Chicago, Illinois - February 7, 2018 - Coeur Mining, Inc. (“Coeur” or the "Company") (NYSE: CDE) today reported full-year 2017 net income of $10.9 million, or $0.06 per share, and cash flow from operating activities
of $197.2 million, an increase of over 100% compared to 2016. Adjusted EBITDA1 rose 4% year-over-year to $203.3 million, and free cash flow1 increased $85.5 million to $60.4 million.
In the fourth quarter, the Company generated net income of $14.3 million, or $0.08 per share, and cash flow from operating activities more than doubled quarter-over-quarter, increasing $54.5 million to $91.8 million.
Adjusted EBITDA1 and free cash flow1 of $77.0 million and $44.8 million, respectively, increased approximately fivefold compared to the prior quarter.
Strong fourth quarter and full-year financial results were driven by record silver equivalent1 production of 10.8 million ounces (11.7 million ounces including discontinued operations) and 35.1 million ounces (39.4
million ounces including discontinued operations), respectively, lower costs from the Company's continuing operations, and decreases in working capital. Lower average debt levels and interest rates led to a 56% reduction in full-year interest expense, which also contributed to improved full-year financial results.
On December 22, 2017, the Company entered into an agreement to sell its wholly-owned Bolivian subsidiary, which owns and operates the San Bartolomé mine. The transaction is expected to close in the first quarter.
As a result, the mine is presented as a discontinued operation and excluded from consolidated operating statistics and financial results for all periods presented unless otherwise noted. In 2017, San Bartolomé produced 4.3 million ounces of silver at adjusted costs applicable to sales ("CAS") per silver ounce1 of $17.17.
"Coeur's robust operating performance during the fourth quarter led to strong financial results for the quarter and full year. Our multi-year strategic initiatives are generating higher-quality ounces and strong cash flow
from our well-balanced portfolio of North American-based assets," said Mitchell J. Krebs, Coeur's President and Chief Executive Officer.
"During 2017, we successfully repositioned and strengthened the Company on multiple fronts. We upgraded our portfolio and pipeline of assets to reflect a North American focus with the acquisition of the high-grade
Silvertip mine in Canada, our announced divestiture of our highest cost mine in Bolivia and the sales of nine non-core assets. We repositioned our balance sheet to provide greater financial flexibility and materially
reduce annual interest expense. By allocating additional capital to near-mine exploration, we expanded our reserve and resource base by double digit percentage increases, which we anticipate will lead to high-return,
long-term value for our stockholders."
• Record fourth quarter and full-year silver equivalent1 production - Fourth quarter and full-year production from continuing operations increased 26% quarter-over-quarter and 14% year-over-year, respectively, to 10.8 million and 35.1 million silver equivalent ounces ("AgEqOz")1. Higher fourth quarter
production was driven by 45% and 26% increases in silver equivalent1 production at the Rochester and Palmarejo mines, respectively, and a 27% increase in gold production at the Kensington mine. Record full-year production was driven primarily by the Palmarejo mine, where 2017 silver equivalent1 production
rose 64% compared to 2016
• Improved cost performance from continuing operations - Companywide adjusted all-in sustaining costs ("AISC") per average spot AgEqOz1 for the fourth quarter decreased 17% quarter-over-quarter to $12.26 and were relatively flat for the full year at $13.82, despite higher diesel and consumables costs
during both periods. Palmarejo's fourth quarter and full-year adjusted CAS per average spot AgEqOz1 were $6.64 and $8.38, respectively, with fourth quarter unit costs decreasing 24% quarter-over-quarter and 34% year-over-year and full-year unit costs declining 12% compared to 2016
• Solid execution of key capital projects - In 2017, Coeur completed or achieved major milestones on key capital projects at Palmarejo, Rochester and Kensington. At Palmarejo, the Company reached its target mining rate of 4,500 tons per day one quarter ahead of schedule following a multi-year development
and ramp-up period. Rochester's Stage IV leach pad expansion was commissioned on schedule in the third quarter after three years of permitting and ten months of construction. During the third quarter, the Company began mining the high-grade Jualin deposit at Kensington following two years of underground
• Continued portfolio enhancements - During the fourth quarter, Coeur completed its acquisition of the Silvertip mine, which is expected to provide Coeur with high-margin, low-cost production, near-term cash flow, and long-term exploration potential in a low-risk, mining-friendly jurisdiction. In December
2017, the Company announced it had entered into an agreement to divest the San Bartolomé mine in Bolivia. The Company's prior acquisition of Wharf in early 2015 has already generated a return on investment of approximately 20%3. Coeur also completed the sale of nine non-core assets during the year
for total consideration of approximately $40 million
• Expanded exploration program generating strong returns - Coeur's total exploration investment increased 66% in 2017 to $41.9 million, including $30.3 million of expensed exploration and $11.6 million of capitalized exploration, and contributed to a 10% increase to silver equivalent1 reserves, net of depletion, from continuing operations compared to year-end 2016. The largest net increases of 36%, 17% and 5% were achieved at Wharf, Palmarejo and Kensington, respectively, with reserves in the United States now
accounting for 73% of total reserves. Measured and indicated silver equivalent1 resources increased 42% compared to the prior year, while inferred silver equivalent1 resources increased 45%
• Meaningful balance sheet improvements achieved - The Company accomplished key balance sheet initiatives during 2017 beginning with the successful refinancing of its 7.875% senior notes due 2021 with 5.875% senior notes due 2024. During the third quarter, Coeur also established a four-year $200 million revolving credit facility, under which the Company drew $100 million to partially fund the Silvertip mine acquisition. Full-year interest expense decreased 56% to $16.4 million from $36.9 million in 2016
"As we enter our 90th year of business, we have strong momentum in positioning Coeur as a leading U.S.- based, North America-focused precious metals mining company," continued Mitchell J. Krebs, Coeur's
President and Chief Executive Officer. "2018 should be another pivotal year as we look to commence production at Silvertip by the end of the first quarter, achieve commercial production at Jualin later in the year and sustain our focus on near-mine exploration. We also expect to publish updated technical reports for Rochester and Kensington in the coming weeks and for Silvertip in the second half of the year. Our team continues to do an outstanding job advancing Coeur's strategic priorities, and we look forward to delivering strong results in the coming quarters."
Financial and Operating Highlights (Unaudited)
On December 22, 2017, Coeur announced it had entered into an agreement to divest the San Bartolomé mine through the sale of its 100%-owned Bolivian subsidiary. As a result, San Bartolomé is presented as a
discontinued operation and excluded from consolidated operating statistics and financial results for all periods presented unless otherwise noted.
(Amounts in millions, except per share amounts, gold ounces
produced & sold, and per-ounce metrics) 2017 4Q 2017 3Q 2017 2Q 2017 1Q 2017 2016 4Q 2016
Revenue $ 709.6 $ 214.6 $ 159.9 $ 149.5 $ 185.6 $ 571.9 $ 139.2
Costs Applicable to Sales $ 440.3 $ 122.0 $ 101.6 $ 102.2 $ 114.5 $ 335.4 $ 84.9
General and Administrative Expenses $ 33.6 $ 9.2 $ 7.3 $ 7.0 $ 10.1 $ 29.3 $ 6.6
Net Income (Loss) $ 10.9 $ 14.3 $ (11.7) $ (10.0) $ 18.3 $ 22.4 $ (10.3)
Net Income (Loss) Per Share $ 0.06 $ 0.08 $ (0.06) $ (0.05) $ 0.10 $ 0.14 $ (0.06)
Adjusted Net Income (Loss)1 $ 4.2 $ 14.1 $ (15.3) $ (1.3) $ 6.8 $ 15.6 $ 0.9
Adjusted Net Income (Loss)1 Per Share $ 0.02 $ 0.08 $ (0.09) $ (0.01) $ 0.04 $ 0.10 $ 0.01
Weighted Average Shares Outstanding 184.1 187.0 179.3 179.2 183.1 163.5 174.0
EBITDA1 $ 202.9 $ 69.6 $ 38.6 $ 23.4 $ 71.4 $ 142.6 $ 24.7
Adjusted EBITDA1 $ 203.3 $ 77.0 $ 40.2 $ 31.9 $ 54.5 $ 194.9 $ 41.0
Cash Flow from Operating Activities $ 197.2 $ 91.8 $ 37.3 $ 24.1 $ 43.9 $ 96.5 $ 21.4
Capital Expenditures $ 136.7 $ 47.1 $ 29.0 $ 37.1 $ 23.6 $ 94.4 $ 28.1
Free Cash Flow1 $ 60.4 $ 44.8 $ 8.3 $ (13.0) $ 20.3 $ (25.1) $ (6.7)
Cash, Equivalents & Short-Term Investments $ 192.0 $ 192.0 $ 195.7 $ 201.0 $ 160.6 $ 118.3 $ 118.3
Total Debt2 $ 411.3 $ 411.3 $ 288.7 $ 284.6 $ 218.8 $ 210.6 $ 210.6
Average Realized Price Per Ounce – Silver $ 16.96 $ 16.57 $ 16.86 $ 16.95 $ 17.49 $ 17.08 $ 16.72
Average Realized Price Per Ounce – Gold $ 1,204 $ 1,224 $ 1,240 $ 1,206 $ 1,149 $ 1,230 $ 1,170
Silver Ounces Produced 12.1 3.7 3.0 2.7 2.7 9.4 2.6
Gold Ounces Produced 383,086 118,756 93,293 82,819 88,218 358,170 102,500
Silver Equivalent Ounces Produced1 35.1 10.8 8.6 7.7 8.0 30.8 8.7
Silver Ounces Sold 12.7 3.8 2.9 2.7 3.3 8.9 2.2
Gold Ounces Sold 410,604 123,564 89,972 86,194 110,874 338,131 87,108
Silver Equivalent Ounces Sold1 37.3 11.1 8.3 7.9 10.0 29.2 7.4
Silver Equivalent Ounces Sold (Average Spot)1 43.0 13.2 9.7 9.0 11.1 33.6 8.4
Adjusted CAS per AgEqOz1 $ 10.62 $ 9.43 $ 11.05 $ 12.02 $ 10.60 $ 11.12 $ 11.45
Adjusted CAS per Average Spot AgEqOz1 $ 9.59 $ 8.35 $ 9.90 $ 10.96 $ 9.79 $ 10.19 $ 10.59
Adjusted CAS per AuEqOz1 $ 822 $ 800 $ 843 $ 860 $ 791 $ 688 $ 676
Adjusted AISC per AgEqOz1 $ 15.90 $ 14.45 $ 17.35 $ 17.81 $ 14.78 $ 15.97 $ 16.13
Adjusted AISC per Average Spot AgEqOz1 $ 13.82 $ 12.26 $ 14.79 $ 15.58 $ 13.30 $ 13.88 $ 14.29
Fourth quarter revenue of $214.6 million increased 34% compared to the prior quarter. Silver sales contributed
30% of revenue during the period and gold sales contributed 70% based on average realized prices of $16.57
and $1,224 per ounce, respectively. For the full year, the Company generated revenue of $709.6 million, 24%
higher than in 2016 with silver sales contributing 30% and gold 70%. Averaged realized silver and gold prices
for the full year were $16.96 and $1,204 per ounce, respectively, marginally declining compared to 2016.
The Company's U.S. operations accounted for approximately 60% of both fourth quarter and full-year revenue.
Average realized gold prices during the fourth quarter and full year reflect the sale of 13,740 and 52,124 gold
ounces, respectively, pursuant to Palmarejo's gold stream agreement at a price of $800 per ounce.
Costs applicable to sales were $122.0 million and $440.3 million for the fourth quarter and full year,
respectively, representing period-over-period increases of 20% and 31%. These increases were primarily the
result of increased ounces sold as well as higher diesel and consumables costs. General and administrative
expenses of $9.2 million in the fourth quarter and $33.6 million for the full year were 26% higher quarterover-
quarter and 15% higher year-over-year, respectively, due to higher employee-related expenses and
professional service costs.
Fourth quarter interest expense, net of capitalized interest, increased 53% from the third quarter to $5.5
million as a result of incremental interest related to the Company's $200 million revolving credit facility (the
"Facility"), under which $100 million was drawn to partially fund the Silvertip acquisition in October 2017.
For the full year, interest expense, net of capitalized interest, decreased 56% to $16.4 million, due primarily
to lower average debt levels compared to 2016 and a lower interest rate on the Company's senior notes, which
were refinanced in the second quarter of 2017.
Expensed exploration was $7.5 million for the fourth quarter, bringing full-year expensed exploration to
$30.3 million, an increase of $17.4 million, or 135%, year-over-year.
Fourth quarter and full-year capital expenditures increased 62% quarter-over-quarter and 45% year-overyear,
respectively, to $47.1 million and $136.7 million, primarily due to $17.7 million of investments made
at Silvertip on underground development drilling, mill and infrastructure upgrades and the purchase of new
equipment. Full-year capital expenditures were also higher than 2016 levels due to final construction and commissioning of the Stage IV leach pad expansion at Rochester.
The acquisition of Silvertip also drove higher fourth quarter and full-year pre-development, reclamation, and other expenses of $6.0 million and $18.9 million, respectively.
Fourth quarter free cash flow1 was $44.8 million, bringing full-year 2017 free cash flow1 to $60.4 million.
This increase of $85.5 million compared to 2016 was driven by record production and sales, improved companywide unit costs, a significant decrease in working capital, and lower interest expense.
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