued operations | | 1,009 |
| | (284 | ) | | (175 | ) | | — |
| | 550 |
|
NET INCOME (LOSS) | | $ | 1,241 |
| | $ | 4,361 |
| | $ | (405 | ) | | $ | (3,956 | ) | | $ | 1,241 |
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax: | | | | | | | | | | |
Unrealized gain (loss) on debt securities, net of tax | | (278 | ) | | — |
| | — |
| | — |
| | (278 | ) |
COMPREHENSIVE INCOME (LOSS) | | $ | 963 |
| | $ | 4,361 |
| | $ | (405 | ) | | $ | (3,956 | ) | | $ | 963 |
|
(1) Excludes amortization.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED SEPTEMBER 30,MARCH 31, 2017 |
| | | | | | | | | | | | | | | | | | | | |
In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Revenue | | $ | — |
| | $ | 99,093 |
| | $ | 76,870 |
| | $ | — |
| | $ | 175,963 |
|
COSTS AND EXPENSES | | | | | | | | | | |
Costs applicable to sales(1) | | — |
| | 68,267 |
| | 50,657 |
| | — |
| | 118,924 |
|
Amortization | | 286 |
| | 15,678 |
| | 17,866 |
| | — |
| | 33,830 |
|
General and administrative | | 7,250 |
| | 6 |
| | 156 |
| | — |
| | 7,412 |
|
Exploration | | 466 |
| | 4,582 |
| | 4,766 |
| | — |
| | 9,814 |
|
Pre-development, reclamation, and other | | 1,030 |
| | 1,922 |
| | 5,009 |
| | — |
| | 7,961 |
|
Total costs and expenses | | 9,032 |
| | 90,455 |
| | 78,454 |
| | — |
| | 177,941 |
|
OTHER INCOME (EXPENSE), NET | | | | | | | | | | |
Loss on debt extinguishments | | — |
| | — |
| | — |
| | — |
| | — |
|
Fair value adjustments, net | | — |
| | — |
| | — |
| | — |
| | — |
|
Other, net | | 2,868 |
| | (4,603 | ) | | 6,312 |
| | (1,413 | ) | | 3,164 |
|
Interest expense, net of capitalized interest | | (3,220 | ) | | (264 | ) | | (1,535 | ) | | 1,413 |
| | (3,606 | ) |
Total other income (expense), net | | (352 | ) | | (4,867 | ) | | 4,777 |
| | — |
| | (442 | ) |
Loss before income and mining taxes | | (9,384 | ) | | 3,771 |
| | 3,193 |
| | — |
| | (2,420 | ) |
Income and mining tax (expense) benefit | | (8,091 | ) | | (574 | ) | | (5,567 | ) | | — |
| | (14,232 | ) |
Total loss after income and mining taxes | | (17,475 | ) | | 3,197 |
| | (2,374 | ) | | — |
| | (16,652 | ) |
Equity income (loss) in consolidated subsidiaries | | 823 |
| | (1,755 | ) | | (304 | ) | | 1,236 |
| | — |
|
NET INCOME (LOSS) | | $ | (16,652 | ) | | $ | 1,442 |
| | $ | (2,678 | ) | | $ | 1,236 |
| | $ | (16,652 | ) |
OTHER COMPREHENSIVE INCOME (LOSS), net of tax: | | | | | | | | | | |
Unrealized gain (loss) on marketable securities, net of tax | | 1,066 |
| | 1,504 |
| | — |
| | (1,504 | ) | | 1,066 |
|
Reclassification adjustments for impairment of equity securities, net of tax | | — |
| | (852 | ) | | — |
| | 852 |
| | — |
|
Reclassification adjustments for realized gain (loss) on sale of equity securities, net of tax | | 32 |
| | 1,112 |
| | — |
| | (1,112 | ) | | 32 |
|
Other comprehensive income (loss) | | 1,098 |
| | 1,764 |
| | — |
| | (1,764 | ) | | 1,098 |
|
COMPREHENSIVE INCOME (LOSS) | | $ | (15,554 | ) | | $ | 3,206 |
| | $ | (2,678 | ) | | $ | (528 | ) | | $ | (15,554 | ) |
(1) Excludes amortization.
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED SEPTEMBER 30, 2016
| | In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Revenue | | $ | — |
| | $ | 117,426 |
| | $ | 58,821 |
| | $ | — |
| | $ | 176,247 |
| | $ | — |
| | $ | 107,194 |
| | $ | 78,360 |
| | $ | — |
| | $ | 185,554 |
|
COSTS AND EXPENSES | | | | | | | | | | | | | | | | | | | | |
Costs applicable to sales(1) | | — |
| | 68,189 |
| | 37,219 |
| | — |
| | 105,408 |
| | — |
| | 71,202 |
| | 43,288 |
| | — |
| | 114,490 |
|
Amortization | | 389 |
| | 19,750 |
| | 7,624 |
| | — |
| | 27,763 |
| | 324 |
| | 18,104 |
| | 20,265 |
| | — |
| | 38,693 |
|
General and administrative | | 6,956 |
| | 16 |
| | 141 |
| | — |
| | 7,113 |
| | 10,106 |
| | 24 |
| | (5 | ) | | — |
| | 10,125 |
|
Exploration | | 989 |
| | 1,410 |
| | 1,307 |
| | — |
| | 3,706 |
| | 336 |
| | 1,727 |
| | 3,189 |
| | — |
| | 5,252 |
|
Pre-development, reclamation, and other | | 388 |
| | 1,470 |
| | 2,633 |
| | — |
| | 4,491 |
| | 175 |
| | 1,781 |
| | 1,881 |
| | — |
| | 3,837 |
|
Total costs and expenses | | 8,722 |
| | 90,835 |
| | 48,924 |
| | — |
| | 148,481 |
| | 10,941 |
| | 92,838 |
| | 68,618 |
| | — |
| | 172,397 |
|
OTHER INCOME (EXPENSE), NET | | | | | | | | | | | | | | | | | | | | |
Loss on debt extinguishments | | (10,040 | ) | | — |
| | — |
| | — |
| | (10,040 | ) | |
Fair value adjustments, net | | — |
| | (852 | ) | | (109 | ) | | — |
| | (961 | ) | | — |
| | (1,200 | ) | | — |
| | — |
| | (1,200 | ) |
Other, net | | 1,666 |
| | 3,021 |
| | 3,178 |
| | (1,460 | ) | | 6,405 |
| | 15,222 |
| | 5,458 |
| | 1,533 |
| | (1,414 | ) | | 20,799 |
|
Interest expense, net of capitalized interest | | (7,852 | ) | | (209 | ) | | (1,467 | ) | | 1,460 |
| | (8,068 | ) | | (3,279 | ) | | (175 | ) | | (1,539 | ) | | 1,414 |
| | (3,579 | ) |
Total other income (expense), net | | (16,226 | ) | | 1,960 |
| | 1,602 |
| | — |
| | (12,664 | ) | | 11,943 |
| | 4,083 |
| | (6 | ) | | — |
| | 16,020 |
|
Income (Loss) before income and mining taxes | | (24,948 | ) | | 28,551 |
| | 11,499 |
| | — |
| | 15,102 |
| |
Income (loss) from continuing operations before income and mining taxes | | | 1,002 |
| | 18,439 |
| | 9,736 |
| | — |
| | 29,177 |
|
Income and mining tax (expense) benefit | | (29,312 | ) | | 41,807 |
| | 41,960 |
| | — |
| | 54,455 |
| | 1,588 |
| | (2,434 | ) | | (10,032 | ) | | — |
| | (10,878 | ) |
Income (Loss) after income and mining taxes | | (54,260 | ) | | 70,358 |
| | 53,459 |
| | — |
| | 69,557 |
| |
Income (loss) from continuing operations | | | 2,590 |
| | 16,005 |
| | (296 | ) | | — |
| | 18,299 |
|
Equity income (loss) in consolidated subsidiaries | | 123,818 |
| | 328 |
| | — |
| | (124,146 | ) | | — |
| | 16,073 |
| | 70 |
| | (67 | ) | | (16,076 | ) | | — |
|
Income (loss) from discontinued operations | | | — |
| | — |
| | 364 |
| | — |
| | 364 |
|
NET INCOME (LOSS) | | $ | 69,558 |
| | $ | 70,686 |
| | $ | 53,459 |
| | $ | (124,146 | ) | | $ | 69,557 |
| | $ | 18,663 |
| | $ | 16,075 |
| | $ | 1 |
| | $ | (16,076 | ) | | $ | 18,663 |
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax: | | | | | | | | | | | | | | | | | | | | |
Unrealized gain (loss) on equity securities, net of tax | | 1,387 |
| | 1,387 |
| | — |
| | (1,387 | ) | | 1,387 |
| |
Unrealized gain (loss) on debt and equity securities, net of tax | | | (2,182 | ) | | (279 | ) | | — |
| | 279 |
| | (2,182 | ) |
Reclassification adjustments for impairment of equity securities, net of tax | | — |
| | — |
| | — |
| | — |
| | — |
| | 121 |
| | 121 |
| | — |
| | (121 | ) | | 121 |
|
Reclassification adjustments for realized loss on sale of equity securities, net of tax | | (2,965 | ) | | (2,485 | ) | | — |
| | 2,485 |
| | (2,965 | ) | | 1,471 |
| | (369 | ) | | — |
| | 369 |
| | 1,471 |
|
Other comprehensive income (loss) | | (1,578 | ) | | (1,098 | ) | | — |
| | 1,098 |
| | (1,578 | ) | | (590 | ) | | (527 | ) | | — |
| | 527 |
| | (590 | ) |
COMPREHENSIVE INCOME (LOSS) | | $ | 67,980 |
| | $ | 69,588 |
| | $ | 53,459 |
| | $ | (123,048 | ) | | $ | 67,979 |
| | $ | 18,073 |
| | $ | 15,548 |
| | $ | 1 |
| | $ | (15,549 | ) | | $ | 18,073 |
|
(1) Excludes amortization.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 2017MARCH 31, 2018
|
| | | | | | | | | | | | | | | | | | | | |
In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | |
Cash provided by (used in) operating activities | | $ | (8,682 | ) | | $ | 27,407 |
| | $ | 9,471 |
| | $ | 1,236 |
| | 29,432 |
|
| | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | |
Capital expenditures | | (318 | ) | | (23,016 | ) | | (6,127 | ) | | — |
| | (29,461 | ) |
Proceeds from the sale of assets | | — |
| | 76 |
| | 1,007 |
| | — |
| | 1,083 |
|
Purchase of investments | | (3,594 | ) | | (1 | ) | | — |
| | — |
| | (3,595 | ) |
Sales of investments | | — |
| | 403 |
| | — |
| | — |
| | 403 |
|
Other | | (5,783 | ) | | — |
| | (67 | ) | | — |
| | (5,850 | ) |
Investments in consolidated subsidiaries | | 3,433 |
| | 7,144 |
| | (1,311 | ) | | (9,266 | ) | | — |
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | | (6,262 | ) |
| (15,394 | ) |
| (6,498 | ) | | (9,266 | ) | | (37,420 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | |
Issuance of notes and bank borrowings | | (2,257 | ) | | — |
| | — |
| | — |
| | (2,257 | ) |
Payments on debt, capital leases, and associated costs | | — |
| | (1,894 | ) | | (1,450 | ) | | — |
| | (3,344 | ) |
Net intercompany financing activity | | 9,266 |
| | (12,370 | ) | | (4,926 | ) | | 8,030 |
| | — |
|
Other | | (6 | ) | | — |
| | — |
| | — |
| | (6 | ) |
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | | 7,003 |
|
| (14,264 | ) |
| (6,376 | ) |
| 8,030 |
|
| (5,607 | ) |
Effect of exchange rate changes on cash and cash equivalents | | — |
| | 3 |
| | (225 | ) | | — |
| | (222 | ) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | | (7,941 | ) |
| (2,248 | ) |
| (3,628 | ) | | — |
| | (13,817 | ) |
Cash and cash equivalents at beginning of period | | 103,878 |
| | 47,912 |
| | 98,248 |
| | — |
| | 250,038 |
|
Cash and cash equivalents at end of period | | $ | 95,937 |
|
| $ | 45,664 |
|
| $ | 94,620 |
|
| $ | — |
|
| $ | 236,221 |
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 2016 |
| | | | | | | | | | | | | | | | | | | | |
In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | |
Cash provided by (used in) operating activities | | $ | 101,581 |
| | $ | 48,791 |
| | $ | 21,586 |
| | $ | (124,146 | ) | | 47,812 |
|
| | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | |
Capital expenditures | | (62 | ) | | (12,550 | ) | | (13,015 | ) | | — |
| | (25,627 | ) |
Acquisitions, net of cash acquired | | — |
| | — |
| | (1,427 | ) | | — |
| | (1,427 | ) |
Proceeds from the sale of assets | | 2 |
| | 560 |
| | 4,240 |
| | — |
| | 4,802 |
|
Purchase of investments | | (5 | ) | | (16 | ) | | — |
| | — |
| | (21 | ) |
Sales of investments | | 2 |
| | 5,430 |
| | — |
| | — |
| | 5,432 |
|
Other | | (1,245 | ) | | (7 | ) | | (47 | ) | | — |
| | (1,299 | ) |
Investments in consolidated subsidiaries | | (117,911 | ) | | 1,356 |
| | — |
| | 116,555 |
| | — |
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | | (119,219 | ) |
| (5,227 | ) |
| (10,249 | ) |
| 116,555 |
|
| (18,140 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | |
Issuance of common stock | | 49,513 |
| | — |
| | — |
| | — |
| | 49,513 |
|
Payments on debt, capital leases, and associated costs | | (104,165 | ) | | (2,498 | ) | | (1,205 | ) | | — |
| | (107,868 | ) |
Gold production royalty payments | | — |
| | — |
| | (7,563 | ) | | — |
| | (7,563 | ) |
Net intercompany financing activity | | 39,297 |
| | (42,679 | ) | | (4,209 | ) | | 7,591 |
| | — |
|
Other | | 1,051 |
| | — |
| | — |
| | — |
| | 1,051 |
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | | (14,304 | ) |
| (45,177 | ) |
| (12,977 | ) |
| 7,591 |
|
| (64,867 | ) |
Effect of exchange rate changes on cash and cash equivalents | | — |
| | — |
| | 121 |
| | — |
| | 121 |
|
NET CHANGE IN CASH AND CASH EQUIVALENTS | | (31,942 | ) |
| (1,613 | ) |
| (1,519 | ) |
| — |
|
| (35,074 | ) |
Cash and cash equivalents at beginning of period | | 127,803 |
| | 53,548 |
| | 76,240 |
| | — |
| | 257,591 |
|
Cash and cash equivalents at end of period | | $ | 95,861 |
|
| $ | 51,935 |
|
| $ | 74,721 |
|
| $ | — |
|
| $ | 222,517 |
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
NINE MONTHS ENDED SEPTEMBER 30, 2017 |
| | | | | | | | | | | | | | | | | | | | |
In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Revenue | | $ | — |
| | $ | 301,658 |
| | $ | 253,797 |
| | $ | — |
| | $ | 555,455 |
|
COSTS AND EXPENSES | | | | | | | | | | |
Costs applicable to sales(1) | | — |
| | 207,385 |
| | 169,872 |
| | — |
| | 377,257 |
|
Amortization | | 908 |
| | 49,617 |
| | 56,355 |
| | — |
| | 106,880 |
|
General and administrative | | 24,316 |
| | 26 |
| | 245 |
| | — |
| | 24,587 |
|
Exploration | | 1,197 |
| | 9,526 |
| | 12,156 |
| | — |
| | 22,879 |
|
Pre-development, reclamation, and other | | 1,803 |
| | 5,593 |
| | 9,512 |
| | — |
| | 16,908 |
|
Total costs and expenses | | 28,224 |
| | 272,147 |
| | 248,140 |
| | — |
| | 548,511 |
|
OTHER INCOME (EXPENSE), NET | | | | | | | | | | |
Loss on debt extinguishments | | (9,342 | ) | | — |
| | — |
| | — |
| | (9,342 | ) |
Fair value adjustments, net | | — |
| | (864 | ) | | — |
| | — |
| | (864 | ) |
Other, net | | 20,090 |
| | 3,332 |
| | 9,256 |
| | (4,239 | ) | | 28,439 |
|
Interest expense, net of capitalized interest | | (9,876 | ) | | (703 | ) | | (4,601 | ) | | 4,239 |
| | (10,941 | ) |
Total other income (expense), net | | 872 |
| | 1,765 |
| | 4,655 |
| | — |
| | 7,292 |
|
Loss before income and mining taxes | | (27,352 | ) | | 31,276 |
| | 10,312 |
| | — |
| | 14,236 |
|
Income and mining tax (expense) benefit | | (3,108 | ) | | (3,946 | ) | | (16,126 | ) | | — |
| | (23,180 | ) |
Total loss after income and mining taxes | | (30,460 | ) | | 27,330 |
| | (5,814 | ) | | — |
| | (8,944 | ) |
Equity income (loss) in consolidated subsidiaries | | 21,516 |
| | (546 | ) | | (609 | ) | | (20,361 | ) | | — |
|
NET INCOME (LOSS) | | $ | (8,944 | ) | | $ | 26,784 |
| | $ | (6,423 | ) | | $ | (20,361 | ) | | $ | (8,944 | ) |
OTHER COMPREHENSIVE INCOME (LOSS), net of tax: | | | | | | | | | | |
Unrealized gain (loss) on marketable securities, net of tax | | (1,134 | ) | | 756 |
| | — |
| | (756 | ) | | (1,134 | ) |
Reclassification adjustments for impairment of equity securities, net of tax | | 426 |
| | (426 | ) | | — |
| | 426 |
| | 426 |
|
Reclassification adjustments for realized gain (loss) on sale of equity securities, net of tax | | 1,300 |
| | 540 |
| | — |
| | (540 | ) | | 1,300 |
|
Other comprehensive income (loss) | | 592 |
| | 870 |
| | — |
| | (870 | ) | | 592 |
|
COMPREHENSIVE INCOME (LOSS) | | $ | (8,352 | ) | | $ | 27,654 |
| | $ | (6,423 | ) | | $ | (21,231 | ) | | $ | (8,352 | ) |
(1) Excludes amortization.
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
NINE MONTHS ENDED SEPTEMBER 30, 2016 |
| | | | | | | | | | | | | | | | | | | | |
In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Revenue | | $ | — |
| | $ | 317,587 |
| | $ | 189,054 |
| | $ | — |
| | $ | 506,641 |
|
COSTS AND EXPENSES | | | | | | | | | | |
Costs applicable to sales(1) | | — |
| | 189,227 |
| | 118,201 |
| | — |
| | 307,428 |
|
Amortization | | 1,225 |
| | 57,983 |
| | 34,024 |
| | — |
| | 93,232 |
|
General and administrative | | 22,132 |
| | 237 |
| | 420 |
| | — |
| | 22,789 |
|
Exploration | | 2,091 |
| | 2,843 |
| | 2,735 |
| | — |
| | 7,669 |
|
Write-downs | | — |
| | — |
| | 4,446 |
| | — |
| | 4,446 |
|
Pre-development, reclamation, and other | | 1,774 |
| | 4,332 |
| | 6,953 |
| | — |
| | 13,059 |
|
Total costs and expenses | | 27,222 |
| | 254,622 |
| | 166,779 |
| | — |
| | 448,623 |
|
OTHER INCOME (EXPENSE), NET | | | | | | | | | | |
Loss on debt extinguishments | | (10,040 | ) | | — |
| | — |
| | — |
| | (10,040 | ) |
Fair value adjustments, net | | (1,635 | ) | | (5,787 | ) | | (5,813 | ) | | — |
| | (13,235 | ) |
Other, net | | 3,345 |
| | 3,082 |
| | 3,068 |
| | (3,633 | ) | | 5,862 |
|
Interest expense, net of capitalized interest | | (28,348 | ) | | (665 | ) | | (4,683 | ) | | 3,633 |
| | (30,063 | ) |
Total other income (expense), net | | (36,678 | ) | | (3,370 | ) | | (7,428 | ) | | — |
| | (47,476 | ) |
Income (Loss) before income and mining taxes | | (63,900 | ) | | 59,595 |
| | 14,847 |
| | — |
| | 10,542 |
|
Income and mining tax (expense) benefit | | (29,768 | ) | | 39,905 |
| | 42,981 |
| | — |
| | 53,118 |
|
Income (Loss) after income and mining taxes | | (93,668 | ) | | 99,500 |
| | 57,828 |
| | — |
| | 63,660 |
|
Equity income (loss) in consolidated subsidiaries | | 157,328 |
| | (4,825 | ) | | — |
| | (152,503 | ) | | — |
|
NET INCOME (LOSS) | | $ | 63,660 |
| | $ | 94,675 |
| | $ | 57,828 |
| | $ | (152,503 | ) | | $ | 63,660 |
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax: | | | | | | | | | | |
Unrealized gain (loss) on equity securities, net of tax | | 4,533 |
| | 4,466 |
| | — |
| | (4,466 | ) | | 4,533 |
|
Reclassification adjustments for impairment of equity securities, net of tax | | 20 |
| | 20 |
| | — |
| | (20 | ) | | 20 |
|
Reclassification adjustments for realized loss on sale of equity securities, net of tax | | (2,691 | ) | | (3,181 | ) | | — |
| | 3,181 |
| | (2,691 | ) |
Other comprehensive income (loss) | | 1,862 |
| | 1,305 |
| | — |
| | (1,305 | ) | | 1,862 |
|
COMPREHENSIVE INCOME (LOSS) | | $ | 65,522 |
| | $ | 95,980 |
| | $ | 57,828 |
| | $ | (153,808 | ) | | $ | 65,522 |
|
(1) Excludes amortization. |
| | | | | | | | | | | | | | | | | | | | | |
In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | |
Cash provided by (used in) activities of continuing operations | | $ | (7,938 | ) | | $ | 5,395 |
| | $ | 22,040 |
| | $ | (3,956 | ) | | 15,541 |
|
Cash provided by (used in) activities of discontinued operations | | — |
| | — |
| | (2,690 | ) | | — |
| | (2,690 | ) |
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | | (7,938 | ) | | 5,395 |
| | 19,350 |
| | (3,956 | ) | | 12,851 |
|
| | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | |
Capital expenditures | | (83 | ) | | (14,341 | ) | | (27,921 | ) | | — |
| | (42,345 | ) |
Proceeds from the sale of assets | | — |
| | 60 |
| | — |
| | — |
| | 60 |
|
Purchase of investments | | (361 | ) | | — |
| | — |
| | — |
| | (361 | ) |
Sales of investments | | 1,067 |
| | 552 |
| | — |
| | — |
| | 1,619 |
|
Other | | — |
| | — |
| | (65 | ) | | — |
| | (65 | ) |
Investments in consolidated subsidiaries | | (4,162 | ) | | 37 |
| | 169 |
| | 3,956 |
| | — |
|
Cash provided by (used in) activities of continuing operations | | (3,539 | ) | | (13,692 | ) | | (27,817 | ) | | 3,956 |
| | (41,092 | ) |
Cash provided by (used in) activities of discontinued operations | | — |
| | — |
| | (28,470 | ) | | — |
| | (28,470 | ) |
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | | (3,539 | ) |
| (13,692 | ) |
|
| (56,287 | ) | | 3,956 |
| | (69,562 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | |
Issuance of notes and bank borrowings, net of issuance costs | | 15,000 |
| | — |
| 52,577 |
| — |
| | — |
| | 15,000 |
|
Payments on debt, capital leases, and associated costs | | — |
| | (2,395 | ) | | (16,054 | ) | | — |
| | (18,449 | ) |
Net intercompany financing activity | | (20,381 | ) | | (10,946 | ) | | 31,327 |
| | — |
| | — |
|
Other | | (4,606 | ) | | — |
| | — |
| | — |
| | (4,606 | ) |
Cash provided by (used in) activities of continuing operations | | (9,987 | ) | | (13,341 | ) | | 15,273 |
| | — |
| | (8,055 | ) |
Cash provided by (used in) activities of discontinued operations | | — |
| | — |
| | (22 | ) | | — |
| | (22 | ) |
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | | (9,987 | ) |
| (13,341 | ) |
|
| 15,251 |
|
| — |
|
| (8,077 | ) |
Effect of exchange rate changes on cash and cash equivalents | | — |
| | 2 |
| | 555 |
| | — |
| | 557 |
|
Less net cash provided by (used in) discontinued operations | | — |
| | — |
| | (32,930 | ) | | — |
| | (32,930 | ) |
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | | (21,464 | ) |
| (21,636 | ) |
|
| 11,799 |
| | — |
| | (31,301 | ) |
Cash, cash equivalents and restricted cash at beginning of period | | 56,033 |
| | 52,239 |
| | 95,130 |
| | — |
| | 203,402 |
|
Cash, cash equivalents and restricted cash at end of period | | $ | 34,569 |
|
| $ | 30,603 |
|
|
| $ | 106,929 |
|
| $ | — |
|
| $ | 172,101 |
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINETHREE MONTHS ENDED SEPTEMBER 30,MARCH 31, 2017
| | In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | | | | | | | | |
Cash provided by (used in) operating activities | | $ | (18,502 | ) | | $ | 59,434 |
| 52,577 |
| $ | 93,411 |
| | $ | (20,361 | ) | | 113,982 |
| |
Cash provided by (used in) activities of continuing operations | | | $ | (4,815 | ) | | $ | 17,183 |
| | $ | 47,644 |
| | $ | (16,076 | ) | | 43,936 |
|
Cash provided by (used in) activities of discontinued operations | | | — |
| | — |
| | 11,335 |
| | — |
| | 11,335 |
|
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | | | (4,815 | ) | | 17,183 |
| | 58,979 |
| | (16,076 | ) | | 55,271 |
|
| | | | | | | | | | | | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | | | | | | | | | | | |
Capital expenditures | | (1,626 | ) | | (63,928 | ) | 52,577 |
| (25,368 | ) | | — |
| | (90,922 | ) | | (319 | ) | | (16,975 | ) | | (6,297 | ) | | — |
| | (23,591 | ) |
Proceeds from the sale of assets | | 8,917 |
| | 6,670 |
| 52,577 |
| 951 |
| | — |
| | 16,538 |
| | 8,916 |
| | 6,151 |
| | (48 | ) | | — |
| | 15,019 |
|
Purchase of investments | | (13,558 | ) | | (1 | ) | 52,577 |
| — |
| | — |
| | (13,559 | ) | | (1,016 | ) | | — |
| | — |
| | — |
| | (1,016 | ) |
Sales of investments | | 9,157 |
| | 2,164 |
| 52,577 |
| — |
| | — |
| | 11,321 |
| | 9,157 |
| | 863 |
| | — |
| | — |
| | 10,020 |
|
Other | | (7,269 | ) | | — |
| 52,577 |
| (188 | ) | | — |
| | (7,457 | ) | | 46 |
| | — |
| | (60 | ) | | — |
| | (14 | ) |
Investments in consolidated subsidiaries | | (9,571 | ) | | 7,897 |
| 52,577 |
| (1,004 | ) | | 2,678 |
| | — |
| | (12,454 | ) | | (70 | ) | | 67 |
| | 12,457 |
| | — |
|
Cash provided by (used in) activities of continuing operations | | | 4,330 |
| | (10,031 | ) | | (6,338 | ) | | 12,457 |
| | 418 |
|
Cash provided by (used in) activities of discontinued operations | | | — |
| | — |
| | (388 | ) | | — |
| | (388 | ) |
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | | (13,950 | ) | | (47,198 | ) | | (25,609 | ) | | 2,678 |
| | (84,079 | ) | | 4,330 |
| | (10,031 | ) | | (6,726 | ) | | 12,457 |
| | 30 |
|
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | | | | | | | | |
Issuance of notes and bank borrowings | | 242,701 |
| | — |
| 52,577 |
| — |
| | — |
| | 242,701 |
| |
Payments on debt, capital leases, and associated costs | | (185,538 | ) | | (5,789 | ) | 52,577 |
| (4,174 | ) | | — |
| | (195,501 | ) | | — |
| | (1,874 | ) | | (1,332 | ) | | — |
| | (3,206 | ) |
Net intercompany financing activity | | 16,904 |
| | (10,809 | ) | 52,577 |
| (23,778 | ) | | 17,683 |
| | — |
| | 14,318 |
| | (9,325 | ) | | (8,612 | ) | | 3,619 |
| | — |
|
Other | | (3,726 | ) | | — |
| 52,577 |
| — |
| | — |
| | (3,726 | ) | | (3,247 | ) | | — |
| | — |
| | — |
| | (3,247 | ) |
Cash provided by (used in) activities of continuing operations | | | 11,071 |
| | (11,199 | ) | | (9,944 | ) | | 3,619 |
| | (6,453 | ) |
Cash provided by (used in) activities of discontinued operations | | | — |
| | — |
| | (20 | ) | | — |
| | (20 | ) |
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | | 70,341 |
| | (16,598 | ) | | (27,952 | ) | | 17,683 |
| | 43,474 |
| | 11,071 |
| | (11,199 | ) | | (9,964 | ) | | 3,619 |
| | (6,473 | ) |
Effect of exchange rate changes on cash and cash equivalents | | — |
| | 3 |
| | 659 |
| | — |
| | 662 |
| | — |
| | — |
| | 555 |
| | — |
| | 555 |
|
NET CHANGE IN CASH AND CASH EQUIVALENTS | | 37,889 |
| | (4,359 | ) | | 40,509 |
| | — |
| | 74,039 |
| |
Cash and cash equivalents at beginning of period | | 58,048 |
| | 50,023 |
| | 54,111 |
| | — |
| | 162,182 |
| |
Cash and cash equivalents at end of period | | $ | 95,937 |
| | $ | 45,664 |
| | $ | 94,620 |
| | $ | — |
| | $ | 236,221 |
| |
Less net cash provided by (used in) discontinued operations | | | — |
| | — |
| | 5,527 |
| | — |
| | 5,527 |
|
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | | | 10,586 |
| | (4,047 | ) | | 37,317 |
| | — |
| | 43,856 |
|
Cash, cash equivalents and restricted cash at beginning of period | | | 66,337 |
| | 50,023 |
| | 10,241 |
| | — |
| | 126,601 |
|
Cash, cash equivalents and restricted cash at end of period | | | $ | 76,923 |
| | $ | 45,976 |
| | $ | 47,558 |
| | $ | — |
| | $ | 170,457 |
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2016 |
| | | | | | | | | | | | | | | | | | | | |
In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | |
Cash provided by (used in) operating activities | | $ | 98,323 |
| | $ | 101,368 |
| | $ | 53,180 |
| | $ | (152,503 | ) | | 100,368 |
|
| | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | |
Capital expenditures | | (196 | ) | | (38,272 | ) | | (32,619 | ) | | — |
| | (71,087 | ) |
Acquisitions, net of cash acquired | | — |
| | — |
| | (1,427 | ) | | — |
| | (1,427 | ) |
Proceeds from the sale of assets | | 2 |
| | 4,601 |
| | 11,501 |
| | — |
| | 16,104 |
|
Purchase of investments | | (104 | ) | | (16 | ) | | — |
| | — |
| | (120 | ) |
Sales of investments | | 501 |
| | 6,576 |
| | — |
| | — |
| | 7,077 |
|
Other | | (4,383 | ) | | 294 |
| | (129 | ) | | — |
| | (4,218 | ) |
Investments in consolidated subsidiaries | | (138,843 | ) | | 25,516 |
| | — |
| | 113,327 |
| | — |
|
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | | (143,023 | ) | | (1,301 | ) | | (22,674 | ) | | 113,327 |
| | (53,671 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | |
Issuance of common stock | | 122,584 |
| | — |
| | — |
| | — |
| | 122,584 |
|
Payments on debt, capital leases, and associated costs | | (104,665 | ) | | (9,001 | ) | | (6,885 | ) | | — |
| | (120,551 | ) |
Gold production royalty payments | | — |
| | — |
| | (27,155 | ) | | — |
| | (27,155 | ) |
Net intercompany financing activity | | 26,196 |
| | (73,364 | ) | | 7,992 |
| | 39,176 |
| | — |
|
Other | | 323 |
| | — |
| | — |
| | — |
| | 323 |
|
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | | 44,438 |
|
| (82,365 | ) |
| (26,048 | ) |
| 39,176 |
|
| (24,799 | ) |
Effect of exchange rate changes on cash and cash equivalents | | — |
| | 5 |
| | (100 | ) | | — |
| | (95 | ) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | | (262 | ) | | 17,707 |
| | 4,358 |
| | — |
| | 21,803 |
|
Cash and cash equivalents at beginning of period | | 96,123 |
| | 34,228 |
| | 70,363 |
| | — |
| | 200,714 |
|
Cash and cash equivalents at end of period | | $ | 95,861 |
| | $ | 51,935 |
| | $ | 74,721 |
| | $ | — |
| | $ | 222,517 |
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2017MARCH 31, 2018
| | In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
ASSETS | | | | | | | | | | | | | | | | |
CURRENT ASSETS | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 95,937 |
| | $ | 45,664 |
| | $ | 94,620 |
| | $ | — |
| | $ | 236,221 |
| | $ | 22,111 |
| | $ | 30,603 |
| | $ | 106,929 |
| | $ | — |
| | $ | 159,643 |
|
Receivables | | 18 |
| | 11,085 |
| | 55,312 |
| | — |
| | 66,415 |
| | 15,895 |
| | 5,084 |
| | 14,885 |
| | — |
| | 35,864 |
|
Ore on leach pads | | — |
| | 78,801 |
| | — |
| | — |
| | 78,801 |
| | — |
| | 75,584 |
| | — |
| | — |
| | 75,584 |
|
Inventory | | — |
| | 35,371 |
| | 36,958 |
| | — |
| | 72,329 |
| | — |
| | 31,512 |
| | 30,211 |
| | — |
| | 61,723 |
|
Prepaid expenses and other | | 7,688 |
| | 2,985 |
| | 9,687 |
| | — |
| | 20,360 |
| | 8,892 |
| | 3,193 |
| | 6,118 |
| | — |
| | 18,203 |
|
| | 103,643 |
| | 173,906 |
| | 196,577 |
| | — |
| | 474,126 |
| | 46,898 |
| | 145,976 |
| | 158,143 |
| | — |
| | 351,017 |
|
NON-CURRENT ASSETS | | | | | | | | | | | | | | | | | | | | |
Property, plant and equipment, net | | 3,940 |
| | 151,765 |
| | 79,353 |
| | — |
| | 235,058 |
| | 3,141 |
| | 165,578 |
| | 97,438 |
| | — |
| | 266,157 |
|
Mining properties, net | | — |
| | 220,022 |
| | 316,179 |
| | — |
| | 536,201 |
| | 6,980 |
| | 219,000 |
| | 617,841 |
| | — |
| | 843,821 |
|
Ore on leach pads | | — |
| | 69,805 |
| | — |
| | — |
| | 69,805 |
| | — |
| | 67,430 |
| | — |
| | — |
| | 67,430 |
|
Restricted assets | | 13,242 |
| | 227 |
| | 7,484 |
| | — |
| | 20,953 |
| | 14,352 |
| | 227 |
| | 7,537 |
| | — |
| | 22,116 |
|
Equity and debt securities | | 27,558 |
| | 1,567 |
| | — |
| | — |
| | 29,125 |
| | 36,772 |
| | 545 |
| | — |
| | — |
| | 37,317 |
|
Receivables | | — |
| | — |
| | 13,461 |
| | — |
| | 13,461 |
| | 24,047 |
| | — |
| | 31,381 |
| | — |
| | 55,428 |
|
Deferred tax assets | | — |
| | — |
| | — |
| | — |
| | — |
| |
Net investment in subsidiaries | | 259,259 |
| | 407 |
| | (1,166 | ) | | (258,500 | ) | | — |
| | 423,448 |
| | 332 |
| | 694 |
| | (424,474 | ) | | — |
|
Other | | 214,047 |
| | 10,531 |
| | 5,168 |
| | (206,383 | ) | | 23,363 |
| | 317,146 |
| | 11,820 |
| | 3,431 |
| | (313,748 | ) | | 18,649 |
|
TOTAL ASSETS | | $ | 621,689 |
| | $ | 628,230 |
| | $ | 617,056 |
| | $ | (464,883 | ) | | $ | 1,402,092 |
| | $ | 872,784 |
| | $ | 610,908 |
| | $ | 916,465 |
| | $ | (738,222 | ) | | $ | 1,661,935 |
|
| | | | | | | | | | | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | |
CURRENT LIABILITIES | | | | | | | | | | | | | | | | | | | | |
Accounts payable | | $ | 2,492 |
| | $ | 25,975 |
| | $ | 31,721 |
| | $ | — |
| | $ | 60,188 |
| | $ | 3,419 |
| | $ | 21,634 |
| | $ | 19,811 |
| | $ | — |
| | $ | 44,864 |
|
Other accrued liabilities | | 9,381 |
| | 14,087 |
| | 27,125 |
| | — |
| | 50,593 |
| | 16,643 |
| | 12,059 |
| | 76,447 |
| | — |
| | 105,149 |
|
Debt | | — |
| | 7,885 |
| | 6,490 |
| | — |
| | 14,375 |
| | — |
| | 9,977 |
| | 7,063 |
| | — |
| | 17,040 |
|
Reclamation | | — |
| | 2,754 |
| | 850 |
| | — |
| | 3,604 |
| | — |
| | 2,313 |
| | 1,464 |
| | — |
| | 3,777 |
|
| | 11,873 |
| | 50,701 |
| | 66,186 |
| | — |
| | 128,760 |
| | 20,062 |
| | 45,983 |
| | 104,785 |
| | — |
| | 170,830 |
|
NON-CURRENT LIABILITIES | | | | | | | | | | | | | | | | | | | | |
Debt | | 244,920 |
| | 22,838 |
| | 213,148 |
| | (206,383 | ) | | 274,523 |
| | 360,280 |
| | 31,116 |
| | 319,336 |
| | (313,748 | ) | | 396,984 |
|
Reclamation | | — |
| | 82,043 |
| | 22,462 |
| | — |
| | 104,505 |
| | — |
| | 83,392 |
| | 35,762 |
| | — |
| | 119,154 |
|
Deferred tax liabilities | | 14,978 |
| | 6,137 |
| | 56,075 |
| | — |
| | 77,190 |
| | 2,641 |
| | 4,978 |
| | 97,605 |
| | — |
| | 105,224 |
|
Other long-term liabilities | | 2,328 |
| | 4,061 |
| | 46,188 |
| | — |
| | 52,577 |
| | 2,602 |
| | 2,751 |
| | 50,079 |
| | — |
| | 55,432 |
|
Intercompany payable (receivable) | | (416,947 | ) | | 341,431 |
| | 75,516 |
| | — |
| | — |
| | (327,111 | ) | | 307,016 |
| | 20,095 |
| | — |
| | — |
|
| | (154,721 | ) | | 456,510 |
| | 413,389 |
| | (206,383 | ) | | 508,795 |
| | 38,412 |
| | 429,253 |
| | 522,877 |
| | (313,748 | ) | | 676,794 |
|
STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | |
Common stock | | 1,814 |
| | 250 |
| | 172,599 |
| | (172,849 | ) | | 1,814 |
| | 1,862 |
| | 19,630 |
| | 195,020 |
| | (214,650 | ) | | 1,862 |
|
Additional paid-in capital | | 3,318,987 |
| | 174,111 |
| | 1,803,807 |
| | (1,977,918 | ) | | 3,318,987 |
| | 3,355,710 |
| | 145,024 |
| | 1,882,610 |
| | (2,027,634 | ) | | 3,355,710 |
|
Accumulated deficit | | (2,554,368 | ) | | (49,984 | ) | | (1,838,925 | ) | | 1,888,909 |
| | (2,554,368 | ) | | (2,542,899 | ) | | (28,982 | ) | | (1,788,827 | ) | | 1,817,810 |
| | (2,542,898 | ) |
Accumulated other comprehensive income (loss) | | (1,896 | ) | | (3,358 | ) | | — |
| | 3,358 |
| | (1,896 | ) | | (363 | ) | | — |
| | — |
| | — |
| | (363 | ) |
| | 764,537 |
| | 121,019 |
| | 137,481 |
| | (258,500 | ) | | 764,537 |
| | 814,310 |
| | 135,672 |
| | 288,803 |
| | (424,474 | ) | | 814,311 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 621,689 |
| | $ | 628,230 |
| | $ | 617,056 |
| | $ | (464,883 | ) | | $ | 1,402,092 |
| | $ | 872,784 |
| | $ | 610,908 |
| | $ | 916,465 |
| | $ | (738,222 | ) | | $ | 1,661,935 |
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 20162017
| | In thousands | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | | Coeur Mining, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
ASSETS | | | | | | | | | | | | | | | | |
CURRENT ASSETS | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 58,048 |
| | $ | 50,023 |
| | $ | 54,111 |
| | $ | — |
| | $ | 162,182 |
| | $ | 44,662 |
| | $ | 52,239 |
| | $ | 95,131 |
| | $ | — |
| | $ | 192,032 |
|
Receivables | | 12 |
| | 6,865 |
| | 53,554 |
| | — |
| | 60,431 |
| | 137 |
| | 7,922 |
| | 11,010 |
| | — |
| | 19,069 |
|
Ore on leach pads | | — |
| | 64,167 |
| | — |
| | — |
| | 64,167 |
| | — |
| | 73,752 |
| | — |
| | — |
| | 73,752 |
|
Inventory | | — |
| | 49,393 |
| | 56,633 |
| | — |
| | 106,026 |
| | — |
| | 29,769 |
| | 28,461 |
| | — |
| | 58,230 |
|
Prepaid expenses and other | | 3,803 |
| | 1,459 |
| | 12,719 |
| | — |
| | 17,981 |
| | 7,824 |
| | 2,816 |
| | 4,413 |
| | — |
| | 15,053 |
|
Assets held for sale | | | — |
| | — |
| | 91,421 |
| | — |
| | 91,421 |
|
| | 61,863 |
| | 171,907 |
| | 177,017 |
| | — |
| | 410,787 |
| | 52,623 |
| | 166,498 |
| | 230,436 |
| | — |
| | 449,557 |
|
NON-CURRENT ASSETS | | | | | | | | | | | | | | | | | | | | |
Property, plant and equipment, net | | 3,222 |
| | 139,885 |
| | 73,689 |
| | — |
| | 216,796 |
| | 4,007 |
| | 161,487 |
| | 89,243 |
| | — |
| | 254,737 |
|
Mining properties, net | | — |
| | 195,791 |
| | 362,664 |
| | — |
| | 558,455 |
| | — |
| | 216,281 |
| | 613,288 |
| | — |
| | 829,569 |
|
Ore on leach pads | | — |
| | 67,231 |
| | — |
| | — |
| | 67,231 |
| | — |
| | 65,393 |
| | — |
| | — |
| | 65,393 |
|
Restricted assets | | 10,170 |
| | 226 |
| | 7,201 |
| | — |
| | 17,597 |
| | 13,251 |
| | 227 |
| | 7,369 |
| | — |
| | 20,847 |
|
Equity and debt securities | | — |
| | 4,488 |
| | — |
| | — |
| | 4,488 |
| | 33,569 |
| | 1,268 |
| | — |
| | — |
| | 34,837 |
|
Receivables | | — |
| | — |
| | 30,951 |
| | — |
| | 30,951 |
| | — |
| | — |
| | 28,750 |
| | — |
| | 28,750 |
|
Net investment in subsidiaries | | 273,056 |
| | 11,650 |
| | — |
| | (284,706 | ) | | — |
| | 422,074 |
| | 223 |
| | (18 | ) | | (422,279 | ) | | — |
|
Other | | 221,381 |
| | 9,263 |
| | 3,344 |
| | (221,384 | ) | | 12,604 |
| | 320,335 |
| | 11,040 |
| | 2,854 |
| | (316,744 | ) | | 17,485 |
|
TOTAL ASSETS | | $ | 569,692 |
| | $ | 600,441 |
| | $ | 654,866 |
| | $ | (506,090 | ) | | $ | 1,318,909 |
| | $ | 845,859 |
| | $ | 622,417 |
| | $ | 971,922 |
| | $ | (739,023 | ) | | $ | 1,701,175 |
|
| | | | | | | | | | | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | |
CURRENT LIABILITIES | | | | | | | | | | | | | | | | | | | | |
Accounts payable | | $ | 2,153 |
| | $ | 24,921 |
| | $ | 26,261 |
| | $ | — |
| | $ | 53,335 |
| | $ | 3,607 |
| | $ | 24,534 |
| | $ | 20,451 |
| | $ | — |
| | $ | 48,592 |
|
Other accrued liabilities | | 12,881 |
| | 13,664 |
| | 16,198 |
| | — |
| | 42,743 |
| | 13,205 |
| | 19,262 |
| | 62,463 |
| | — |
| | 94,930 |
|
Debt | | — |
| | 6,516 |
| | 5,523 |
| | — |
| | 12,039 |
| | — |
| | 9,215 |
| | 21,538 |
| | — |
| | 30,753 |
|
Royalty obligations | | — |
| | 4,995 |
| | — |
| | — |
| | 4,995 |
| |
Reclamation | | — |
| | 2,672 |
| | 850 |
| | — |
| | 3,522 |
| | — |
| | 2,313 |
| | 1,464 |
| | — |
| | 3,777 |
|
Liabilities held for sale | | | — |
| | — |
| | 50,677 |
| | — |
| | 50,677 |
|
| | 15,034 |
| | 52,768 |
| | 48,832 |
| | — |
| | 116,634 |
| | 16,812 |
| | 55,324 |
| | 156,593 |
| | — |
| | 228,729 |
|
NON-CURRENT LIABILITIES | | | | | | | | | | | | | | | | | | | | |
Debt | | 175,991 |
| | 15,214 |
| | 229,036 |
| | (221,384 | ) | | 198,857 |
| | 345,088 |
| | 28,313 |
| | 323,912 |
| | (316,744 | ) | | 380,569 |
|
Royalty obligations | | — |
| | 4,292 |
| | — |
| | — |
| | 4,292 |
| |
Reclamation | | — |
| | 75,183 |
| | 20,621 |
| | — |
| | 95,804 |
| | — |
| | 82,021 |
| | 35,034 |
| | — |
| | 117,055 |
|
Deferred tax liabilities | | 13,810 |
| | 6,179 |
| | 54,809 |
| | — |
| | 74,798 |
| | 4,110 |
| | 5,127 |
| | 95,911 |
| | — |
| | 105,148 |
|
Other long-term liabilities | | 1,993 |
| | 4,750 |
| | 53,294 |
| | — |
| | 60,037 |
| | 2,311 |
| | 3,063 |
| | 49,323 |
| | — |
| | 54,697 |
|
Intercompany payable (receivable) | | (405,623 | ) | | 336,813 |
| | 68,810 |
| | — |
| | — |
| | (337,439 | ) | | 317,759 |
| | 19,680 |
| | — |
| | — |
|
| | (213,829 | ) | | 442,431 |
| | 426,570 |
| | (221,384 | ) | | 433,788 |
| | 14,070 |
| | 436,283 |
| | 523,860 |
| | (316,744 | ) | | 657,469 |
|
STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | |
Common stock | | 1,809 |
| | 250 |
| | 197,913 |
| | (198,163 | ) | | 1,809 |
| | 1,856 |
| | 19,630 |
| | 195,020 |
| | (214,650 | ) | | 1,856 |
|
Additional paid-in capital | | 3,314,590 |
| | 181,009 |
| | 1,864,261 |
| | (2,045,270 | ) | | 3,314,590 |
| | 3,357,345 |
| | 149,194 |
| | 1,885,046 |
| | (2,034,240 | ) | | 3,357,345 |
|
Accumulated deficit | | (2,545,424 | ) | | (73,529 | ) | | (1,882,710 | ) | | 1,956,239 |
| | (2,545,424 | ) | | (2,546,743 | ) | | (34,551 | ) | | (1,788,597 | ) | | 1,823,148 |
| | (2,546,743 | ) |
Accumulated other comprehensive income (loss) | | (2,488 | ) | | (2,488 | ) | | — |
| | 2,488 |
| | (2,488 | ) | | 2,519 |
| | (3,463 | ) | | — |
| | 3,463 |
| | 2,519 |
|
| | 768,487 |
| | 105,242 |
| | 179,464 |
| | (284,706 | ) | | 768,487 |
| | 814,977 |
| | 130,810 |
| | 291,469 |
| | (422,279 | ) | | 814,977 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 569,692 |
| | $ | 600,441 |
| | $ | 654,866 |
| | $ | (506,090 | ) | | $ | 1,318,909 |
| | $ | 845,859 |
| | $ | 622,417 |
| | $ | 971,922 |
| | $ | (739,023 | ) | | $ | 1,701,175 |
|
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
NOTE 1920 – COMMITMENTS AND CONTINGENCIES
Labor Union Contract
The Company maintains a labor agreement with Sindicato de Trabajadores Mineros de la Empresa Manquiri S.A. at the San Bartolomé mine in Bolivia. The San Bartolomé mine labor agreement, which became effective January 28, 2010, is currently active and does not have a fixed term. At September 30, 2017, approximately 11% of the Company’s global labor force was covered by this collective bargaining agreement. The Company cannot predict whether this agreement will be renewed on similar terms or at all, whether future labor disruptions will occur or, if disruptions do occur, how long they will last.
Palmarejo Gold Stream
Effective August 2016, Coeur Mexicana, S.A. de C.V. (“Coeur Mexicana”), a subsidiary of Coeur, sells 50% of Palmarejo gold production (excluding production from the Paramount properties acquired in 2015) to a subsidiary of Franco-Nevada Corporation under a gold stream agreement for the lesser of $800 or spot price per ounce. In 2015, Coeur Mexicana received a $22.0 million deposit toward future deliveries under the gold stream agreement. In accordance with generally accepted accounting principles, although Coeur has satisfied its contractual obligation to repay the deposit to Franco-Nevada, the deposit is accounted for as deferred revenue and is recognized as revenue on a units of production basis as ounces are sold to Franco-Nevada. As of March 31, 2018, the remaining unamortized balance was $14.3 million.
Silvertip Contingent Consideration
A total of up to $50.0 million of contingent consideration, payable in cash and common stock, is payable in conjunction with the October 2017 Silvertip acquisition. The contingent consideration is based on the achievement of two milestones, which the Company has determined to be probable at March 31, 2018. The first milestone payment of $25.0 million is contingent upon receipt of a permit expansion for a sustained mining and milling rate of 1,000 tonnes per day. The permit application must be submitted to the British Columbia Ministry of Energy and Mining no later than June 2018. The second milestone payment of up to $25.0 million is contingent upon the amount of resource tonnes added as of December 31, 2019. The maximum payment of $25.0 million can be earned if the total resource reaches 3.7 million tonnes. The former JDS Silver Holdings Ltd. shareholders will receive $5.0 million for a total resource of at least 2.5 million tonnes and $5.0 million for every 0.3 million tonnes over 2.5 million tonnes up to 3.7 million tonnes.
NOTE 2021 – SUBSEQUENT EVENTSDISCONTINUED OPERATIONS
On September 10,In December 2017, the Company and certain of its subsidiaries entered into an Arrangementa definitive agreement (as amended, the “Agreement”) to sell all of the outstanding capital stock of Manquiri, which is the operator of the San Bartolomé mine and processing facility (the “Manquiri Divestiture”). On February 28, 2018, the Manquiri Divestiture was completed, and, in accordance with the Agreement, Manquiri was sold to Ag-Mining Investments, AB, a privately-held Swedish company owned by a group of individuals with extensive mining experience in Latin America.
Coeur and its subsidiaries received the following consideration:
2.0% net smelter returns royalty (the “Arrangement Agreement”“NSR”) amongpayable to Coeur on all metals processed through the San Bartolomé Mine’s processing facility, commencing immediately upon the closing of the Transaction, valued at $7.1 million.
Pre-closing value added tax refunds valued at $12.7 million that will be collected or received by Manquiri in the future will be paid to Coeur (net of collection costs).
Eighteen-month promissory notes valued at $26.9 million payable to Coeur and certain of its subsidiaries representing Manquiri’s cash and cash equivalents on the date of closing of the Manquiri Divestiture, and providing for repayment beginning in October 2018.
The Company an indirect wholly-owned subsidiaryrecognized a liability of approximately $5.7 million for certain post-closing covenants, guaranties and indemnification obligations on the part of the Company JDS Silver Holdings, Ltd. (“JDS Silver”)pursuant to the Agreement
The sale of Manquiri resulted in a gain of $1.5 million, which is included in Income (loss) from discontinued operations.
Coeur Mining, Inc. and Silvertip Resources Investment LLCSubsidiaries
Notes to Condensed Consolidated Financial Statements
The sale of Manquiri and San Bartolomé is expected to have a major effect on the Company's results and operations. Accordingly, San Bartolomé’s operations for the three months ended March 31, 2018 and 2017 are classified on the consolidated statements of operations and comprehensive income (loss) as representativeIncome (loss) from discontinued operations. The major classes of line items constituting the pretax profit or loss for the three months ended March 31, 2018 and 2017 are as follows:
|
| | | | | | | |
| Three months ended March 31, |
| 2018 | | 2017 |
Revenue | $ | 12,346 |
| | $ | 20,584 |
|
COSTS AND EXPENSES | | | |
Costs applicable to sales(1) | 12,269 |
| | 18,222 |
|
Amortization | — |
| | 1,411 |
|
General and administrative | 41 |
| | 8 |
|
Pre-development, reclamation, and other | 265 |
| | 744 |
|
OTHER INCOME (EXPENSE), NET | | | |
Interest expense, net of capitalized interest | (3 | ) | | (6 | ) |
Other, net | (260 | ) | | 340 |
|
Pretax profit (loss) on discontinued operations related to major classes of pretax profit (loss) | (492 | ) | | 533 |
|
Pretax gain on the disposal of the discontinued operation | 1,525 |
| | — |
|
Total pretax gain or loss on discontinued operations | 1,033 |
| | 533 |
|
Income and mining tax (expense) benefit | (483 | ) | | (169 | ) |
Income (loss) from discontinued operations | $ | 550 |
| | $ | 364 |
|
(1) Excludes amortization.
Net cash used in operating activities from San Bartolomé was $2.7 million for the three months ended March 31, 2018 compared to net cash provided by operating activities of $11.3 million for the three months ended March 31, 2017, respectively. Net cash used in investing activities from San Bartolomé were $28.5 million and $0.4 million for the three months ended March 31, 2018 and 2017, respectively.
NOTE 22 – ADDITIONAL BALANCE SHEET DETAIL AND SUPPLEMENTAL CASH FLOW INFORMATION
Accrued liabilities and other consist of the shareholdersfollowing: |
| | | | | | | |
| March 31, 2018 | | December 31, 2017 |
Accrued salaries and wages | $ | 15,552 |
| | $ | 26,559 |
|
Income and mining taxes | 36,642 |
| | 25,788 |
|
Silvertip contingent consideration | 24,543 |
| | 24,393 |
|
Accrued operating costs | 17,174 |
| | 12,323 |
|
Taxes other than income and mining | 5,644 |
| | 4,354 |
|
Accrued interest payable | 5,594 |
| | 1,513 |
|
Accrued liabilities and other | $ | 105,149 |
| | $ | 94,930 |
|
The following table provides a reconciliation of JDS Silver. The Arrangement Agreement provides forcash, cash equivalents, and restricted cash reported within the implementationstatement of a Plan of Arrangement (the “Plan of Arrangement”), pursuantfinancial position that sum to which the Company would acquire alltotal of the issued and outstanding common sharessame such amounts shown in the statement of JDS Silver (the “Acquisition”), the owner of the high-grade silver-zinc-lead Silvertip Mine located in northern British Columbia, Canada. On October 16, 2017, the Supreme Court of British Columbia approved the Plan of Arrangement, and the Company completed the Acquisition on October 17, 2017. Total initial consideration for the Acquisition was $200.0 million, consisting of (i) payments by the Company of approximately $147.5 million in cash and approximately $37.5 million in shares of common stock of the Company, and (ii) the assumption of approximately $15.0 million in existing debt. Additional contingent consideration of up to $50.0 million may become payable upon the achievement of certain permitting and exploration milestones prior to December 31, 2019.flows:
In connection with the completion of the Acquisition, on October 12, 2017 the Company borrowed $100.0 million under the revolving credit facility. |
| | | | | | | |
| March 31, 2018 | | March 31, 2017 |
Cash and cash equivalents | $ | 159,643 |
| | $ | 160,636 |
|
Restricted cash equivalents | 12,458 |
| | 9,821 |
|
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | 172,101 |
| | 170,457 |
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis (“MD&A”) provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Coeur Mining, Inc. and its subsidiaries (collectively the “Company”, “our”“our”, or “we”). We use certain non-GAAP financial performance measures in our MD&A. For a detailed description of these measures, please see “Non-GAAP Financial Performance Measures” at the end of this item. We provide certain operational and financial data on a silver equivalent basis, converting gold to silver at a historical 60:1 ratio of silver ounces to gold ounces, unless otherwise noted. We also provide realized silver equivalent data determined by average spot silver and gold prices during the relevant period.
Overview
We are a gold, silver, zinc and silverlead producer with mines located in the United States, Mexico and BoliviaCanada and exploration projects in the United States and Mexico. The Palmarejo complex, and Rochester, Kensington Wharf, and San BartoloméWharf mines constitute our principal sources of revenue.
In October 2017, the Company added its sixtha mine to Coeur’s North America-focused platform with the acquisition of the high-grade silver-zinc-lead Silvertip mine (“Silvertip”) located in northern British Columbia, Canada. The Silvertip mine commenced milling in the first quarter of 2018, and is expected to achievecommence commercial production in the second quarter of 2018. In February 2018, the Company completed the Manquiri Divestiture, which we determined to represent a strategic shift to a North America-focused mining portfolio with a major effect on the Company’s results and operations; therefore, San Bartolomé’s results of operations are reported as discontinued operations for all periods. In the following discussion and analysis, the operating statistics, results of operations, cash flows and financial condition that we present and discuss are those of our continuing operations unless otherwise indicated.
The Company's strategy is to discover, acquire, develop and operate low-cost silver and gold mines, which may include base metals such as zinc and lead, that produce long-term cash flow, provide opportunities for growth through continued exploration, and generate superior and sustainable returns for stockholders. Management focuses on maximizing net cash flow through identifying and implementing revenue enhancement opportunities, reducing operating and non-operating costs, exercising consistent capital discipline, and efficient working capital management.
ThirdFirst Quarter Highlights
Production from continuing operations of 9.58.3 million silver equivalent ounces, consisting of 4.03.2 million silver ounces and 93,29385,383 gold ounces
Sales from continuing operations of 9.28.4 million silver equivalent ounces, consisting of 3.83.2 million silver ounces and 89,97287,153 gold ounces
Net lossincome from continuing operations of $16.7$0.7 million ($0.090.00 per share) and adjusted net lossincome of $18.4$0.7 million ($0.100.00 per share) (see “Non-GAAP Financial Performance Measures”)
Costs applicable to sales from continuing operations were $12.28$9.77 per silver equivalent ounce ($11.198.55 per average spot silver equivalent ounce) and $845$970 per gold equivalent ounce (see “Non-GAAP Financial Performance Measures”)
All-in sustaining costs from continuing operations were $17.68$17.33 per silver equivalent ounce ($15.3014.44 per average spot silver equivalent ounce) (see “Non-GAAP Financial Performance Measures”)
Operating cash flow from continuing operations of $29.4$15.5 million and adjusted EBITDA from continuing operations of $39.5$49.5 million (see “Non-GAAP Financial Performance Measures”)
Cash and cash equivalents of $236.2$159.6 million at September 30, 2017March 31, 2018
AcquiredCompleted the Silvertip mineManquiri Divestiture for initialtotal consideration of $200.0$46.7 million (closedconsisting of a 2.0% NSR valued at $7.1 million, pre-closing value added tax refunds valued at $12.7 million payable to the Company, and $26.9 million of promissory notes payable in eighteen months to the Company, with payments beginning in October 2017). Additional consideration up to $50.0 million is contingent upon achieving specific future permitting and exploration milestones.
Established a $200.0 million secured revolving credit facility, which may be increased by up to $50.0 million in incremental loans and commitments subject to the terms of the Credit Agreement; drew $100.0 million on October 12, 2017 in connection with the Silvertip closing
2018
Selected Financial and Operating Results
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended March 31, |
| 2017 | | 2016 | | 2017 | | 2016 | 2018 | | 2017 |
Financial Results from Continuing Operations: | | | | |
Metal sales | $ | 175,963 |
| | $ | 176,386 |
| | $ | 555,455 |
| | $ | 503,219 |
| $ | 163,267 |
| | $ | 185,554 |
|
Net income (loss) | $ | (16,652 | ) | | $ | 69,557 |
| | $ | (8,944 | ) | | $ | 63,660 |
| $ | 691 |
| | $ | 18,299 |
|
Net income (loss) per share, diluted | $ | (0.09 | ) | | $ | 0.42 |
| | $ | (0.05 | ) | | $ | 0.40 |
| $ | 0.00 |
| | $ | 0.10 |
|
Adjusted net income (loss)(1) | $ | (18,425 | ) | | $ | 38,555 |
| | $ | (13,958 | ) | | $ | 45,045 |
| $ | 680 |
| | $ | 6,766 |
|
Adjusted net income (loss) per share, diluted(1) | $ | (0.10 | ) | | $ | 0.23 |
| | $ | (0.08 | ) | | $ | 0.28 |
| $ | 0.00 |
| | $ | 0.04 |
|
EBITDA(1) | $ | 35,016 |
| | $ | 50,933 |
| | $ | 132,057 |
| | $ | 133,837 |
| $ | 49,382 |
| | $ | 71,449 |
|
Adjusted EBITDA(1) | $ | 39,477 |
| | $ | 62,725 |
| | $ | 128,125 |
| | $ | 171,137 |
| $ | 49,524 |
| | $ | 54,514 |
|
Operating Results from Continuing Operations: | | | | |
Silver ounces produced | 3,951,616 |
| | 3,545,697 |
| | 11,858,974 |
| | 10,948,145 |
| 3,182,110 |
| | 2,717,869 |
|
Gold ounces produced | 93,293 |
| | 84,871 |
| | 264,330 |
| | 255,669 |
| 85,383 |
| | 88,218 |
|
Silver equivalent ounces produced | 9,549,196 |
|
| 8,637,957 |
|
| 27,718,774 |
|
| 26,288,285 |
| 8,305,090 |
|
| 8,010,949 |
|
Silver ounces sold | 3,817,063 |
| | 3,394,121 |
| | 12,377,603 |
| | 10,897,097 |
| 3,160,913 |
| | 3,325,706 |
|
Gold ounces sold | 89,972 |
| | 83,389 |
| | 287,040 |
| | 251,023 |
| 87,153 |
| | 110,874 |
|
Silver equivalent ounces sold | 9,215,393 |
| | 8,397,467 |
| | 29,599,974 |
| | 25,958,451 |
| 8,390,090 |
| | 9,978,120 |
|
Average realized price per silver ounce | $ | 16.86 |
| | $ | 19.61 |
| | $ | 17.17 |
| | $ | 17.36 |
| $ | 16.70 |
| | $ | 17.49 |
|
Average realized price per gold ounce | $ | 1,240 |
| | $ | 1,317 |
| | $ | 1,195 |
| | $ | 1,251 |
| $ | 1,268 |
| | $ | 1,149 |
|
Costs applicable to sales per silver equivalent ounce(1) | $ | 12.28 |
| | $ | 12.38 |
| | $ | 12.21 |
| | $ | 11.79 |
| $ | 9.77 |
| | $ | 10.61 |
|
Costs applicable to sales per average spot silver equivalent ounce(1) | $ | 11.19 |
| | $ | 11.91 |
| | $ | 11.28 |
| | $ | 11.02 |
| $ | 8.55 |
| | $ | 9.80 |
|
Costs applicable to sales per gold equivalent ounce(1) | $ | 845 |
| | $ | 767 |
| | $ | 831 |
| | $ | 716 |
| $ | 970 |
| | $ | 788 |
|
All-in sustaining costs per silver equivalent ounce(1) | $ | 17.68 |
| | $ | 17.02 |
| | $ | 16.72 |
| | $ | 16.03 |
| $ | 17.33 |
| | $ | 14.77 |
|
All-in sustaining costs per average spot silver equivalent ounce(1) | $ | 15.30 |
| | $ | 15.75 |
| | $ | 14.86 |
| | $ | 14.17 |
| $ | 14.44 |
| | $ | 13.29 |
|
Financial and Operating Results from Discontinued Operations:(2) | | | | |
Income (loss) from discontinued operations | | $ | 550 |
| | $ | 364 |
|
Silver ounces produced | | 643,078 |
| | 1,214,507 |
|
Gold ounces produced | | 78 |
| | — |
|
Silver equivalent ounces produced | | 647,758 |
| | 1,214,507 |
|
Silver ounces sold | | 704,479 |
| | 1,148,006 |
|
Gold ounces sold | | 292 |
| | — |
|
Silver equivalent ounces sold | | 721,999 |
| | 1,148,006 |
|
| |
(1) | See “Non-GAAP Financial Performance Measures.” |
| |
(2) | Reported production and financial results include operations through February 28, 2018. |
Consolidated Financial Results
Three Months Ended September 30, 2017March 31, 2018 compared to Three Months Ended September 30, 2016March 31, 2017
Net Income (Loss) from Continuing Operations
Net lossincome from continuing operations was $16.7$0.7 million ($0.090.00 per share) compared to Net income of $69.6$18.3 million ($0.420.10 per share). The decrease in Net incomefrom continuing operations is primarily due to lower ounces sold and a significant tax benefit realized$21.1 million gain on the sale of the Joaquin project in 2016, lower realized silver and gold prices and higher all-in sustaining costs per silver equivalent ounce,the first quarter of 2017, partially offset by higher production, lower interest expense and loss on debt extinguishment in the third quarter of 2016.operating margin per consolidated silver equivalent ounce.
Revenue
Metal sales were lower due to higher sales in the first quarter of 2017 resulting from holdover ounces from 2016 and a decrease in average realized silver andprices of 5%, partially offset by an increase in average realized gold prices of 14% and 6%, respectively, partially offset by higher silver and gold production.10%. The Company sold 3.83.2 million silver ounces and 89,97287,153 gold ounces, compared to sales of 3.43.3 million silver ounces and 83,389110,874 gold ounces. Gold contributed 63%68% of sales and silver contributed 37%32%, compared to 62%69% of sales from gold and 38%31% from silver. Metal sales from North American operations provided 91% of consolidated revenue, compared to 84%.
Costs Applicable to Sales
Costs applicable to sales increaseddecreased due to higherlower silver and gold ounces sold and lower costs applicable to sales per silver equivalent ounce, partially offset by higher costs applicable to sales per gold equivalent ounce. For a complete discussion of costs applicable to sales, see Results of Operations below.
Amortization
Amortization increased $6.1decreased $7.9 million or 22%20%, primarily due to higherlower silver and gold ounces sold.
Expenses
General and administrative expenses increased 4%decreased $1.3 million or 13% due to higherlower compensation, severance and professional service costs.
Exploration expense increased $6.1$1.4 million or 27%, due to the Company’s expansion of near-mine drilling efforts at Palmarejo, Kensington, and Rochester and regional exploration focused on projects in Nevada and Chihuahua, Mexico.
Pre-development, reclamation, and other expenses increased 77%$0.4 million or 10% due to additional workhigher asset retirement obligation accretion at La Preciosa, Silvertip acquisition costs, and workforce reduction severance at San Bartolomé.Palmarejo.
Other Income and Expenses
In 2016, the Company incurred losses of $10.0 million on extinguishment of debt and non-cashNon-cash fair value adjustments, relatednet, were a gain of $5.0 million compared to the Palmarejo gold production royalty which was terminateda loss of $1.2 million due to unrealized gains of $4.8 million on equity securities and a favorable fair value adjustment on zinc hedges. Effective January 1, 2018, as a result of ASU 2016-01, changes in the third quarterfair value of 2016 and the Rochester royalty obligation which was terminatedequity investments are recognized as fair value adjustments instead of other comprehensive income (loss) in the second quarterCondensed Consolidated Statements of 2017.Comprehensive Income (Loss).
Interest expense (net of capitalized interest of $0.7$0.1 million) decreasedincreased to $3.6$6.0 million from $8.1$3.6 million, primarily due to lowerhigher average debt levels andrelated to the lower 2024 Senior Notes interest rate.and the Facility.
Other, net decreased by $3.2to $0.2 million, primarily due to lower gainsa $21.1 million gain on the sale of non-core assets and investments.the Joaquin project in Argentina in the first quarter of 2017.
Income and Mining Taxes
During the thirdfirst quarter of 2017,2018, the Company reported estimated income and mining tax expense of approximately $14.2$11.9 million resulting in an effective tax rate of (588.1%)94.5%. This compares to estimated income and mining tax benefitexpense of $54.5$10.9 million for an effective tax rate of (360.6%)37.3% during the thirdfirst quarter of 2016.2017.
The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit:
|
| | | | | | | | | | | | | |
| Three months ended September 30, |
| 2017 | | 2016 |
In thousands | Income (loss) before tax | Tax (expense) benefit | | Income (loss) before tax | Tax (expense) benefit |
United States | $ | (6,008 | ) | $ | (2,362 | ) | | $ | 3,286 |
| $ | 10,712 |
|
Argentina | 738 |
| (366 | ) | | (301 | ) | 67 |
|
Mexico | 3,210 |
| (9,057 | ) | | 3,020 |
| 37,821 |
|
Bolivia | (5,029 | ) | (518 | ) | | 4,325 |
| 5,904 |
|
Other jurisdictions | 4,669 |
| (1,929 | ) | | 4,772 |
| (49 | ) |
| $ | (2,420 | ) | $ | (14,232 | ) | | $ | 15,102 |
| $ | 54,455 |
|
The Company’s effective income and mining tax rate is a function of the combined effective tax rates and foreign exchange rates in the jurisdictions in which it operates. Variations in the jurisdictional mix of income and loss and foreign exchange rates result in significant fluctuations in the consolidated effective tax rate, along with mining taxes, uncertain tax positions, and a full valuation allowance on deferred tax assets related to losses in the United States and certain foreign jurisdictions. Favorable operating results at Palmarejo continued to contribute to higher income and mining tax expense. The three months ended September 30, 2016 benefited from a legal entity reorganization to integrate acquisitions that resulted in a valuation allowance release of $40.8 million and a $15.0 million deferred tax benefit related to unremitted earnings.
A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related benefits will not be realized. The Company analyzes its deferred tax assets and if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company will ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of risk factors that could impact the Company’s ability to realize its deferred tax assets.
Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016
Net Income (Loss)
Net loss was $8.9 million ($0.05 per share) compared to Net income of $63.7 million ($0.40 per share). The decrease in Net income is primarily due to a significant tax benefit realized in 2016, lower realized silver and gold prices, and higher all-in sustaining costs per silver equivalent ounce, partially offset by a $21.1 million gain on the sale of the Joaquin project, less unfavorable fair value adjustments, lower interest expense and higher silver and gold production.
Revenue
Metal sales increased due to higher silver and gold production, and a reduction in metal inventory, partially offset by a 1% and 4% decrease in average realized silver and gold prices, respectively. The Company sold 12.4 million silver ounces and 287,040 gold ounces, compared to sales of 10.9 million silver ounces and 251,023 gold ounces. Gold contributed 62% of sales and silver contributed 38% for both periods. Royalty revenue was lower due to the Company’s divestiture of non-core royalty assets throughout 2016 and the first half of 2017. Metal sales from North American operations provided 89% of revenue, compared to 85%.
Costs Applicable to Sales
Costs applicable to sales increased due to higher silver and gold ounces sold and higher mining and processing costs. For a complete discussion of costs applicable to sales, see Results of Operations below.
Amortization
Amortization increased $13.6 million, or 15%, primarily due to higher silver and gold ounces sold.
Expenses
General and administrative expenses increased 8% due to higher compensation, severance and professional service costs.
Exploration expense increased $15.2 million, due to the Company’s expansion of near-mine exploration drilling at Palmarejo, Kensington and Rochester as well as regional exploration with a focus on projects in Nevada and Chihuahua, Mexico.
Pre-development, reclamation, and other expenses increased 29% to $16.9 million due to additional work at La Preciosa, Silvertip acquisition costs and workforce reduction severance at San Bartolomé.
Other Income and Expenses
In 2017, the Company incurred a $9.3 million loss in connection with the repurchase of the 2021 7.875% Senior Notes concurrent with the completed offering of the 2024 5.875% Senior Notes compared to $10.0 million primarily related to the voluntary repayment of a term loan.
Non-cash fair value adjustments, net, were a loss of $0.9 million compared to a loss of $13.2 million, primarily due to the termination of the Palmarejo gold production royalty in the third quarter of 2016 and the lesser impact of changes in future metal prices on the Rochester royalty obligation, which was repurchased and terminated in May 2017.
Interest expense (net of capitalized interest of $1.8 million) decreased to $10.9 million from $30.1 million, primarily due lower debt levels and a lower interest rate on the 2024 Senior Notes compared to the 2021 Senior Notes.
Other, net increased by $22.6 million, primarily due to a $21.1 million gain on the sale of the Joaquin project in Argentina and a $2.3 million gain on the repurchase of the Rochester royalty obligation.
Income and Mining Taxes
During the first three quarters of 2017, the Company reported estimated income and mining tax expense of approximately $23.2 million resulting in an effective tax rate of 162.8%. This compares to estimated income and mining tax benefit of $53.1 million for an effective tax rate of (503.9%) during the first nine months of 2016.
The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit:
| | | Nine months ended September 30, | Three months ended March 31, |
| 2017 | | 2016 | 2018 | | 2017 |
In thousands | Income (loss) before tax | Tax (expense) benefit | | Income (loss) before tax | Tax (expense) benefit | Income (loss) before tax | Tax (expense) benefit | | Income (loss) before tax | Tax (expense) benefit |
United States | $ | 8,213 |
| $ | (2,739 | ) | | $ | (5,956 | ) | $ | 8,370 |
| $ | 1,187 |
| $ | 517 |
| | $ | 20,653 |
| $ | (1,827 | ) |
Argentina | 281 |
| 1,704 |
| | 3,137 |
| (183 | ) | 254 |
| 10 |
| | (328 | ) | 1,124 |
|
Mexico | 9,665 |
| (23,745 | ) | | (1,136 | ) | 42,155 |
| 13,126 |
| (13,222 | ) | | 8,650 |
| (9,923 | ) |
Bolivia | (6,559 | ) | (304 | ) | | 10,388 |
| 5,182 |
| |
Other jurisdictions | 2,636 |
| 1,904 |
| | 4,109 |
| (2,406 | ) | (1,927 | ) | 746 |
| | 202 |
| (252 | ) |
| $ | 14,236 |
| $ | (23,180 | ) | | $ | 10,542 |
| $ | 53,118 |
| $ | 12,640 |
| $ | (11,949 | ) | | $ | 29,177 |
| $ | (10,878 | ) |
The Company’s effective income and mining tax rate is a function of the combined effective tax rates and foreign exchange rates in the jurisdictions in which it operates. Variations in the jurisdictional mix of income and loss and foreign exchange rates result in significant fluctuations in the consolidated effective tax rate, along with mining taxes, uncertain tax positions, and a full valuation allowance on deferred tax assets related to losses in the United States and certain foreign jurisdictions. During the first three quarters of the year, fluctuationsFluctuations in foreign exchange rates on deferred tax balances increased income and mining tax expense by $7.2$3.6 million and $5.6 million for the three months ended March 31, 2018 and 2017, respectively, predominately due to the strengthstrengthening of the Mexican Peso. Also, continuedAdditionally, favorable operating results at Palmarejo contributed to higher income and mining tax expense. The first three quarters of 2016 benefited from a legal entity reorganization to integrate acquisitions that resultedexpense in a valuation allowance release of $40.8 million and a $15.0 million deferred tax benefit related to unremitted earnings.Mexico.
A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company will ultimately be more likely than not able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of risk factors that could impact the Company’s ability to realize its deferred tax assets.
2017Income (loss) from Discontinued Operations
In respect of San Bartolomé’s operating results, income increased $0.2 million, primarily due to a $1.5 million gain on the sale of San Bartolomé in the first quarter of 2018, partially offset by lower production and higher unit costs.
2018 Outlook
Full-year 2017The Company is maintaining its full-year 2018 production guidance remains unchanged from the revised guidance published in the third quarter production release on October 5, 2017, which reflected lower expected silver production at the San Bartolomé mine due to persistent drought conditions. Revised 2017and related cost guidance is shown in the table below.guidance.
2017 Production Outlook
|
| | | |
(silver and silver equivalent ounces in thousands) | Silver | Gold | Silver Equivalent1 |
Palmarejo | 6,500 - 7,000 | 110,000 - 120,000 | 13,100 - 14,200 |
Rochester | 4,200 - 4,700 | 47,000 - 52,000 | 7,020 - 7,820 |
San Bartolomé | 4,500 - 4,750 | — | 4,500 - 4,750 |
Endeavor | 107 | — | 107 |
Kensington | — | 120,000 - 125,000 | 7,200 - 7,500 |
Wharf | — | 90,000 - 95,000 | 5,400 - 5,700 |
Total | 15,307 - 16,557 | 367,000 - 392,000 | 37,327 - 40,077 |
2017 Cost Outlook
|
| | |
(dollars in millions, except per ounce amounts) | Previous Guidance | Revised Guidance |
CAS per AgEqOz1 – Palmarejo
| $10.00 - $10.50 | $10.00 - $10.50 |
CAS per AgEqOz1 – Rochester
| $11.50 - $12.00 | $12.50 - $13.00 |
CAS per AgOz1 – San Bartolomé
| $15.75 - $16.25 | $16.50 - $17.00 |
CAS per AuOz1 – Kensington
| $800 - $850 | $850 - $900 |
CAS per AuEqOz1 – Wharf
| $700 - $750 | $700 - $750 |
Capital Expenditures | $109 - $129 | $120 - $140 |
General and Administrative Expenses | $28 - $32 | $28 - $32 |
Exploration Expense | $29 - $31 | $32 - $36 |
AISC per AgEqOz1
| $15.75 - $16.25 | $16.25 - $16.75 |
| |
(1) | See “Non-GAAP Financial Performance Measures.”
|
Results of Continuing Operations
The Company produced 4.03.2 million ounces of silver and 93,29385,383 ounces of gold in the three months ended September 30, 2017,March 31, 2018, compared to 3.52.7 million ounces of silver and 84,87188,218 ounces of gold in the three months ended September 30, 2016.March 31, 2017. Silver production increased 11% 17% due to higher mill throughput and higher grade at Palmarejo partially offset by lowerand higher placed tons placed at Rochester and lower grade and mill throughput at San Bartolomé. Gold production increased 10% due to higher mill throughput and grade at Palmarejo, partially offset by lower grades at Wharf.
The Company produced 11.9 million ounces of silver and 264,330 ounces of gold in the nine months ended September 30, 2017, compared to 10.9 million ounces of silver and 255,669 ounces of gold in the nine months ended September 30, 2016. Silver production increased 8% due to higher mill throughput and grade at Palmarejo and timing of leach pad recoveries at Rochester, partially offset by lower mill throughput and grade at San Bartolomé and lower tons placed at Rochester. Gold production increaseddecreased 3% due to higherlower grade at Wharf, lower mill throughput and grade Palmarejo, partially offset by lower grades at Kensington and Wharf.lower recovery at Palmarejo.
Costs applicable to sales were $12.28$9.77 per silver equivalent ounce ($11.198.55 per average spot silver equivalent ounce) and $845$970 per gold equivalent ounce in the three months ended September 30, 2017March 31, 2018 compared to $12.38$10.61 per silver equivalent ounce ($11.919.80 per average spot silver equivalent ounce) and $767$788 per gold equivalent ounce in the three months ended September 30, 2016.March 31, 2017. Costs applicable to sales per silver equivalent ounce remained comparabledecreased 8% due to lower unit costs at Palmarejo while costs applicable to sales per gold equivalent ounce increased 10%23% in the three months ended September 30, 2017 due to lower grades and production at Kensington and Wharf.
Costs applicable to sales were $12.21 per silver equivalent ounce ($11.28 per average spot silver equivalent ounce) and $831 per gold equivalent ounce in the nine months ended September 30, 2017 compared to $11.79 per silver equivalent ounce ($11.02 per average spot silver equivalent ounce) and $716 per gold equivalent ounce in the nine months ended September 30, 2016. Costs applicable to sales per silver equivalent ounce increased 4% in the nine months ended September 30, 2017March 31, 2018 due to higher mining and maintenanceunit costs at Rochester and lower production at San Bartolomé. Costs applicable to sales per gold equivalent ounce increased16%in the nine months ended September 30, 2017 due to lower grades and production at Kensington and Wharf.
All-in sustaining costs were $17.68$17.33 per silver equivalent ounce ($15.3014.44 per average spot silver equivalent ounce) in the three months ended September 30, 2017,March 31, 2018, compared to $17.02$14.77 per silver equivalent ounce ($15.7513.29 per average spot silver equivalent ounce) in the three months ended September 30, 2016.March 31, 2017. The 4%17% increase in all-in sustaining costs per silver equivalent ounce in 2017 was primarily due to higher costs applicable to sales per consolidated silver equivalent ounce and exploration expense,higher sustaining capital related to underground development at Palmarejo and Kensington, partially offset by lower sustaining capital.general and administrative costs.
All-in sustaining costswere $16.72 per silver equivalent ounce ($14.86 per average spot silver equivalent ounce) in the nine months ended September 30, 2017, compared to $16.03 per silver equivalent ounce ($14.17 per average spot silver equivalent ounce) in the nine months ended September 30, 2016. The 4% increase in all-in sustaining costs per silver equivalent ounce in 2017 was primarily due to higher costs applicable to sales and exploration expense, partially offset by lower sustaining capital.
Palmarejo
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended March 31, |
| 2017 | | 2016 | | 2017 | | 2016 | 2018 | | 2017 |
Tons milled | 413,086 |
| | 274,644 |
| | 1,108,897 |
| | 791,319 |
| 359,893 |
| | 360,383 |
|
Silver ounces produced | 1,907,548 |
| | 933,200 |
| | 4,894,910 |
| | 3,173,665 |
| 2,013,239 |
| | 1,530,541 |
|
Gold ounces produced | 28,948 |
| | 16,608 |
| | 84,032 |
| | 50,006 |
| 29,896 |
| | 30,792 |
|
Silver equivalent ounces produced | 3,644,428 |
| | 1,929,680 |
| | 9,936,830 |
| | 6,174,025 |
| 3,806,999 |
| | 3,378,061 |
|
Costs applicable to sales per silver equivalent oz(1) | $ | 9.82 |
| | $ | 10.96 |
| | $ | 10.19 |
| | $ | 10.58 |
| $ | 8.01 |
| | $ | 9.71 |
|
Costs applicable to sales per average spot silver equivalent oz(1) | $ | 8.73 |
| | $ | 10.29 |
| | $ | 9.17 |
| | $ | 9.58 |
| $ | 6.94 |
| | $ | 8.89 |
|
| |
(1) | See Non-GAAP Financial Performance Measures. |
Three Months Ended September 30, 2017March 31, 2018 compared to Three Months Ended September 30, 2016March 31, 2017
Silver equivalent production increased 89%13% due to higher mining rates from Guadalupe and Independencia and higher silver and gold grade. Metal sales were $60.7 million, or 34% of Coeur’s metal sales, compared with $30.7 million, or 17% of Coeur’s metal sales. Costs applicable to sales per ounce decreased 10% as a result of higher production, partially offset by higher consumable costs. Amortization increased to $16.4 million, primarily due to due to higher production from Guadalupe and Independencia. Capital expenditures decreased to $5.5 million due to lower underground development at Independencia.
Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016
Silver equivalent production increased 61% due to higher mining rates from Guadalupe and Independencia and higher silver and gold grade, partially offset by lower silver and gold recovery. Metal sales were $191.6$70.0 million, or 34%43% of Coeur’s metal sales, compared with $108.7$77.7 million, or 22%43% of Coeur’s metal sales. Costs applicable to sales per ounce decreased 4%18% as a result of higher production. Amortization increaseddecreased to $51.0$16.3 million compared to $27.8$20.2 million, primarily due to higher production fromlife of mine reserves, partially offset by higher production. Capital expenditures increased to $9.3 million due to underground development at Guadalupe and Independencia. Capital expenditures decreased to $23.0 million due to lower underground development at Independencia.
Rochester
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended March 31, |
| 2017 | | 2016 | | 2017 | | 2016 | 2018 | | 2017 |
Tons placed | 4,262,011 |
| | 4,901,039 |
| | 12,268,819 |
| | 15,677,511 |
| 4,351,131 |
| | 3,513,708 |
|
Silver ounces produced | 1,069,945 |
| | 1,160,902 |
| | 3,353,608 |
| | 3,286,817 |
| 1,157,026 |
| | 1,127,322 |
|
Gold ounces produced | 10,955 |
| | 12,120 |
| | 32,056 |
| | 36,521 |
| 11,487 |
| | 10,356 |
|
Silver equivalent ounces produced | 1,727,245 |
| | 1,888,102 |
| | 5,276,968 |
| | 5,478,077 |
| 1,846,246 |
| | 1,748,682 |
|
Costs applicable to sales per silver equivalent oz(1) | $ | 13.91 |
| | $ | 11.66 |
| | $ | 13.31 |
| | $ | 11.87 |
| $ | 13.59 |
| | $ | 12.56 |
|
Costs applicable to sales per average spot silver equivalent oz(1) | $ | 12.66 |
| | $ | 11.11 |
| | $ | 12.32 |
| | $ | 10.90 |
| $ | 12.13 |
| | $ | 11.80 |
|
| |
(1) | See Non-GAAP Financial Performance Measures. |
Three Months Ended September 30, 2017March 31, 2018 compared to Three Months Ended September 30, 2016March 31, 2017
Silver equivalent production decreased 9%increased 6% due to lowerhigher tons placed, partially offset by the timing oflower silver recoveries.grade. Metal sales were $31.2$33.5 million, or 18%21% of Coeur’s metal sales, compared with $37.9 million, or 22% of Coeur’s metal sales. Costs applicable to sales per silver equivalent ounce increased 19% due to lower production, higher waste tons mined as well as higher hauling and maintenance costs. Amortization decreased to $4.6 million compared to $5.2 million due to lower production. Capital expenditures increased to $9.7 million compared to $3.4 million due to the stage IV leach pad expansion and commissioning.
Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016
Silver equivalent production decreased 4% due to lower tons placed resulting from planned crusher maintenance and higher waste tons mined, partially offset by the timing of silver recoveries. Metal sales were $102.9 million, or 19% of Coeur’s metal sales, compared with $103.7$39.0 million, or 21% of Coeur’s metal sales. Costs applicable to sales per silver equivalent ounce increased 12%8% due to lower placed recoverablesilver ounces higher waste tons mined as well as higher hauling and maintenance costs.placed. Amortization remained comparable at $15.3 million.decreased to $4.8 million due to lower ounces sold. Capital expenditures increaseddecreased to $34.1$2.6 million compared to $10.6 million due to the stagecompletion of the Stage IV leach pad expansion and commissioning.in 2017.
Kensington
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended March 31, |
| 2017 | | 2016 | | 2017 | | 2016 | 2018 | | 2017 |
Tons milled | 172,038 |
| | 140,322 |
| | 501,096 |
| | 456,799 |
| 158,706 |
| | 165,895 |
|
Gold ounces produced | 27,541 |
| | 26,459 |
| | 80,162 |
| | 90,642 |
| 26,064 |
| | 26,197 |
|
Costs applicable to sales/oz(1) | $ | 948 |
| | $ | 862 |
| | $ | 931 |
| | $ | 794 |
| $ | 1,031 |
| | $ | 885 |
|
| |
(1) | See Non-GAAP Financial Performance Measures. |
Three Months Ended September 30, 2017March 31, 2018 compared to Three Months Ended September 30, 2016March 31, 2017
Gold production increased 4% due to higher mill throughput, partially offset by lower grades mined.remained comparable. Metal sales were $36.6$36.3 million, or 21%22% of Coeur’s metal sales, compared to $40.2$38.0 million, or 23%20% of Coeur’s metal sales. Costs applicable to sales per ounce were 10%16% higher, primarily due to lower grade,mill throughput, higher maintenancediesel costs, and higher contract services.mining costs. Amortization remained comparable at $7.9 million.decreased to $6.7 million from $9.2 million due to lower ounces sold. Capital expenditures increased to $10.1 million compared to $8.6$11.4 million due to higher ratesexpansion of underground mine development.
Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016
Gold production decreased 12% due to lower grades mined, partially offset by higher mill throughput. Metal sales were $110.1 million, or 20% of Coeur’s metal sales, compared to $112.4 million, or 22% of Coeur’s metal sales. Costs applicable to sales per ounce were 17% higher, primarily due to lower grade and higher contract services. Amortization was $25.4 million compared to $26.2 million due to lower production, partially offset by higher amortizable mining properties and equipment. Capital expenditures remained comparable at $24.3 million.
the site power plant.
Wharf
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended March 31, |
| 2017 | | 2016 | | 2017 | | 2016 | 2018 | | 2017 |
Tons placed | 1,150,308 |
| | 1,199,008 |
| | 3,435,656 |
| | 3,089,302 |
| 1,076,395 |
| | 1,292,181 |
|
Gold ounces produced | 25,849 |
| | 29,684 |
| | 68,080 |
| | 78,500 |
| 17,936 |
| | 20,873 |
|
Silver ounces produced | 14,817 |
| | 25,335 |
| | 47,469 |
| | 73,515 |
| 11,845 |
| | 20,065 |
|
Gold equivalent ounces produced(1) | 26,096 |
|
| 30,106 |
|
| 68,871 |
|
| 79,725 |
| 18,133 |
|
| 21,207 |
|
Costs applicable to sales per gold equivalent oz(1) | $ | 720 |
| | $ | 668 |
| | $ | 704 |
| | $ | 623 |
| $ | 874 |
| | $ | 662 |
|
| |
(1) | See Non-GAAP Financial Performance Measures. |
Three Months Ended September 30, 2017March 31, 2018 compared to Three Months Ended September 30, 2016March 31, 2017
Gold equivalent production decreased 13%14% due to fewer high-gradelower grade and lower tons placed from the Golden Reward deposit.placed. Metal sales were $31.3$23.4 million, or 18%14% of Coeur’s metal sales, compared to $39.3$30.3 million, or 22%16% of Coeur’s metal sales. Costs applicable to sales per gold equivalent ounce increased 8%32% due to lower production partially offset by lowerresulting from the completion of mining crushingat the higher-grade Golden Reward deposit in 2017, higher pad unloading costs, and processinghigher diesel costs. Amortization was $3.2$2.7 million compared to $6.5 million due to lower production and higher life of mine reserves. Capital expenditures increased to $3.1 million due to mining equipment purchases.
Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016
Gold equivalent production decreased 14% due to lower grade, partially offset by higher tons placed. Metal sales were $88.6 million, or 16% of Coeur’s metal sales, compared to $101.3 million, or 20% of Coeur’s metal sales. Costs applicable to sales per gold equivalent ounce increased 13% due to lower production and higher blasting and crushing costs. Amortization was $8.9 million compared to $15.6 million due to lower production and higher life of mine reserves.ounces sold. Capital expenditures increaseddecreased to $5.5 million due to mining equipment purchases.$0.3 million.
San BartoloméEndeavor Silver Stream
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended March 31, |
| 2017 | | 2016 | | 2017 | | 2016 | 2018 | | 2017 |
Tons milled | 365,554 |
| | 450,409 |
| | 1,167,605 |
| | 1,298,656 |
| — |
| | 45,340 |
|
Silver ounces produced | 956,893 |
| | 1,370,194 |
| | 3,455,961 |
| | 4,210,051 |
| — |
| | 39,941 |
|
Costs applicable to sales/oz(1) | $ | 18.26 |
| | $ | 14.97 |
| | $ | 16.86 |
| | $ | 13.58 |
| $ | — |
| | 7.22 |
|
| |
(1) | See Non-GAAP Financial Performance Measures. |
Three Months Ended September 30, 2017 compared to Three Months Ended September 30, 2016
Silver production decreased 30% due to lower high-grade ore purchases and mill throughput due to continued drought conditions and lower third-party ore purchases. Silver sales were $16.0 million, or 9%of Coeur’s metal sales, compared with $27.5 million, or 16% of Coeur’s metal sales. Costs applicable to sales per ounce increased due to lower production and an inventory adjustment of $0.6 million. Amortization remained comparable at $1.4 million due to lower life of mine reserves. Capital expenditures decreased to $0.5 million.
Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016
Silver production decreased 18% due to lower high-grade ore purchases and mill throughput due to continued drought conditions and lower third-party ore purchases, partially offset by higher recoveries. Silver sales were $60.4 million, or 11%of Coeur’s metal sales, compared with $73.9 million, or 15% of Coeur’s metal sales. Costs applicable to sales per ounce increased due to lower production and inventory adjustments of $1.6 million. Amortization remained comparable at $5.1 million due to lower life of mine reserves. Capital expenditures decreased to $1.2 million.
Endeavor Silver Stream
|
| | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Tons milled | — |
| | 42,335 |
| | 133,905 |
| | 166,740 |
|
Silver ounces produced | 2,413 |
| | 56,066 |
| | 107,026 |
| | 204,097 |
|
Costs applicable to sales/oz(1) | $ | 4.86 |
| | $ | 8.10 |
| | 6.95 |
| | 6.42 |
|
| |
(1) | See Non-GAAP Financial Performance Measures. |
In July 2017, the Company sold the Endeavor silver streamSilver Stream and our remaining portfolio of royalties for total consideration of $13.0 million to Metalla Royalty & Streaming Ltd. Reported production and financial results include operations through May 2017 as the buyer is entitled to production and any associated sales subject to the stream agreement after June 1, 2017 underin accordance with the terms of the sale agreement. Amounts presented for the three months ended September 30, 2017 relate to final adjustments for provisional sales.
Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016
Silver production at Endeavor decreased due to lower grades. Costs applicable to sales per ounce increased due to the impact of higher silver prices on the Company’s silver price sharing agreement with the Endeavor mine operator. Amortization was $0.3 million compared to $0.9 million due to lower production and lower amortizable mining properties.
Liquidity and Capital Resources
Cash and cash equivalents decreased $32.4 million in the three months ended March 31, 2018 as a result of pre-production capital expenditures to advance Silvertip toward commercial production, lower silver equivalent ounces sold, and higher costs applicable to sales per silver equivalent ounce, partially offset by higher average realized prices.
Cash Provided by Operating Activities from Continuing Operations
Net cash provided by operating activities for the three and nine months ended September 30,March 31, 2018 and 2017 was $29.4$15.5 million and $114.0$43.9 million, respectively, compared to net cash provided by operating activities of $47.8 million and $100.4 million, respectively, for the three and nine months ended September 30, 2016, and was impacted by the following key factors:
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended March 31, |
| 2017 | | 2016 | | 2017 | | 2016 | 2018 | | 2017 |
Consolidated silver equivalent ounces sold | 9,215,393 |
| | 8,397,467 |
| | 29,599,974 |
| | 25,958,451 |
| 8,390,090 |
| | 9,978,120 |
|
Average realized price per consolidated silver equivalent ounce | $ | 19.09 |
| | $ | 21.00 |
| | $ | 18.77 |
| | $ | 19.39 |
| $ | 19.46 |
| | $ | 18.60 |
|
Costs applicable to sales per consolidated silver equivalent ounce (1) | (12.90 | ) | | (12.55 | ) | | (12.75 | ) | | (11.84 | ) | (11.84 | ) | | (11.47 | ) |
Operating margin per consolidated silver equivalent ounce | $ | 6.19 |
| | $ | 8.45 |
| | $ | 6.02 |
| | $ | 7.55 |
| $ | 7.62 |
| | $ | 7.13 |
|
| |
(1) | See Non-GAAP Financial Performance Measures. |
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended March 31, |
In thousands | 2017 | | 2016 | | 2017 | | 2016 | 2018 | | 2017 |
Cash flow before changes in operating assets and liabilities | $ | 21,237 |
| | $ | 58,118 |
| | $ | 92,421 |
| | $ | 128,867 |
| $ | 33,440 |
| | $ | 43,290 |
|
Changes in operating assets and liabilities: | | | | | | | | | | |
Receivables | 6,529 |
| | 19,672 |
| | 17,719 |
| | 10,751 |
| (1,691 | ) | | 5,680 |
|
Prepaid expenses and other | (3,195 | ) | | (2,816 | ) | | (3,882 | ) | | (2,435 | ) | (5,635 | ) | | (4,906 | ) |
Inventories | (2,874 | ) | | (8,900 | ) | | 10,421 |
| | (24,408 | ) | (8,708 | ) | | 15,171 |
|
Accounts payable and accrued liabilities | 7,735 |
| | (18,262 | ) | | (2,697 | ) | | (12,407 | ) | (1,865 | ) | | (15,299 | ) |
CASH PROVIDED BY OPERATING ACTIVITIES | $ | 29,432 |
| | $ | 47,812 |
| | $ | 113,982 |
| | $ | 100,368 |
| |
Cash provided by continuing operating activities | | $ | 15,541 |
| | $ | 43,936 |
|
Cash provided by operating activities decreased $18.4$28.4 million for the three months ended September 30, 2017March 31, 2018 compared to the three months ended September 30, 2016March 31, 2017 due to lower average realized prices and higher costs applicable to sales per consolidated silver equivalent ounce, partially offset by higher silver equivalent ounces sold, and favorable working capital adjustments. Metal sales for the three months ended September 30, 2017 decreased $0.4 million, with $15.7 million due to lower average realized prices mostly offset by $15.3 million due to higher silver equivalent ounces sold. The $8.2 million working capital decrease in the three months ended September 30, 2017 was primarily due to an increase in accounts payable partially offset by an increase in inventories and prepaid assets, compared to the $10.3 million working capital increase in the three months ended September 30, 2016 primarily due to an increase on ore on leach pads and timing of payments, partially offset by lower trade receivables.
Cash provided by operating activities increased $13.6 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 due to higher silver equivalent ounces sold and favorable working capital adjustments, partially offset by higher costs applicable to sales per consolidated silver equivalent ounce and lowerunfavorable working capital adjustments, partially offset by higher average realized prices. Metal sales for the ninethree months ended September 30, 2017 increased $52.2March 31, 2018 decreased $22.3 million, with $68.5$32.8 million due to higherlower silver equivalent ounces sold, partially offset by $16.2$10.5 million due to lowerhigher average realized prices. The $21.6$17.9 million working capital increase in the three months ended March 31, 2018 was primarily due to an increase in inventories and prepaid assets and the timing on the collection of accounts receivable and VAT refunds, compared to the $0.6 million working capital decrease in the ninethree months ended September 30,March 31, 2017, which was primarily due to the reduction in precious metal inventory and
receivables, compared to the $28.5 million working capital increase in the nine months ended September 30, 2016, primarily due to an increase in ore on leach pads and precious metal inventory, and a reduction inof inventories carried over from the fourth quarter of 2016 and the collection of accounts payablereceivable, partially offset by lower receivables.the timing of payments.
Cash Used inProvided by (Used in) Investing Activities from Continuing Operations
Net cash used in investing activities in the three months ended September 30, 2017March 31, 2018 was $37.4$41.1 million compared to $18.1net cash provided by investing activities of $0.4 million in the three months ended September 30, 2016,March 31, 2017, primarily due to the purchase of strategic equity investments, and higher capital expenditures partially offset by non-core asset sales.at Silvertip and the proceeds from the sale of the Joaquin project in the first quarter of 2017. The Company had capital expenditures of $29.5$42.3 million in the three months ended September 30, 2017March 31, 2018 compared with $25.6$23.6 million in the three months ended September 30, 2016.March 31, 2017. Capital expenditures in the three months ended September 30,March 31, 2018 were primarily related to general pre-production capital spending at Silvertip and underground development at Silvertip, Palmarejo, and Kensington. Capital expenditures in the three months ended March 31, 2017 were primarily related to underground development at Palmarejo and Kensington, capitalized conversion drilling, and the Stage IV leach pad expansion and commissioning at Rochester. Capital expenditures in the three months ended September 30, 2016 were primarily related to underground development at Palmarejo and Kensington.
Net cash used in investing activities in the nine months ended September 30, 2017 was $84.1 million compared to $53.7 million in the nine months ended September 30, 2016, primarily due to higher capital expenditures and the purchase of strategic equity investments, partially offset by the proceeds from the sale of the Joaquin project. The Company had capital expenditures of $90.9 million in the nine months ended September 30, 2017 compared with $71.1 million in the nine months ended September 30, 2016. Capital expenditures in the nine months ended September 30, 2017 were primarily related to underground development at Palmarejo and Kensington, capitalized conversion drilling, and the Stage IV leach pad expansion and commissioning at Rochester. Capital expenditures in the nine months ended September 30, 2016 were primarily related to underground development at Palmarejo and Kensington.
Cash Provided by (Used in)Used in Financing Activities from Continuing Operations
Net cash used in financing activities in the three months ended September 30, 2017March 31, 2018 was $5.6$8.1 million compared to $64.9$6.5 million in the three months ended September 30, 2016, primarily due to issuance costs incurred in connection with the Revolving Credit Facility.March 31, 2017. During the three months ended September 30, 2016,March 31, 2018, the Company repaid the Term Loan, partially offset by net proceedsdrew $15.0 million from the settlement of sales of shares of its common stock.Facility to repay Silvertip’s debt obligation. In addition, the Company made paymentshad higher tax withholdings on vested stock-based compensation awards during the three months ended March 31, 2018.
Critical Accounting Policies and Accounting Developments
Please see Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contained in the Company’s Form
10-K for the year ended December 31, 2017 (the “2017 10-K”) for the Company’s critical accounting policies and estimates.
Revenue Recognition
On January 1, 2018, the Company adopted the updated revenue guidance applicable under ASC 606 - Revenue from Contracts with Customers. The new guidance creates a five-step framework to determine revenue recognition:
| |
1. | Identify the contract with the customer |
| |
2. | Identify the performance obligations |
| |
3. | Determine the transaction price |
| |
4. | Allocate the transaction price to the performance obligations |
| |
5. | Recognize revenue when (or as) the entity satisfies a performance obligation |
The Company produces doré and concentrate that is shipped to third-party refiners and smelters, respectively, for processing. The Company enters into contracts to sell its metal to various third-party customers which may include the refiners and smelters that process the doré and concentrate. The Company’s performance obligation in these transactions is generally the transfer of $7.6metal to the customer.
In the case of doré shipments, the company generally sells refined metal at market prices agreed upon by both parties. The Company also has the right, but not the obligation, to sell a portion of the anticipated refined metal in advance of being fully refined. When the Company sells refined metal or advanced metal, the performance obligation is satisfied when the metal is delivered to the customer. Revenue and Costs Applicable to Sales are recorded on a gross basis under these contracts at the time the performance obligation is satisfied.
Under the Company’s concentrate sales contracts with third-party smelters, metal prices are set on a specified future quotational period, typically one to three months, after the shipment date based on market prices. When the Company sells gold concentrate to the third-party smelters, the performance obligation is satisfied when the concentrate is loaded onto the third-party shipping vessel. The contracts, in general, provide for provisional payment based upon provisional assays and historical metal prices. Final settlement is based on the applicable price for the specified future quotational period and generally occurs three to six months after shipment. The Company’s provisionally priced sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of concentrates measured at the forward price at the time of sale. The embedded derivative does not qualify for hedge accounting and is adjusted to fair value through revenue each period until the date of final metal settlement.
The Company also sells concentrate under off-take agreements to third-party customers that are responsible for arranging the smelting of the concentrate. Prices are can either be fixed or based on a quotational period. The quotational period varies by contract, but is generally a one-month period following the shipment of the concentrate. The performance obligation is satisfied when the concentrate is loaded onto the third-party shipping vessel. The off-take agreement allows for the Company to sell concentrate in advance of shipment and results in the customer taking ownership of the concentrate prior to shipment.
For doré and off-take sales, the Company may incur a finance charge related to advance sales that is not considered significant and, as such, is not considered a separate performance obligation. In addition, the Company has elected to treat freight costs as a fulfillment cost under ASC 606 and not as a separate performance obligation.
The Company’s streaming agreement with a subsidiary of Franco-Nevada commenced in 2016 with a $20.0 million underdeposit paid by Franco-Nevada in exchange for the Palmarejo gold production royaltyright and obligation that terminated in July 2016. Coeur Mexicana now sellsto purchase 50% of a portion of Palmarejo gold production (excluding production from Independencia Este, acquired in the 2015 Paramount transaction) forat the lesser of $800 or spotmarket price per ounceounce. Because there is no minimum obligation associated with this deposit, it is not considered financing, and each shipment is considered to be a separate performance obligation. The streaming agreement represents a contract liability under a gold stream agreement.
Net cash provided by financing activities in the nine months ended September 30, 2017 was $43.5 million compared to net cash used in financing activities of $24.8 million in the nine months ended September 30, 2016. During the nine months ended September 30, 2017,ASC 606, which requires the Company received net proceeds of approximately $245.0 million from the issuanceto ratably recognize a portion of the 2024 Senior Notes, partially offset by the repurchase of the 2021 Senior Notesdeposit as revenue for $185.5 million, including premiums. Payments of $27.2 million were made in 2016 under the Palmarejoeach gold production royalty that terminated in July 2016. Coeur Mexicana now sells 50% of Palmarejo gold production (excluding production from Independencia Este, acquired in 2015 Paramount transaction) for the lesser of $800 or spot price per ounce under a gold stream agreement.
In September 2017, the Company, as borrower, and certain subsidiaries of the Company, as guarantors, entered into a Credit Agreement (the “Credit Agreement”) with Bank of America, N.A, Royal Bank of Canada, Bank of Montreal, Chicago Branch, and the Bank of Nova Scotia. The Credit Agreement provides for a $200.0 million senior secured revolving credit facility (the “Facility”), which may be increased by updelivered to $50.0 million in incremental loans and commitments subject to the terms of the Credit Agreement. The Facility has a term of four years. Loans under the Facility will bear interest at a rate equal to either a base rate plus a margin ranging from 1.00% to 1.75% or an adjusted LIBOR rate plus a margin ranging from 2.00% to 2.75%, as selected by the Company, in each case, with such margin determined in accordance with a pricing grid based upon the Company’s consolidated net leverage ratio as of the end of the applicable period.
The Facility is secured by substantially all of the assets of the Company and its domestic subsidiaries, including the land, mineral rights and infrastructure at the Kensington, Rochester and Wharf mines, as well as a pledge of the shares of certain of the Company’s subsidiaries. The Credit Agreement contains representations and warranties and affirmative and negative covenants that are usual and customary, including representations, warranties, and covenants that, among other things, restrict the ability of the Company and its subsidiaries to incur additional debt, incur or permit liens on assets, make investments and acquisitions, consolidate or merge with any other company, engage in asset sales and make dividends and distributions. The Credit Agreement also contains financial covenants consisting of a consolidated net leverage ratio and a consolidated interest coverage ratio. Obligations under the Credit Agreement may be accelerated upon the occurrence of certain customary events of default At September 30, 2017, the Company had $200.0 million available under the Facility with no amounts drawn. Issuance costs of $1.8 million were recorded as prepaid costs and will be amortized over the term of the Facility. On October 12, 2017, the Company drew $100.0 million from the Facility at a rate of 3.5% based on the 1-month LIBOR rate plus a margin of 2.25%.Franco-Nevada.
In May 2017, the Company completed an offering of $250.0 million in aggregate principal amount of 2024 Senior Notes in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended for net proceeds of approximately $245.0 million. The 2024 Senior Notes are governed by an Indenture dated as of May 31, 2017 (the “Indenture”), among the Company, as issuer, certain of the Company's subsidiaries named therein, as guarantors thereto (the “Guarantors”), and the Bank of New York Mellon, as trustee. In connection with the sale of the 2024 Senior Notes, the Company entered into a Registration Rights Agreement. On August 4, 2017, the Company commenced an exchange offer of registered 2024 Senior Notes for privately-placed 2024 Senior Notes which was completed on September 12, 2017. The 2024 Senior Notes bear interest at a rate of 5.875% per year from the date of issuance. Interest on the 2024 Senior Notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2017. The 2024 Senior Notes will mature on June 1, 2024 and are fully and unconditionally guaranteed by the Guarantors. At any time prior to June 1, 2020, the Company may redeem all or part of the 2024 Senior Notes upon not less than 30 nor more than 60 days’ prior notice at a redemption price equal to the sum of (i) 100% of the principal amount thereof, plus (ii) a make-whole premium as of the date of redemption, plus (iii) accrued and unpaid interest and additional interest, if any, thereon, to the date of redemption. In addition, the Company may redeem some or all of the 2024 Senior Notes on or after June 1, 2020, at redemption prices set forth in the Indenture, together with accrued and unpaid interest. At any time prior to June 1, 2020, the Company may use the proceeds of certain equity offerings to redeem up to 35% of the aggregate principal amount of the 2024 Senior Notes, including any permitted additional 2024 Senior Notes, at a redemption price equal to 105.875% of the principal amount. The Indenture contains covenants that, among other things, limit the Company’s ability under certain circumstances to incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem capital stock, prepay, redeem or repurchase certain debt, make loans and investments, create liens, sell, transfer or otherwise dispose of assets, enter into transactions with affiliates, enter into agreements restricting the Company's subsidiaries' ability to pay dividends and impose conditions on the Company’s ability to engage in mergers, consolidations and sales of all or substantially all of its assets. The Indenture also contains certain “Events of Default” (as defined in the Indenture) customary for indentures of this type.
Concurrent with the offering of the 2024 Senior Notes, the Company commenced a cash tender offer (the “Tender Offer”) to purchase the outstanding $178.0 million in aggregate principal amount of its 2021 Senior Notes. The Tender Offer was made on the terms and subject to the conditions set forth in the Offer to Purchase dated May 19, 2017. Holders of the 2021 Senior Notes who tendered their notes were entitled to receive $1,043.88 per $1,000 principal amount of the Notes, plus accrued and unpaid interest. $118.1 million aggregate principal amount of the Notes were tendered and purchased by the Company on May 31, 2017. In accordance with the terms of the indenture governing the 2021 Senior Notes, the remaining $59.9 million aggregate principal amount of the Notes were redeemed on June 30, 2017 at the redemption price of $1,039.38 per $1,000 principal amount, plus accrued and unpaid interest. The Company recorded a loss of $9.3 million as a result of the extinguishment of the 2021 Senior Notes.
Other Liquidity Matters
We believe that our liquidity and capital resources from U.S. operations are adequate to fund our U.S. operations and corporate activities. The Company has asserted indefinite reinvestment of earnings from its Mexican operations as determined by management’s judgment about and intentions concerning the future operations of the Company. The Company does not believe that the amounts reinvested will have a material impact on liquidity.
Critical Accounting PoliciesIn order to reduce future cash interest payments, and/or amounts due at maturity or upon redemption, from time to time we may repurchase certain of our debt securities for cash or in exchange for other securities, which may include secured or unsecured notes or equity, in each case in open market or privately negotiated transactions. We regularly engage in conversations with our bondholders and Accounting Developments
Please see Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES containedevaluate any such transactions in light of prevailing market conditions, liquidity requirements, contractual restrictions, and other factors. The amounts involved may be significant and any such transactions may occur at a substantial discount to the Company’s Form
10-K for the year ended December 31, 2016 (the “2016 10-K”) for the Company’s critical accounting policies and estimates. Those critical accounting policies and estimates have been supplemented and updated in this Form 10-Q.
debt securities’ face amount.
Non-GAAP Financial Performance Measures
Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles (“GAAP”). Unless otherwise noted, we present the Non-GAAP financial measures of our continuing operations in the tables below. For additional information regarding our discontinued operations, see Note 21 -- to the Condensed Consolidated Financial Statements. These measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.
Adjusted Net Income (Loss)
Management uses Adjusted net income (loss) to evaluate the Company’s operating performance, and to plan and forecast its operations. The Company believes the use of Adjusted net income (loss) reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies. Management’s determination of the components of Adjusted net income (loss) are evaluated periodically and are based, in part, on a review of non-GAAP financial measures used by mining industry analysts. The tax effect of adjustments are based on statutory tax rates and the Company’s tax attributes, including the impact through the Company’s valuation allowance. The combined effective rate of tax adjustments may not be consistent with the statutory tax rates or the Company’s effective tax rate due to jurisdictional tax attributes and related valuation allowance impacts which may minimize the tax effect of certain adjustments and may not apply to gains and losses equally. Adjusted net income (loss) is reconciled to Net income (loss) in the table below:
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended March 31, |
In thousands except per share amounts | 2017 | | 2016 | | 2017 | | 2016 | 2018 | | 2017 |
Net income (loss) | $ | (16,652 | ) | | $ | 69,557 |
| | $ | (8,944 | ) | | $ | 63,660 |
| $ | 1,241 |
| | $ | 18,663 |
|
(Income) loss from discontinued operations, net of tax | | (550 | ) | | (364 | ) |
Fair value adjustments, net | — |
| | 961 |
| | 864 |
| | 13,235 |
| (4,987 | ) | | 1,200 |
|
Impairment of equity and debt securities | — |
| | — |
| | 425 |
| | 20 |
| — |
| | 121 |
|
Write-downs | — |
| | — |
| | — |
| | 4,446 |
| |
Inventory write-downs | — |
| | 3,689 |
| | — |
| | 3,689 |
| |
Gain on sale of Joaquin project | — |
| | — |
| | (21,138 | ) | | — |
| — |
| | (21,138 | ) |
(Gain) loss on sale of assets and securities | (2,117 | ) | | (7,462 | ) | | (565 | ) | | (11,674 | ) | 574 |
| | 2,066 |
|
Gain on repurchase of Rochester royalty | — |
| | — |
| | (2,332 | ) | | — |
| |
Loss on debt extinguishment | — |
| | 10,040 |
| | 9,342 |
| | 10,040 |
| |
San Bartolomé workforce severance | 2,175 |
| | — |
| | 2,175 |
| | — |
| |
Transaction costs | 819 |
| | 26 |
| | 819 |
| | 1,198 |
| 90 |
| | — |
|
Deferred tax on reorganization | — |
| | (40,767 | ) | | — |
| | (40,767 | ) | |
Foreign exchange loss (gain) | (1,660 | ) | | 2,549 |
| | 4,580 |
| | (1,384 | ) | 4,312 |
| | 4,411 |
|
Tax effect of adjustments(1) | (990 | ) | | (38 | ) | | 816 |
| | 2,582 |
| — |
| | 1,807 |
|
Adjusted net income (loss) | $ | (18,425 | ) |
| $ | 38,555 |
|
| $ | (13,958 | ) | | $ | 45,045 |
| $ | 680 |
| | $ | 6,766 |
|
| | | | | | | | | | |
Adjusted net income (loss) per share - Basic | $ | (0.10 | ) | | $ | 0.24 |
| | $ | (0.08 | ) | | $ | 0.29 |
| $ | 0.00 |
| | $ | 0.04 |
|
Adjusted net income (loss) per share - Diluted | $ | (0.10 | ) | | $ | 0.23 |
| | $ | (0.08 | ) | | $ | 0.28 |
| $ | 0.00 |
| | $ | 0.04 |
|
| |
(1) | For the three months ended September 30,March 31, 2017, tax effect of adjustments of $(1.0)$1.8 million (112.9%) is primarily related to deferred taxes on the Metalla transaction. For the three months ended September 30, 2016, tax effect of adjustments of $(38) thousand (0.5%) is primarily related to the tax gain on the sale of an asset, partially offset by losses on other asset sales where no tax benefit was recognized and tax benefit from fair value adjustment. |
For the nine months ended September 30, 2017, tax effect of adjustments of $0.8 million (-7.8%) is primarily related to a taxable gain on the sale of the Joaquin project and deferred taxes on the Metalla transaction. For the nine months ended September 30, 2016, tax effect of adjustments of $2.6 million (-12.3%(14%) is primarily related to a taxable gain on the sale of assets and the tax valuation allowance impact from an asset write-down, partially offset by tax benefit from fair value adjustments.
EBITDA and Adjusted EBITDA
Management uses EBITDA to evaluate the Company’s operating performance, to plan and forecast its operations, and assess leverage levels and liquidity measures. The Company believes the use of EBITDA reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies. Adjusted EBITDA is a measure used in the 2024 Senior Notes Indenture and the Facility to determine our ability to make certain payments and incur additional indebtedness. EBITDA and Adjusted EBITDA do not represent, and should not be considered an alternative to, Net income (Loss) or Cash Flow from Operations as determined under GAAP. Other companies may calculate Adjusted EBITDA differently and those calculations may not be comparable to our presentation. Adjusted EBITDA is reconciled to Net income (loss) in the table below:
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended March 31, |
In thousands except per share amounts | 2017 | | 2016 | | 2017 | | 2016 | 2018 | | 2017 |
Net income (loss) | $ | (16,652 | ) | | $ | 69,557 |
| | $ | (8,944 | ) | | $ | 63,660 |
| $ | 1,241 |
| | $ | 18,663 |
|
(Income) loss from discontinued operations, net of tax | | (550 | ) | | (364 | ) |
Interest expense, net of capitalized interest | 3,606 |
| | 8,068 |
| | 10,941 |
| | 30,063 |
| 5,965 |
| | 3,579 |
|
Income tax provision (benefit) | 14,232 |
| | (54,455 | ) | | 23,180 |
| | (53,118 | ) | 11,949 |
| | 10,878 |
|
Amortization | 33,830 |
| | 27,763 |
| | 106,880 |
| | 93,232 |
| 30,777 |
| | 38,693 |
|
EBITDA | 35,016 |
|
| 50,933 |
|
| 132,057 |
|
| 133,837 |
| 49,382 |
|
| 71,449 |
|
Fair value adjustments, net | — |
| | 961 |
| | 864 |
| | 13,235 |
| (4,987 | ) | | 1,200 |
|
Impairment of equity and debt securities | — |
| | — |
| | 425 |
| | 20 |
| — |
| | 121 |
|
Foreign exchange (gain) loss | (229 | ) | | 1,466 |
| | (2,577 | ) | | 7,286 |
| 670 |
| | (1,206 | ) |
Gain on sale of Joaquin project | — |
| | — |
| | (21,138 | ) | | — |
| — |
| | (21,138 | ) |
(Gain) loss on sale of assets and securities | (2,117 | ) | | (7,462 | ) | | (565 | ) | | (11,674 | ) | 574 |
| | 2,066 |
|
Gain on repurchase of Rochester royalty | — |
| | — |
| | (2,332 | ) | | — |
| |
Loss on debt extinguishment | — |
| | 10,040 |
| | 9,342 |
| | 10,040 |
| |
San Bartolomé workforce severance | 2,175 |
| | — |
| | 2,175 |
| | — |
| |
Transaction costs | 819 |
| | 26 |
| | 819 |
| | 1,198 |
| 90 |
| | — |
|
Asset retirement obligation accretion | 2,511 |
| | 2,096 |
| | 7,352 |
| | 6,221 |
| 2,669 |
| | 2,116 |
|
Inventory adjustments and write-downs | 1,302 |
| | 4,665 |
| | 1,703 |
| | 6,528 |
| 1,126 |
| | (94 | ) |
Write-downs | — |
| | — |
| | — |
| | 4,446 |
| |
Adjusted EBITDA | $ | 39,477 |
|
| $ | 62,725 |
|
| $ | 128,125 |
|
| $ | 171,137 |
| $ | 49,524 |
|
| $ | 54,514 |
|
Costs Applicable to Sales and All-in Sustaining Costs
Management uses Costs applicable to sales (“CAS”) and All-in sustaining costs (“AISC”) to evaluate the Company’s current operating performance and life of mine performance from discovery through reclamation. We believe these measures assist analysts, investors and other stakeholders in understanding the costs associated with producing silver and gold, assessing our operating performance and ability to generate free cash flow from operations and sustaining production. These measures may not be indicative of operating profit or cash flow from operations as determined under GAAP. Management believes converting the benefit from selling gold into silver equivalent ounces best allows management, analysts, investors and other stakeholders to evaluate the operating performance of the Company. Other companies may calculate CAS and AISC differently as a result of reflecting the benefit from selling non-silver metals as a by-product credit rather than converting to silver equivalent ounces, differences in the determination of sustaining capital expenditures, and differences in underlying accounting principles and accounting frameworks such as in International Financial Reporting Standards.
Three Months Ended September 30, 2017March 31, 2018
| | | | Silver | | Gold | | Total | | Silver | | Gold | | Total |
In thousands except per ounce amounts | | Palmarejo | | Rochester | | San Bartolomé | | Endeavor | | Total | | Kensington | | Wharf | | Total | | | Palmarejo | | Rochester | | Total | | Kensington | | Wharf | | Total | |
Costs applicable to sales, including amortization (U.S. GAAP) | | $ | 49,669 |
| | $ | 27,866 |
| | $ | 18,795 |
| | $ | 59 |
| | $ | 96,389 |
| | $ | 35,522 |
| | $ | 20,553 |
| | $ | 56,075 |
| | $ | 152,464 |
| | $ | 47,421 |
|
| $ | 29,136 |
| | $ | 76,557 |
| | $ | 35,347 |
| | $ | 17,966 |
| | $ | 53,313 |
| | $ | 129,870 |
|
Amortization | | 16,414 |
| | 4,591 |
| | 1,430 |
| | 20 |
| | 22,455 |
| | 7,864 |
| | 3,223 |
| | 11,087 |
| | 33,542 |
| | 16,325 |
| | 4,831 |
| | 21,156 |
| | 6,717 |
| | 2,657 |
| | 9,374 |
| | 30,530 |
|
Costs applicable to sales | | $ | 33,255 |
| | $ | 23,275 |
| | $ | 17,365 |
| | $ | 39 |
| | $ | 73,934 |
| | $ | 27,658 |
| | $ | 17,330 |
| | $ | 44,988 |
| | $ | 118,922 |
| | $ | 31,096 |
| | $ | 24,305 |
| | $ | 55,401 |
| | $ | 28,630 |
| | $ | 15,309 |
| | $ | 43,939 |
| | $ | 99,340 |
|
Silver equivalent ounces sold | | 3,386,963 |
| | 1,673,704 |
| | 951,219 |
| | 8,027 |
| | 6,019,913 |
| | | | | | | | 9,215,393 |
| | 3,883,983 |
| | 1,789,007 |
| | 5,672,990 |
| | | | | | | | 8,390,090 |
|
Gold equivalent ounces sold | | | | | | | | | | | | 29,173 |
| | 24,085 |
| | 53,258 |
| | | | | | | | | | 27,763 |
| | 17,522 |
| | 45,285 |
| | |
Costs applicable to sales per ounce | | $ | 9.82 |
| | $ | 13.91 |
| | $ | 18.26 |
| | $ | 4.86 |
| | $ | 12.28 |
| | $ | 948 |
| | $ | 720 |
| | $ | 845 |
| | $ | 12.90 |
| | $ | 8.01 |
|
| $ | 13.59 |
| | $ | 9.77 |
| | $ | 1,031 |
| | $ | 874 |
| | $ | 970 |
| | $ | 11.84 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Costs applicable to sales per average spot ounce | | $ | 8.73 |
| | $ | 12.66 |
| | | | | | $ | 11.19 |
| | | | | | | | $ | 11.17 |
| | $ | 6.94 |
| | $ | 12.13 |
| | $ | 8.55 |
| |
| |
| |
| | $ | 9.87 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Costs applicable to sales | | | | | | | | | | | | | | | | | | $ | 118,922 |
| | | | | | | | | | | | | | $ | 99,340 |
|
Treatment and refining costs | | | | | | | | | | | | | | | | | | 1,408 |
| | | | | | | | | | | | | | 1,195 |
|
Sustaining capital(1) | | | | | | | | | | | | | | | | | | 18,626 |
| | | | | | | | | | | | | | 23,389 |
|
General and administrative | | | | | | | | | | | | | | | | | | 7,412 |
| | | | | | | | | | | | | | 8,804 |
|
Exploration | | | | | | | | | | | | | | | | | | 9,814 |
| | | | | | | | | | | | | | 6,683 |
|
Reclamation | | | | | | | | | | | | | | | | | | 4,364 |
| | | | | | | | | | | | | | 4,532 |
|
Project/pre-development costs | | | | | | | | | | | | | | | | | | 2,337 |
| | | | | | | | | | | | | | 1,421 |
|
All-in sustaining costs | | | | | | | | | | | | | | | | | | $ | 162,883 |
| | | | | | | | | | | | | | $ | 145,364 |
|
Silver equivalent ounces sold | | | | | | | | | | | | | | | | | | 6,019,913 |
| | | | | | | | | | | | | | 5,672,990 |
|
Kensington and Wharf silver equivalent ounces sold | Kensington and Wharf silver equivalent ounces sold | | | | | | | | | | | | | | 3,195,480 |
| Kensington and Wharf silver equivalent ounces sold | | | | | | | | | | 2,717,100 |
|
Consolidated silver equivalent ounces sold | Consolidated silver equivalent ounces sold | | | | | | | | | | | | | | | | 9,215,393 |
| Consolidated silver equivalent ounces sold | | | | | | | | | | | | 8,390,090 |
|
All-in sustaining costs per silver equivalent ounce | All-in sustaining costs per silver equivalent ounce | | | | | | | | | | | | | | $ | 17.68 |
| All-in sustaining costs per silver equivalent ounce | | | | | | | | | | $ | 17.33 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consolidated silver equivalent ounces sold (average spot) | Consolidated silver equivalent ounces sold (average spot) | | | | | | | | | | | | | | 10,645,948 |
| Consolidated silver equivalent ounces sold (average spot) | | | | | | | | | | 10,066,759 |
|
All-in sustaining costs per average spot silver equivalent ounce | All-in sustaining costs per average spot silver equivalent ounce | | | | | | | | | | | | | | $ | 15.30 |
| All-in sustaining costs per average spot silver equivalent ounce | | | | | | | | | | $ | 14.44 |
|
| |
(1) | Excludes development capital for Jualin Guadalupe South Portal and Rochester expansion permitting.Silvertip. |
Three Months Ended September 30, 2016March 31, 2017
| | | | Silver | | Gold | | | | Silver | | Gold | | |
In thousands except per ounce amounts | | Palmarejo | | Rochester | | San Bartolomé | | Endeavor | | Total | | Kensington | | Wharf | | Total | | Total | | Palmarejo | | Rochester | | Endeavor | | Total | | Kensington | | Wharf | | Total | | Total |
Costs applicable to sales, including amortization (U.S. GAAP) | | $ | 21,794 |
| | $ | 27,027 |
| | $ | 22,536 |
| | $ | 486 |
| | $ | 71,843 |
| | $ | 34,755 |
| | $ | 26,158 |
| | $ | 60,913 |
| | $ | 132,756 |
| | $ | 63,151 |
| | $ | 32,255 |
| | $ | 400 |
| | $ | 95,806 |
| | $ | 37,621 |
| | $ | 19,431 |
| | $ | 57,052 |
| | $ | 152,858 |
|
Amortization | | 5,761 |
| | 5,244 |
| | 1,723 |
| | 113 |
| | 12,841 |
| | 8,046 |
| | 6,461 |
| | 14,507 |
| | 27,348 |
| | 20,150 |
| | 5,816 |
| | 113 |
| | 26,079 |
| | 9,178 |
| | 3,111 |
| | 12,289 |
| | 38,368 |
|
Costs applicable to sales | | $ | 16,033 |
| | $ | 21,783 |
| | $ | 20,813 |
| | $ | 373 |
| | $ | 59,002 |
| | $ | 26,709 |
| | $ | 19,697 |
| | $ | 46,406 |
| | $ | 105,408 |
| | $ | 43,001 |
| | $ | 26,439 |
| | $ | 287 |
| | $ | 69,727 |
| | $ | 28,443 |
| | $ | 16,320 |
| | $ | 44,763 |
| | $ | 114,490 |
|
Silver equivalent ounces sold | | 1,462,401 |
| | 1,868,085 |
| | 1,390,552 |
| | 46,069 |
| | 4,767,107 |
| | | | | | | | 8,397,467 |
| | 4,427,346 |
| | 2,104,209 |
| | 39,765 |
| | 6,571,320 |
| | | | | | | | 9,978,120 |
|
Gold equivalent ounces sold | | | | | | | | | | | | 30,998 |
| | 29,508 |
| | 60,506 |
| | | | | | | | | | | | 32,144 |
| | 24,636 |
| | 56,780 |
| | |
Costs applicable to sales per ounce | | $ | 10.96 |
| | $ | 11.66 |
| | $ | 14.97 |
| | $ | 8.10 |
| | $ | 12.38 |
| | $ | 862 |
| | $ | 668 |
| | $ | 767 |
| | $ | 12.55 |
| | $ | 9.71 |
|
| $ | 12.56 |
|
| $ | 7.22 |
|
| $ | 10.61 |
| | $ | 885 |
|
| $ | 662 |
|
| $ | 788 |
| | $ | 11.47 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Costs applicable to sales per average spot ounce | | $ | 10.29 |
| | $ | 11.11 |
| | | | | | $ | 11.91 |
| | | | | | | | $ | 11.62 |
| | $ | 8.89 |
| | $ | 11.80 |
| |
| | $ | 9.80 |
| | | | | | | | $ | 10.33 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Costs applicable to sales | | | | | | | | | | | | | | | | | | $ | 105,408 |
| | | | | | | | | | | | | | | | $ | 114,490 |
|
Treatment and refining costs | | | | | | | | | | | | | | | | | | 761 |
| | | | | | | | | | | | | | | | 1,616 |
|
Sustaining capital(1) | | | | | | | | | | | | | | | | | | 19,762 |
| | | | | | | | | | | | | | | | 11,191 |
|
General and administrative | | | | | | | | | | | | | | | | | | 7,113 |
| | | | | | | | | | | | | | | | 10,125 |
|
Exploration | | | | | | | | | | | | | | | | | | 3,706 |
| | | | | | | | | | | | | | | | 5,252 |
|
Reclamation | | | | | | | | | | | | | | | | | | 4,036 |
| | | | | | | | | | | | | | | | 3,338 |
|
Project/pre-development costs | | | | | | | | | | | | | | | | | | 2,133 |
| | | | | | | | | | | | | | | | 1,419 |
|
All-in sustaining costs | | | | | | | | | | | | | | | | | | $ | 142,919 |
| | | | | | | | | | | | | | | | $ | 147,431 |
|
Silver equivalent ounces sold | | | | | | | | | | | | | | | | | | 4,767,107 |
| | | | | | | | | | | | | | | | 6,571,320 |
|
Kensington and Wharf silver equivalent ounces sold | Kensington and Wharf silver equivalent ounces sold | | | | | | | | | | | | | | 3,630,360 |
| Kensington and Wharf silver equivalent ounces sold | | | | | | | | | | | | 3,406,800 |
|
Consolidated silver equivalent ounces sold | Consolidated silver equivalent ounces sold | | | | | | | | | | | | | | | | 8,397,467 |
| Consolidated silver equivalent ounces sold | | | | | | | | | | | | | | 9,978,120 |
|
All-in sustaining costs per silver equivalent ounce | All-in sustaining costs per silver equivalent ounce | | | | | | | | | | | | | | $ | 17.02 |
| All-in sustaining costs per silver equivalent ounce | | | | | | | | | | | | $ | 14.77 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consolidated silver equivalent ounces sold (average spot) | Consolidated silver equivalent ounces sold (average spot) | | | | | | | | | | | | | | 9,074,222 |
| Consolidated silver equivalent ounces sold (average spot) | | | | | | | | | | | | 11,093,378 |
|
All-in sustaining costs per average spot silver equivalent ounce | All-in sustaining costs per average spot silver equivalent ounce | | | | | | | | | | | | | | $ | 15.75 |
| All-in sustaining costs per average spot silver equivalent ounce | | | | | | | | | | | | $ | 13.29 |
|
| |
(1) | Excludes development capital for Jualin, Guadalupe, Independencia, and Rochester crushing capacity expansion. |
Nine Months Ended September 30, 2017
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Silver | | Gold | | Total |
In thousands except per ounce amounts | | Palmarejo | | Rochester | | San Bartolomé | | Endeavor | | Total | | Kensington | | Wharf | | Total | |
Costs applicable to sales, including amortization (U.S. GAAP) | | $ | 161,145 |
|
| $ | 89,220 |
| | $ | 64,032 |
| | $ | 1,045 |
| | $ | 315,442 |
| | $ | 109,478 |
| | $ | 58,301 |
| | $ | 167,779 |
| | $ | 483,221 |
|
Amortization | | 50,995 |
| | 15,345 |
| | 5,053 |
| | 301 |
| | 71,694 |
| | 25,389 |
| | 8,883 |
| | 34,272 |
| | 105,966 |
|
Costs applicable to sales | | $ | 110,150 |
| | $ | 73,875 |
| | $ | 58,979 |
| | $ | 744 |
| | $ | 243,748 |
| | $ | 84,089 |
| | $ | 49,418 |
| | $ | 133,507 |
| | $ | 377,255 |
|
Silver equivalent ounces sold | | 10,809,932 |
| | 5,551,913 |
| | 3,497,263 |
| | 107,026 |
| | 19,966,134 |
| | | | | | | | 29,599,974 |
|
Gold equivalent ounces sold | | | | | | | | | | | | 90,348 |
| | 70,216 |
| | 160,564 |
| | |
Costs applicable to sales per ounce | | $ | 10.19 |
|
| $ | 13.31 |
| | $ | 16.86 |
| | $ | 6.95 |
| | $ | 12.21 |
| | $ | 931 |
| | $ | 704 |
| | $ | 831 |
| | $ | 12.75 |
|
| | | | | | | | | | | | | | | | | | |
Costs applicable to sales per average spot ounce | | $ | 9.17 |
| | $ | 12.32 |
| |
| |
| | $ | 11.28 |
| |
| |
| |
| | $ | 11.33 |
|
| | | | | | | | | | | | | | | | | | |
Costs applicable to sales | | | | | | | | | | | | | | | | | | $ | 377,255 |
|
Treatment and refining costs | | | | | | | | | | | | | | | | | | 4,312 |
|
Sustaining capital(1) | | | | | | | | | | | | | | | | | | 47,795 |
|
General and administrative | | | | | | | | | | | | | | | | | | 24,587 |
|
Exploration | | | | | | | | | | | | | | | | | | 22,879 |
|
Reclamation | | | | | | | | | | | | | | | | | | 12,279 |
|
Project/pre-development costs | | | | | | | | | | | | | | | | | | 5,903 |
|
All-in sustaining costs | | | | | | | | | | | | | | | | | | $ | 495,010 |
|
Silver equivalent ounces sold | | | | | | | | | | | | | | | | | | 19,966,134 |
|
Kensington and Wharf silver equivalent ounces sold | | | | | | | | | | | | | | 9,633,840 |
|
Consolidated silver equivalent ounces sold | | | | | | | | | | | | | | | | 29,599,974 |
|
All-in sustaining costs per silver equivalent ounce | | | | | | | | | | | | | | $ | 16.72 |
|
| | | | | | | | | | | | | | | | | | |
Consolidated silver equivalent ounces sold (average spot) | | | | | | | | | | | | | | 33,311,575 |
|
All-in sustaining costs per average spot silver equivalent ounce | | | | | | | | | | | | | | $ | 14.86 |
|
| |
(1) | Excludes development capital for Jualin, Guadalupe South Portal and Rochester expansion permitting. |
Nine Months Ended September 30, 2016
The table below includes the Company’s mineralized material at December 31, 2017.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Silver | | Gold | | |
In thousands except per ounce amounts | | Palmarejo | | Rochester | | San Bartolomé | | Endeavor | | Total | | Kensington | | Wharf | | Total | | Total |
Costs applicable to sales, including amortization (U.S. GAAP) | | $ | 87,751 |
| | $ | 81,983 |
| | $ | 62,285 |
| | $ | 1,806 |
| | $ | 233,825 |
| | $ | 99,941 |
| | $ | 65,140 |
| | $ | 165,081 |
| | $ | 398,906 |
|
Amortization | | 27,815 |
| | 15,994 |
| | 5,330 |
| | 496 |
| | 49,635 |
| | 26,203 |
| | 15,640 |
| | 41,843 |
| | 91,478 |
|
Costs applicable to sales | | $ | 59,936 |
| | $ | 65,989 |
| | $ | 56,955 |
| | $ | 1,310 |
| | $ | 184,190 |
| | $ | 73,738 |
| | $ | 49,500 |
| | $ | 123,238 |
| | $ | 307,428 |
|
Silver equivalent ounces sold | | 5,667,133 |
| | 5,559,347 |
| | 4,193,397 |
| | 204,174 |
| | 15,624,051 |
| | | | | | | | 25,958,451 |
|
Gold equivalent ounces sold | | | | | | | | | | | | 92,824 |
| | 79,416 |
| | 172,240 |
| | |
Costs applicable to sales per ounce | | $ | 10.58 |
|
| $ | 11.87 |
|
| $ | 13.58 |
|
| $ | 6.42 |
|
| $ | 11.79 |
| | $ | 794 |
|
| $ | 623 |
|
| $ | 716 |
| | $ | 11.84 |
|
| | | | | | | | | | | | | | | | | | |
Costs applicable to sales per average spot ounce | | $ | 9.58 |
| | $ | 10.90 |
| |
| |
| | $ | 11.02 |
| | | | | | | | $ | 10.47 |
|
| | | | | | | | | | | | | | | | | | |
Costs applicable to sales | | | | | | | | | | | | | | | | | | $ | 307,428 |
|
Treatment and refining costs | | | | | | | | | | | | | | | | | | 3,047 |
|
Sustaining capital(1) | | | | | | | | | | | | | | | | | | 57,491 |
|
General and administrative | | | | | | | | | | | | | | | | | | 22,789 |
|
Exploration | | | | | | | | | | | | | | | | | | 7,669 |
|
Reclamation | | | | | | | | | | | | | | | | | | 11,967 |
|
Project/pre-development costs | | | | | | | | | | | | | | | | | | 5,789 |
|
All-in sustaining costs | | | | | | | | | | | | | | | | | | $ | 416,180 |
|
Silver equivalent ounces sold | | | | | | | | | | | | | | | | | | 15,624,051 |
|
Kensington and Wharf silver equivalent ounces sold | | | | | | | | | | | | | | 10,334,400 |
|
Consolidated silver equivalent ounces sold | | | | | | | | | | | | | | | | 25,958,451 |
|
All-in sustaining costs per silver equivalent ounce | | | | | | | | | | | | | | $ | 16.03 |
|
| | | | | | | | | | | | | | | | | | |
Consolidated silver equivalent ounces sold (average spot) | | | | | | | | | | | | | | 29,370,501 |
|
All-in sustaining costs per average spot silver equivalent ounce | | | | | | | | | | | | | | $ | 14.17 |
|
|
| | | | | | | | | | | | | | |
| Mineralized Material at December 31, 2017(1)(2)(3)(4) |
| Tons (000s) | | Silver Grade (oz./ton) | | Gold Grade (oz./ton) | | Lead Grade (percent) | | Zinc Grade (percent) |
Palmarejo Mine, Mexico(5) | 8,074 |
| | 3.35 |
| | 0.046 |
| | — |
| | — |
|
San Bartolomé Mine, Bolivia(6) | 4,087 |
| | 3.42 |
| | — |
| | — |
| | — |
|
Kensington Mine, USA(7) | 2,878 |
| | — |
| | 0.271 |
| | — |
| | — |
|
Wharf Mine, USA(8) | 7,710 |
| | — |
| | 0.023 |
| | — |
| | — |
|
Rochester Mine, USA(9) | 179,885 |
| | 0.36 |
| | 0.002 |
| | — |
| | — |
|
Silvertip Mine, Canada(10) | 2,589 |
| | 10.26 |
| | — |
| | 6.74 |
| | 9.41 |
|
La Preciosa Project, Mexico(11) | 28,677 |
| | 3.67 |
| | 0.006 |
| | — |
| | — |
|
Total Mineralized Material | 233,900 |
| | | | | | | | |
| |
(1) | Excludes development capitalAssumed metal prices for Jualin, Guadalupe, Independenciaestimated 2017 mineralized material were $20.00 per ounce of silver, $1,400 per ounce of gold, $1.15 per pound zinc, and Rochester crushing capacity expansion.$1.00 per pound lead. 2017 mineralized material effective December 31, 2017. |
Reconciliation of All-in Sustaining Costs per Silver Equivalent Ounce for Revised 2017 Guidance
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Silver | Gold | |
In thousands except per ounce amounts | Palmarejo | Rochester | San Bartolomé | Endeavor | Total Silver | Kensington | Wharf | Total Gold | Total Combined |
Costs applicable to sales, including amortization (U.S. GAAP) | $ | 215,400 |
| $ | 118,700 |
| $ | 86,000 |
| $ | 1,044 |
| $ | 421,144 |
| $ | 153,800 |
| $ | 83,600 |
| $ | 237,400 |
| $ | 658,544 |
|
Amortization | 67,800 |
| 20,500 |
| 7,800 |
| 300 |
| 96,400 |
| 38,800 |
| 12,800 |
| 51,600 |
| 148,000 |
|
Costs applicable to sales | $ | 147,600 |
| $ | 98,200 |
| $ | 78,200 |
| $ | 744 |
| $ | 324,744 |
| $ | 115,000 |
| $ | 70,800 |
| $ | 185,800 |
| $ | 510,544 |
|
Silver equivalent ounces sold | 14,500,000 |
| 7,690,000 |
| 4,700,000 |
| 107,000 |
| 26,997,000 |
| | | | 40,557,000 |
|
Gold equivalent ounces sold | | | | | | 131,000 |
| 95,000 |
| 226,000 |
| |
Costs applicable to sales per ounce | $10.00 - $10.50 | $12.50 - $13.00 | $16.50 - $17.00 |
|
| $850 - $900 | $700 - $750 |
|
|
| | | | | | | | | |
Costs applicable to sales | | | | | | | | | $ | 510,544 |
|
Treatment and refining costs | | | | | | | | | 5,100 |
|
Sustaining capital, including capital lease payments | | | | | | | 70,000 |
|
General and administrative | | | | | | | | | 32,000 |
|
Exploration | | | | | | | | | 33,000 |
|
Reclamation | | | | | | | | | 16,000 |
|
Project/pre-development costs | | | | | | | | | 7,000 |
|
All-in sustaining costs | | | | | | | | | $ | 673,644 |
|
Silver equivalent ounces sold | | | | | | | | | 26,997,000 |
|
Kensington and Wharf silver equivalent ounces sold | | | | | | 13,560,000 |
|
Consolidated silver equivalent ounces sold | | | | | | | | 40,557,000 |
|
All-in sustaining costs per silver equivalent ounce | | | | | | $16.25 - $16.75 |
Reconciliation of All-in Sustaining Costs per Silver Equivalent Ounce for Previous 2017 Guidance
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Silver | Gold | |
In thousands except per ounce amounts | Palmarejo | Rochester | San Bartolomé | Endeavor | Total Silver | Kensington | Wharf | Total Gold | Total Combined |
Costs applicable to sales, including amortization (U.S. GAAP) | $ | 228,500 |
| $ | 113,550 |
| $ | 92,300 |
| $ | 1,038 |
| $ | 435,388 |
| $ | 136,600 |
| $ | 82,200 |
| $ | 218,800 |
| $ | 654,188 |
|
Amortization | 76,500 |
| 22,550 |
| 8,300 |
| 281 |
| 107,631 |
| 29,100 |
| 13,200 |
| 42,300 |
| 149,931 |
|
Costs applicable to sales | $ | 152,000 |
| $ | 91,000 |
| $ | 84,000 |
| $ | 757 |
| $ | 327,757 |
| $ | 107,500 |
| $ | 69,000 |
| $ | 176,500 |
| $ | 504,257 |
|
Silver equivalent ounces sold | 14,900,000 |
| 7,800,000 |
| 5,200,000 |
| 105,000 |
| 28,005,000 |
| | | | 41,505,000 |
|
Gold equivalent ounces sold | | | | | | 130,000 |
| 95,000 |
| 225,000 |
| |
Costs applicable to sales per ounce guidance | $10.00 - $10.50 | $11.50 - $12.00 | $15.75 - $16.25 | | | $800 - $850 | $700 - $750 | | |
| | | | | | | | | |
Costs applicable to sales | | | | | | | | | $ | 504,257 |
|
Treatment and refining costs | | | | | | | | | 4,500 |
|
Sustaining capital, including capital lease payments | | | | | | | 77,000 |
|
General and administrative | | | | | | | | | 30,000 |
|
Exploration | | | | | | | | | 30,000 |
|
Reclamation | | | | | | | | | 15,000 |
|
Project/pre-development costs | | | | | | | | | 6,000 |
|
All-in sustaining costs | | | | | | | | | $ | 666,757 |
|
Silver equivalent ounces sold | | | | | | | | | 28,005,000 |
|
Kensington and Wharf silver equivalent ounces sold | | | | | | 13,500,000 |
|
Consolidated silver equivalent ounces sold | | | | | | | | 41,505,000 |
|
All-in sustaining costs per silver equivalent ounce guidance | | | | | | $15.75 - $16.25 |
| |
(2) | Estimated with mining cost parameters and initial metallurgical test results. |
| |
(3) | Mineralized material estimates were completed by company technical staff, except for La Preciosa which was completed by an external consultant supervised by technical company staff. |
| |
(4) | Estimated using 3-dimensional geologic modeling and geostatistical evaluation of the exploration drill data. Mineralized material is reported exclusive of reserves. “Mineralized material” as used in this Quarterly Report on Form 10-Q, although permissible under Guide 7, does not indicate “reserves” by SEC standards. There is no certainty that any part of the reported mineralized material will ever be confirmed or converted into Guide 7 compliant “reserves”. |
| |
(5) | Cutoff grades for mineralized material is 2.49 g/tonne AuEq. |
| |
(6) | Cutoff grades for mineralized material is 95 g/tonne. |
| |
(7) | The cutoff grade for mineralized material is 0.13 oz/ton Au. |
| |
(8) | The cutoff grade for mineralized material is 0.009 oz/ton Au. |
| |
(9) | The cutoff grade for mineralized material is 0.46 oz/ton AgEq. |
| |
(10) | The cutoff grade for mineralized material is 200 g/tonne AgEq. |
| |
(11) | The cutoff grade for mineralized material is 121.71 g/ton AgEq for underground, and 71.86 g/t for surface mining. |
Cautionary Statement Concerning Forward-Looking Statements
This report contains numerous forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) relating to the Company’s gold, silver, zinc and silverlead mining business, including statements regarding mineralized material estimates, exploration efforts, drilling, development at Kensington, Palmarejo and Silvertip, estimated production, costs, capital expenditures, contingent payments for the Silvertip acquisition, expenses, metals prices, sufficiency of assets, ability to discharge liabilities, liquidity management, financing needs, environmental compliance expenditures, risk management strategies, to produce long-term cash flow, provide opportunities for growth through continued exploration, generate superioroperational excellence, cost reduction initiatives, capital discipline, and sustainable returns for stockholders,initiatives to maximize net cash flow, enhance revenues, reduce operating and non-operating costs, demonstrate consistent capital discipline, efficientlyand manage working capital and statements regarding tax positions, the anticipated results of the Silvertip acquisition, anticipated production, costs and expenses, drought conditions in Bolivia, efforts to mitigate risks associated with gold and silver price and foreign currency fluctuations and the adequacy of liquidity and capital resources.efficiently. Such forward-looking statements are identified by the use of words such as “believes,” “intends,” “expects,” “hopes,” “may,” “should,” “plan,” “projected,” “contemplates,” “anticipates” or similar words. Actual results could differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ materially from those projected in the forward-looking statements include (i) the risk factors set forth in the “Risk Factors” section of the 20162017 10-K, the risk factors set forth below under Item 1A and in this ReportManagement’s Discussion and in the Company’s Quarterly Report on Form 10-Q filed on July 27, 2017,Analysis of Financial Condition and the risks and uncertainties discussed in this MD&A,Results of Operations , (ii) the risk that the anticipated resultsramp up of theproduction at Silvertip acquisition are not realized,will be delayed, (iii) 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), (iv) changes in the market prices of gold, silver, zinc and silverlead and a sustained lower price environment, including any resulting impact on cash flows, (v) the uncertainties inherent in the Company’s production, exploratory and developmental activities, including risks relating to permitting and regulatory delays, ground conditions and grade variability, (vi) any future labor disputes or work stoppages (involving the Company and its subsidiaries or third parties), (vii) the uncertainties inherent in the estimation of gold, silver, zinc and silverlead reserves and mineralized material, (viii) changes that could result from the Company’s future acquisition of new mining properties or businesses, (ix) the loss of access to any third-party smelter to whichwhom the Company markets silver and gold, (x) the effects of environmental and other governmental regulations, (xi) the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries, (xii) the political risks and uncertainties associated with operations in Bolivia; and (xiii)(xii) the Company’s ability to raise additional financing necessary to conduct its business, make payments or refinance its debt. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to various market risks as a part of its operations and engages in risk management strategies to mitigate these risks. The Company continually evaluates the potential benefits of engaging in these strategies based on current market conditions. The Company does not actively engage in the practice of trading derivative instruments for profit. Additional information about the Company’s derivative financial instruments may be found in Note 11 -- Derivative Financial Instruments in the notes to the condensed consolidated financial statements. This discussion of the Company’s market risk assessments contains “forward looking statements”. For additional information regarding forward-looking statements and risks and uncertainties that could impact the Company, please refer to Item 2 of this Report - Cautionary Statement Concerning Forward-Looking Statements. Actual results and actions could differ materially from those discussed below.
Gold, Silver, Zinc and Silver PriceLead Prices
Gold, silver, zinc, and silverlead prices may fluctuate widely due to numerous factors, such as U.S. dollar strength or weakness, demand, investor sentiment, inflation or deflation, and global mine production. The Company’s profitability and cash flow may be significantly impacted by changes in the market price of gold, silver, zinc, and silver.lead.
Gold, Silver, Zinc and SilverLead Hedging
To mitigate the risks associated with gold, silver, zinc and silverlead price fluctuations, the Company may enter into option contracts to hedge future production. The Company had no outstanding goldAsian put and silvercall option contracts in net-zero-cost collar contracts on zinc at September 30, 2017.March 31, 2018. The weighted average strike prices on the put and call contracts are $3,000 and $4,050 per metric ton, respectively. The contracts are generally net cash settled and, if the price of zinc at the time of the expiration is between the put and call prices, would expire at no cost to the Company. At March 31, 2018, the fair market value of the put and call zero cost collar contracts was a net asset of $0.1 million. During the three months ended March 31, 2018, the Company had recorded unrealized gains of $0.1 million related to outstanding options which were included in Fair value adjustments, net.
Provisional Silver and Gold Sales
The Company enters into sales contracts with third-party smelters and refiners which, in some cases, provide for a provisional payment based upon preliminary assays and quoted metal prices. The provisionally priced sales contracts contain an embedded derivative that is required to be separated from the host contract. Depending on the difference between the price at the time of sale and the final settlement price, embedded derivatives are recorded as either a derivative asset or liability. The embedded
derivatives do not qualify for hedge accounting and, as a result, are marked to the market gold and silver price at the end of each period from the provisional sale date to the date of final settlement. The mark-to-market gains and losses are recorded in earnings. Changes in silver and gold prices resulted in provisional pricing mark-to-market lossesgains of $0.1$0.3 million and gains of $0.6$1.2 million in the three and nine months ended September 30,March 31, 2018 and 2017, respectively, compared to losses of $0.8 million and gains of $0.4 million in the three and nine months ended September 30, 2016, respectively.
At September 30, 2017,March 31, 2018, the Company had outstanding provisionally priced sales of 0.2 million49,853 ounces of silver and 26,08745,051 ounces of gold at prices of $16.86$16.66 and $1,299,$1,317, respectively. A 10% change in realized silver price would causeresult in a de minimis change in revenue to vary by $0.4 million and a 10% change in realized gold price would cause revenue to vary by $3.4$5.9 million.
Foreign Currency
The Company operates, or has mineral interests, in several foreign countries including Australia, Bolivia, Chile,Canada, Mexico, Argentina, Ecuador, and New Zealand, which exposes it to foreign currency exchange rate risks. Foreign currency exchange rates are influenced by world market factors beyond the Company’s control such as supply and demand for U.S. and foreign currencies and related monetary and fiscal policies. Fluctuations in local currency exchange rates in relation to the U.S. dollar may significantly impact profitability and cash flow.
Foreign Exchange Hedging
To manage foreign currency risk, the Company may enter into foreign exchange forward and/or option contracts when the Company believes such contracts would be beneficial. The Company had no outstanding foreign exchange contracts at September 30, 2017.March 31, 2018.
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Item 4. | Controls and Procedures |
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(a) | Disclosure Controls and Procedures |
As of the end of the period covered by this quarterly report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which by their nature, can provide only reasonable assurance regarding management’s control objectives. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events. Based upon the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective and operating to provide reasonable assurance that information required to be disclosed by it in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
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(b) | Management’s Report on Internal Control Over Financial Reporting |
Based on an evaluation by the Company’s Chief Executive Officer and Chief Financial Officer, such officers concluded
that there was no change in the Company’s internal control over financial reporting during the three months ended September 30, 2017three months ended March 31, 2018 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II
Item 1. Legal Proceedings
For a discussion of legal proceedings, see Note 1920 -- Commitments and Contingencies in the notes to the Consolidated Financial Statements included herein.
Item 1A. Risk Factors
Item 1A --- Risk Factors of the 20162017 10-K and the Company’s Quarterly Report on Form 10-Q filed on July 27, 2017 sets forth information relating to important risks and uncertainties that could
materially adversely affect the Company'sCompany’s business, financial condition or operating results. Those risk factors have been supplemented and updated in this Form 10-Q. Except as supplemented and updated below, the risk factors set forth in the 2017 10-K remain current. Additional risks and uncertainties that the Company does not presently know or that it currently deems immaterial also may impair our business operations.
The Company’s business depends on good relations with, and the retention and hiring of, employees.
The Company may be unable to successfully integrate the recently acquired Silvertip mineexperience labor disputes, work stoppages or other acquisitions.
There candisruptions in production that could adversely affect its business and results of operations. Labor disruptions may be no assurance thatused to advocate labor, political or social goals, particularly at non-U.S. mines. For example, labor disruptions may occur in sympathy with strikes or labor unrest in other sectors of local economies. During the anticipated benefitspast several years, two of the recently completed acquisitionCompany’s mines have experienced work stoppages, each of the Silvertip mine in British Columbia, Canada,which was resolved within a short period of time and had no material effect on results of operations or any future acquisition, will be realized. The success of this and any other acquisition will depend upon the Company’s ability to effectively manage the integration and operations of entities or properties it acquires and to realize other anticipated benefits. The process of managing acquired businesses may involve unforeseen difficulties and may require a disproportionate amount of management resources, which may divert management’s focus and resources from other strategic opportunities and from operational matters during this process.
Any acquisition would be accompanied by risks, including:
a significant change in commodity prices after the Company has committed to complete the transaction and established the purchase price or exchange ratio;
a material orebody may prove to be below expectations;
difficulties integrating and assimilating the operations and personnel of any acquired companies, realizing anticipated synergies and maximizing the financial and strategic position of the combined enterprise, and maintaining uniform standards, policies and controls across the organization; and
the acquired business or assets may have unknown liabilities which may be significant.
In addition, the Silvertip acquisition was funded, in part, with funds drawn under the Facility, resulting in increased interest expense. In connection with any future acquisition, the Company may incur indebtedness or issue equity securities or securities convertible into equity securities, resulting in increased interest expense, or dilution of the percentage ownership of existing stockholders.condition. The Company cannot predict the impact of future acquisitions on the price of its common stock, or assure that it
would be able to obtain any necessary financing on acceptable terms. Unprofitable acquisitions,work stoppages or additional indebtednessother disruptions will not occur in the future. Any such work stoppage or issuances of securities in connection with such acquisitions, may negatively affect results of operations.
Finally, the Company’s systems, procedures and controls may be inadequate to support the expansion of our operations resulting from an acquisition or development of a new mine, including the Silvertip mine. The Company’s future operating resultsdisruption could be affected by the ability of its officers and key employees to manage the changing business conditions and to integrate an acquired business or new operation into Coeur. There may also be liabilities, such as environmental liabilities, or significant capital expenditures thatexpose the Company failed to discover or have underestimated in connection with any acquisition or development. Any such liabilities or capital expenditure requirements couldsignificant costs and have a material adverse effect on its business, results of operations or financial condition. At March 31, 2018, none of the Company’s business,global workforce was represented by unions.
We compete with other mining companies to attract and retain key executives, skilled labor, contractors and other employees. We may be unable to continue to attract and retain skilled and experienced employees, which could have an adverse effect on our competitive position or adversely impact our results of operations or financial condition or future prospects.condition.
Continuation of the Company’s mining operations is dependent on the availability of sufficient and affordable water supplies.
The Company's resultsCompany’s mining operations require significant quantities of operations, cash flowswater for mining, ore processing and related support facilities. In particular, the Company’s properties in Mexico are in areas where water is scarce and competition among users for continuing access to water is significant. Continuous production and mine development is dependent on the Company’s ability to acquire and maintain water rights and claims and to defeat claims adverse to current water uses in legal proceedings. Although each of the Company’s operating costs are highly dependent uponmines currently has sufficient water rights and claims to cover its operational demands, the market pricesCompany cannot predict the potential outcome of silverpending or future legal proceedings relating to water rights, claims and gold and, following the Silvertip acquisition, other commodities, including zinc and lead, which are volatile and beyond the Company's control.uses.
Silver, gold, leadWater shortages may also result from weather or environmental and zinc are actively traded commodities, and their prices are volatile. During the twelve months ended September 30, 2017, the priceclimate impacts out of silver ranged from a low of $15.22 per ounce to a high of $19.35 per ounce, the price of gold ranged from a low of $1,126 per ounce to a high of $1,346 per ounce, the price of lead ranged from a low of $0.89 per pound to a high of $1.14 per pound, and the price of zinc ranged from a low of $1.01 per pound to a high of $1.45 per pound. The closing market prices of silver, gold, lead, and zinc on October 24, 2017 were $17.04 per ounce, $1,276 per ounce, $1.12 per pound, and $1.47 per pound, respectively.
Silver, gold, lead and zinc prices are affected by many factors beyond the Company’s control, including U.S. dollar strength or weakness, speculation, global currency values, the price of products that incorporate silver, gold, lead or zinc, globalcontrol. Shortages in water supply could result in production and regional demand and production, political and economic conditions and other factors.processing interruptions. In addition, Exchange Traded Funds (“ETFs”),the scarcity of water in certain regions could result in increased costs to obtain sufficient quantities of water to conduct the Company’s operations. The loss of some or all water rights, in whole or in part, or ongoing shortages of water to which we have substantially facilitatedrights or significantly higher costs to obtain sufficient quantities of water (or the abilityfailure to procure sufficient quantities of large and small investorswater) could result in the Company’s inability to buy and sell precious metals and base metals, have become significant holders of gold, silver, lead and zinc. Silver and gold prices are also affected by prevailing interest rates and returns on other asset classes, expectations regarding inflation and governmental decisions regarding precious metals stockpiles.
Becausemaintain production at current or expected levels, require the Company derives a significant portion of its revenuesto curtail or shut down mining production and could prevent the Company from sales of silver and gold, and to a lesser extent, lead and zinc as a result of the Silvertip acquisition, its results of operations and cash flows will fluctuate as the prices of these metals change. A period of significant and sustained lower gold and silver prices and, to a lesser extent, lead and zinc prices, would materially andpursuing expansion or development opportunities, which could adversely affect the Company’s results of operations and cash flows. Additionally, if market prices for silver, gold, leadfinancial condition. Laws and zinc decline further or remain at current or lower levels for a sustained period of time,regulations may be introduced in some jurisdictions in which the Company may haveoperates which could also limit access to revise its operating plans, including reducing operating costs and capital expenditures, terminating or suspending mining operations at one or more of its properties and discontinuing certain exploration and development plans. The Company may be unable to decrease its costs in an amount sufficient to offset reductions in revenues, and may continue to incur losses.
Operating costs atwater resources, thus adversely affecting the Company’s mines are also affected by the price of input commodities, such as fuel, electricity, labor, chemical reagents, explosives, steel and concrete. Prices for these input commodities are volatile and can fluctuate due to conditions that are difficult to predict, including global competition for resources, currency fluctuations, consumer or industrial demand and other factors. Continued volatility in the prices of commodities and other supplies the Company purchases could lead to higher costs, which would adversely affect results of operations and cash flows.
The terms of the Company’s debt impose restrictions on its operations.
The agreements governing the Company’s outstanding indebtedness include a number of significant negative covenants. These covenants, among other things:
limit the Company’s ability to obtain additional financing, repurchase outstanding equity or issue debt securities;
require the Company to meet certain financial covenants consisting of a consolidated net leverage ratio and a consolidated interest coverage ratio;
require a portion of the Company’s cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;
limit the Company’s ability to sell, transfer or otherwise dispose of assets, enter into transactions with and invest capital in affiliates, enter into agreements restricting our subsidiaries’ ability to pay dividends, consolidate, amalgamate, merger or sell all or substantially all of the Company’s assets;
increase our vulnerability to general adverse economic and industry conditions;
limit the Company’s flexibility in planning for and reacting to changes in the industry in which we compete; and
place the Company at a disadvantage compared to other, less leveraged competitors.
A breach of any of these covenants could result in an event of default under the applicable agreement governing the Company’s outstanding indebtedness that, if not cured or waived, could cause all amounts outstanding with respect to the debt to be due and payable immediately. Acceleration of any debt could result in cross-defaults under the Company’s other debt instruments. The Company’s assets and cash flow may be insufficient to repay borrowings fully under all of its outstanding debt instruments if any of its debt instruments are accelerated upon an event of default, which could force the Company into bankruptcy or liquidation.
The Company’s future operating performance may not generate cash flows sufficient to meet debt payment obligations.
As of September 30, 2017, the Company had approximately $288.9 million of outstanding indebtedness. On October 12, 2017, the Company borrowed $100.0 million under the Facility. The Company’s ability to make scheduled debt payments on outstanding indebtedness will depend on future results of operations and cash flows. The Company’s results of operations and cash flows, in part, are subject to economic factors beyond its control, including the market prices of silver, gold, lead and zinc. The Company may not be able to generate enough cash flow to meet obligations and commitments under outstanding debt instruments. If the Company cannot generate sufficient cash flow from operations to service debt, it may need to further refinance debt, dispose of assets or issue equity to obtain the necessary funds.
If the Company’s cash flows and capital resources are insufficient to fund its debt services obligations, the Company could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance its indebtedness. The Company cannot predict whether it would be able to refinance debt, issue equity or dispose of assets to raise funds on a timely basis or on satisfactory terms. In a rising interest rate environment, the costs of borrowing additional funds or refinancing outstanding indebtedness would also be expected to increase. The agreements governing the Company’s outstanding indebtedness restrict the Company’s ability to dispose of assets and use the proceeds from those dispositions and may also restrict its ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. The Company may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due. If the Company raises additional funds by issuing equity securities or securities convertible into equity securities, holders of its common stock could experience significant dilution of their ownership interest, and these securities could have rights senior to those of the holders of common stock.
Item 4. Mine Safety Disclosures
Information pertaining to mine safety matters is reported in accordance with Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act in Exhibit 95.1 attached to this Form 10-Q.
Item 5. Other Information
None.
Item 6. Exhibits
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10.1 | CreditAmendment to Share Purchase Agreement, dated September 29, 2017,February 16, 2018, by and among Coeur Mining, Inc., certain subsidiariesa Delaware corporation, Coeur South America Corp., a Delaware corporation, Coeur Explorations, Inc., an Idaho corporation, Empresa Minera Manquiri S.A., a Bolivian sociedad anónima, and Ag-Mining Investments, AB (formerly NewCo 4714 Sweden AB under change of Coeur Mining, Inc., as guarantors, the lenders party thereto and Bank of America, N.A., as administrative agentname to Argentum Investment AB). (Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 2, 2017February 16, 2018 (File No. 001-08641)). |
31.1 | |
31.2 | |
32.1 | |
32.2 | |
95.1 | |
101.INS | XBRL Instance Document** |
101.SCH | XBRL Taxonomy Extension Schema** |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase** |
101.DEF | XBRL Taxonomy Extension Definition Linkbase** |
101.LAB | XBRL Taxonomy Extension Label Linkbase** |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase** |
* Management contract or compensatory plan or arrangement.
** The following financial information from Coeur Mining, Inc.’s Quarterly's Annual Report on Form 10-Q for the three and nine months ended September 30, 2017,March 31, 2018, formatted in XBRL (Extensible Business Reporting Language): Condensed Consolidated Statements of Comprehensive Income (Loss), Condensed Consolidated Statements of Cash Flows, Condensed Consolidated Balance Sheets, and Condensed Consolidated Statement of Changes in Stockholders’ Equity.Stockholders' Equity
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | COEUR MINING, INC. | |
| | (Registrant) | |
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Dated | OctoberApril 25, 20172018 | /s/ Mitchell J. Krebs | |
| | MITCHELL J. KREBS | |
| | President and Chief Executive Officer (Principal Executive Officer) |
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Dated | OctoberApril 25, 20172018 | /s/ Peter C. Mitchell | |
| | PETER C. MITCHELL | |
| | Senior Vice President and Chief Financial Officer (Principal Financial Officer) |
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Dated | OctoberApril 25, 20172018 | /s/ Mark SpurbeckKen Watkinson | |
| | MARK SPURBECKKEN WATKINSON | |
| | Vice President, FinanceCorporate Controller and Chief Accounting Officer (Principal Accounting Officer) |