UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
___________________________________________ 
FORM 10-Q

þQuarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31,September 30, 2018
OR
 ¨   
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
____________________________________________ 
a021914coeurminingrpmshsmb26.jpg
COEUR MINING, INC.
(Exact name of registrant as specified in its charter)

Delaware 82-0109423
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
  
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.
Large accelerated filer þAccelerated filer 
¨   
    
Non-accelerated filer 
¨   
Smaller reporting company 
¨   
      
   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 186,116,975199,125,817 shares were issued and outstanding as of April 23,October 29, 2018.

COEUR MINING, INC.
INDEX
  Page
Part I.
Financial Information
 
   
 
Item 1. Financial Statements
 
   
 Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
3
   
 Condensed Consolidated Statements of Cash Flows (Unaudited)
4
   
 Condensed Consolidated Balance Sheets
5
   
 Condensed Consolidated Statement of Changes in Stockholders’ Equity
6
   
 Notes to Condensed Consolidated Financial Statements (Unaudited)
7
   
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
3139
   
 Consolidated Financial Results
3342
   
 Results of Operations
3445
   
 Liquidity and Capital Resources
3749
   
 Non-GAAP Financial Performance Measures
3952
   
 
Item 3. Quantitative and Qualitative Disclosures about Market Risk
4357
   
 
Item 4. Controls and Procedures
4559
   
Part II.
Other Information
4559
   
 
Item 1. Legal Proceedings
4559
   
 
Item 1A. Risk Factors
4559
   
 
Item 4. Mine Safety Disclosures
4659
   
 Item 5. Other Information
4659
   
 
Item 6. Exhibits
4760
   
Signatures
4760



PART I
Item 1.        Financial Statements

COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
 Three months ended March 31, Three months ended September 30, Nine months ended September 30,
 2018 2017 2018 2017 2018 2017
NotesIn thousands, except share dataNotesIn thousands, except share data
Revenue3$163,267
 $185,554
3$148,795
 $159,920
 $482,049
 $495,014
COSTS AND EXPENSES            
Costs applicable to sales(1)
399,340
 114,490
3116,857
 101,559
 324,443
 318,278
Amortization 30,777
 38,693
 31,184
 32,400
 91,420
 101,827
General and administrative 8,804
 10,125
 7,729
 7,345
 24,183
 24,495
Exploration 6,683
 5,252
 8,157
 9,791
 21,269
 22,856
Pre-development, reclamation, and other 4,225
 3,837
 8,121
 5,030
 15,966
 12,952
Total costs and expenses 149,829
 172,397
 172,048
 156,125

477,281
 480,408
OTHER INCOME (EXPENSE), NET            
Loss on debt extinguishment
—
 —
 —
 (9,342)
Fair value adjustments, net104,987
 (1,200)10715
 —
 2,907
 (864)
Interest expense, net of capitalized interest18(5,965) (3,579)18(5,818) (3,595) (17,801) (10,918)
Other, net7180
 20,799
7(20,903) 2,361
 (19,846) 27,134
Total other income (expense), net (798) 16,020
 (26,006) (1,234)
(34,740) 6,010
Income (loss) before income and mining taxes 12,640
 29,177
 (49,259) 2,561

(29,972) 20,616
Income and mining tax (expense) benefit8(11,949) (10,878)8(3,785) (14,289) (19,451) (24,040)
Income (loss) from continuing operations $691
 $18,299
 $(53,044) $(11,728)
$(49,423) $(3,424)
Income (loss) from discontinued operations21550
 364
21—
 (4,924) 550
 (5,520)
NET INCOME (LOSS) $1,241
 $18,663
 $(53,044) $(16,652)
$(48,873) $(8,944)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:            
Unrealized gain (loss) on debt and equity securities (278) (2,182) 192
 1,066
 (173) (1,134)
Reclassification adjustments for impairment of equity securities —
 121
 —
 —
 —
 426
Reclassification adjustments for realized (gain) loss on sale of equity securities —
 1,471
 —
 32
 —
 1,300
Other comprehensive income (loss) (278) (590) 192
 1,098

(173) 592
COMPREHENSIVE INCOME (LOSS) $963
 $18,073
 $(52,852) $(15,554)
$(49,046) $(8,352)
            
NET INCOME (LOSS) PER SHARE9   9       
Basic income (loss) per share:            
Net income (loss) from continuing operations $0.00
 $0.10
 $(0.29) $(0.07) $(0.27) $(0.02)
Net income (loss) from discontinued operations 0.00
 0.00
 0.00
 (0.03) 0.00
 (0.03)
Basic(2)
 $0.01
 $0.10
 $(0.29) $(0.09) $(0.26) $(0.05)
Diluted income (loss) per share:            
Net income (loss) from continuing operations $0.00
 $0.10
 $(0.29) $(0.07) $(0.27) $(0.02)
Net income (loss) from discontinued operations 0.00
 0.00
 0.00
 (0.03) 0.00
 (0.03)
Diluted(2)
 $0.01
 $0.10
 $(0.29) $(0.09) $(0.26) $(0.05)
(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 March 31, Three months ended September 30, Nine months ended September 30,
 2018 2017 2018 2017 2018 2017
NotesIn thousandsNotesIn thousands
CASH FLOWS FROM OPERATING ACTIVITIES:            
Net income (loss) $1,241
 $18,663
 $(53,044) $(16,652) $(48,873) $(8,944)
(Income) loss from discontinued operations (550) (364) —
 4,924
 (550) 5,520
Adjustments:            
Amortization 30,777
 38,693
 31,184
 32,400
 91,420
 101,827
Accretion 3,318
 2,240
 3,117
 2,402
 10,321
 6,954
Deferred taxes 454
 2,584
 (3,276) 2,504
 (4,087) 1,452
Loss on debt extinguishment —
 —
 —
 9,342
Fair value adjustments, net10(4,987) 1,200
10(715) —
 (2,907) 864
Stock-based compensation52,786
 3,307
51,942
 2,585
 6,578
 8,127
Gain on sale of the Joaquin project —
 (21,138) —
 —
 —
 (21,138)
Write-downs 30,787
 —
 30,787
 —
Other 401
 (1,895) 2,938
 (3,013) 5,180
 (8,330)
Changes in operating assets and liabilities:            
Receivables (1,691) 5,680
 (5,930) 6,289
 (16,509) 9,754
Prepaid expenses and other current assets (5,635) (4,906) 1,377
 (1,332) 3,868
 (2,177)
Inventory and ore on leach pads (8,708) 15,171
 (8,156) (2,282) (19,630) 8,080
Accounts payable and accrued liabilities (1,865) (15,299) 5,565
 9,484
 (35,562) (5,982)
CASH PROVIDED BY OPERATING ACTIVITIES OF CONTINUING OPERATIONS 15,541
 43,936
 5,789

37,309

20,036
 105,349
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES OF DISCONTINUED OPERATIONS (2,690) 11,335
 —
 (7,877) (2,690) 8,633
CASH PROVIDED BY OPERATING ACTIVITIES 12,851
 55,271
 5,789
 29,432
 17,346
 113,982
CASH FLOWS FROM INVESTING ACTIVITIES:            
Capital expenditures (42,345) (23,591) (39,472) (28,982) (122,982) (89,680)
Proceeds from the sale of assets 60
 15,019
 393
 1,016
 549
 16,471
Purchase of investments (361) (1,016) (15) (3,595) (415) (13,559)
Sale of investments 1,619
 10,020
 (78) 403
 12,682
 11,321
Proceeds from notes receivable 15,000
 —
 15,000
 —
Other (65) (14) 64
 (4,319) (34) (4,385)
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES OF CONTINUING OPERATIONS (41,092) 418
 (24,108)
(35,477) (95,200) (79,832)
CASH USED IN INVESTING ACTIVITIES OF DISCONTINUED OPERATIONS (28,470) (388) —
 (412) (28,470) (1,175)
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (69,562) 30
 (24,108) (35,889) (123,670) (81,007)
CASH FLOWS FROM FINANCING ACTIVITIES:            
Issuance of notes and bank borrowings, net of issuance costs1815,000
 —
1825,000
 (2,257) 40,000
 242,701
Payments on debt, capital leases, and associated costs18(18,449) (3,206)18(25,533) (3,323) (48,355) (195,439)
Other (4,606) (3,247) (77) (6) (4,916) (3,726)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES OF CONTINUING OPERATIONS (8,055) (6,453) (610)
(5,586)
(13,271) 43,536
CASH USED IN FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS (22) (20) —
 (21) (22) (62)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (8,077) (6,473) (610) (5,607) (13,293) 43,474
Effect of exchange rate changes on cash and cash equivalents 557
 555
 183
 (222) 565
 662
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (64,231) 49,383
 (18,746) (12,286)
(119,052) 77,111
Less net cash provided by (used in) discontinued operations(1)
 (32,930) 5,527
 —
 (8,491) (32,930) (3,302)
 (31,301) 43,856
 (18,746) (3,795) (86,122) 80,413
Cash, cash equivalents and restricted cash at beginning of period 203,402
 126,601
 136,026
 210,809
 203,402
 126,601
Cash, cash equivalents and restricted cash at end of period $172,101
 $170,457
 $117,280
 $207,014

$117,280
 $207,014
(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$181 for the three months ended March 31,September 30, 2017 and $1,748 and $10,698 during the nine months ended September 30, 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
 March 31, 2018 (unaudited) December 31, 2017 September 30, 2018 (unaudited) December 31, 2017
ASSETSNotesIn thousands, except share dataNotesIn thousands, except share data
CURRENT ASSETS        
Cash and cash equivalents $159,643
 $192,032
 $104,746
 $192,032
Receivables1435,864
 19,069
1430,480
 19,069
Inventory1561,723
 58,230
1562,569
 58,230
Ore on leach pads1575,584
 73,752
1577,515
 73,752
Prepaid expenses and other 18,203
 15,053
 12,167
 15,053
Assets held for sale21—
 91,421
21—
 91,421
 351,017
 449,557
 287,477
 449,557
NON-CURRENT ASSETS        
Property, plant and equipment, net16266,157
 254,737
16285,871
 254,737
Mining properties, net17843,821
 829,569
17865,043
 829,569
Ore on leach pads1567,430
 65,393
1567,420
 65,393
Restricted assets1322,116
 20,847
1321,361
 20,847
Equity and debt securities1337,317
 34,837
1324,232
 34,837
Receivables1455,428
 28,750
1428,035
 28,750
Other 18,649
 17,485
 18,938
 17,485
TOTAL ASSETS $1,661,935
 $1,701,175
 $1,598,377
 $1,701,175
LIABILITIES AND STOCKHOLDERS’ EQUITY        
CURRENT LIABILITIES        
Accounts payable $44,864
 $48,592
 $55,132
 $48,592
Accrued liabilities and other22105,149
 94,930
2265,400
 94,930
Debt1817,040
 30,753
1822,696
 30,753
Reclamation43,777
 3,777
43,777
 3,777
Liabilities held for sale21—
 50,677
21—
 50,677
 170,830
 228,729
 147,005
 228,729
NON-CURRENT LIABILITIES        
Debt18396,984
 380,569
18406,494
 380,569
Reclamation4119,154
 117,055
4122,977
 117,055
Deferred tax liabilities 105,224
 105,148
 98,891
 105,148
Other long-term liabilities 55,432
 54,697
 55,227
 54,697
 676,794
 657,469
 683,589
 657,469
STOCKHOLDERS’ EQUITY        
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
Common stock, par value $0.01 per share; authorized 300,000,000 shares, 187,026,334 issued and outstanding at September 30, 2018 and 185,637,724 at December 31, 2017 1,870
 1,856
Additional paid-in capital 3,355,710
 3,357,345
 3,359,183
 3,357,345
Accumulated other comprehensive income (loss) (363) 2,519
 (258) 2,519
Accumulated deficit (2,542,898) (2,546,743) (2,593,012) (2,546,743)
 814,311
 814,977
 767,783
 814,977
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $1,661,935
 $1,701,175
 $1,598,377
 $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, 2017185,638
 $1,856
 $3,357,345
 $(2,546,743) $2,519
 $814,977
185,638
 $1,856
 $3,357,345
 $(2,546,743) $2,519
 $814,977
Net income (loss)—
 —
 —
 1,241
 —
 1,241
—
 —
 —
 (48,873) —
 (48,873)
Reclassification of unrealized gain (loss) on equity securities for ASU 2016-01—
 —
 —
 2,604
 (2,604) —
—
 —
 —
 2,604
 (2,604) —
Other comprehensive income (loss)—
 —
 —
 —
 (278) (278)—
 —
 —
 —
 (173) (173)
Common stock issued under stock-based compensation plans, net538
 6
 (1,635) —
 —
 (1,629)1,389
 14
 1,838
 —
 —
 1,852
Balances at March 31, 2018 (Unaudited)186,176
 $1,862
 $3,355,710
 $(2,542,898) $(363) $814,311
Balances at September 30, 2018 (Unaudited)187,027
 $1,870
 $3,359,183
 $(2,593,012) $(258) $767,783
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, 2018. The condensed consolidated December 31, 2017 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, 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.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 companyCompany 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 be 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.

The Company recognizes revenue from concentrate sales, net of treatment and refining charges, when it satisfies the performance obligation of transferring control of the concentrate to the customer.

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 streaminggold stream agreement with a subsidiary of Franco-Nevada Corporation (“Franco-Nevada”) commenced in 2016 withprovided for a $20.0 million deposit paid by Franco-Nevada in exchange for the right and obligation, commencing in 2016, to purchase
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

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 thisthe 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,Three months ended September 30, Nine months ended September 30,
In thousands2018 20172018 2017 2018 2017
Opening Balance$14,883
 $19,281
$13,799
 $16,835
 $14,883
 $19,281
Revenue Recognized(543) $(1,629)(582) $(793) $(1,666) $(3,239)
Closing Balance$14,340
 $17,652
$13,217
 $16,042
 $13,217
 $16,042

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 became effective for the Company’s fiscal year beginning January 1, 2018 and did not 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 became effective for the Company’s fiscal year beginning January 1, 2018 and resulted in the inclusion of restricted cash equivalents on the Consolidated Statements of Cash Flows of $12.5 million and $11.4 million at March 31,September 30, 2018 and $9.8 million at March 31, 2017.2017, respectively.
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 became effective for the Company’s fiscal year beginning January 1, 2018 and did not materially impact the Company’s consolidated net income, financial position or 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,2019 and the date of initial application, is required with an optionCompany plans to use certainadopt it using the cumulative-effect adjustment transition relief.method approved by the FASB in July 2018. 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 became effective for the Company’s fiscal year beginning January 1, 2018 and did not 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, 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 became effective under the modified retrospective method of adoption for the Company’s fiscal year beginning January 1, 2018 and did not 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 Silvertip mines. Except 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. Silvertip commenced commercial production on September 1, 2018. 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 determined that the disposition in the first quarter of 2018 of Empresa Minera Manquiri S.A., a Bolivian Sociedad anonima (“Manquiri”), which operates the San Bartolomé mine, representsrepresented a strategic shift to a North America-focused mining portfolio and has ahad significant effect on the entity's results and operations; therefore, the results of operations are presented as discontinued operations in Other for all periods presented.
Financial information relating to the Company’s segments is as follows (in thousands):
Three months ended March 31, 2018Palmarejo Rochester Silvertip Kensington Wharf Other Total
Three months ended September 30, 2018Palmarejo Rochester Silvertip Kensington Wharf Other Total
Revenue                          
Metal sales$70,037
 $33,497
 $—
 $36,300
 $23,433
 $—
 $163,267
$55,456
 $35,524
 $4,051
 $29,771
 $23,993
 $—
 $148,795
Costs and Expenses            

             
Costs applicable to sales(1)
31,096
 24,305
 —
 28,630
 15,309
 —
 99,340
31,554
 27,548
 11,535
 28,241
 17,979
 —
 116,857
Amortization16,325
 4,831
 —
 6,717
 2,657
 247
 30,777
14,794
 5,294
 1,073
 6,912
 2,878
 233
 31,184
Exploration3,970
 33
 —
 1,590
 10
 1,080
 6,683
3,195
 51
 2,333
 1,640
 63
 875
 8,157
Other operating expenses731
 884
 20
 321
 665
 10,408
 13,029
771
 4,362
 148
 333
 699
 9,537
 15,850
Other income (expense)                          
Fair value adjustments, net—
 —
 —
 —
 —
 4,987
 4,987
—
 —
 —
 —
 —
 715
 715
Interest expense, net(119) (98) (410) (243) (12) (5,083) (5,965)(842) (115) 166
 (248) (9) (4,770) (5,818)
Other, net(2,144) (40) 362
 (37) (21) 2,060
 180
(1,010) 278
 (447) (34) (422) (19,268) (20,903)
Income and mining tax (expense) benefit(12,443) (371) 835
 —
 (639) 669
 (11,949)(6,461) (83) 4,320
 —
 (334) (1,227) (3,785)
Income (loss) from continuing operations$3,209

$2,935
 $767

$(1,238)
$4,120

$(9,102)
$691
$(3,171) $(1,651) $(6,999) $(7,637) $1,609
 $(35,195) $(53,044)
Income (loss) from discontinued operations$—
 $—
 $—
 $—
 $—
 $550
 $550
$—
 $—
 $—
 $—
 $—
 $—
 $—
Segment assets(2)
$377,146
 $245,881
 $361,212
 $215,244
 $104,805
 $119,922
 $1,424,210
$368,257
 $252,291
 $405,334
 $225,161
 $98,978
 $79,079
 $1,429,100
Capital expenditures$9,293
 $2,633
 $18,629
 $11,364
 $344
 $82
 $42,345
$4,686
 $3,582
 $17,949
 $11,960
 $1,176
 $119
 $39,472
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
Three months ended September 30, 2017Palmarejo Rochester Kensington Wharf Other Total
Revenue           
Metal sales$60,677
 $31,156
 $36,603
 $31,334
 $150
 $159,920
Costs and Expenses        

  
Costs applicable to sales(1)
33,255

23,275

27,658

17,330
 41
 101,559
Amortization16,414

4,591

7,864

3,223
 308
 32,400
Exploration4,517

531

2,966

207
 1,570
 9,791
Other operating expenses319

846

356

648
 10,206
 12,375
Other income (expense)        

  
Interest expense, net(112) (136) (113) (16) (3,218) (3,595)
Other, net(218) (73) (28) 4
 2,676
 2,361
Income and mining tax (expense) benefit(7,898) 41
 —
 (963) (5,469) (14,289)
Income (loss) from continuing operations$(2,056) $1,745
 $(2,382) $8,951
 $(17,986) $(11,728)
Income (loss) from discontinued operations$—
 $—
 $—
 $—
 $(4,924) $(4,924)
Segment assets(2)
$388,044
 $253,477
 $211,052
 $103,843
 $71,551
 $1,027,967
Capital expenditures$5,540
 $9,737
 $10,144
 $3,135
 $426
 $28,982
(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, 2018Palmarejo Rochester Silvertip Kensington Wharf Other Total
Revenue             
Metal sales$196,237
 $102,689
 $4,051
 $101,806
 $77,266
 $—
 $482,049
Costs and Expenses            

Costs applicable to sales(1)
92,960
 76,304
 11,535
 91,098
 52,546
 —
 324,443
Amortization45,752
 14,918
 1,073
 20,070
 8,888
 719
 91,420
Exploration10,363
 296
 2,439
 4,625
 73
 3,473
 21,269
Other operating expenses2,252
 6,149
 173
 981
 2,052
 28,542
 40,149
Other income (expense)             
Fair value adjustments, net—
 —
 —
 —
 —
 2,907
 2,907
Interest expense, net(1,108) (338) (490) (722) (32) (15,111) (17,801)
Other, net(2,399) 704
 (25) (104) (379) (17,643) (19,846)
Income and mining tax (expense) benefit(22,550) (917) 6,098
 —
 (2,009) (73) (19,451)
Income (loss) from continuing operations$18,853

$4,471
 $(5,586)
$(15,794)
$11,287

$(62,654)
$(49,423)
Income (loss) from discontinued operations$—
 $—
 $—
 $—
 $—
 $550
 $550
Segment assets(2)
$368,257
 $252,291
 $405,334
 $225,161
 $98,978
 $79,079
 $1,429,100
Capital expenditures$23,458
 $6,884
 $55,623
 $34,032
 $2,682
 $303
 $122,982
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests


Three months ended March 31, 2017Palmarejo Rochester Kensington Wharf Other Total
Nine months ended September 30, 2017Palmarejo Rochester Kensington Wharf Other Total
Revenue                      
Metal sales$77,704
 $38,979
 $37,964
 $30,251
 $656
 $185,554
$191,616
 $102,926
 $110,134
 $88,598
 $1,740
 $495,014
Costs and Expenses                   —
  
Costs applicable to sales(1)
43,001
 26,439
 28,443
 16,320
 287
 114,490
110,150
 73,875
 84,089
 49,418
 746
 318,278
Amortization20,150
 5,816
 9,178
 3,111
 438
 38,693
50,995
 15,345
 25,389
 8,883
 1,215
 101,827
Exploration1,631
 144
 839
 —
 2,638
 5,252
9,272
 990
 5,785
 210
 6,599
 22,856
Other operating expenses301
 810
 345
 619
 11,887
 13,962
930
 2,487
 1,051
 1,899
 31,080
 37,447
Other income (expense)        

          

  
Loss on debt extinguishment—
 —
 —
 —
 (9,342) (9,342)
Fair value adjustments, net—
 (1,200) —
 —
 —
 (1,200)—
 (864)
—

—
 —
 (864)
Interest expense, net(125) (117) (40) (19) (3,278) (3,579)(339)
(386)
(266)
(52) (9,875) (10,918)
Other, net1,794
 (32) (808) 89
 19,756
 20,799
(345)
2,239

(893)
429
 25,704
 27,134
Income and mining tax (expense) benefit(12,245) (498) —
 (957) 2,822
 (10,878)(22,313)
(413)
—

(2,980) 1,666
 (24,040)
Income (loss) from continuing operations$2,045

$3,923

$(1,689)
$9,314

$4,706
 $18,299
$(2,728)
$10,805

$(7,339)
$25,585

$(29,747) $(3,424)
Income (loss) from discontinued operations$—
 $—
 $—
 $—
 $364
 $364
$—
 $—
 $—
 $—
 $(5,520) $(5,520)
Segment assets(2)
$401,623
 $227,526
 $204,987
 $104,673
 $84,402
 $1,023,211
$388,044
 $253,477
 $211,052
 $103,843
 $71,551
 $1,027,967
Capital expenditures$6,230
 $10,568
 $5,521
 $887
 $385
 $23,591
$22,972
 $34,121
 $24,314
 $5,493
 $2,780
 $89,680
(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests

AssetsSeptember 30, 2018
December 31, 2017
Total assets for reportable segments$1,429,100
 $1,344,553
Cash and cash equivalents104,746
 192,032
Other assets64,531

164,590
Total consolidated assets$1,598,377

$1,701,175






Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

AssetsMarch 31, 2018
December 31, 2017
Total assets for reportable segments$1,424,210
 $1,344,553
Cash and cash equivalents159,643
 192,032
Other assets78,082

164,590
Total consolidated assets$1,661,935

$1,701,175


Geographic Information
Long-Lived AssetsMarch 31, 2018
December 31, 2017September 30, 2018
December 31, 2017
Mexico$364,047
 $370,188
$351,509
 $370,188
United States384,578
 377,768
398,614
 377,768
Canada350,556
 331,440
392,470
 331,440
Other10,797
 4,910
8,321
 4,910
Total$1,109,978

$1,084,306
$1,150,914

$1,084,306
 
RevenueThree months ended March 31,Three months ended September 30, Nine months ended September 30,
2018 20172018 2017 2018 2017
United States$93,230
 $107,194
$89,289
 $99,093
 $281,762
 $301,658
Mexico70,037
 77,704
55,455
 60,677
 196,236
 191,616
Canada4,051
 —
 4,051
 —
Australia—
 656
—
 150
 —
 1,740
Total$163,267

$185,554
$148,795
 $159,920
 $482,049

$495,014
    
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

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 its operating sites are as follows:
Three months ended March 31,Three months ended September 30, Nine months ended September 30,
In thousands2018 20172018 2017 2018 2017
Asset retirement obligation - Beginning$118,799
 $86,754

$122,907
 
$90,002
 $118,799
 $86,754
Accretion2,545
 2,064
2,830
 2,167
 8,141
 6,347
Additions and changes in estimates—
 3,116
 —
 3,116
Settlements(496) (421)(1,171) (656) (2,374) (1,588)
Asset retirement obligation - Ending$120,848
 $88,397

$124,566
 
$94,629
 $124,566
 $94,629
The Company has accrued $2.12.2 million and $2.0$2.0 million at March 31,September 30, 2018 and December 31, 2017, respectively, for reclamation liabilities related to former mining activities, which are included in Reclamation.

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 March 31,September 30, 2018 and 2017 was $2.8$2.0 million and $3.3$6.6 million, respectively, compared to $2.6 million and $8.1 million for the three and nine months ended September 30, 2017, respectively. At March 31,September 30, 2018, there was $4.8$8.6 million of unrecognized stock-based compensation cost which is expected to be recognized over a weighted-average remaining vesting period of 1.41.5 years.
The performance shares issued in 2018 vest at the end of a three-year service period if internal performance metrics are met. The number of shares that vest is also impacted by the inclusion of a modifier that is based upon a relative stockholder return metric. The relative stockholder return metric is included in the determination of the grant date fair value of the performance shares however the recognition of compensation cost for performance share awards is based on the results of the internal performance metrics. The performance shares issued prior to 2018 vest at the end of a three-year service period if relative stockholder return and internal performance metrics are met and the existence of a market condition requires recognition of compensation cost for the relative stockholder return portion of the performance share awards over the requisite period regardless of whether the relative stockholder return metric is met. All other stock-based compensation awards are consistent with prior years.
The following table summarizes the grants awarded during the threenine months ended March 31,September 30, 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
 
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
 —
 $—
 —
 $—
 31,887
 $7.84
 —
 $—
 —
 $—
May 9, 2018 868,134
 $7.90
 14,310
 $4.09
 408,179
 $7.39

The following options and stock appreciation rights were exercisable during the threenine months ended March 31,September 30, 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 93,920
 $1.81
 397,651
 $14.39
 159,069
 $3.35
 315,032
 $15.06
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 March 31,September 30, 2018 and 2017 were $1.2$0.8 million and $2.1 million.$2.5 million, respectively, compared to $1.8 million and $5.7 million for the three and nine months ended September 30, 2017, respectively. In addition, the Company has a deferred compensation plan for employees whose benefits under the 401(k) plan are limited by federal regulations.
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements


NOTE 7 - OTHER, NET
Other, net consists of the following:
Three months ended March 31,Three months ended September 30, Nine months ended September 30,
In thousands2018 20172018 2017 2018 2017
Foreign exchange gain (loss)$(670) $1,206
$(3,104) $(39) $(7,083) $1,953
Loss on sale of assets and investments(574) (2,066)
Gain (loss) on sale of assets and investments(28) 878
 316
 (674)
Write-down of Manquiri consideration(18,599) —
 (18,599) —
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
Mexico inflation adjustment—
 —
 1,939
 —
Other1,424
 521
828
 350
 3,581
 1,213
Other, net$180
 $20,799
$(20,903) $2,361
 $(19,846) $27,134

Coeur Mining, Inc.In September 2018, the Company entered into a Letter Agreement with Ag-Mining Investments, AB, a privately-held Swedish company, the purchaser of Manquiri (the “Buyer”), pursuant to which the total aggregate principal amount of the Manquiri Notes Receivable received as partial consideration in the Manquiri Divestiture (as defined below) was reduced from $28.5 million to $25.0 million (as defined below) and Subsidiaries
the Buyer made a concurrent cash payment of $15.0 million to the Company in respect of the Manquiri Notes Receivable (as defined below). In addition, the Company also agreed to Condensed Consolidated Financial Statements
suspend the quarterly payments in respect of the 2.0% net smelter returns royalty on all metals processed through the San Bartolomé mine’s processing facility (the “NSR”) received as partial consideration in the Manquiri Divestiture until October 15, 2019 and to forgo any rights the Company retained in the transaction to any value added tax (“VAT”) refunds collected or received by Manquiri. Based on the Company’s evaluation of the terms of the Letter Agreement, the Company recorded an $18.6 million write-down that is made up of $13.1 million on the VAT refunds, $3.6 million on the Manquiri Notes Receivable and $1.9 million on the NSR, See Note 10 -- Fair Value Measurements and 21 -- Discontinued Operations for additional detail.

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 March 31,September 30, 2018 and 2017 by significant jurisdiction:

Three months ended March 31,Three months ended September 30, Nine months ended September 30,
2018 20172018 2017 2018 2017
In thousandsIncome (loss) before taxTax (expense) benefit Income (loss) before taxTax (expense) benefitIncome (loss) before taxTax (expense) benefit Income (loss) before taxTax (expense) benefit Income (loss) before taxTax (expense) benefit Income (loss) before taxTax (expense) benefit
United States$1,187
$517
 $20,653
$(1,827)$(35,250)$(908) $(6,055)$(2,892) $(45,397)$(2,700) $8,036
$(4,072)
Argentina254
10
 (328)1,124
(2,058)(75) 738
(366) (1,985)(172) 281
1,704
Canada(13,194)4,432
 —
—
 (17,103)6,476
 —
—
Mexico13,126
(13,222) 8,650
(9,923)1,419
(7,234) 3,210
(9,057) 35,088
(23,055) 9,665
(23,745)
Other jurisdictions(1,927)746

202
(252)(176)—

4,668
(1,974)
(575)—

2,634
2,073
$12,640
$(11,949) $29,177
$(10,878)$(49,259)$(3,785) $2,561
$(14,289) $(29,972)$(19,451) $20,616
$(24,040)
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 increased income and mining tax expense by $3.6$3.0 million and $5.6decreased income and mining tax expense by $1.4 million for the three months ended March 31,September 30, 2018 and 2017, respectively, predominately due to the strengthening of the Mexican Peso. Additionally, favorable operating results at Palmarejo contributed to higherrespectively. Fluctuations in foreign exchange rates on deferred tax balances increased income and mining tax expense in Mexico.by $2.1 million and $7.2 million for the nine months ended September 30, 2018 and 2017, respectively. The impact of foreign exchange rates on deferred tax balances is predominately due to the Mexican Peso and Canadian Dollar.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

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 ultimately 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 sectionssection titled “Risk Factors” set forth in the 2017 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 20142015 forward for the U.S. federal jurisdiction and from 20082011 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 March 31,September 30, 2018 and December 31, 2017, the Company had $3.9$3.7 million and $4.3 million of total gross unrecognized tax benefits, respectively that, if recognized, 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 March 31,September 30, 2018 and December 31, 2017, the amount of accrued income-tax-related interest and penalties was $4.2$3.5 million and $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 March 31,September 30, 2018, 672,399 and 2017, 496,064 and 1,368,6851,526,109 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, 633,391 and 851,254 common stock equivalents were excluded from the diluted earnings per share calculation for the three and nine months ended September 30, 2017, respectively.
Three months ended March 31,Three months ended September 30, Nine months ended September 30,
In thousands except per share amounts2018 20172018 2017 2018 2017
Net income (loss) available to common stockholders:          
Income (loss) from continuing operations$691
 $18,299
$(53,044) $(11,728) $(49,423) $(3,424)
Income (loss) from discontinued operations550
 364
—
 (4,924) 550
 (5,520)
$1,241
 $18,663
$(53,044) $(16,652) $(48,873) $(8,944)
          
Weighted average shares:          
Basic184,367
 178,898
185,246
 179,278
 184,935
 179,141
Effect of stock-based compensation plans3,254
 4,170
—
 —
 —
 —
Diluted187,621

183,068
185,246

179,278

184,935

179,141
          
Basic income (loss) per share:          
Income (loss) from continuing operations$0.00
 $0.10
$(0.29) $(0.07) $(0.27) $(0.02)
Income (loss) from discontinued operations0.00
 0.00
0.00
 (0.03) 0.00
 (0.03)
Basic(1)
$0.01

$0.10
$(0.29) $(0.09) $(0.26)
$(0.05)
          
Diluted income (loss) per share:          
Income (loss) from continuing operations$0.00
 $0.10
$(0.29) $(0.07) $(0.27) $(0.02)
Income (loss) from discontinued operations0.00
 0.00
0.00
 (0.03) 0.00
 (0.03)
Diluted(1)
$0.01

$0.10
$(0.29) $(0.09) $(0.26)
$(0.05)
(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 March 31,Three months ended September 30, Nine months ended September 30,
In thousands2018 20172018 2017 2018 2017
Rochester royalty obligation$—
 $(1,200)$—
 $—
 $—
 $(864)
Interest rate swap206
 —
 18
 —
Unrealized gain (loss) on equity securities4,842
 —
286
 —
 (2,898) —
Realized gain (loss) on equity securities(3) —
 5,199
 —
Zinc options145
 —
226
 —
 588
 —
Fair value adjustments, net$4,987
 $(1,200)$715
 $—
 $2,907
 $(864)
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 March 31, 2018Fair Value at September 30, 2018
In thousandsTotal Level 1 Level 2 Level 3  Total Level 1 Level 2 Level 3  
Assets:              
Equity and debt securities$37,317
 $31,003
 $—
 $6,314
$24,232
 $19,665
 $—
 $4,567
Other derivative instruments, net552
 —
 552
 —
507
 —
 507
 —
$37,869
 $31,003
 $552
 $6,314
$24,739
 $19,665
 $507
 $4,567
Liabilities:              
Silvertip contingent consideration$48,289
 $—
 $—
 $48,289
$48,945
 $—
 $—
 $48,945
Other derivative instruments, net125
 —
 125
 —
267
 —
 267
 —
$48,414
 $—
 $125
 $48,289
$49,212
 $—
 $267
 $48,945
 
 Fair Value at December 31, 2017
In thousandsTotal Level 1 Level 2 Level 3  
Assets:       
Equity and debt securities$34,837
 $27,946
 $—
 $6,891
Other derivative instruments, net251
 —
 251
 —
 $35,088
 $27,946
 $251
 $6,891
Liabilities:       
Silvertip contingent consideration$47,965
 $—
 $—
 $47,965
Other derivative instruments, net222
 —
 222
 —
 $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 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, include concentrate and certain doré sales contracts, as well as zinc hedges, and an interest rate swap which are valued using pricing models with inputs 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 July 2017, the Company sold the Endeavor Silver 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.ownership of Metalla. In July 2018, Metalla completed an asset acquisition through the issuance of additional common stock, triggering the top-up clause in the convertible debenture, resulting in the conversion of $1.9 million of debt into Metalla common stock. The fair value of the convertible debenture is estimated based on observable marketand unobservable 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.TheLtd. 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 threenine months ended March 31,September 30, 2018.
The following tables present the changes in the fair value of the Company's Level 3 financial assets and liabilities for the three and nine months ended March 31,September 30, 2018:
Three Months Ended March 31, 2018Three Months Ended September 30, 2018
In thousandsBalance at the beginning of the period Revaluation Settlements Accretion 
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$6,891
 $(278) $(299) $—
 $6,314
$6,227
 $193
 $(1,853) $—
 $4,567
Liabilities:                  
Silvertip contingent consideration$47,965
 $—
 $—
 $324
 $48,289
$48,616
 $—
 $—
 $329
 $48,945
 Nine Months Ended September 30, 2018
In thousandsBalance at the beginning of the period Revaluation Settlements Accretion 
Balance at the
end of the
period
Assets:         
Equity and debt securities$6,891
 $(172) $(2,152) $—
 $4,567
Liabilities:         
Silvertip contingent consideration$47,965
 $—
 $—
 $980
 $48,945
The fair value of financial assets and liabilities carried at book value in the financial statements at March 31,September 30, 2018 and December 31, 2017 is presented in the following table:
March 31, 2018September 30, 2018
In thousandsBook Value Fair Value Level 1 Level 2 Level 3  Book Value Fair Value Level 1 Level 2 Level 3  
Assets:                  
Manquiri Notes Receivable$39,887
 $39,887
 $—
 $—
 $39,887
$9,207
 $9,207
 $—
 $—
 $9,207
Liabilities:  
        
      
5.875% Senior Notes due 2024(1)
$245,280
 $244,520
 $—
 $244,520
 $—
$245,662
 $235,725
 $—
 $235,725
 $—
Revolving Credit Facility(2)
$115,000
 $115,000
 $—
 $115,000
 $—
$120,000
 $120,000
 $—
 $120,000
 $—
(1) Net of unamortized debt issuance costs of $4.7$4.3 million.
(2) Unamortized debt issuance costs of $1.8$1.5 million included in Other Non-Current Assets.
 December 31, 2017
In thousandsBook 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.
(2) Unamortized debt issuance costs of $1.9 million included in Other Non-Current Assets.
In September 2018, the Company entered into a Letter Agreement with the Buyer, pursuant to which the total aggregate principal amount of the Manquiri Notes Receivable received as partial consideration in the Manquiri Divestiture was reduced from $28.5 million to $25.0 million, and the Buyer made a concurrent cash payment of $15.0 million to the Company in respect of the Manquiri Notes Receivable. In addition, the Company also agreed to suspend the quarterly payments in respect of the NSR on all metals processed through the San Bartolomé mine’s processing facility received as partial consideration in the Manquiri Divestiture until October 15, 2019 and to forgo any rights the Company retained in the transaction to any VAT refunds collected or received by Manquiri. Based on the Company’s evaluation of the terms of the Letter Agreement, the Company recorded an $18.6 million write-down that is made up of $13.1 million on the VAT refunds, $3.6 million on the Manquiri Notes Receivable and $1.9 million on the NSR, which is included in Other, net.. The fair value of the Manquiri Notes Receivable approximates bookwas determined using a discounted cash flow model using a 12% discount rate which takes into consideration the increased credit risk and short duration of the Manquiri Notes Receivable.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

The fair value due to no significant changeis estimated based on observable and unobservable data including yield curves and credit spreads, therefore, the Company classifies the Manquiri Notes Receivable in interest rates sinceLevel 3 of the sale of Manquiri;fair value hierarchy; see Note 21 -- Discontinued Operations for additional detail.
The fair value of the 5.875% Senior Notes due 2024 (the “2024 Senior Notes”) was 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
Provisional Silver and GoldMetal 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 gains of $0.3 million and $1.2 million in the three months ended March 31, 2018 and 2017, respectively.
Zinc Options
At March 31,September 30, 2018, the Company has outstanding Asian (or average value) put and call option contracts in net-zero-cost collar arrangements on a volume of 300 metric tons of zinc per month commencing in April 2018 and ending 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 zinc at the time of the expiration is between the put and call prices, would expire at no cost to the Company.
Interest Rate Swap
The Company is a party to an interest rate swap contract in which it will receive variable-rate interest and pay fixed-rate interest. The Company uses this instrument to manage its exposure to changes in interest rates related to its Revolving Credit Facility (see Note 18 -- Debt). The interest rate swap derivative instrument is not designated as a hedge from an accounting standpoint and hedge accounting is not applied. The notional amount is used to measure interest to be paid or received. The interest rate swap derivative instrument became effective June 2018 with a contractual term of twelve months and net settles monthly.
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

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. At March 31, 2017, the Company had no outstanding options contracts.
At March 31,September 30, 2018, the Company had the following derivative instruments that settle as follows:
In thousands except average prices and notional ounces2018 Thereafter2018 Thereafter
   
Provisional silver sales contracts$831
 $—
$1,444
 $—
Average silver price per ounce$16.66
 $—
$14.61
 $—
Notional ounces49,853
 —
98,832
 —
      
Provisional gold sales contracts$59,332
 $—
$14,802
 $—
Average gold price per ounce$1,317
 $—
$1,224
 $—
Notional ounces45,051
 —
12,089
 —
      
Provisional zinc sales contracts$2,123
 $—
Average zinc price per pound$1.20
 $—
Notional pounds1,772,075
 —
   
Provisional lead sales contracts$1,130
 $—
Average lead price per pound$0.92
 $—
Notional pound1,230,193
 —
   
Zinc put options purchased$8,100
 $—
$2,700

$—
Average zinc strike price per metric ton$3,000
 $—
$3,000
 $—
Notional metric tons2,700
 —
900
 —
      
Zinc call options sold$(10,935) $—
$(3,645) $—
Average zinc strike price per metric ton$4,050
 $—
$4,050
 $—
Notional metric tons2,700
 —
900
 —
   
Fixed interest rate swap payable$960
 $—
Fixed Interest rate2.46% —
Notional dollars$50,000
 $—
   
Variable interest rate swap receivable$979
 $—
Average variable interest rate2.51% $—
Notional dollars$50,000
 $—
The following summarizes the classification of the fair value of the derivative instruments:
March 31, 2018September 30, 2018
In thousandsPrepaid expenses and other Accrued liabilities and other Current portion of royalty obligation Non-current portion of royalty obligationPrepaid expenses and other Accrued liabilities and other
Provisional silver and gold sales contracts$407
 $125
 $—
 $—
Provisional metal sales contracts$310
 $267
Zinc options145
 —
 —
 —
339
 —
Interest rate swaps68
 —
$552
 $125
 $—
 $—
$717
 $267
December 31, 2017December 31, 2017
In thousandsPrepaid expenses and other Accrued liabilities and other Current portion of royalty obligation Non-current portion of royalty obligationPrepaid expenses and other Accrued liabilities and other
Provisional silver and gold sales contracts$251
 $222
 $—
 $—
Provisional metal sales contracts$251
 $222
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

The following represent mark-to-market gains (losses) on derivative instruments for the three and nine months ended March 31,September 30, 2018 and 2017, respectively (in thousands):
 Three months ended March 31, Three months ended September 30, Nine months ended September 30,
Financial statement lineDerivative2018 2017Derivative2018 2017 2018 2017
RevenueProvisional silver and gold sales contracts$253
 $1,212
Provisional metal sales contracts$34
 $147
 $15
 $596
Fair value adjustments, netZinc options145
 —
Zinc options225
 —
 588
 —
Fair value adjustments, netInterest rate swaps206
 —
 18
 —
 $398
 $1,212
 $465
 $147
 $621
 $596
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 iswas not significant to the Company’s results of operations, individually or in the aggregate, because the Silvertip mine iswas in in pre-production. As there arewere no significant differences from the Company’s historical results of operations, no pro forma financial information iswas provided.
The allocation of purchase price to the acquired assets and liabilities assumed is preliminary as of March 31,September 30, 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 within one year of the acquisition date and recorded in the fourth quarter of 2018, as management continues tocompletes the review of the valuation methodologies used to estimate the fair value of these assets. The preliminary purchase price allocation is as follows (in thousands):
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Common shares issued (4,191,679 at $8.59)$36,007
Cash153,194
Contingent consideration47,705
Total purchase price(1)
$236,906
Assets: 
Receivables and other assets$6,828
Property, plant, and equipment29,943
Mining properties, net288,464
 325,235
Liabilities: 
Accounts payable and accrued liabilities13,077
Asset retirement obligation6,982
Debt and capital lease20,149
Deferred income taxes48,121
 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.
At March 31, 2018At September 30, 2018
In thousandsCost 
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
 $—
 $2,837
 $9,131
8,147
 —
 2,113
 10,260
Corvus Gold Inc.3,582
 —
 6,844
 10,426
Almaden Minerals, Ltd.2,067
 (727) —
 1,340
Northern Empire Resources Corp.4,489
 —
 2,999
 7,488
Northern Empire Resources Corp. (1)
4,489
 —
 2,716
 7,205
Rockhaven Resources, Ltd.2,064
 (596) —
 1,468
2,064
 (538) —
 1,526
Other1,190
 (155) 115
 1,150
1,390
 (716) —
 674
Equity securities$19,686
 $(1,478) $12,795
 $31,003
$16,090
 $(1,254) $4,829
 $19,665
              
Debt Securities              
Metalla Royalty & Streaming Ltd.$6,677
 $(363) $—
 $6,314
$4,825
 $(258) $—
 $4,567
              
Equity and debt securities$26,363
 $(1,841) $12,795
 $37,317
$20,915
 $(1,512) $4,829
 $24,232
(1) In October 2018, the Company acquired the remaining outstanding shares of Norther Empire Resources Corp. not already owned by the Company. See Note 23 -- Subsequent Events for additional detail.

Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

 At December 31, 2017
In thousandsCost 
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.738
 —
 1
 739
Other1,479
 (453) 405
 1,431
Equity securities$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 thousands2018 2017
Net gain (loss)$4,529
 $(1,471)
Less: Realized (gain) loss313
 1,471
Unrealized gain (loss)$4,842
 $—


Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
 Three months ended September 30, Nine months ended September 30,
In thousands2018 2017 2018 2017
Net gain (loss)$283
 $(32) $2,301
 $(1,300)
Less: Realized (gain) loss3
 32
 (5,199) 1,300
Unrealized gain (loss)$286
 $—
 $(2,898) $—

The Company performs a quarterly assessment on its debt securities with unrealized losses to determine if the securities are other than temporarily impaired. The following table summarizes unrealized losses on 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 March 31,September 30, 2018:

Less than twelve months Twelve months or more TotalLess than twelve months Twelve months or more Total
In thousandsUnrealized LossesFair Value Unrealized LossesFair Value Unrealized LossesFair ValueUnrealized LossesFair Value Unrealized LossesFair Value Unrealized LossesFair Value
Debt securities363
6,314
 —
—
 363
6,314
—
—
 257
4,568
 257
4,568
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 March 31,September 30, 2018 and December 31, 2017, the Company held certificates of deposit and cash equivalents under these agreements of $22.1$21.4 million and $17.6$20.8 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 14 – RECEIVABLES
Receivables consist of the following:
In thousandsMarch 31, 2018 December 31, 2017
Current receivables:   
Trade receivables$3,840
 $5,883
Income tax receivable48
 7
Value added tax receivable14,482
 10,982
Manquiri note receivable15,840
 —
Other1,654
 2,197
 $35,864
 $19,069
Non-current receivables:   
Value added tax receivable$31,381
 $28,750
Manquiri note receivable24,047
 —
 55,428
 28,750
Total receivables$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 14 – RECEIVABLES
Receivables consist of the following:
In thousandsSeptember 30, 2018 December 31, 2017
Current receivables:   
Trade receivables$5,965
 $5,883
Value added tax receivable13,406
 10,982
Manquiri Notes Receivable9,207
 —
Other1,902
 2,204
 $30,480
 $19,069
Non-current receivables:   
Value added tax receivable$28,035
 $28,750
 28,035
 28,750
Total receivables$58,515
 $47,819

The increase in receivables is due to the recognition of the Manquiri Notes Receivable as consideration for the sale of San Bartolomé. See Note 10 -- Fair Value Measurements and 21 -- Discontinued Operations for additional detail.

NOTE 15 – INVENTORY AND ORE ON LEACH PADS
Inventory consists of the following:
In thousandsMarch 31, 2018 December 31, 2017September 30, 2018 December 31, 2017
Inventory:      
Concentrate$11,062
 $6,831
$8,778
 $6,831
Precious metals17,783
 18,803
20,116
 18,803
Supplies32,878
 32,596
33,675
 32,596
61,723
 58,230
62,569
 58,230
Ore on leach pads:      
Current75,584
 73,752
77,515
 73,752
Non-current67,430
 65,393
67,420
 65,393
143,014
 139,145
144,935
 139,145
Total inventory and ore on leach pads$204,737
 $197,375
$207,504
 $197,375
Upon commencement of commercial production, Silvertip recognized a $8.7 million write-down of metal inventory as a result of lower than expected production levels, grades and recovery rates as well as reduced process plant availability and unfavorable changes in metal prices. It is possible that additional write-downs will be required as the Company works to optimize operations at Silvertip.

NOTE 16 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
In thousandsMarch 31, 2018 December 31, 2017September 30, 2018 December 31, 2017
Land$9,107
 $9,408
$9,082
 $9,408
Facilities and equipment559,276
 554,160
583,459
 554,160
Assets under capital leases88,720
 82,753
109,042
 82,753
657,103
 646,321
701,583
 646,321
Accumulated amortization (1)
(456,374) (448,001)(474,431) (448,001)
200,729
 198,320
227,152
 198,320
Construction in progress65,428
 56,417
58,719
 56,417
Property, plant and equipment, net$266,157
 $254,737
$285,871
 $254,737
(1) Includes $29.0$44.9 million and $28.2 million of accumulated amortization related to assets under capital leases at March 31,September 30, 2018 and December 31, 2017, respectively.

Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements


NOTE 17 – MINING PROPERTIES
Mining properties consist of the following (in thousands):
March 31, 2018Palmarejo Rochester Silvertip Kensington Wharf La Preciosa Other Total
September 30, 2018Palmarejo Rochester Silvertip Kensington Wharf La Preciosa Other Total
Mine development$220,141
 $194,390
 $70,626
 $307,996
 $40,688
 $—
 $—
 $833,841
$233,562
 $196,143
 $105,320
 $322,901
 $41,498
 $—
 $—
 $899,424
Accumulated amortization(151,102) (146,245) —
 (182,555) (16,456) —
 —
 (496,358)(159,120) (149,729) (389) (191,026) (17,811) —
 —
 (518,075)
69,039
 48,145
 70,626
 125,441
 24,232
 —
 —
 337,483
74,442
 46,414
 104,931
 131,875
 23,687
 —
 —
 381,349
Mineral interests629,303
 —
 245,116
 —
 45,837
 49,085
 7,102
 976,443
629,303
 —
 245,116
 —
 45,837
 49,085
 5,171
 974,512
Accumulated amortization(445,327) —
 —
 —
 (24,655)—
—
 (123) (470,105)(463,565) —
 (988) —
 (25,843)
—
 (422) (490,818)
183,976
 —
 245,116
 —
 21,182
 49,085
 6,979
 506,338
165,738
 —
 244,128
 —
 19,994
 49,085
 4,749
 483,694
Mining properties, net$253,015
 $48,145
 $315,742
 $125,441
 $45,414
 $49,085
 $6,979
 $843,821
$240,180
 $46,414
 $349,059
 $131,875
 $43,681
 $49,085
 $4,749
 $865,043
December 31, 2017Palmarejo Rochester Silvertip Kensington Wharf La Preciosa TotalPalmarejo Rochester Silvertip Kensington Wharf La Preciosa Total
Mine development$214,383
 $193,881
 $57,214
 $298,749
 $40,618
 $—
 $804,845
$214,383
 $193,881
 $57,214
 $298,749
 $40,618
 $—
 $804,845
Accumulated amortization(146,598) (144,390) —
 (178,632) (15,748) —
 (485,368)(146,598) (144,390) —
 (178,632) (15,748) —
 (485,368)
67,785
 49,491
 57,214
 120,117
 24,870
 —
 319,477
67,785
 49,491
 57,214
 120,117
 24,870
 —
 319,477
Mineral interests629,303
 —
 245,116
 —
 45,837
 49,085
 969,341
629,303
 —
 245,116
 —
 45,837
 49,085
 969,341
Accumulated amortization(435,215) —
 —
 —
 (24,034)—
—
 (459,249)(435,215) —
 —
 —
 (24,034) —
 (459,249)
194,088
 —
 245,116
 —
 21,803
 49,085
 510,092
194,088
 —
 245,116
 —
 21,803
 49,085
 510,092
Mining properties, net$261,873
 $49,491
 $302,330
 $120,117
 $46,673
 $49,085
 $829,569
$261,873
 $49,491
 $302,330
 $120,117
 $46,673
 $49,085
 $829,569
In February 2018, the Company completed the sale of the Manquiri which operates the San Bartolomé mine.Divestiture. Pursuant to the terms of the agreement, the Company received, among other things, a 2.0% net smelter returns royalty.consideration, the NSR. Coeur estimates the value of this net smelter returns royalty to be approximately $7.1 million, which is included in Other. In September 2018, the Company entered into the Letter Agreement, pursuant to which the Company agreed to suspend the quarterly payments in respect of the NSR until October 15, 2019. Based on the Company’s evaluation of the terms of the Letter Agreement, the Company recorded a write-down of $1.9 million on the NSR. See Note 10 -- Fair Value Measurements and 21 -- Discontinued Operations for additional detail.
The Silvertip mine is expected to reachreached commercial production in the second quarter ofon September 1, 2018. The determination of commercial production (or ready for intended use) iswas based on many factors requiring the exercise of judgment.  Factors that arewere considered when determining if intended use hashad been achieved includeincluded achievement of continuous production or other output, mineral recoveries at or near expected levels, the absence of routine take-downs of the plant to address commissioning issues and fix problems, and the release of the commissioning team.
Prior to commercial production, costs related to mine development, construction of long-lived assets, and inventory arewere capitalized; all other costs arewere expensed in the period incurred. Amortization of mining properties will commencecommenced when the mine has been determined to be inreached commercial production.

NOTE 18 – DEBT
March 31, 2018 December 31, 2017September 30, 2018 December 31, 2017
In thousandsCurrent Non-Current Current Non-CurrentCurrent Non-Current Current Non-Current
2024 Senior Notes, net(1)
$—
 $245,280
 $—
 $245,088
$—
 $245,662
 $—
 $245,088
Revolving Credit Facility(2)
—
 115,000
 —
 100,000
—
 120,000
 —
 100,000
Capital lease obligations17,040
 36,704
 16,559
 35,481
22,696
 40,832
 16,559
 35,481
Silvertip debt obligation—
 —
 14,194
 —
—
 —
 14,194
 —
$17,040
 $396,984
 $30,753
 $380,569
$22,696
 $406,494
 $30,753
 $380,569
(1) Net of unamortized debt issuance costs of $4.7$4.3 million and $4.9 million at March 31,September 30, 2018 and December 31, 2017, respectively.
(2) Unamortized debt issuance costs of $1.8$1.5 million and $1.9 million at March 31,September 30, 2018 and December 31, 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, 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.
At March 31,September 30, 2018, the Company had $73.0$68.0 million available under the Facility; $25.0 million was drawn in the third quarter of 2018 to finance working capital and general corporate purposes, $15.0 million was drawn to repay the third-party debt obligation at Silvertip as described below, $100.0 million was drawn to partially fund the Silvertip acquisition in 2017, and $12.0 million currently supportswas drawn to support outstanding letters of credit. In September 2018, the company repaid $20.0 million of the outstanding balance. At March 31,September 30, 2018, the interest rate of the Facility was 4.1%4.415%. The Company has swapped $50,000,000 of variable rate debt on the Facility to fixed rate debt through an interest rate swap.
Silvertip Debt Obligation
The Company assumed an existing third-party debt obligation as part of the Silvertip acquisition. In February 2018, the Company voluntarily terminated and repaid the remaining debt obligation of $12.6 million.
Capital Lease Obligations
From time to time, the Company acquires mining equipment under capital lease agreements. In the threenine months ended March 31,September 30, 2018, the Company entered into new lease financing arrangements primarily for mining equipment at Rochester, Palmarejo, Silvertip 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 March 31,Three months ended September 30, Nine months ended September 30,
In thousands2018 20172018 2017 2018 2017
2024 Senior Notes$3,673
 $—
$3,672
 $3,672
 $11,016
 $4,937
2021 Senior Notes—
 3,504
—
 —
 —
 6,221
Revolving Credit Facility1,152
 —
1,515
 —
 4,035
 —
Capital lease obligations524
 306
512
 402
 1,551
 1,092
Amortization of debt issuance costs325
 166
323
 180
 972
 518
Accretion of debt premium—
 (43)—
 —
 —
 (71)
Accretion of Silvertip contingent consideration324
 —
329
 —
 980
 —
Other debt obligations107

9
196
 13
 312

30
Capitalized interest(140) (363)(729) (672) (1,065) (1,809)
Total interest expense, net of capitalized interest$5,965
 $3,579
$5,818
 $3,595
 $17,801
 $10,918

Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

NOTE 19 - 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,SEPTEMBER 30, 2018
In thousands Coeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations ConsolidatedCoeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Revenue $—
 $93,230
 $70,037
 $—
 $163,267
$—
 $89,289
 $59,506
 $—
 $148,795
COSTS AND EXPENSES                   
Costs applicable to sales(1)
 —
 68,245
 31,095
 —
 99,340
—
 73,768
 43,089
 —
 116,857
Amortization 246
 14,205
 16,326
 —
 30,777
232
 15,084
 15,868
 —
 31,184
General and administrative 8,797
 3
 4
 —
 8,804
7,682
 3
 44
 —
 7,729
Exploration 459
 2,245
 3,979
 —
 6,683
383
 2,245
 5,529
 —
 8,157
Pre-development, reclamation, and other 406
 1,947
 1,872
 —
 4,225
1,302
 5,456
 1,363
 —
 8,121
Total costs and expenses 9,908
 86,645
 53,276
 —
 149,829
9,599
 96,556
 65,893
 —
 172,048
OTHER INCOME (EXPENSE), NET                   
Fair value adjustments, net 5,279
 (292) —
 —
 4,987
745
 (30) —
 —
 715
Other, net 4,142
 (137) (106) (3,719) 180
(14,194) (189) (2,599) (3,921) (20,903)
Interest expense, net of capitalized interest (5,083) (353) (4,248) 3,719
 (5,965)(5,445) (372) (3,922) 3,921
 (5,818)
Total other income (expense), net 4,338
 (782) (4,354) —
 (798)(18,894) (591) (6,521) —
 (26,006)
Income (loss) from continuing operations before income and mining taxes (5,570) 5,803
 12,407
 —
 12,640
(28,493) (7,858) (12,908) —
 (49,259)
Income and mining tax (expense) benefit 1,638
 (1,120) (12,467) —
 (11,949)(430) (489) (2,866) —
 (3,785)
Income (loss) from continuing operations (3,932) 4,683
 (60) —
 691
(28,923) (8,347) (15,774) —
 (53,044)
Equity income (loss) in consolidated subsidiaries 4,164
 (38) (170) (3,956) —
(24,122) (47) (174) 24,343
 —
Income (loss) from discontinued operations 1,009
 (284) (175) —
 550
—
 —
 —
 —
 —
NET INCOME (LOSS) $1,241
 $4,361
 $(405) $(3,956) $1,241
$(53,045) $(8,394) $(15,948) $24,343
 $(53,044)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:                   
Unrealized gain (loss) on debt securities, net of tax (278) —
 —
 —
 (278)192
 —
 —
 —
 192
COMPREHENSIVE INCOME (LOSS) $963
 $4,361
 $(405) $(3,956) $963
$(52,853) $(8,394) $(15,948) $24,343
 $(52,852)
(1) Excludes amortization.















Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED MARCH 31,SEPTEMBER 30, 2017
In thousands Coeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations ConsolidatedCoeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Revenue $—
 $107,194
 $78,360
 $—
 $185,554
$—
 $99,093
 $60,827
 $—
 $159,920
COSTS AND EXPENSES                   
Costs applicable to sales(1)
 —
 71,202
 43,288
 —
 114,490
—
 68,267
 33,292
 —
 101,559
Amortization 324
 18,104
 20,265
 —
 38,693
286
 15,678
 16,436
 —
 32,400
General and administrative 10,106
 24
 (5) —
 10,125
7,250
 6
 89
 —
 7,345
Exploration 336
 1,727
 3,189
 —
 5,252
466
 4,582
 4,743
 —
 9,791
Pre-development, reclamation, and other 175
 1,781
 1,881
 —
 3,837
1,030
 1,922
 2,078
 —
 5,030
Total costs and expenses 10,941
 92,838
 68,618
 —
 172,397
9,032
 90,455
 56,638
 —
 156,125
OTHER INCOME (EXPENSE), NET                   
Fair value adjustments, net —
 (1,200) —
 —
 (1,200)
Other, net 15,222
 5,458
 1,533
 (1,414) 20,799
2,868
 (4,603) 5,509
 (1,413) 2,361
Interest expense, net of capitalized interest (3,279) (175) (1,539) 1,414
 (3,579)(3,220) (264) (1,524) 1,413
 (3,595)
Total other income (expense), net 11,943
 4,083
 (6) —
 16,020
(352) (4,867) 3,985
 —
 (1,234)
Income (loss) from continuing operations before income and mining taxes 1,002
 18,439
 9,736
 —
 29,177
(9,384) 3,771
 8,174
 —
 2,561
Income and mining tax (expense) benefit 1,588
 (2,434) (10,032) —
 (10,878)(8,091) (574) (5,624) —
 (14,289)
Income (loss) from continuing operations 2,590
 16,005
 (296) —
 18,299
(17,475) 3,197
 2,550
 —
 (11,728)
Equity income (loss) in consolidated subsidiaries 16,073
 70
 (67) (16,076) —
823
 (1,755) (304) 1,236
 —
Income (loss) from discontinued operations —
 —
 364
 —
 364
—
 —
 (4,924) —
 (4,924)
NET INCOME (LOSS) $18,663
 $16,075
 $1
 $(16,076) $18,663
$(16,652) $1,442
 $(2,678) $1,236
 $(16,652)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:                   
Unrealized gain (loss) on debt and equity securities, net of tax (2,182) (279) —
 279
 (2,182)
Unrealized gain (loss) on debt securities, net of tax1,066
 1,504
 —
 (1,504) 1,066
Reclassification adjustments for impairment of equity securities, net of tax 121
 121
 —
 (121) 121
—
 (852) —
 852
 —
Reclassification adjustments for realized loss on sale of equity securities, net of tax 1,471
 (369) —
 369
 1,471
Reclassification adjustments for realized gain (loss) on sale of equity securities, net of tax32
 1,112
 —
 (1,112) 32
Other comprehensive income (loss) (590) (527) —
 527
 (590)1,098
 1,764
 —
 (1,764) 1,098
COMPREHENSIVE INCOME (LOSS) $18,073
 $15,548
 $1
 $(15,549) $18,073
$(15,554) $3,206
 $(2,678) $(528) $(15,554)
(1) Excludes amortization.

Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31,SEPTEMBER 30, 2018
In thousands Coeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations ConsolidatedCoeur 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
$(37,112) $7,058
 $11,500
 $24,343
 5,789
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
(37,112) 7,058
 11,500
 24,343
 5,789
                   
CASH FLOWS FROM INVESTING ACTIVITIES                   
Capital expenditures (83) (14,341) (27,921) —
 (42,345)(119) (16,720) (22,633) —
 (39,472)
Proceeds from the sale of assets —
 60
 —
 —
 60
—
 304
 89
 —
 393
Purchase of investments (361) —
 —
 —
 (361)(15) —
 —
 —
 (15)
Sales of investments 1,067
 552
 —
 —
 1,619
(126) 48
 —
 —
 (78)
Proceeds from notes receivable15,000
 —
 —
 —
 15,000
Other —
 —
 (65) —
 (65)124
 —
 (60) —
 64
Investments in consolidated subsidiaries (4,162) 37
 169
 3,956
 —
24,121
 56
 166
 (24,343) —
Cash provided by (used in) activities of continuing operations (3,539) (13,692) (27,817) 3,956
 (41,092)38,985
 (16,312) (22,438) (24,343) (24,108)
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)38,985
 (16,312) (22,438) (24,343) (24,108)
CASH FLOWS FROM FINANCING ACTIVITIES:                   
Issuance of notes and bank borrowings, net of issuance costs 15,000
 —
52,577
—
 —
 15,000
25,000
 —
 —
 —
 25,000
Payments on debt, capital leases, and associated costs —
 (2,395) (16,054) —
 (18,449)(20,000) (3,535) (1,998) —
 (25,533)
Net intercompany financing activity (20,381) (10,946) 31,327
 —
 —
(7,130) (4,844) 11,974
 —
 —
Other (4,606) —
 —
 —
 (4,606)(77) —
 —
 —
 (77)
Cash provided by (used in) activities of continuing operations (9,987) (13,341) 15,273
 —
 (8,055)(2,207) (8,379) 9,976
 —
 (610)
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)(2,207) (8,379) 9,976
 —
 (610)
Effect of exchange rate changes on cash and cash equivalents —
 2
 555
 —
 557
—
 (2) 185
 —
 183
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)(334) (17,635) (777) —
 (18,746)
Cash, cash equivalents and restricted cash at beginning of period 56,033
 52,239
 95,130
 —
 203,402
24,232
 40,200
 71,594
 —
 136,026
Cash, cash equivalents and restricted cash at end of period $34,569

$30,603


$106,929

$—

$172,101
$23,898
 $22,565
 $70,817
 $—
 $117,280



















Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31,SEPTEMBER 30, 2017
In thousandsCoeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:         
Cash provided by (used in) activities of continuing operations$(8,682) $27,407
 $17,348
 $1,236
 37,309
Cash provided by (used in) activities of discontinued operations—
 —
 (7,877) —
 (7,877)
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) (5,648) —
 (28,982)
Proceeds from the sale of assets—
 76
 940
 —
 1,016
Purchase of investments(3,594) (1) —
 —
 (3,595)
Sales of investments—
 403
 —
 —
 403
Other(4,252) —
 (67) —
 (4,319)
Investments in consolidated subsidiaries3,432
 7,144
 (9,340) (1,236) —
Cash provided by (used in) activities of continuing operations(4,732) (15,394) (14,115) (1,236) (35,477)
Cash provided by (used in) activities of discontinued operations—

—

(412) —
 (412)
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES(4,732) (15,394) (14,527) (1,236) (35,889)
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) (1,429) —
 (3,323)
Net intercompany financing activity9,266
 (12,370)
3,104
 —
 —
Other(6) —
 —
 —
 (6)
Cash provided by (used in) activities of continuing operations7,003
 (14,264) 1,675
 —
 (5,586)
Cash provided by (used in) activities of discontinued operations—
 —

(21) —
 (21)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES7,003
 (14,264) 1,654
 —
 (5,607)
Effect of exchange rate changes on cash and cash equivalents—
 3
 (225) —
 (222)
Less net cash provided by (used in) discontinued operations—
 —
 (8,491) —
 (8,491)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH(6,411) (2,248) 4,864
 —
 (3,795)
Cash, cash equivalents and restricted cash at beginning of period113,708
 47,912
 49,189
 —
 210,809
Cash, cash equivalents and restricted cash at end of period$107,297
 $45,664
 $54,053
 $—
 $207,014




















Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
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 $(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 (319) (16,975) (6,297) —
 (23,591)
Proceeds from the sale of assets 8,916
 6,151
 (48) —
 15,019
Purchase of investments (1,016) —
 —
 —
 (1,016)
Sales of investments 9,157
 863
 —
 —
 10,020
Other 46
 —
 (60) —
 (14)
Investments in consolidated subsidiaries (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 4,330
 (10,031) (6,726) 12,457
 30
CASH FLOWS FROM FINANCING ACTIVITIES:          
Payments on debt, capital leases, and associated costs —
 (1,874) (1,332) —
 (3,206)
Net intercompany financing activity 14,318
 (9,325) (8,612) 3,619
 —
Other (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 11,071
 (11,199) (9,964) 3,619
 (6,473)
Effect of exchange rate changes on cash and cash equivalents —
 —
 555
 —
 555
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 COMPREHENSIVE INCOME (LOSS)
NINE MONTHS ENDED SEPTEMBER 30, 2018
In thousandsCoeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Revenue$—
 $281,762
 $200,287
 $—
 $482,049
COSTS AND EXPENSES         
Costs applicable to sales(1)
—
 219,948
 104,495
 —
 324,443
Amortization714
 43,876
 46,830
 —
 91,420
General and administrative24,113
 15
 55
 —
 24,183
Exploration1,168
 7,289
 12,812
 —
 21,269
Pre-development, reclamation, and other1,912
 9,391
 4,663
 —
 15,966
Total costs and expenses27,907
 280,519
 168,855
 —
 477,281
OTHER INCOME (EXPENSE), NET         
Fair value adjustments, net3,335
 (428) 

 —
 2,907
Other, net(4,890) 187
 (3,607) (11,536) (19,846)
Interest expense, net of capitalized interest(15,786) (1,092) (12,459) 11,536
 (17,801)
Total other income (expense), net(17,341) (1,333) (16,066) —
 (34,740)
Income (loss) from continuing operations before income and mining taxes(45,248) (90) 15,366
 —
 (29,972)
Income and mining tax (expense) benefit286
 (2,997) (16,740) —
 (19,451)
Income (loss) from continuing operations(44,962) (3,087) (1,374) —
 (49,423)
Equity income (loss) in consolidated subsidiaries(4,922) (113) (590) 5,625
 —
Income (loss) from discontinued operations1,010
 (284) (176) —
 550
NET INCOME (LOSS)$(48,874) $(3,484) $(2,140) $5,625
 $(48,873)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:         
Unrealized gain (loss) on debt securities, net of tax(173) —
 —
 —
 (173)
COMPREHENSIVE INCOME (LOSS)$(49,047) $(3,484) $(2,140) $5,625
 $(49,046)
(1) Excludes amortization.



































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 thousandsCoeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Revenue$—
 $301,658
 $193,356
 $—
 $495,014
COSTS AND EXPENSES         
Costs applicable to sales(1)
—
 207,385
 110,893
 —
 318,278
Amortization908
 49,617
 51,302
 —
 101,827
General and administrative24,316
 26
 153
 —
 24,495
Exploration1,197
 9,526
 12,133
 —
 22,856
Pre-development, reclamation, and other1,803
 5,593
 5,556
 —
 12,952
Total costs and expenses28,224
 272,147
 180,037
 —
 480,408
OTHER INCOME (EXPENSE), NET         
Loss on debt extinguishments(9,342) —
 —
 —
 (9,342)
Fair value adjustments, net—
 (864) —
 —
 (864)
Other, net20,090
 3,332
 7,951
 (4,239) 27,134
Interest expense, net of capitalized interest(9,876) (703) (4,578) 4,239
 (10,918)
Total other income (expense), net872
 1,765
 3,373
 —
 6,010
Income (loss) from continuing operations before income and mining taxes(27,352) 31,276
 16,692
 —
 20,616
Income and mining tax (expense) benefit(3,108) (3,946) (16,986) —
 (24,040)
Income (loss) from continuing operations(30,460) 27,330
 (294) —
 (3,424)
Equity income (loss) in consolidated subsidiaries21,516
 (546) (609) (20,361) —
Income (loss) from discontinued operations—
 —
 (5,520) —
 (5,520)
NET INCOME (LOSS)$(8,944) $26,784
 $(6,423) $(20,361) $(8,944)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:         
Unrealized gain (loss) on debt and equity securities, net of tax(1,134) 756
 —
 (756) (1,134)
Reclassification adjustments for impairment of equity securities, net of tax426
 (426) —
 426
 426
Reclassification adjustments for realized loss on sale of equity securities, net of tax1,300
 540
 —
 (540) 1,300
Other comprehensive income (loss)592
 870
 —
 (870) 592
COMPREHENSIVE INCOME (LOSS)$(8,352) $27,654
 $(6,423) $(21,231) $(8,352)
(1) Excludes amortization.

Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2018
In thousandsCoeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:         
Cash provided by (used in) activities of continuing operations$(36,687) $33,173
 $17,925
 $5,625
 20,036
Cash provided by (used in) activities of discontinued operations—
 —
 (2,690) —
 (2,690)
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES(36,687) 33,173
 15,235
 5,625
 17,346
          
CASH FLOWS FROM INVESTING ACTIVITIES         
Capital expenditures(303) (43,598) (79,081) —
 (122,982)
Proceeds from the sale of assets23
 437
 89
 —
 549
Purchase of investments(415) —
 —
 —
 (415)
Sales of investments11,694
 988
 —
 —
 12,682
Proceeds from notes receivable15,000
 —
 —
 —
 15,000
Other45
 109
 (188) —
 (34)
Investments in consolidated subsidiaries4,922
 121
 582
 (5,625) —
Cash provided by (used in) activities of continuing operations30,966
 (41,943) (78,598) (5,625) (95,200)
Cash provided by (used in) activities of discontinued operations—
 —
 (28,470) —
 (28,470)
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES30,966

(41,943)
(107,068) (5,625) (123,670)
CASH FLOWS FROM FINANCING ACTIVITIES:         
Issuance of notes and bank borrowings, net of issuance costs40,000
 —

—
 —
 40,000
Payments on debt, capital leases, and associated costs(20,000) (8,462) (19,893) —
 (48,355)
Net intercompany financing activity(41,498) (12,436) 53,934
 —
 —
Other(4,916) —
 —
 —
 (4,916)
Cash provided by (used in) activities of continuing operations(26,414) (20,898) 34,041
 —
 (13,271)
Cash provided by (used in) activities of discontinued operations—
 —
 (22) —
 (22)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES(26,414)
(20,898)
34,019

—

(13,293)
Effect of exchange rate changes on cash and cash equivalents—
 (6) 571
 —
 565
Less net cash provided by (used in) discontinued operations—
 —
 (32,930) —
 (32,930)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH(32,135)
(29,674)
(24,313) —
 (86,122)
Cash, cash equivalents and restricted cash at beginning of period56,033
 52,239
 95,130
 —
 203,402
Cash, cash equivalents and restricted cash at end of period$23,898

$22,565

$70,817

$—

$117,280

Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2017
In thousandsCoeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:         
Cash provided by (used in) activities of continuing operations$(18,502) $59,434
 $84,778
 $(20,361) 105,349
Cash provided by (used in) activities of discontinued operations—
 —
 8,633
 —
 8,633
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES(18,502) 59,434
 93,411
 (20,361) 113,982
          
CASH FLOWS FROM INVESTING ACTIVITIES         
Capital expenditures(1,626) (63,928) (24,126) —
 (89,680)
Proceeds from the sale of assets8,917
 6,670
 884
 —
 16,471
Purchase of investments(13,558) (1) —
 —
 (13,559)
Sales of investments9,157
 2,164
 —
 —
 11,321
Other(4,197) —
 (188) —
 (4,385)
Investments in consolidated subsidiaries(9,572) 7,897
 (18,686) 20,361
 —
Cash provided by (used in) activities of continuing operations(10,879) (47,198) (42,116) 20,361
 (79,832)
Cash provided by (used in) activities of discontinued operations—
 —
 (1,175) —
 (1,175)
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES(10,879) (47,198) (43,291) 20,361
 (81,007)
CASH FLOWS FROM FINANCING ACTIVITIES:         
Issuance of notes and bank borrowings242,701
 —
 —
 —
 242,701
Payments on debt, capital leases, and associated costs(185,538) (5,789) (4,112) —
 (195,439)
Net intercompany financing activity16,904
 (10,809) (6,095) —
 —
Other(3,726) —
 —
 —
 (3,726)
Cash provided by (used in) activities of continuing operations70,341
 (16,598) (10,207) —
 43,536
Cash provided by (used in) activities of discontinued operations—
 —
 (62) —
 (62)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES70,341
 (16,598) (10,269) —
 43,474
Effect of exchange rate changes on cash and cash equivalents—
 3
 659
 —
 662
Less net cash provided by (used in) discontinued operations—
 —
 (3,302) —
 (3,302)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH40,960
 (4,359) 43,812
 —
 80,413
Cash, cash equivalents and restricted cash at beginning of period66,337
 50,023
 10,241
 —
 126,601
Cash, cash equivalents and restricted cash at end of period$107,297
 $45,664
 $54,053
 $—
 $207,014



Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31,SEPTEMBER 30, 2018
In thousands Coeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations ConsolidatedCoeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
ASSETS               
CURRENT ASSETS                   
Cash and cash equivalents $22,111
 $30,603
 $106,929
 $—
 $159,643
$11,432
 $22,496
 $70,818
 $—
 $104,746
Receivables 15,895
 5,084
 14,885
 —
 35,864
9,697
 3,355
 17,428
 —
 30,480
Ore on leach pads —
 75,584
 —
 —
 75,584
—
 77,515
 —
 —
 77,515
Inventory —
 31,512
 30,211
 —
 61,723
—
 28,751
 33,818
 —
 62,569
Prepaid expenses and other 8,892
 3,193
 6,118
 —
 18,203
4,938
 1,430
 5,799
 —
 12,167
 46,898
 145,976
 158,143
 —
 351,017
26,067
 133,547
 127,863
 —
 287,477
NON-CURRENT ASSETS                   
Property, plant and equipment, net 3,141
 165,578
 97,438
 —
 266,157
2,893
 176,645
 106,333
 —
 285,871
Mining properties, net 6,980
 219,000
 617,841
 —
 843,821
4,753
 221,969
 638,321
 —
 865,043
Ore on leach pads —
 67,430
 —
 —
 67,430
—
 67,420
 —
 —
 67,420
Restricted assets 14,352
 227
 7,537
 —
 22,116
14,359
 227
 6,775
 —
 21,361
Equity and debt securities 36,772
 545
 —
 —
 37,317
24,218
 14
 —
 —
 24,232
Receivables 24,047
 —
 31,381
 —
 55,428
—
 —
 28,035
 —
 28,035
Net investment in subsidiaries 423,448
 332
 694
 (424,474) —
459,064
 258
 294
 (459,616) —
Other 317,146
 11,820
 3,431
 (313,748) 18,649
297,919
 11,846
 3,897
 (294,724) 18,938
TOTAL ASSETS $872,784
 $610,908
 $916,465
 $(738,222) $1,661,935
$829,273
 $611,926
 $911,518
 $(754,340) $1,598,377
                   
LIABILITIES AND STOCKHOLDERS’ EQUITY                   
CURRENT LIABILITIES                   
Accounts payable $3,419
 $21,634
 $19,811
 $—
 $44,864
$2,244
 $21,697
 $31,191
 $—
 $55,132
Other accrued liabilities 16,643
 12,059
 76,447
 —
 105,149
11,701
 11,148
 42,551
 —
 65,400
Debt —
 9,977
 7,063
 —
 17,040
—
 16,913
 5,783
 —
 22,696
Reclamation —
 2,313
 1,464
 —
 3,777
—
 2,313
 1,464
 —
 3,777
 20,062
 45,983
 104,785
 —
 170,830
13,945
 52,071
 80,989
 —
 147,005
NON-CURRENT LIABILITIES                   
Debt 360,280
 31,116
 319,336
 (313,748) 396,984
365,662
 33,022
 302,534
 (294,724) 406,494
Reclamation —
 83,392
 35,762
 —
 119,154
—
 85,376
 37,601
 —
 122,977
Deferred tax liabilities 2,641
 4,978
 97,605
 —
 105,224
5,179
 4,928
 88,784
 —
 98,891
Other long-term liabilities 2,602
 2,751
 50,079
 —
 55,432
2,627
 3,178
 49,422
 —
 55,227
Intercompany payable (receivable) (327,111) 307,016
 20,095
 —
 —
(325,923) 305,823
 20,100
 —
 —
 38,412
 429,253
 522,877
 (313,748) 676,794
47,545
 432,327
 498,441
 (294,724) 683,589
STOCKHOLDERS’ EQUITY                   
Common stock 1,862
 19,630
 195,020
 (214,650) 1,862
1,870
 39,010
 195,020
 (234,030) 1,870
Additional paid-in capital 3,355,710
 145,024
 1,882,610
 (2,027,634) 3,355,710
3,359,183
 143,542
 1,927,630
 (2,071,172) 3,359,183
Accumulated deficit (2,542,899) (28,982) (1,788,827) 1,817,810
 (2,542,898)(2,593,012) (55,024) (1,790,562) 1,845,586
 (2,593,012)
Accumulated other comprehensive income (loss) (363) —
 —
 —
 (363)(258) —
 —
 —
 (258)
 814,310
 135,672
 288,803
 (424,474) 814,311
767,783
 127,528
 332,088
 (459,616) 767,783
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $872,784
 $610,908
 $916,465
 $(738,222) $1,661,935
$829,273
 $611,926
 $911,518
 $(754,340) $1,598,377

Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2017
In thousandsCoeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
ASSETS       
CURRENT ASSETS         
Cash and cash equivalents$44,662
 $52,239
 $95,131
 $—
 $192,032
Receivables137
 7,922
 11,010
 —
 19,069
Ore on leach pads—
 73,752
 —
 —
 73,752
Inventory—
 29,769
 28,461
 —
 58,230
Prepaid expenses and other7,824
 2,816
 4,413
 —
 15,053
Assets held for sale—
 —
 91,421
 —
 91,421
 52,623
 166,498
 230,436
 —
 449,557
NON-CURRENT ASSETS         
Property, plant and equipment, net4,007
 161,487
 89,243
 —
 254,737
Mining properties, net—
 216,281
 613,288
 —
 829,569
Ore on leach pads—
 65,393
 —
 —
 65,393
Restricted assets13,251
 227
 7,369
 —
 20,847
Equity and debt securities33,569
 1,268
 —
 —
 34,837
Receivables—
 —
 28,750
 —
 28,750
Net investment in subsidiaries422,074
 223
 (18) (422,279) —
Other320,335
 11,040
 2,854
 (316,744) 17,485
TOTAL ASSETS$845,859
 $622,417
 $971,922
 $(739,023) $1,701,175
          
LIABILITIES AND STOCKHOLDERS’ EQUITY         
CURRENT LIABILITIES         
Accounts payable$3,607
 $24,534
 $20,451
 $—
 $48,592
Other accrued liabilities13,205
 19,262
 62,463
 —
 94,930
Debt—
 9,215
 21,538
 —
 30,753
Reclamation—
 2,313
 1,464
 —
 3,777
Liabilities held for sale—
 —
 50,677
 —
 50,677
 16,812
 55,324
 156,593
 —
 228,729
NON-CURRENT LIABILITIES         
Debt345,088
 28,313
 323,912
 (316,744) 380,569
Reclamation—
 82,021
 35,034
 —
 117,055
Deferred tax liabilities4,110
 5,127
 95,911
 —
 105,148
Other long-term liabilities2,311
 3,063
 49,323
 —
 54,697
Intercompany payable (receivable)(337,439) 317,759
 19,680
 —
 —
 14,070
 436,283
 523,860
 (316,744) 657,469
STOCKHOLDERS’ EQUITY         
Common stock1,856
 19,630
 195,020
 (214,650) 1,856
Additional paid-in capital3,357,345
 149,194
 1,885,046
 (2,034,240) 3,357,345
Accumulated deficit(2,546,743) (34,551) (1,788,597) 1,823,148
 (2,546,743)
Accumulated other comprehensive income (loss)2,519
 (3,463) —
 3,463
 2,519
 814,977
 130,810
 291,469
 (422,279) 814,977
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$845,859
 $622,417
 $971,922
 $(739,023) $1,701,175

Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

NOTE 20 – COMMITMENTS AND CONTINGENCIES
Palmarejo Gold Stream
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 Franco-Nevada 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,September 30, 2018, the remaining unamortized balance was $14.3$13.2 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,September 30, 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 mustwas required to be submitted to the British Columbia Ministry of Energy and Mining no later than June 2018 and was submitted on April 30, 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. The maximum payment of $25.0 million can be earned if the total resource reaches 3.7 million tonnes. The Silvertip mine had total mineralized material of approximately 2.6 million tonnes at December 31, 2017.

NOTE 21 – DISCONTINUED OPERATIONS
In December 2017, the Company and certain of its subsidiaries entered into a definitive agreement (as amended, the “Agreement”“Manquiri 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 bycompany. See below for a groupdiscussion of individuals with extensive mining experience in Latin America.the Letter Agreement, which amended certain terms of the Manquiri Agreement.
Coeur and its subsidiaries received the following consideration:
2.0% net smelter returns royalty (the “NSR”) payable to Coeur on all metals processed through the San Bartolomé Mine’s processing facility,The NSR commencing immediately upon the closing of the Transaction, valued at $7.1 million.
Pre-closing value added taxVAT 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 notesThe Manquiri Notes Receivable 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 recognized a liability of approximately $5.7 million for certain post-closing covenants, guaranties and indemnification obligations on the part of the Company 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 Subsidiaries
Notes to Condensed Consolidated Financial Statements

The sale of Manquiri and San Bartolomé is expected to havehad a majorsignificant effect on the Company's results and operations. Accordingly, San Bartolomé’s operations for the three and nine months ended March 31,September 30, 2018 and 2017 are classified on the consolidated statements of operations and comprehensive income (loss) as Income (loss) from discontinued operations. The major classes of line items constituting the pretax profit or loss for the three and nine months ended March 31,September 30, 2018 and 2017 are as follows:follows (in thousands):
Three months ended March 31,Three months ended September 30, Nine months ended September 30,
2018 20172018 2017 2018 2017
Revenue$12,346
 $20,584
$—
 $16,043
 $12,346
 $60,441
COSTS AND EXPENSES          
Costs applicable to sales(1)
12,269
 18,222
—
 17,365
 12,269
 58,979
Amortization—
 1,411
—
 1,430
 —
 5,053
General and administrative41
 8
—
 67
 41
 92
Exploration—
 23
 —
 23
Pre-development, reclamation, and other265
 744
—
 2,931
 265
 3,956
OTHER INCOME (EXPENSE), NET          
Interest expense, net of capitalized interest(3) (6)—
 (11) (3) (23)
Other, net(260) 340
—
 804
 (260) 1,305
Pretax profit (loss) on discontinued operations related to major classes of pretax profit (loss)(492) 533
—
 (4,980) (492) (6,380)
Pretax gain on the disposal of the discontinued operation1,525
 —
—
 —
 1,525
 —
Total pretax gain or loss on discontinued operations1,033
 533
—
 (4,980) 1,033
 (6,380)
Income and mining tax (expense) benefit(483) (169)—
 56
 (483) 860
Income (loss) from discontinued operations$550
 $364
$—
 $(4,924) $550
 $(5,520)
(1) Excludes amortization.
Net cash used by operating activities was $7.9 million for the three months ended September 30, 2017. Net cash used in operating activities from San Bartolomé was $2.7 million for the threenine months ended March 31,September 30, 2018 compared to net cash provided by operating activities of $11.3$8.6 million for the nine months ended September 30, 2017, respectively. Net cash used in investing activities from San Bartolomé was $0.4 million for the three months ended March 31, 2017, respectively.September 30, 2017. Net cash used in investing activities from San Bartolomé were $28.5 million and $0.4$1.2 million for the threenine months ended March 31,September 30, 2018 and 2017, respectively.

In September 2018, the Company entered into a Letter Agreement with the Buyer pursuant to which the total aggregate principal amount of the Manquiri Notes Receivable was reduced to $25.0 million and the Buyer made a concurrent cash payment of $15.0 million to the Sellers in respect of the Manquiri Notes Receivable. In addition, the Company also agreed to suspend the quarterly payments in respect of the NSR on all metals processed through the San Bartolomé mine’s processing facility until October 15, 2019 and to forgo any rights to any value added tax refunds collected or received by Manquiri. Based on the Company’s evaluation of the terms of the Letter Agreement, the Company recorded an $18.6 million write-down that is made up of $13.1 million on the value added tax refunds, $3.6 million on the Manquiri Notes Receivable and $1.9 million on the NSR, which is included in Other, net. See Note 10 -- Fair Value Measurements for additional detail.

Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

NOTE 22 – ADDITIONAL BALANCE SHEET DETAIL AND SUPPLEMENTAL CASH FLOW INFORMATION
Accrued liabilities and other consist of the following:
March 31, 2018 December 31, 2017
In thousandsSeptember 30, 2018 December 31, 2017
Accrued salaries and wages$15,552
 $26,559
$18,677
 $26,559
Income and mining taxes36,642
 25,788
1,252
 25,788
Silvertip contingent consideration24,543
 24,393
24,847
 24,393
Accrued operating costs17,174
 12,323
11,883
 12,323
Taxes other than income and mining5,644
 4,354
3,378
 4,354
Accrued interest payable5,594
 1,513
5,363
 1,513
Accrued liabilities and other$105,149
 $94,930
$65,400
 $94,930

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows:flows for the three and nine months ended September 30, 2018 and 2017:
March 31, 2018 March 31, 2017
In thousandsSeptember 30, 2018 September 30, 2017
Cash and cash equivalents$159,643
 $160,636
$104,746
 $195,654
Restricted cash equivalents12,458
 9,821
12,534
 11,360
Total cash, cash equivalents and restricted cash shown in the statement of cash flows172,101
 170,457
117,280
 207,014

NOTE 23 – SUBSEQUENT EVENTS
On October 1, 2018 the Company completed its acquisition of Northern Empire Resources Corp. (“Northern Empire”). Upon completion of the acquisition, each share of Northern Empire common stock issued and outstanding immediately prior to the effective time of the Plan of Arrangement, excluding shares owned by the Company, was exchanged for shares of the Company’s common stock at a ratio of 0.1850 shares of Company common stock for each Northern Empire common share. Approximately 12.1 million Coeur shares were issued to Northern Empire shareholders (other than the Company) upon closing of the acquisition, representing aggregate value of approximately $63.9 million as of the closing date. Prior to the acquisition, the Company had an existing investment valued at $4.5 million in Northern Empire. See Note 13 -- Investments for additional detail.
On October 15, 2018 the Company entered into an Asset Purchase Agreement among the Company, Coeur Rochester, Inc. (“CRI”), Rye Patch Gold US Inc., a Nevada corporation (“RPG”), and Alio Gold Inc., a British Columbia corporation, pursuant to which CRI will acquire all of RPG’s rights, titles, and interests in and to certain real property assets and patented and unpatented mining claims located in Pershing County, Nevada (collectively, the “RPG Assets”). In consideration for the RPG Assets, the Company will pay RPG consideration of $19.0 million in shares of Company common stock calculated using a five-day volume-weighted average price of Company common stock for a five-trading day period ending on the third trading day immediately preceding the closing (the “Shares”). Closing of the acquisition is anticipated in the fourth quarter of 2018, subject to customary regulatory approvals and other conditions.
On October 29, 2018, the Company and Bank of America, N.A., as administrative agent for the Facility lenders, entered into the First Amendment to Credit Agreement (the “Amendment”). Pursuant to the Amendment, the Facility was increased by $50.0 million to $250.0 million, and the term was extended by approximately one year and now has a maturity date of October 29, 2022.


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, zinc is converted at a historical 0.06:1 ratio of silver ounces to zinc pounds and lead is converted at a historical 0.05:1 ratio of silver ounces to lead pounds, unless otherwise noted. We also provide realized silver equivalent data determined by average spot silver, gold, zinc and goldlead prices during the relevant period.
Overview
We are a gold, silver, zinc and lead producer with mines located in the United States, Mexico and Canada and exploration projects in the United States and Mexico. The Palmarejo complex, Rochester, Silvertip, Kensington and Wharf mines constitute our principal sources of revenue.
In October 2017, the Company added a new mine to Coeur’s North America-focused platform with the acquisition of the high-grade silver-zinc-lead Silvertip mine located in northern British Columbia, Canada. The Silvertip mine commenced milling in the first quarter of 2018 and is expected to commencecommenced commercial production on September 1, 2018. Upon commencement of commercial production, Silvertip recognized a $8.7 million write-down of metal inventory as a result of lower than expected production levels, grades and recovery rates as well as reduced process plant availability and unfavorable changes in the second quarter of 2018. metal prices.
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 majorsignificant effect on the Company’s results and operations; therefore, San Bartolomé’s results of operations are reported as discontinued operations for all periods.periods presented. 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. In September 2018, the Company entered into a letter agreement (“Letter Agreement”) with Ag-Mining Investments, AB, a privately-held Swedish company, (the “Buyer”) pursuant to which the total aggregate principal amount of the Manquiri Notes Receivable was reduced to $25.0 million and the Buyer made a concurrent cash payment of $15.0 million to the Company in respect of the Manquiri Notes Receivable. In addition, the Company also agreed to suspend the quarterly payments in respect of NSR on all metals processed through the San Bartolomé mine’s processing facility until October 15, 2019 and to forgo any rights to any value added tax refunds collected or received by Manquiri. Based on the Company’s evaluation of the terms of the Letter Agreement, the Company recorded an $18.6 million write-down comprised of a $13.1 million write-down on the value added tax refunds, a $3.6 million write-down on the Manquiri Notes Receivable and a $1.9 million write-down on the NSR.
In August 2018, the Company entered into a definitive agreement to acquire all of the issued and outstanding securities of Northern Empire Resources Corp. (“Northern Empire”) not owned by the Company. Northern Empire’s principal asset is the Sterling Gold Project located in Nevada. The transaction closed on October 1, 2018 for total consideration valued at approximately $63.9 million based on the issuance of approximately 12.1 million shares of Coeur common stock at $5.27 per share.
In October 2018, the Company and its wholly-owned subsidiary, Coeur Rochester, Inc. entered into a definitive agreement to acquire a property package adjacent to the Rochester mine consisting of the Lincoln Hill Project, Wilco Project, Gold Ridge Property and other nearby claims from a subsidiary of Alio Gold Inc. (“Alio Gold”) for total consideration of $19.0 million, payable in the form of Company common stock. The transaction is expected to close in the fourth quarter of 2018.
On October 29, 2018, the Company and Bank of America, N.A., as administrative agent for the Facility lenders, entered into the First Amendment to Credit Agreement (the “Amendment”). Pursuant to the Amendment, the Facility was increased by $50.0 million to $250.0 million, and the term was extended by approximately one year and now has a maturity date of October 29, 2022.
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 efficientmanaging working capital management.efficiently.
First

Third Quarter Highlights
Average realized prices of $14.68 per silver ounce, $1,150 per gold ounce, $0.94 per zinc pound and $0.85 per lead pound
Production from continuing operations of 8.38.2 million silver equivalent ounces (10.1 million silver equivalent ounces produced (average spot)), consisting of 3.22.9 million silver ounces, and 85,38387,539 gold ounces, 1.1 million zinc pounds and 0.4 million lead pounds
Sales from continuing operations of 8.48.5 million silver equivalent ounces (10.4 million silver equivalent ounces sold (average spot)), consisting of 3.22.9 million silver ounces, and 87,15389,609 gold ounces, 1.8 million zinc pounds and 1.2 million lead pounds
Net incomeloss from continuing operations of $0.7$53.0 million, ($0.00or $0.29 per share)share, and adjusted net incomeloss of $0.7$19.7 million, ($0.00or $0.11 per share)share, (see “Non-GAAP Financial Performance Measures”)
Costs applicable to sales from continuing operations were $9.77 per silver equivalent ounce ($8.55$10.55 per average spot silver equivalent ounce ($12.32 per silver equivalent ounce) and $970$1,011 per gold equivalent ounce (see “Non-GAAP Financial Performance Measures”)
All-in sustaining costs from continuing operations were $17.33$15.33 per average spot silver equivalent ounce ($14.4418.78 per average spot silver equivalent ounce) (see “Non-GAAP Financial Performance Measures”)
Operating cash flow fromused in continuing operations of $15.5$5.8 million and adjusted EBITDA from continuing operations of $49.5$24.7 million (see “Non-GAAP Financial Performance Measures”)
Cash and cash equivalents of $159.6$104.7 million at March 31,September 30, 2018
Completed the Manquiri DivestitureSilvertip commenced commercial production on September 1, 2018
Acquired Northern Empire for total consideration of $46.7 million consisting of a 2.0% NSR valued at $7.1approximately $63.9 million pre-closing value added tax refunds valued at $12.7 million payable(closed October 1, 2018) as more fully discussed above.
Announced agreement to acquire assets from Alio Gold located adjacent to Rochester including the Company, and $26.9 million of promissory notes payable in eighteen monthsLincoln Hill Project as more fully discussed above.
Expanded the Facility capacity to the Company, with payments beginning in October 2018provide additional balance sheet flexibility as more fully discussed above.


Selected Financial and Operating Results
Three months ended March 31,Three months ended September 30, Nine months ended September 30,
2018 2017
In thousands2018 2017 2018 2017
Financial Results from Continuing Operations:          
Metal sales$163,267
 $185,554
Revenue$148,795
 $159,920
 $482,049
 $495,014
Net income (loss)$691
 $18,299
$(53,044) $(11,728) $(49,423) $(3,424)
Net income (loss) per share, diluted$0.00
 $0.10
$(0.29) $(0.07) $(0.27) $(0.02)
Adjusted net income (loss)(1)
$680
 $6,766
$(19,653) $(15,342) $(18,251) $(9,920)
Adjusted net income (loss) per share, diluted(1)
$0.00
 $0.04
$(0.11) $(0.09) $(0.10) $(0.06)
EBITDA(1)
$49,382
 $71,449
$(12,257) $38,556
 $79,249
 $133,361
Adjusted EBITDA(1)
$49,524
 $54,514
$24,671
 $40,245
 $121,397
 $126,679
Operating Results from Continuing Operations:          
Silver ounces produced(3)3,182,110
 2,717,869
2,886,117
 2,994,723
 9,272,126
 8,403,013
Gold ounces produced85,383
 88,218
87,539
 93,293
 266,974
 264,330
Zinc pounds produced(3)
1,099,408
 —
 1,099,408
 —
Lead pounds produced(3)
413,285
 —
 413,285
 —
Silver equivalent ounces produced8,305,090

8,010,949
8,225,086

8,592,303

25,377,195

24,262,813
Silver equivalent ounces produced (average spot price)10,068,517
 10,074,729
 30,644,015
 27,672,670
Silver ounces sold3,160,913
 3,325,706
2,931,513
 2,865,844
 9,295,230
 8,880,340
Gold ounces sold87,153
 110,874
89,609
 89,972
 271,217
 287,040
Zinc pounds sold1,772,023
 —
 1,772,023
 —
Lead pounds sold1,230,266
 —
 1,230,266
 —
Silver equivalent ounces sold8,390,090
 9,978,120
8,475,883
 8,264,174
 25,736,073
 26,102,711
Silver equivalent ounces sold (average spot price)10,383,913
 9,693,819
 31,137,842
 29,805,556
Average realized price per silver ounce$16.70
 $17.49
$14.68
 $16.86
 $15.99
 $17.12
Average realized price per gold ounce$1,268
 $1,149
$1,150
 $1,240
 $1,219
 $1,195
Average realized price per zinc pound$0.94
 $—
 $0.94
 $—
Average realized price per lead pound$0.85
 $—
 $0.85
 $—
Costs applicable to sales per silver equivalent ounce(1)
$9.77
 $10.61
$12.32
 $11.16
 $10.52
 $11.22
Costs applicable to sales per average spot silver equivalent ounce(1)
$8.55
 $9.80
$10.55
 $10.00
 $9.13
 $10.20
Costs applicable to sales per gold equivalent ounce(1)
$970
 $788
$1,011
 $845
 $1,008
 $831
All-in sustaining costs per silver equivalent ounce(1)
$17.33
 $14.77
$18.78
 $17.43
 $17.94
 $16.55
All-in sustaining costs per average spot silver equivalent ounce(1)
$14.44
 $13.29
$15.33
 $14.86
 $14.83
 $14.51
Financial and Operating Results from Discontinued Operations:(2)
          
Income (loss) from discontinued operations$550
 $364
$—
 $(4,924) $550
 $(5,520)
Silver ounces produced643,078
 1,214,507
—
 956,893
 643,078
 3,455,961
Gold ounces produced78
 —
—
 —
 78
 —
Silver equivalent ounces produced647,758
 1,214,507
—
 956,893
 647,758
 3,455,961
Silver ounces sold704,479
 1,148,006
—
 951,219
 704,479
 3,497,263
Gold ounces sold292
 —
—
 —
 292
 —
Silver equivalent ounces sold721,999
 1,148,006
—
 951,219
 721,999
 3,497,263
(1)
See “Non-GAAP“Non-GAAP Financial Performance Measures.”
(2)Reported production and financial results include operations through February 28, 2018.
(3)Prior to September 1, 2018 commercial production date the Silvertip mine produced 0.2 million ounces of silver, 2.6 million pounds of zinc, and 1.8 million pounds of lead which are excluded from production numbers presented, unless otherwise noted.


Consolidated Financial Results
Three Months Ended March 31,September 30, 2018 compared to Three Months Ended March 31,September 30, 2017
Net Income (Loss)Loss from Continuing Operations
Net incomeloss from continuing operations was $0.7$53.0 million, ($0.00or $0.29 per share)share, compared to Net incomenet loss of $18.3$11.7 million, ($0.10or $0.07 per share).share. The decreasein Net net income from continuing operations is primarily due to lower ounces sold and a $21.1 million gain on the sale of the Joaquin project in the first quarter of 2017, partially offset by higherlower operating margin per consolidated silver equivalent ounce.ounce, a write-down of $18.6 million on the consideration received from the Manquiri Divestiture, a write-down of $3.4 million of property, plant and equipment at Rochester and higher interest expense.
Revenue
Metal sales wereRevenue was lower due to higher sales in the first quarter of 2017 resulting from holdover ounces from 2016 and a decrease in average realized silver and gold prices of 5%13% and 7%, respectively, partially offset by an increasesales from Silvertip, which commenced commercial production in average realized gold prices of 10%.September 2018. The Company sold 3.22.9 million silver ounces, 89,609 gold ounces, 1.8 million zinc pounds and 1.2 million lead pounds compared to 2.9 million silver ounces and 87,15389,972 gold ounces compared to sales of 3.3 million silver ounces and 110,874 gold ounces.in the prior year. Gold contributed 68%69% of sales, and silver contributed 32%29%, zinc and lead each contributed 1% , compared to 69%70% of sales from gold and 31%30% from silver.
Costs Applicable to Sales
Costs applicable to sales decreased due to lower silver and gold ounces sold and lowerincreased as a result of higher costs applicable to sales per silver equivalent ounce partially offset by higher costs applicable to sales per gold equivalent ounce.and a write-down of inventory at Silvertip. For a complete discussion of costs applicable to sales, see Results of Operations below.
Amortization
Amortization decreased $7.9$1.2 million, or 20%4%, primarily due to lower silverfewer ounces sold by Palmarejo, Kensington and gold ounces sold.Wharf.
Expenses
General and administrative expenses decreased $1.3increased $0.4 million, or 13%5%, primarily due to lowerhigher compensation severance and professional service costs.
Exploration expense increased $1.4decreased $1.6 million, or 27%17%, due to the Company’s expansionas a result of near-mine drilling effortslower exploration costs at Palmarejo, Rochester, Kensington and regional exploration focused on projects in Nevada and Mexico.La Preciosa.
Pre-development, reclamation, and other expenses increased $0.4$3.1 million, or 10% due61%, of which $3.4 million is attributable to higher asset retirement obligation accretionthe write-down of property, plant and equipment at Palmarejo.Rochester.
Other Income and Expenses
Non-cash fairFair value adjustments, net, were a gain of $5.0 million compared to a loss of $1.2$0.7 million due to unrealized gainsfavorable fair value adjustments of $4.8$0.3 million, $0.2 million and $0.2 million on equity securities, interest rate swap and a favorable fair value adjustment on zinc hedges.options, respectively. Effective January 1, 2018, as a result of ASU 2016-01, changes in the fair value of equity investments are recognized as fair value adjustments instead of other comprehensive income (loss) in the Condensed Consolidated Statements of Comprehensive Income (Loss).
Interest expense (net of capitalized interest of $0.1$0.7 million) increased to $6.0$5.8 million from $3.6 million, primarily due to higher average debt levels related to the 2024 Senior Notes and the Facility.Facility..
Other, net decreased to $0.2was an expense of $20.9 million, primarily due toas a $21.1result of the $18.6 million gainwrite-down of the consideration received from the Manquiri Divestiture, unfavorable foreign exchange rate movements and gains on the sale of the Joaquin projectnon-core assets and investments in Argentina in the first quarter of 2017.
Income and Mining Taxes
During the firstthird quarter of 2018, the Company reported estimated income and mining tax expense of approximately $11.9$3.8 million resulting in an effective tax rate of 94.5%7.7%. This compares to estimated income tax expense of $10.9$14.3 million for an effective tax rate of 37.3%557.9% during the firstthird quarter of 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 March 31,Three months ended September 30,
2018 20172018 2017
In thousandsIncome (loss) before taxTax (expense) benefit Income (loss) before taxTax (expense) benefitIncome (loss) before taxTax (expense) benefit Income (loss) before taxTax (expense) benefit
United States$1,187
$517
 $20,653
$(1,827)$(35,250)$(908) $(6,055)$(2,892)
Argentina254
10
 (328)1,124
(2,058)(75) 738
(366)
Canada(13,194)4,432
 —
—
Mexico13,126
(13,222) 8,650
(9,923)1,419
(7,234) 3,210
(9,057)
Other jurisdictions(1,927)746
 202
(252)(176)—
 4,668
(1,974)
$12,640
$(11,949) $29,177
$(10,878)$(49,259)$(3,785) $2,561
$(14,289)
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 increased income and mining tax expense by $3.6$3.0 million and $5.6decreased income and mining tax expense by $1.4 million for the three months ended March 31,September 30, 2018 and 2017, respectively,respectively. The impact of foreign exchange rates on deferred tax balances is predominately due to the strengtheningMexican Peso and Canadian Dollar.
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 Mexican Peso. Additionally, favorablerelated 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 section titled “Risk Factors” in the Company’s Form 10-K for the year ended December 31, 2017 (the "2017 10-K")
Nine Months Ended September 30, 2018 compared to Nine Months Ended September 30, 2017
Net Loss from Continuing Operations
Net loss from continuing operations was $49.4 million, or $0.27 per share, compared to net loss of $3.4 million, or $0.02 per share. The decrease in net income from continuing operations is due to a lower operating resultsmargin per consolidated silver equivalent ounce, a write-down of $18.6 million on the consideration received from the Manquiri Divestiture, a write-down of $3.4 million of property, plant and equipment at Rochester and higher interest expense as well as a $21.1 million gain on the sale of the Joaquin project in 2017.
Revenue
Revenue was lower resulting from a reduction of gold inventories carried over from 2016 that were sold in the first quarter of 2017 and a decrease in average realized silver prices of 7%, partially offset by an increase in average realized gold prices of 2%. The Company sold 9.3 million silver ounces, 271,217 gold ounces, 1.8 million zinc pounds and 1.2 million lead pounds, compared to sales of 8.9 million silver ounces and 287,040 gold ounces. Gold contributed 68% of sales and silver contributed 31% compared to 69% of sales from gold and 31% from silver.
Costs Applicable to Sales
Costs applicable to sales increased as a result of higher costs applicable to sales per silver equivalent ounce and a write-down of inventory at Silvertip. For a complete discussion of costs applicable to sales, see Results of Operations below.
Amortization
Amortization decreased $10.4 million or 10%, due to lower ounces sold at Kensington and Wharf.
Expenses
General and administrative expenses remained comparable at $24.2 million.
Exploration decreased $1.6 million or 7%, as a result of lower exploration costs at Palmarejo, contributedRochester, Kensington and La Preciosa.

Pre-development, reclamation, and other expenses increased $3.0 million or 23%, of which $3.4 million is attributable to the write-down of property, plant and equipment at Rochester.
Other Income and Expenses
In 2017, the Company incurred a $9.3 million loss in connection with the repurchase of the 7.875% Senior Notes due 2021 (the “2021 Senior Notes”) concurrent with the completed offering of the 5.875% Senior Notes due 2024 (the “2024 Senior Notes”).
Fair value adjustments, net, were a gain of $2.9 million compared to a loss of $0.9 million due to unrealized losses of $2.9 million and realized gains of $5.2 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 fair value of equity investments are recognized as fair value adjustments instead of other comprehensive income (loss) in the Condensed Consolidated Statements of Comprehensive Income (Loss).
Interest expense (net of capitalized interest of $1.1 million) increased to $17.8 million from $10.9 million, due to higher average debt levels related to the 2024 Senior Notes and the Facility (as defined below).
Other, net was an expense of $19.8 million, primarily due to the write-down of $18.6 million on the consideration received from the Manquiri Divestiture in 2018 compared to $21.1 million gain on the sale of the Joaquin project and a $2.3 million gain on the repurchase of the Rochester royalty obligation in 2017.
Income and Mining Taxes
During the first three quarters of 2018, the Company reported estimated income and mining tax expense of approximately $19.5 million resulting in Mexico.an effective tax rate of 64.9%. This compares to estimated income tax expense of $24.0 million for an effective tax rate of 116.6% during the first three quarters of 2017.
The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit:
 Nine months ended September 30,
 2018 2017
In thousandsIncome (loss) before taxTax (expense) benefit Income (loss) before taxTax (expense) benefit
United States$(45,397)$(2,700) $8,036
$(4,072)
Argentina(1,985)(172) 281
1,704
Canada(17,103)6,476
 —
—
Mexico35,088
(23,055) 9,665
(23,745)
Other jurisdictions(575)—
 2,634
2,073
 $(29,972)$(19,451) $20,616
$(24,040)
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 income and 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 increased income and mining tax expense by $2.1 million and $7.2 million for the three months ended September 30, 2018 and 2017, respectively. The impact of foreign exchange rates on deferred tax balances is predominately due to the Mexican Peso and Canadian Dollar.
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.
Income (loss) from Discontinued Operations
In respect of San Bartolomé’s operating results, income increased $0.2$6.1 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
The Company is maintaining its full-yearCoeur's 2018 production and relatedguidance was revised on September 4, 2018 to reflect improved visibility of Silvertip's production following the commencement of commercial production as well as stronger than expected performance at Rochester during the first half of the year. The Company’s cost guidance.guidance remains unchanged from the revised guidance published in the second quarter .
2018 Production Outlook
SilverGoldZincLead
Silver Equivalent1
(K oz)(oz)(K lbs)(K lbs)(K oz)
Palmarejo7,500 - 7,900115,000 - 120,000——14,400 - 15,100
Rochester4,800 - 5,20048,000 - 52,000——7,680 - 8,320
Kensington—115,000 - 120,000——6,900 - 7,200
Wharf—85,000 - 90,000——5,100 - 5,400
Silvertip700 - 1,200—13,000 - 23,00011,000 - 18,0002,030 - 3,480
Total13,000 - 14,300363,000 - 382,00013,000 - 23,00011,000 - 18,00036,110 - 39,500

Results of Continuing Operations
The Company produced 3.22.9 million ounces of silver, 87,539 ounces of gold, 1.1 million pounds of zinc and 0.4 millionpounds of lead in the three months ended September 30, 2018, compared to 3.0 million ounces of silver and 85,38393,293 ounces of gold in the three months ended March 31,September 30, 2017. Silver production decreased 4%, due to a temporary suspension of mining activities after an underground mining accident at the Guadalupe mine and supply chain disruptions due to a local road blockade at Palmarejo, partially offset by leaching activities on the periphery of the pad at Rochester and the commencement of commercial production at Silvertip. Gold production decreased 6% due to the aforementioned events at Palmarejo and unplanned weather-related downtime and timing of leach pad recoveries at Wharf. The Silvertip mine reached commercial production on September 1, 2018 and produced 1.1 million pounds of zinc and 0.4 millionpounds of lead.
The Company produced 9.3 million ounces of silver, 266,974 ounces of gold, 1.1 million pounds of zinc and 0.4 million pounds of lead in the nine months ended September 30, 2018, compared to 2.78.4 million ounces of silver and 88,218264,330 ounces of gold in the threenine months ended March 31,September 30, 2017. Silver production increased 17%10% due to higher grade at Palmarejo and Rochester and higher placed tons at Rochester. Gold production decreasedincreased 3%1% due to lower gradehigher grades at Wharf,Palmarejo and Rochester, partially offset by lower mill throughput at Kensington and unplanned weather-related downtime, lower recoverygrade and timing of leach pad recoveries at Palmarejo.Wharf. The Silvertip mine reached commercial production on September 1, 2018 and produced 1.1 million pounds of zinc and 0.4 million pounds of lead.
Costs applicable to sales were $9.77 per silver equivalent ounce ($8.55$10.55 per average spot silver equivalent ounce ($12.32 per silver equivalent ounce) and $970$1,011 per gold equivalent ounce in the three months ended March 31,September 30, 2018 compared to $10.61 per silver equivalent ounce ($9.80$10.00 per average spot silver equivalent ounce ($11.16 per silver equivalent ounce) and $788$845 per gold equivalent ounce in the three months ended March 31,September 30, 2017. Costs applicable to sales per silver equivalent ounce increased 10% as a result of a higher initial unit costs at Silvertip. Costs applicable to sales per gold equivalent ounce increased20%in the three months ended September 30, 2018 due to higher unit costs at Kensington and Wharf.
Costs applicable to sales were $9.13 per average spot silver equivalent ounce ($10.52 per silver equivalent ounce) and $1,008 per gold equivalent ounce in the nine months ended September 30, 2018 compared to $10.20 per average spot silver equivalent ounce ($11.22 per silver equivalent ounce) and $831 per gold equivalent ounce in the nine months ended September 30, 2017. Costs applicable to sales per silver equivalent ounce decreased 8%6% due to lower unit costs at Palmarejo while costs applicable to sales per gold equivalent ounce increased 23%21% in the threenine months ended March 31,September 30, 2018 due to higher unit costs at Kensington and Wharf.
All-in sustaining costs were $17.33$15.33 per average spot silver equivalent ounce ($14.4418.78 per average spot silver equivalent ounce) in the three months ended March 31,September 30, 2018, compared to $14.77$14.86 per average spot silver equivalent ounce ($13.2917.43 per average spot silver equivalent ounce) in the three months ended March 31,September 30, 2017. The 17%8% increase was primarily due to higher costs applicable to sales per consolidated silver equivalent ounce and higher general administrative costs and higher sustaining capital related to underground development at Palmarejo and Kensington, partially offset by lower exploration costs.

All-in sustaining costswere $14.83 per average spot silver equivalent ounce ($17.94 per silver equivalent ounce) in the nine months ended September 30, 2018, compared to $14.51 per average spot silver equivalent ounce ($16.55 per silver equivalent ounce) in the nine months ended September 30, 2017. The 8% increase was primarily due to higher costs applicable to sales per consolidated silver equivalent ounce and higher sustaining capital related to underground development at Palmarejo and Kensington, partially offset by lower general and administrative costs.Kensington.

Palmarejo
Three months ended March 31,Three months ended September 30,Nine months ended September 30,
2018 20172018 20172018 2017
Tons milled359,893
 360,383
300,116
 413,086
1,004,082
 1,108,897
Silver ounces produced2,013,239
 1,530,541
1,543,948
 1,907,548
5,622,710
 4,894,910
Gold ounces produced29,896
 30,792
27,885
 28,948
91,483
 84,032
Silver equivalent ounces produced3,806,999
 3,378,061
3,217,048
 3,644,428
11,111,690
 9,936,830
Silver equivalent ounces produced (average spot price)3,795,941
 4,104,412
12,907,501
 11,020,843
Costs applicable to sales per silver equivalent oz(1)
$8.01
 $9.71
$9.39
 $9.82
$8.29
 $10.19
Costs applicable to sales per average spot silver equivalent oz(1)
$6.94
 $8.89
$7.93
 $8.73
$7.14
 $9.17
(1)See Non-GAAP Financial Performance Measures.
Three Months Ended March 31,September 30, 2018 compared to Three Months Ended March 31,September 30, 2017
Silver equivalent production increased 13%decreased 12% due to higherthe temporary suspension of mining ratesactivities relating to fatalities that occurred during the quarter in addition to supply chain disruptions stemming from Independencialocal road blockades that temporarily interrupted the delivery of certain mining consumables, and higher silver and gold grade, partially offset by lower silver and gold recovery.a weather-related interruption that impacted the process plant. Normal operating activities have resumed. Metal sales were $70.0$55.5 million, or 43%37% of Coeur’s metal sales, compared with $77.7$60.7 million, or 43%38% of Coeur’s metal sales. Costs applicable to sales per ounce decreased 18%4% as a result of higher silver and gold grades coupled with lower mining and processing costs. Amortization decreased to $14.8 million primarily due to lower ounces sold. Capital expenditures decreased to $4.7 million due to the timing of capital expenditures. Capital expenditures focused on underground development and conversion drilling.
Nine Months Ended September 30, 2018 compared to Nine Months Ended September 30, 2017
Silver equivalent production increased 12% due to higher silver and gold grade, partially offset by the temporary suspension of mining activities relating to fatalities that occurred during the quarter in addition to supply chain disruptions stemming from local road blockades that temporarily interrupted the delivery of certain mining consumables, and a weather-related interruption that impacted the process plant. Metal sales were $196.2 million, or 41% of Coeur’s metal sales, compared with $191.6 million, or 39% of Coeur’s metal sales. Costs applicable to sales per ounce decreased 19% as a result of higher production. Amortization decreased to $16.3$45.8 million compared to $20.2$51.0 million, primarily due to higher life of mine reserves, partially offset by higher production.ounces sold. Capital expenditures increased to $9.3 million due toremained comparable at $23.5 million. Capital expenditures focused on underground development, at Guadalupeconversion drilling and Independencia.the implementation of the new on-site absorption, desorption, and recovery plant.
Rochester
Three months ended March 31,Three months ended September 30,Nine months ended September 30,
2018 20172018 20172018 2017
Tons placed4,351,131
 3,513,708
4,061,082
 4,262,011
12,495,241
 12,268,819
Silver ounces produced1,157,026
 1,127,322
1,289,640
 1,069,945
3,571,740
 3,353,608
Gold ounces produced11,487
 10,356
14,702
 10,955
38,462
 32,056
Silver equivalent ounces produced1,846,246
 1,748,682
2,171,760
 1,727,245
5,879,460
 5,276,968
Silver equivalent ounces produced (average spot price)2,476,974
 1,901,320
6,634,469
 5,690,490
Costs applicable to sales per silver equivalent oz(1)
$13.59
 $12.56
$13.10
 $13.91
$13.36
 $13.31
Costs applicable to sales per average spot silver equivalent oz(1)
$12.13
 $11.80
$11.48
 $12.66
$11.84
 $12.32
(1)See Non-GAAP Financial Performance Measures.

Three Months Ended March 31,September 30, 2018 compared to Three Months Ended March 31,September 30, 2017
Silver equivalent production increased 26% driven by the leaching of placed ounces from the periphery of the pad that had not been leached previously, partially offset by lower tons placed. Metal sales were $35.5 million, or 24% of Coeur’s metal sales, compared with $31.2 million, or 19% of Coeur’s metal sales. Costs applicable to sales per ounce decreased 6% due to higher production. Amortization increased to $5.3 million due to higher ounces sold. Capital expenditures decreased to $3.6 million from $9.7 million due to the completion of the Stage IV leach pad expansion in 2017.
Nine Months Ended September 30, 2018 compared to Nine Months Ended September 30, 2017
Silver equivalent production increased 6%11% due to higher tons placed and the leaching of placed ounces from the periphery of the pad that had not been leached previously, partially offset by lower silver grade. Metal sales were $33.5$102.7 million, or 21% of Coeur’s metal sales, compared with $39.0$102.9 million, or 21% of Coeur’s metal sales. Costs applicable to sales per silver equivalent ounce increased 8% due to lower silver ounces placed.remained comparable at $13.36. Amortization decreased to $4.8 million due to lower ounces sold.remained comparable at $14.9 million. Capital expenditures decreased to $2.6$6.9 million compared to $10.6$34.1 million due to the completion of the Stage IV leach pad expansion in 2017.
KensingtonSilvertip
 Three months ended March 31,
 2018 2017
Tons milled158,706
 165,895
Gold ounces produced26,064
 26,197
Costs applicable to sales/oz(1)
$1,031
 $885
 Three months ended September 30,Nine months ended September 30,
 2018 20172018 2017
Tons milled10,652
 —
10,652
 —
Silver ounces produced(2)
39,976
 —
39,976
 —
Zinc pounds produced(2)
1,099,408
 —
1,099,408
 —
Lead pounds produced(2)
413,285
 —
413,285
 —
Silver equivalent ounces produced126,605
 —
126,605
 —
Silver equivalent ounces produced (average spot price)152,726
 —
152,726
 —
Costs applicable to sales per silver equivalent oz(1)
$43.26
 $—
$43.26
 $—
Costs applicable to sales per average spot silver equivalent oz(1)
$36.69
 $—
$33.49
 $—
(1)See Non-GAAP Financial Performance Measures.
(2)Prior to September 1, 2018 commercial production date the Silvertip mine produced 0.2 million ounces of silver, 2.6 million pounds of zinc, and 1.8 million pounds of lead which are excluded from production numbers presented, unless otherwise noted.
Three Months Ended September 30, 2018 compared to Three Months Ended September 30, 2017
The Company acquired Silvertip in the October 2017 and on September 1, 2018, Silvertip commenced commercial production. Metal sales were $4.1 million, or 3% of Coeur’s metal sales compared to none in the prior year. Costs applicable to sales per ounce was higher than anticipated due to a $8.7 million write-down of metal inventory as a result of lower than expected production levels, grades and recovery rates as well as reduced process plant availability and unfavorable changes in metal prices. Amortization was $1.1 million. Capital expenditures were $17.9 million primarily related to pre-production capital, underground mine development and capitalized exploration spending.
Nine Months Ended September 30, 2018 compared to Nine Months Ended September 30, 2017
Metal sales, costs applicable to sales per ounce and amortization were the same for both periods in 2018 as Silvertip commenced commercial production on September 1, 2018. Capital expenditures were $55.6 million primarily related to pre-production capital, underground mine development and capitalized exploration spending.
Wharf
 Three months ended September 30,Nine months ended September 30,
 2018 20172018 2017
Tons placed1,127,391
 1,150,308
3,279,606
 3,435,656
Gold ounces produced19,437
 25,849
59,880
 68,080
Silver ounces produced12,553
 14,817
37,700
 47,469
Gold equivalent ounces produced(1)
19,646
 26,096
60,508
 68,871
Costs applicable to sales per gold equivalent oz(1)
$895
 $720
$863
 $704
(1)See Non-GAAP Financial Performance Measures.

Three Months Ended March 31,September 30, 2018 compared to Three Months Ended March 31,September 30, 2017
Gold equivalent production remained comparable.decreased 25% due to unplanned weather-related events and timing of leach pad recoveries. In the fourth quarter 2018, Wharf plans to increase mining and crushing rates to offset the shortfall in production. Metal sales were $36.3$24.0 million, or 22%16% of Coeur’s metal sales, compared to $38.0$31.3 million, or 20% of Coeur’s metal sales. Costs applicable to sales per ounce were 16% higher, primarily due to lower mill throughput, higher diesel costs, and higher contract mining costs. Amortization decreased to $6.7 million from $9.2 million due to lower ounces sold. Capital expenditures increased to $11.4 million due to expansion of the site power plant.

Wharf
 Three months ended March 31,
 2018 2017
Tons placed1,076,395
 1,292,181
Gold ounces produced17,936
 20,873
Silver ounces produced11,845
 20,065
Gold equivalent ounces produced(1)
18,133

21,207
Costs applicable to sales per gold equivalent oz(1)
$874
 $662
(1)See Non-GAAP Financial Performance Measures.
Three Months Ended March 31, 2018 compared to Three Months Ended March 31, 2017
Gold equivalent production decreased 14% due to lower grade and lower tons placed. Metal sales were $23.4 million, or 14% of Coeur’s metal sales, compared to $30.3 million, or 16% of Coeur’s metal sales. Costs applicable to sales per gold equivalent ounce increased 32%24% due to lower production resulting from the completion of mining at the higher-grade Golden Reward deposit in 2017 and higher equipment rental and diesel costs. Amortization decreased to $2.9 million due to lower ounces sold. Capital expenditures decreased to $1.2 million due to lower process plant capital expenditures.
Nine Months Ended September 30, 2018 compared to Nine Months Ended September 30, 2017
Gold equivalent production decreased 12% due to unplanned weather-related events and timing of leach pad recoveries. In the fourth quarter 2018, Wharf plans to increase crushing rates to offset this shortfall in production. Metal sales were $77.3 million, or 16% of Coeur’s metal sales, compared to $88.6 million, or 18% of Coeur’s metal sales. Costs applicable to sales per gold equivalent ounce increased 23% due to lower production resulting from the completion of mining at the higher-grade Golden Reward deposit in 2017, higher pad unloading costs, and higher equipment rental and diesel costs. Amortization wasremained comparable at $8.9 million. Capital expenditures decreased to $2.7 million due to lower process plant capital expenditures.
Kensington
 Three months ended September 30,Nine months ended September 30,
 2018 20172018 2017
Tons milled163,603
 172,038
491,060
 501,096
Gold ounces produced25,515
 27,541
77,149
 80,162
Costs applicable to sales/oz(1)
$1,101
 $948
$1,117
 $931
(1)See Non-GAAP Financial Performance Measures.
Three Months Ended September 30, 2018 compared to $3.1Three Months Ended September 30, 2017
Gold production decreased 7% due to lower mill throughput resulting from lower mine ore production, partially offset by higher gold grade. Metal sales were $29.8 million, or 20% of Coeur’s metal sales, compared to $36.6 million, or 23% of Coeur’s metal sales. Costs applicable to sales per ounce were 16% higher, primarily due to lower production and higher diesel costs. Amortization decreased to $6.9 million from $7.9 million due to higher life of mine reserves and lower ounces sold. Capital expenditures increased to $12.0 million resulting from higher underground development at Raven.
Nine Months Ended September 30, 2018 compared to Nine Months Ended September 30, 2017
Gold production decreased 4% due to lower mill throughput resulting from lower mine ore production, partially offset by higher gold grade. Metal sales were $101.8 million, or 21% of Coeur’s metal sales, compared to $110.1 million, or 22% of Coeur’s metal sales. Costs applicable to sales per ounce were 20% higher, primarily due to lower production, higher diesel costs, and higher contract mining costs. Amortization decreased to $0.3 million.$20.1 million from $25.4 million due to higher life of mine reserves and lower ounces sold. Capital expenditures increased to $34.0 million due to the expansion of the site power plant and higher underground development at Raven.
Endeavor Silver Stream
Three months ended March 31,Three months ended September 30,Nine months ended September 30,
2018 20172018 20172018 2017
Tons milled—
 45,340
—
 —
—
 133,905
Silver ounces produced—
 39,941
—
 2,413
—
 107,026
Costs applicable to sales/oz(1)
$—
 7.22
$—
 $4.86
$—
 6.95
(1)See Non-GAAP Financial Performance Measures.
In July 2017, the Company sold the Endeavor Silver Stream and ourits 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 in accordance with the terms of the sale agreement.


Liquidity and Capital Resources

Cash and cash equivalents decreased $32.4$87.3 million in the threenine months ended March 31, 2018 as aSeptember 30, 2018. This was the result of lower silver prices, pre-production capital expenditures to advance Silvertip toward commercial production, lower silver equivalent ounces sold,income and mining tax payments at Palmarejo and an increase in inventories, partially offset by a higher costs applicable to salesoperating margin per consolidated silver equivalent ounce partially offset by higher average realized prices.at Palmarejo and Rochester.
Cash Provided by Operating Activities from Continuing Operations
Net cash provided by operating activities for the three months ended March 31,September 30, 2018 and 2017 was $15.5$5.8 million and $43.9compared to net cash provided by operating activities of $37.3 million respectively, andfor the three months ended September 30, 2017. Net cash provided by operating activities for the nine months ended September 30, 2018 was $20.0 million compared to $105.3 million for the nine months ended September 30, 2017. Net cash provided by operating activities was impacted by the following key factors:factors for the applicable periods:
Three months ended March 31,Three months ended September 30, Nine months ended September 30,
2018 20172018 2017 2018 2017
Consolidated silver equivalent ounces sold8,390,090
 9,978,120
8,475,883
 8,264,174
 25,736,073
 26,102,711
Average realized price per consolidated silver equivalent ounce(1)$19.46
 $18.60
$17.56
 $19.35
 $18.73
 $18.96
Costs applicable to sales per consolidated silver equivalent ounce (1)(2)
(11.84) (11.47)(13.79) (12.29) (12.61) (12.19)
Operating margin per consolidated silver equivalent ounce$7.62
 $7.13
$3.77
 $7.06
 $6.12
 $6.77
(1)Calculated by dividing the Company’s total metal sales by total silver equivalent ounces (based on a historical 60:1 ratio of silver ounces to gold ounces, 0.06:1 ratio of silver ounces to zinc pounds and 0.05:1 ratio of silver ounces to lead pounds).
(2)See Non-GAAP Financial Performance Measures.
Three months ended March 31,Three months ended September 30, Nine months ended September 30,
In thousands2018 20172018 2017 2018 2017
Cash flow before changes in operating assets and liabilities$33,440
 $43,290
$12,933
 $25,150
 $87,869
 $95,674
Changes in operating assets and liabilities:          
Receivables(1,691) 5,680
(5,930) 6,289
 (16,509) 9,754
Prepaid expenses and other(5,635) (4,906)1,377
 (1,332) 3,868
 (2,177)
Inventories(8,708) 15,171
(8,156) (2,282) (19,630) 8,080
Accounts payable and accrued liabilities(1,865) (15,299)5,565
 9,484
 (35,562) (5,982)
Cash provided by continuing operating activities$15,541
 $43,936
$5,789
 $37,309
 $20,036
 $105,349
Cash provided by operating activities decreased $28.4$31.5 million for the three months ended March 31,September 30, 2018 compared to the three months ended March 31,September 30, 2017, primarily due to a decrease in silver and gold prices, an increase in inventories and a lower silver equivalent ounces sold, higher costs applicable to salesoperating margin per consolidated silver equivalent ounce, and unfavorable working capital adjustments, partially offset by higher average realized prices. Metal salessilver equivalent ounces sold. Revenue for the three months ended March 31,September 30, 2018 decreased $22.3$11.1 million, with $32.8$14.4 million of which was due to lower silver equivalent ounces sold,average realized prices, partially offset by $10.5an increase of $3.3 million due to higher average realized prices.silver equivalent ounces sold. The $17.9$7.1 million working capital increase in the three months ended March 31,September 30, 2018 was primarily due to an increase in inventories and prepaid assets and theaccrued interest, timing on the collection of accounts receivable and VAT refunds,collections and an inventory buildup at Silvertip, compared to the $0.6$12.2 million working capital decrease in the three months ended March 31,September 30, 2017, was primarily due to an increase in accounts payable partially offset by an increase in inventories and prepaid assets.
Cash provided by operating activities decreased $85.3 million for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017, primarily due to lower silver prices, income and mining tax payments at Palmarejo, lower silver equivalent ounces sold, a lower operating margin per consolidated silver equivalent ounce and an increase in inventories. Revenue for the nine months ended September 30, 2018 decreased $13.0 million, $10.0 million of which was due to lower silver equivalent ounces sold and $3.0 million due to lower average realized prices. The $67.8 million working capital increase in the nine months ended September 30, 2018 was primarily due to the timing of income and mining tax payments at Palmarejo, an increase in inventories and the timing on accounts receivable and VAT collections, compared to the $9.7 million working capital decrease in the nine months ended September 30, 2017, which was primarily due to a reduction of inventories carried over from the fourth quarter of 2016 and the collection of accounts receivable, partially offset by the timing of payments.

Cash Provided by (Used in)Used in Investing Activities from Continuing Operations
Net cash used in investing activities in the three months ended March 31,September 30, 2018 was $41.1$24.1 million compared to net cash provided byused in investing activities of $0.4$35.5 million in the three months ended March 31,September 30, 2017, primarily due to capital expenditures at Silvertipthe $15.0 million payment received as part of the Manquiri Letter Agreement, and the proceeds from the saleacquisition of the Joaquin projectstrategic equity investments in the first quarter of 2017. The Company had capital expenditures of $42.3$39.5 million in the three months ended March 31,September 30, 2018 compared with $23.6$29.0 million in the three months ended March 31,September 30, 2017. Capital expenditures in the three months ended March 31,September 30, 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,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.
Net cash used in investing activities in the nine months ended September 30, 2018 was $95.2 million compared to net cash used in investing activities of $79.8 million in the nine months ended September 30, 2017, primarily due to pre-production capital expenditures at Silvertip and the proceeds from the sale of the Joaquin project in the first quarter of 2017, partially offset by the $15.0 million payment received as part of the Manquiri Letter Agreement. The Company had capital expenditures of $123.0 million in the nine months ended September 30, 2018 compared with $89.7 million in the nine months ended September 30, 2017. Capital expenditures in the nine months ended September 30, 2018 were primarily related to pre-production capital spending at Silvertip and underground development at Silvertip, Palmarejo, and Kensington. 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
Cash Used inProvided by (Used in) Financing Activities from Continuing Operations
Net cash used in financing activities in the three months ended March 31,September 30, 2018 was $8.1$0.6 million compared to $6.5net cash used in financing activities of $5.6 million in the three months ended March 31,September 30, 2017. During the three months ended March 31,September 30, 2018, the Company drew $15.0$5.0 million, net from the Facility.
Net cash used in financing activities in the nine months ended September 30, 2018 was $13.3 million compared to net cash provided by financing activities of $43.5 million in the nine months ended September 30, 2017. During the nine months ended September 30, 2018, the Company drew $20.0 million, net from the Facility to repay Silvertip’s debt obligation. In addition, theobligation and to finance working capital and general corporate purposes. The Company also had higher cash remittances to tax authorities in respect of tax withholdings on vested stock-based compensation awards duringawards. During the threenine months ended March 31, 2018.September 30, 2017, the Company received net proceeds of approximately $245.0 million from the issuance of the 2024 Senior Notes, partially offset by the repurchase of the 2021 Senior Notes for $185.5 million, including premiums.


Critical Accounting Policies and Accounting Developments
Please see Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contained in the Company’s Form
2017 10-K for the year ended December 31, 2017 (the “2017 10-K”)and in Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contain in this Report 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.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 companyCompany 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 be 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.

The Company recognizes revenue from concentrate sales, net of treatment and refining charges, when it satisfies the performance obligation of transferring control of the concentrate to the customer.

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 streaminggold stream agreement with a subsidiary of 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 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.



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.

In 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 evaluate 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 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 areis 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 March 31,Three months ended September 30, Nine months ended September 30,
In thousands except per share amounts2018 20172018 2017 2018 2017
Net income (loss)$1,241
 $18,663
$(53,044) $(16,652) $(48,873) $(8,944)
(Income) loss from discontinued operations, net of tax(550) (364)—
 4,924
 (550) 5,520
Fair value adjustments, net(4,987) 1,200
(715) —
 (2,907) 864
Impairment of equity and debt securities—
 121
—
 —
 —
 426
Gain on sale of Joaquin project—
 (21,138)—
 —
 —
 (21,138)
(Gain) loss on sale of assets and securities574
 2,066
28
 (2,051) (317) (498)
Gain on repurchase of Rochester royalty—
 —
 —
 (2,332)
(Gain) loss on debt extinguishment—
 —
 —
 9,342
Mexico inflation adjustment—
 —
 (1,939) —
Transaction costs90
 —
1,049
 819
 1,049
 819
Interest income on notes receivables(628) —
 (1,450) —
Manquiri sale consideration write-down18,599
 —
 18,599
 —
Silvertip start-up write-down8,746
 —
 8,746
 —
Rochester In-Pit crusher write-down3,441
 —
 3,441
 —
Foreign exchange loss (gain)4,312
 4,411
6,062
 (1,392) 9,141
 5,205
Tax effect of adjustments(1)
—
 1,807
(3,191) (990) (3,191) 816
Adjusted net income (loss)$680
 $6,766
$(19,653)
$(15,342)
$(18,251) $(9,920)
          
Adjusted net income (loss) per share - Basic$0.00
 $0.04
$(0.11) $(0.09) $(0.10) $(0.06)
Adjusted net income (loss) per share - Diluted$0.00
 $0.04
$(0.11) $(0.09) $(0.10) $(0.06)
(1)For the three months ended March 31, 2017,September 30, 2018, tax effect of adjustments of $1.8$3.2 million (14%(10%) is primarily related to a taxable gain on the salewrite-down of assets and the tax valuation allowance impact from an asset write-down, partially offset by tax benefit from fair value adjustments.Silvertip start-up costs.

For the three months ended September 30, 2017, tax effect of adjustments of $1.0 million (80%) is primarily related to deferred taxes on the Metalla transaction.

(2)For the nine months ended September 30, 2018, tax effect of adjustments of $3.2 million (13%) is primarily related to the write-down of Silvertip start-up costs.

For the nine months ended September 30, 2017, tax effect of adjustments of $0.8 million (-7%) is primarily related to a taxable gain on the sale of the Joaquin project and deferred taxes on the Metalla transaction. 






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 March 31,Three months ended September 30, Nine months ended September 30,
In thousands except per share amounts2018 20172018 2017 2018 2017
Net income (loss)$1,241
 $18,663
$(53,044) $(16,652) $(48,873) $(8,944)
(Income) loss from discontinued operations, net of tax(550) (364)—
 4,924
 (550) 5,520
Interest expense, net of capitalized interest5,965
 3,579
5,818
 3,595
 17,801
 10,918
Income tax provision (benefit)11,949
 10,878
3,785
 14,289
 19,451
 24,040
Amortization30,777
 38,693
31,184
 32,400
 91,420
 101,827
EBITDA49,382

71,449
(12,257)
38,556

79,249

133,361
Fair value adjustments, net(4,987) 1,200
(715) —
 (2,907) 864
Impairment of equity and debt securities—
 121
—
 —
 —
 426
Foreign exchange (gain) loss670
 (1,206)3,104
 39
 7,083
 (1,953)
Gain on sale of Joaquin project—
 (21,138)—
 —
 —
 (21,138)
(Gain) loss on sale of assets and securities574
 2,066
28
 (2,051) (317) (498)
Gain on repurchase of Rochester royalty—
 —
 —
 (2,332)
Loss on debt extinguishment—
 —
 —
 9,342
Mexico inflation adjustment—
 —
 (1,939) —
Transaction costs90
 —
1,049
 819
 1,049
 819
Interest income on notes receivables(628) —
 (1,450) —
Manquiri sale consideration write-down18,599
 —
 18,599
 —
Silvertip start-up write-down8,746
 —
 8,746
 —
Rochester In-Pit crusher write-down3,441
 —
 3,441
 —
Asset retirement obligation accretion2,669
 2,116
2,883
 2,223
 8,369
 6,508
Inventory adjustments and write-downs1,126
 (94)421
 659
 1,474
 1,280
Adjusted EBITDA$49,524

$54,514
$24,671

$40,245

$121,397

$126,679
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 March 31,September 30, 2018
 Silver Gold Total Silver Gold Total
In thousands except per ounce amounts Palmarejo Rochester Total Kensington Wharf Total  Palmarejo Rochester Silvertip Total Kensington Wharf Total 
Costs applicable to sales, including amortization (U.S. GAAP) $47,421

$29,136
 $76,557
 $35,347
 $17,966
 $53,313
 $129,870
 $46,348
 $32,842
 $12,608
 $91,798
 $35,153
 $20,857
 $56,010
 $147,808
Amortization 16,325
 4,831
 21,156
 6,717
 2,657
 9,374
 30,530
 14,794
 5,294
 1,073
 21,161
 6,912
 2,878
 9,790
 30,951
Costs applicable to sales $31,096
 $24,305
 $55,401
 $28,630
 $15,309
 $43,939
 $99,340
 $31,554
 $27,548
 $11,535
 $70,637
 $28,241
 $17,979
 $46,220
 $116,857
Silver equivalent ounces sold 3,883,983
 1,789,007
 5,672,990
       8,390,090
 3,361,893
 2,103,584
 266,666
 5,732,143
       8,475,883
Gold equivalent ounces sold       27,763
 17,522
 45,285
           25,648
 20,081
 45,729
  
Costs applicable to sales per ounce $8.01

$13.59
 $9.77
 $1,031
 $874
 $970
 $11.84
 $9.39
 $13.10
 $43.26
 $12.32
 $1,101
 $895
 $1,011
 $13.79
                              
Costs applicable to sales per average spot ounce $6.94
 $12.13
 $8.55
 
 
 
 $9.87
 $7.93
 $11.48
 $36.69
 $10.55
       $11.25
                              
Costs applicable to sales             $99,340
               $116,857
Treatment and refining costs             1,195
               1,551
Sustaining capital(1)
             23,389
               19,236
General and administrative             8,804
               7,729
Exploration             6,683
               8,157
Reclamation             4,532
               4,545
Project/pre-development costs             1,421
               1,137
All-in sustaining costs             $145,364
               $159,212
Silver equivalent ounces sold             5,672,990
               5,732,143
Kensington and Wharf silver equivalent ounces soldKensington and Wharf silver equivalent ounces sold         2,717,100
Kensington and Wharf silver equivalent ounces sold           2,743,740
Consolidated silver equivalent ounces soldConsolidated silver equivalent ounces sold           8,390,090
Consolidated silver equivalent ounces sold             8,475,883
All-in sustaining costs per silver equivalent ounceAll-in sustaining costs per silver equivalent ounce         $17.33
All-in sustaining costs per silver equivalent ounce           $18.78
                              
Consolidated silver equivalent ounces sold (average spot)Consolidated silver equivalent ounces sold (average spot)         10,066,759
Consolidated silver equivalent ounces sold (average spot)           10,385,649
All-in sustaining costs per average spot silver equivalent ounceAll-in sustaining costs per average spot silver equivalent ounce         $14.44
All-in sustaining costs per average spot silver equivalent ounce           $15.33
(1)Excludes development capital for Jualin and Silvertip.

Three Months Ended March 31,September 30, 2017
 Silver Gold   Silver Gold  
In thousands except per ounce amounts Palmarejo Rochester Endeavor Total Kensington Wharf Total Total Palmarejo Rochester Endeavor Total Kensington Wharf Total Total
Costs applicable to sales, including amortization (U.S. GAAP) $63,151
 $32,255
 $400
 $95,806
 $37,621
 $19,431
 $57,052
 $152,858
 $49,669
 $27,866
 $59
 $77,594
 $35,522
 $20,553
 $56,075
 $133,669
Amortization 20,150
 5,816
 113
 26,079
 9,178
 3,111
 12,289
 38,368
 16,414
 4,591
 20
 21,025
 7,864
 3,223
 11,087
 32,112
Costs applicable to sales $43,001
 $26,439
 $287
 $69,727
 $28,443
 $16,320
 $44,763
 $114,490
 $33,255
 $23,275
 $39
 $56,569
 $27,658
 $17,330
 $44,988
 $101,557
Silver equivalent ounces sold 4,427,346
 2,104,209
 39,765
 6,571,320
       9,978,120
 3,386,963
 1,673,704
 8,027
 5,068,694
       8,264,174
Gold equivalent ounces sold         32,144
 24,636
 56,780
           29,173
 24,085
 53,258
  
Costs applicable to sales per ounce $9.71

$12.56

$7.22

$10.61
 $885

$662

$788
 $11.47
 $9.82
 $13.91
 $4.86
 $11.16
 $948
 $720
 $845
 $12.29
                                
Costs applicable to sales per average spot ounce $8.89
 $11.80
 
 $9.80
       $10.33
 $8.73
 $12.66
   $10.00
       $10.47
                                
Costs applicable to sales               $114,490
               $101,557
Treatment and refining costs               1,616
               1,408
Sustaining capital(1)
               11,191
               18,126
General and administrative               10,125
               7,345
Exploration               5,252
               9,791
Reclamation               3,338
               3,915
Project/pre-development costs               1,419
               1,979
All-in sustaining costs               $147,431
               $144,121
Silver equivalent ounces sold               6,571,320
               5,068,694
Kensington and Wharf silver equivalent ounces soldKensington and Wharf silver equivalent ounces sold           3,406,800
Kensington and Wharf silver equivalent ounces sold           3,195,480
Consolidated silver equivalent ounces soldConsolidated silver equivalent ounces sold             9,978,120
Consolidated silver equivalent ounces sold             8,264,174
All-in sustaining costs per silver equivalent ounceAll-in sustaining costs per silver equivalent ounce           $14.77
All-in sustaining costs per silver equivalent ounce           $17.43
                                
Consolidated silver equivalent ounces sold (average spot)Consolidated silver equivalent ounces sold (average spot)           11,093,378
Consolidated silver equivalent ounces sold (average spot)           9,698,587
All-in sustaining costs per average spot silver equivalent ounceAll-in sustaining costs per average spot silver equivalent ounce           $13.29
All-in sustaining costs per average spot silver equivalent ounce           $14.86
(1)Excludes development capital for Jualin, Independencia, Guadalupe South Portal and Rochester expansion permitting.


The table below includes the Company’s mineralized material at December 31, 2017.Nine Months Ended September 30, 2018
 
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 Material233,900
        
  Silver Gold Total
In thousands except per ounce amounts Palmarejo Rochester Silvertip Total Kensington Wharf Total 
Costs applicable to sales, including amortization (U.S. GAAP) $138,712

$91,222
 $12,608
 $242,542
 $111,168
 $61,434
 $172,602
 $415,144
Amortization 45,752
 14,918
 1,073
 61,743
 20,070
 8,888
 28,958
 90,701
Costs applicable to sales $92,960
 $76,304
 $11,535
 $180,799
 $91,098
 $52,546
 $143,644
 $324,443
Silver equivalent ounces sold 11,210,084
 5,711,663
 266,666
 17,188,413
       25,736,073
Gold equivalent ounces sold         81,576
 60,885
 142,461
  
Costs applicable to sales per ounce $8.29

$13.36
 $43.26
 $10.52
 $1,117
 $863
 $1,008
 $12.61
                 
Costs applicable to sales per average spot ounce $7.14
 $11.84
 $33.49
 $9.13
 
 
 
 $10.42
                 
Costs applicable to sales               $324,443
Treatment and refining costs               3,792
Sustaining capital(1)
               71,196
General and administrative               24,183
Exploration               21,269
Reclamation               13,744
Project/pre-development costs               3,075
All-in sustaining costs               $461,702
Silver equivalent ounces sold               17,188,413
Kensington and Wharf silver equivalent ounces sold           8,547,660
Consolidated silver equivalent ounces sold             25,736,073
All-in sustaining costs per silver equivalent ounce           $17.94
                 
Consolidated silver equivalent ounces sold (average spot)           31,132,974
All-in sustaining costs per average spot silver equivalent ounce           $14.83
(1)Assumed metal pricesExcludes development capital for estimated 2017 mineralized material were $20.00 per ounce of silver, $1,400 per ounce of gold, $1.15 per pound zinc,Jualin and $1.00 per pound lead. 2017 mineralized material effective December 31, 2017.Silvertip.

Nine Months Ended September 30, 2017
  Silver Gold  
In thousands except per ounce amounts Palmarejo Rochester Endeavor Total Kensington Wharf Total Total
Costs applicable to sales, including amortization (U.S. GAAP) $161,145
 $89,220
 $1,045
 $251,410
 $109,478
 $58,301
 $167,779
 $419,189
Amortization 50,995
 15,345
 301
 66,641
 25,389
 8,883
 34,272
 100,913
Costs applicable to sales $110,150
 $73,875
 $744
 $184,769
 $84,089
 $49,418
 $133,507
 $318,276
Silver equivalent ounces sold 10,809,932
 5,551,913
 107,026
 16,468,871
       26,102,711
Gold equivalent ounces sold         90,348
 70,216
 160,564
  
Costs applicable to sales per ounce $10.19

$13.31

$6.95

$11.22
 $931

$704

$831
 $12.19
                 
Costs applicable to sales per average spot ounce $9.17
 $12.32
 
 $10.20
       $10.68
                 
Costs applicable to sales               $318,276
Treatment and refining costs               4,312
Sustaining capital(1)
               46,491
General and administrative               24,495
Exploration               22,856
Reclamation               10,835
Project/pre-development costs               5,075
All-in sustaining costs               $432,340
Silver equivalent ounces sold               16,468,871
Kensington and Wharf silver equivalent ounces sold           9,633,840
Consolidated silver equivalent ounces sold             26,102,711
All-in sustaining costs per silver equivalent ounce           $16.55
                 
Consolidated silver equivalent ounces sold (average spot)           29,796,003
All-in sustaining costs per average spot silver equivalent ounce           $14.51
(2)(1)Estimated with mining cost parametersExcludes development capital for Jualin, Guadalupe South Portal 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.Rochester expansion permitting.


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 lead mining business, including statements regarding, mineralized material estimates, exploration efforts, drilling, development at Kensington, Palmarejo and Silvertip, estimated production, costs, capital expenditures, mining and crushing rates at Wharf, 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, operational excellence, cost reduction initiatives, capital discipline, and initiatives to maximize net cash flow, enhance revenues, reduce operating and non-operating costs, and manage working capital 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 2017 10-K, the risk factors set forth below under Item 1ACompany’s Form 10-Q for the quarterly period ended March 31, 2018 and in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, , (ii)  the risk that the ramp up of production at Silvertip 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)(iii) changes in the market prices of gold, silver, zinc and lead and a sustained lower price environment, (v)(iv) 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)(v) any future labor disputes or work stoppages (involving the Company and its subsidiaries or third parties), (vii)(vi) the uncertainties inherent in the estimation of gold, silver, zinc and lead reserves and mineralized material, (viii)(vii) changes that could result from the Company’s future acquisition of new mining properties or businesses, (ix)(viii)  the loss of access to any third-party smelter to whom the Company markets silver and gold, (x)(ix) the effects of environmental and other governmental regulations, (xi)(x) the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries, and (xii)(xi) 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 Lead Prices
Gold, silver, zinc, and lead 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 lead.
Gold, Silver, Zinc and Lead Hedging
To mitigate the risks associated with gold, silver, zinc and lead price fluctuations, the Company may enter into option contracts to hedge future production. The Company had outstanding Asian put and call option contracts in net-zero-cost collar contracts on zinc at March 31,September 30, 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,September 30, 2018, the fair market value of the put and call zero cost collar contracts was a net asset of $0.1$0.3 million. During the threenine months ended March 31,September 30, 2018, the Company had recorded unrealized gains of $0.1$0.6 million related to outstanding options which were included in Fair value adjustments, net. A 10% increase or decrease in the price of zinc at September 30, 2018 would result in gains of $0.1 million and $0.5 million, respectively, on settlement.
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, gold, zinc and goldlead prices resulted in provisional pricing mark-to-market gains of $0.3 million$34 thousand and $1.2 million$15 thousand in the three and nine months ended March 31,September 30, 2018, and 2017, respectively.
At March 31,September 30, 2018, the Company had outstanding provisionally priced sales of 49,853 ounces of silver and 45,05112,089 ounces of gold at pricesan average price of $16.66$1,224, 98,832 ounces of silver at an average price of $14.61, 1.8 million pounds of zinc at an average price of $1.20 and $1,317, respectively.1.2 million pounds of lead at an average price of $0.92. A 10% change in realized silver, price would result in a de minimis change in revenuegold, zinc and a 10% change in realized gold pricelead prices would cause revenue to vary by $5.9$2.0 million.
Foreign Currency
The Company operates, or has mineral interests, in several foreign countries including Canada, Mexico, 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 March 31,September 30, 2018.
Interest Rates
Interest Rate Hedging
We may use financial instruments to manage exposures to changes in interest rates on loans, which exposes us to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, it does not pose credit risk. We seek to minimize the credit risk in derivative instruments by entering into transactions with what we believe are high-quality counterparties. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. The Company had an outstanding interest rate swap whereby the Company receives a variable rate in exchange for a floating rate at September 30, 2018. A 10% change in the 1-month LIBOR would cause Fair value adjustments, net to vary by $0.1 million.


Item 4.Controls and Procedures
(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.
(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 three months ended March 31,September 30, 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, seeSee Note 20 -- Commitments and Contingencies in the notes to the Consolidated Financial Statements included herein.

Item 1A.     Risk Factors

Item 1A -- Risk Factors of the 2017 10-K setsand the Company’s Quarterly Report on Form 10-Q filed on April 25, 2018 set forth information relating to important risks and uncertainties that could
materially adversely affect the Company’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 experience labor disputes, work stoppages or other disruptions in production that could adversely affect its business and results of operations. Labor disruptions may be used 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 past several years, two of the Company’s mines have experienced work stoppages, each of which was resolved within a short period of time and had no material effect on results of operations or financial condition. The Company cannot assure that work stoppages or other disruptions will not occur in the future. Any such work stoppage or disruption could expose the Company to significant 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 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.
Continuation of the Company’s mining operations is dependent on the availability of sufficient and affordable water supplies.

The Company’s mining operations require significant quantities of water 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 mines currently has sufficient water rights and claims to cover its operational demands, the Company cannot predict the potential outcome of pending or future legal proceedings relating to water rights, claims and uses.

Water shortages may also result from weather or environmental and climate impacts out of the Company’s control. Shortages in water supply could result in production and processing interruptions. In addition, 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 rights or significantly higher costs to obtain sufficient quantities of water (or the failure to procure sufficient quantities of water) could result in the Company’s inability to maintain production at current or expected levels, require the Company to curtail or shut down mining production and could prevent the Company from pursuing expansion or development opportunities, which could adversely affect the Company’s results of operations and financial condition. Laws and regulations may be introduced in some jurisdictions in which the Company operates which could also limit access to sufficient water resources, thus adversely affecting the Company’s operations.

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

On October 29, 2018, the Company entered into the Amendment to, among other things, increase the maximum principal amount of the Facility by $50.0 million in incremental loans and commitments to an aggregate of $250.0 million and to extend the maturity date of the Facility to be four years after the effective date of the Amendment.
None.A copy of the Amendment is attached hereto as Exhibit 10.3 and is incorporated herein by reference. The description of the Amendment is a summary only and is qualified in its entirety by the terms of the Credit Agreement as amended by the Amendment.

Item 6.        Exhibits
2.1
Arrangement Agreement, dated August 2, 2018, by and among Coeur Mining, Inc., and Northern Empire Resources Corp. (incorporated herein by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on August 2, 2018 (File No. 001-08641))
10.1
AmendmentForm of Voting Agreement (incorporated herein by reference to Share PurchaseExhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on August 2, 2018 (File No. 001-08641))
10.2
Letter Agreement, dated February 16,September 25, 2018, by and among Coeur Mining, Inc., a 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 name to Argentum Investment AB). (Incorporated (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 16,September 25, 2018 (File No. 001-08641)).
10.3
First Amendment to Credit Agreement, dated October 29, 2018, by and among Coeur Mining, Inc., certain subsidiaries of Coeur Mining, Inc., as guarantors, the lenders party thereto and Bank of America, N.A., as administrative agent (filed herewith).
31.1
Certification of the CEO (Filed herewith).
31.2
Certification of the CFO (Filed herewith).
32.1
CEO Section 1350 Certification (Filed herewith).
32.2
CFO Section 1350 Certification (Filed herewith).
95.1
Mine Safety Disclosure (Filed herewith).
101.INSXBRL Instance Document**
101.SCHXBRL Taxonomy Extension Schema**
101.CALXBRL Taxonomy Extension Calculation Linkbase**
101.DEFXBRL Taxonomy Extension Definition Linkbase**
101.LABXBRL Taxonomy Extension Label Linkbase**
101.PREXBRL Taxonomy Extension Presentation Linkbase**
*    Management contract or compensatory plan or arrangement.
**    The following financial information from Coeur Mining, Inc.'s Annual Report on Form 10-Q for the three and nine months ended March 31,September 30, 2018, formatted in XBRL (Extensible Business Reporting Language): Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Cash Flows, Consolidated Balance Sheets, and Consolidated Statement of Changes in 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.
  COEUR MINING, INC. 
  (Registrant) 
    
DatedApril 25,October 31, 2018/s/ Mitchell J. Krebs 
  MITCHELL J. KREBS 
  President and Chief Executive Officer (Principal Executive Officer)
    
DatedApril 25,October 31, 2018/s/ Peter C. Mitchell 
  PETER C. MITCHELL 
  Senior Vice President and Chief Financial Officer (Principal Financial Officer)
    
DatedApril 25,October 31, 2018/s/ Ken Watkinson 
  KEN WATKINSON 
  Vice President, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer)


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