Coeur Mining, Inc. 10-Q

Item 1. Financial Statements and Supplementary Data COEUR MINING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, 2020 December 31, 2019 ASSETS Notes In thousands, except share data CURRENT ASSETS Cash and cash equivalents $ 77,148 $ 55,645 Receivables 4 22,490 18,666 Inventory 5 46,978 55,886 Ore on leach pads 5 72,326 66,192 Prepaid expenses and other 20,285 14,047 239,227 210,436 NON-CURRENT ASSETS Property, plant and equipment, net 226,115 248,789 Mining properties, net 708,744 711,955 Ore on leach pads 5 87,420 71,539 Restricted assets 8,819 8,752 Equity and debt securities 6 19,862 35,646 Receivables 4 23,493 28,709 Other 57,466 62,810 TOTAL ASSETS $ 1,371,146 $ 1,378,636 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 71,461 $ 69,176 Accrued liabilities and other 19 107,990 95,616 Debt 8 23,265 22,746 Reclamation 9 3,094 3,114 205,810 190,652 NON-CURRENT LIABILITIES Debt 8 277,873 272,751 Reclamation 9 139,608 133,417 Deferred tax liabilities 30,947 41,976 Other long-term liabilities 52,681 72,836 501,109 520,980 COMMITMENTS AND CONTINGENCIES 17 STOCKHOLDERS’ EQUITY Common stock, par value $ 0.01 per share; authorized 300,000,000 shares, 243,744,601 issued and outstanding at September 30, 2020 and 241,529,021 at December 31, 2019 2,437 2,415 Additional paid-in capital 3,608,102 3,598,472 Accumulated other comprehensive income (loss) ( 26,312 ) ( 136 ) Accumulated deficit ( 2,920,000 ) ( 2,933,747 ) 664,227 667,004 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,371,146 $ 1,378,636 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 4 COEUR MINING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Notes In thousands, except share data Revenue 3 $ 229,728 $ 199,469 $ 557,144 $ 516,462 COSTS AND EXPENSES Costs applicable to sales (1) 3 112,772 140,952 321,704 404,550 Amortization 32,216 45,678 96,254 130,758 General and administrative 7,757 9,635 25,293 26,859 Exploration 12,818 5,893 31,059 15,326 Pre-development, reclamation, and other 15,031 4,851 40,261 13,619 Total costs and expenses 180,594 207,009 514,571 591,112 OTHER INCOME (EXPENSE), NET Loss on debt extinguishment 12 — ( 1,282 ) — ( 1,282 ) Fair value adjustments, net 12 2,243 4,377 3,491 8,201 Interest expense, net of capitalized interest 8 ( 5,096 ) ( 5,980 ) ( 15,989 ) ( 19,259 ) Other, net 14 ( 6,312 ) ( 3,634 ) ( 4,310 ) ( 2,931 ) Total other income (expense), net ( 9,165 ) ( 6,519 ) ( 16,808 ) ( 15,271 ) Income (loss) before income and mining taxes 39,969 ( 14,059 ) 25,765 ( 89,921 ) Income and mining tax (expense) benefit 10 ( 13,113 ) ( 218 ) ( 12,018 ) 13,986 Income (loss) from continuing operations $ 26,856 $ ( 14,277 ) $ 13,747 $ ( 75,935 ) Income (loss) from discontinued operations 18 — — — 5,693 NET INCOME (LOSS) $ 26,856 $ ( 14,277 ) $ 13,747 $ ( 70,242 ) OTHER COMPREHENSIVE INCOME (LOSS): Change in fair value of derivative contracts designated as cash flow hedges, net of tax of $ 0 and $ 365 for the three and nine months ended September 30, 2020 and 2019 respectively. ( 18,606 ) 1,132 ( 26,176 ) 1,132 Unrealized gain (loss) on debt and equity securities — — — 59 Other comprehensive income (loss) ( 18,606 ) 1,132 ( 26,176 ) 1,191 COMPREHENSIVE INCOME (LOSS) $ 8,250 $ ( 13,145 ) $ ( 12,429 ) $ ( 69,051 ) NET INCOME (LOSS) PER SHARE 15 Basic income (loss) per share: Net income (loss) from continuing operations $ 0.11 $ ( 0.06 ) $ 0.06 $ ( 0.36 ) Net income (loss) from discontinued operations — — — 0.03 Basic (2) $ 0.11 $ ( 0.06 ) $ 0.06 $ ( 0.33 ) Diluted income (loss) per share: Net income (loss) from continuing operations $ 0.11 $ ( 0.06 ) $ 0.06 $ ( 0.36 ) Net income (loss) from discontinued operations — — — 0.03 Diluted (2) $ 0.11 $ ( 0.06 ) $ 0.06 $ ( 0.33 ) (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. 5 COEUR MINING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Notes In thousands CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 26,856 $ ( 14,277 ) $ 13,747 $ ( 70,242 ) (Income) loss from discontinued operations — — — ( 5,693 ) Adjustments: Amortization 32,216 45,678 96,254 130,758 Accretion 2,969 3,073 8,724 9,023 Deferred taxes ( 4,515 ) ( 10,545 ) ( 11,547 ) ( 27,962 ) Loss on debt extinguishment 12 — 1,282 — 1,282 Fair value adjustments, net 12 ( 2,243 ) ( 4,377 ) ( 3,491 ) ( 8,201 ) Stock-based compensation 11 1,969 2,432 6,269 6,642 Gain on modification of right of use lease 7 — — ( 4,051 ) — Write-downs 1,232 13,966 16,821 41,285 Deferred revenue recognition 17 ( 5,485 ) ( 15,250 ) ( 21,167 ) ( 16,008 ) Other 4,379 8,994 2,374 15,733 Changes in operating assets and liabilities: Receivables ( 1,497 ) ( 3,350 ) ( 3,846 ) ( 20,709 ) Prepaid expenses and other current assets ( 1,921 ) 1,375 ( 1,186 ) ( 2,143 ) Inventory and ore on leach pads ( 3,066 ) ( 9,389 ) ( 33,047 ) ( 42,601 ) Accounts payable and accrued liabilities 28,570 22,384 15,566 41,421 CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES OF CONTINUING OPERATIONS 79,464 41,996 81,420 52,585 CASH PROVIDED BY (USED IN )OPERATING ACTIVITIES OF DISCONTINUED OPERATIONS — — — — CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 79,464 41,996 81,420 52,585 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 22,996 ) ( 30,678 ) ( 61,886 ) ( 78,865 ) Proceeds from the sale of assets 18 730 26 5,245 930 Purchase of investments ( 2,500 ) — ( 2,500 ) — Sale of investments — 1,007 19,802 2,109 Proceeds from notes receivable — — — 7,168 Other ( 25 ) ( 57 ) ( 225 ) 1,961 CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES OF CONTINUING OPERATIONS ( 24,791 ) ( 29,702 ) ( 39,564 ) ( 66,697 ) CASH USED IN INVESTING ACTIVITIES OF DISCONTINUED OPERATIONS — — — — CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ( 24,791 ) ( 29,702 ) ( 39,564 ) ( 66,697 ) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 19 — 73,781 — 122,668 Issuance of notes and bank borrowings, net of issuance costs 8 — 30,000 150,000 45,000 Payments on debt, finance leases, and associated costs 8 ( 48,557 ) ( 87,778 ) ( 150,171 ) ( 201,051 ) Silvertip contingent consideration 17 — — ( 18,750 ) — Other 114 301 ( 1,718 ) ( 2,958 ) CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES OF CONTINUING OPERATIONS ( 48,443 ) 16,304 ( 20,639 ) ( 36,341 ) CASH USED IN FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS — — — — CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES ( 48,443 ) 16,304 ( 20,639 ) ( 36,341 ) Effect of exchange rate changes on cash and cash equivalents ( 10 ) ( 192 ) 293 65 INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 6,220 28,406 21,510 ( 50,388 ) Less net cash used in discontinued operations — — — — 6,220 28,406 21,510 ( 50,388 ) Cash, cash equivalents and restricted cash at beginning of period 72,308 39,275 57,018 118,069 Cash, cash equivalents and restricted cash at end of period $ 78,528 $ 67,681 $ 78,528 $ 67,681 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 6 COEUR MINING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED) In thousands Common Stock Shares Common Stock Par Value Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Balances at December 31, 2019 241,529 $ 2,415 $ 3,598,472 $ ( 2,933,747 ) $ ( 136 ) $ 667,004 Net income (loss) — — — ( 11,900 ) — ( 11,900 ) Other comprehensive income (loss) — — — — 206 206 Common stock issued for Silvertip contingent consideration payment 878 9 5,286 — — 5,295 Common stock issued/canceled under long-term incentive plans and director fees and options, net 1,179 12 27 — — 39 Balances at March 31, 2020 243,586 $ 2,436 $ 3,603,785 $ ( 2,945,647 ) $ 70 $ 660,644 Net income (loss) — — — ( 1,209 ) — ( 1,209 ) Other comprehensive income (loss) — — — — ( 7,776 ) ( 7,776 ) Common stock issued/canceled under long-term incentive plans and director fees and options, net 146 1 2,197 — — 2,198 Balances at June 30, 2020 243,732 $ 2,437 $ 3,605,982 $ ( 2,946,856 ) $ ( 7,706 ) $ 653,857 Net income (loss) — — — 26,856 — 26,856 Other comprehensive income (loss) — — — — ( 18,606 ) ( 18,606 ) Common stock issued/canceled under long-term incentive plans and director fees and options, net 13 — 2,120 — — 2,120 Balances at September 30, 2020 243,745 $ 2,437 $ 3,608,102 $ ( 2,920,000 ) $ ( 26,312 ) $ 664,227 In thousands Common Stock Shares Common Stock Par Value Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Balances at December 31, 2018 203,310 $ 2,033 $ 3,443,082 $ ( 2,592,544 ) $ ( 59 ) 852,512 Net income (loss) — — — ( 19,201 ) — ( 19,201 ) Other comprehensive income (loss) — — — — 59 59 Common stock issued under stock-based compensation plans, net 1,801 18 ( 1,053 ) — — ( 1,035 ) Balances at March 31, 2019 205,111 $ 2,051 $ 3,442,029 $ ( 2,611,745 ) $ — 832,335 Net income (loss) — — — ( 36,764 ) — ( 36,764 ) Common stock issued under "at the market" stock offering 16,631 166 48,721 — — 48,887 Common stock issued under stock-based compensation plans, net 117 2 1,986 — — 1,988 Balances at June 30, 2019 221,859 $ 2,219 $ 3,492,736 $ ( 2,648,509 ) $ — 846,446 Net income (loss) — — — ( 14,277 ) — ( 14,277 ) Other comprehensive income (loss) — — — — 1,132 1,132 Common stock issued for the extinguishment of Senior Notes 4,452 44 21,246 — — 21,290 Common stock issued under "at the market" stock offering 14,220 142 73,639 — — 73,781 Common stock issued under stock-based compensation plans, net ( 22 ) — 2,435 — — 2,435 Balances at September 30, 2019 240,509 $ 2,405 $ 3,590,056 $ ( 2,662,786 ) $ 1,132 930,807 The accompanying notes are an integral part of these Consolidated Financial Statements. 7 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, 2020. The condensed consolidated December 31, 2019 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, 2019 (the “2019 10-K”). NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Significant Accounting Policies Please see Note 2 -- Summary of Significant Accounting Policies contained in the 2019 10-K. Use of Estimates The Company's Condensed Consolidated Financial Statements have been prepared in accordance with United States Generally Accepted Accounting Principles. The preparation of the Company's Condensed Consolidated Financial Statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results will differ from the amounts estimated in these financial statements. The severity, magnitude and duration, as well as the economic consequences of the COVID-19 pandemic, are uncertain, rapidly changing and difficult to predict. Therefore, the Company’s accounting estimates and assumptions may change over time in response to the COVID-19 pandemic and may change materially in future periods. Revenue Recognition The Company’s gold stream agreement with a subsidiary of Franco-Nevada Corporation (“Franco-Nevada”) provided for a $ 20.0 million, net, deposit paid by Franco-Nevada in exchange for the right and obligation, commencing in 2016, 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 the 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 recognize ratably a portion of the deposit as revenue for each gold ounce delivered to Franco-Nevada. See Note 17 -- Commitments and Contingencies for additional detail. The following table presents a rollforward of the Franco-Nevada contract liability balance: Three Months Ended September 30, Nine Months Ended September 30, In thousands 2020 2019 2020 2019 Opening Balance $ 10,389 $ 12,160 $ 11,061 $ 12,918 Revenue Recognized ( 393 ) ( 545 ) ( 1,065 ) ( 1,303 ) Closing Balance $ 9,996 $ 11,615 $ 9,996 $ 11,615 In June 2020, the Company received a $ 15.0 million prepayment (the “June 2020 Prepayment” as defined in Note 17) for deliveries of gold concentrate from the Kensington mine pursuant to the Amended Sales Contract (as defined below). The Amended Sales Contract represents a contract liability under ASC 606, which requires the Company to recognize ratably a portion of the deposit as revenue for each gold ounce delivered to the customer. See Note 17 -- Commitments and Contingencies for additional detail. The following table presents a rollforward of the Amended Sales Contract liability balance: 8 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Three Months Ended September 30, Nine Months Ended September 30, In thousands 2020 2019 2020 2019 Opening Balance $ 15,006 $ 25,021 $ 15,010 $ — Additions 108 276 15,114 25,297 Revenue Recognized ( 5,200 ) ( 14,705 ) ( 20,210 ) ( 14,705 ) Closing Balance $ 9,914 $ 10,592 $ 9,914 $ 10,592 Recently Adopted Accounting Standards In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326)”. The new standard is effective for reporting periods beginning after December 15, 2019. The standard replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. The standard requires a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company adopted the new credit loss standard effective January 1, 2020. The adoption of the new standard did not have a material impact on the Company’s consolidated net income, financial position or cash flows. Recently Issued Accounting Standards In December 2019, the FASB issued ASU 2019-12, “Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740)” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 will be effective for interim and annual periods beginning after December 15, 2020 (January 1, 2021 for the Company). Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2019-12 will have on its consolidated financial statements. 9 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements NOTE 3 – SEGMENT REPORTING The Company’s operating segments include the Palmarejo, Rochester, Kensington, Wharf and Silvertip mines. Except for the Silvertip mine, all operating segments are engaged in the discovery, mining, and production of gold and/or silver. The Silvertip mine, which temporarily suspended mining and processing activities in February 2020, is engaged in the discovery, mining, and production of silver, zinc and lead. Other includes the Sterling/Crown and La Preciosa projects, other mineral interests, strategic equity investments, corporate office, elimination of intersegment transactions, and other items necessary to reconcile to consolidated amounts. The 2019 novel strain of coronavirus causing a contagious respiratory disease known as COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, poses a material risk to our business and operations. Early in the second quarter of 2020, we temporarily suspended active mining and processing activities at the Palmarejo complex in the State of Chihuahua, Mexico, in accordance with a government decree in response to COVID-19, and we began taking steps to restart active mining, processing and exploration activities at Palmarejo in accordance with updated guidance from the government approximately 45 days later. In addition, as a result of several reported positive COVID-19 cases at our Kensington mine outside of Juneau, Alaska, during the third quarter of 2020 we experienced a minor short-term production impact associated with this situation, which has adversely impacted production and cash flows. W e continue to require all employees who travel to the Kensington mine to submit to a 7-day quarantine and testing protocol in Juneau, Alaska before traveling to the mine. We believe this is an important step to protect the health and safety of all workers who stay at the Kensington camp, although it has required changes to worker scheduling and is expected to result in higher labor costs due to additional overtime pay and pay during the quarantine period. Incremental costs associated with the Company’s COVID-19 health and safety protocols are recorded in Pre-development, reclamation, and other expenses in our Condensed Consolidated Statement of Comprehensive Income (Loss) and are included in Other operating expenses in the table below. Because of the highly uncertain and dynamic nature of events relating to the COVID-19 pandemic, it is not currently possible to estimate the impact of the pandemic on the Company’s operating segments. However, these effects could have a material impact on our operations, and we will continue to monitor the COVID-19 situation closely. Financial information relating to the Company’s segments is as follows (in thousands): Three months ended September 30, 2020 Palmarejo Rochester Kensington Wharf Silvertip Other Total Revenue Gold sales $ 39,416 $ 12,860 $ 52,357 $ 62,499 $ — $ — $ 167,132 Silver sales 42,339 19,250 — 1,007 — — 62,596 Zinc sales — — — — — — — Lead sales — — — — — — — Metal sales 81,755 32,110 52,357 63,506 — — 229,728 Costs and Expenses Costs applicable to sales (1) 34,251 19,104 31,530 27,887 — — 112,772 Amortization 11,912 3,278 11,523 4,000 1,185 318 32,216 Exploration 1,978 465 3,397 534 3,920 2,524 12,818 Other operating expenses 2,378 1,376 3,448 127 5,916 9,543 22,788 Other income (expense) Loss on debt extinguishment — — — — — — — Fair value adjustments, net — — — — — 2,243 2,243 Interest expense, net ( 201 ) ( 283 ) ( 296 ) ( 48 ) ( 124 ) ( 4,144 ) ( 5,096 ) Other, net ( 1,168 ) ( 2,502 ) ( 34 ) 7 451 ( 3,066 ) ( 6,312 ) Income and mining tax (expense) benefit ( 6,841 ) ( 143 ) ( 380 ) ( 2,630 ) 21 ( 3,140 ) ( 13,113 ) Income (loss) from continuing operations $ 23,026 $ 4,959 $ 1,749 $ 28,287 $ ( 10,673 ) $ ( 20,492 ) $ 26,856 Income (loss) from discontinued operations $ — $ — $ — $ — $ — $ — $ — Segment assets (2) $ 302,599 $ 325,165 $ 177,700 $ 76,247 $ 155,932 $ 170,208 $ 1,207,851 Capital expenditures $ 4,998 $ 9,773 $ 5,333 $ 545 $ 2,065 $ 282 $ 22,996 (1) Excludes amortization (2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests 10 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Three months ended September 30, 2019 Palmarejo Rochester Kensington Wharf Silvertip Other Total Revenue Gold sales $ 41,547 $ 11,290 $ 52,636 $ 36,398 $ — $ — $ 141,871 Silver sales 29,790 16,191 — 293 5,307 — 51,581 Zinc sales — — — — 2,046 — 2,046 Lead sales — — — — 3,971 — 3,971 Metal sales 71,337 27,481 52,636 36,691 11,324 — 199,469 Costs and Expenses Costs applicable to sales (1) 37,397 27,749 29,533 22,084 24,189 — 140,952 Amortization 15,840 4,250 13,552 3,301 8,268 467 45,678 Exploration 1,608 145 1,465 102 828 1,745 5,893 Other operating expenses 1,327 1,210 281 698 254 10,716 14,486 Other income (expense) Loss on debt extinguishment — — — — — ( 1,282 ) ( 1,282 ) Fair value adjustments, net — — — — — 4,377 4,377 Interest expense, net ( 74 ) ( 287 ) ( 453 ) ( 26 ) ( 410 ) ( 4,730 ) ( 5,980 ) Other, net ( 2,535 ) ( 368 ) ( 99 ) ( 151 ) ( 190 ) ( 291 ) ( 3,634 ) Income and mining tax (expense) benefit ( 1,630 ) ( 2,067 ) — ( 1,672 ) 916 4,235 ( 218 ) Income (loss) from continuing operations 10,926 ( 8,595 ) 7,253 8,657 ( 21,899 ) ( 10,619 ) ( 14,277 ) Income (loss) from discontinued operations — — — — — — — Segment assets (2) 342,274 283,229 204,926 99,600 417,678 172,735 1,520,442 Capital expenditures 7,818 10,248 4,944 759 6,359 550 30,678 (1) Excludes amortization (2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests Nine months ended September 30, 2020 Palmarejo Rochester Kensington Wharf Silvertip Other Total Revenue Gold sales $ 104,732 $ 30,508 $ 159,200 $ 128,199 $ — $ — $ 422,639 Silver sales 89,332 41,650 — 1,640 1,230 — 133,852 Zinc sales — — — — ( 662 ) — ( 662 ) Lead sales — — — — 1,315 — 1,315 Metal sales 194,064 72,158 159,200 129,839 1,883 — 557,144 Costs and Expenses Costs applicable to sales (1) 89,050 54,396 92,419 68,182 17,657 — 321,704 Amortization 32,357 9,194 36,298 9,625 7,761 1,019 96,254 Exploration 4,373 2,529 7,746 639 7,073 8,699 31,059 Other operating expenses 6,279 3,835 7,298 451 17,770 29,921 65,554 Other income (expense) Loss on debt extinguishment — — — — — — — Fair value adjustments, net — — — — — 3,491 3,491 Interest expense, net ( 667 ) ( 851 ) ( 819 ) ( 149 ) ( 603 ) ( 12,900 ) ( 15,989 ) Other, net ( 2,866 ) ( 2,580 ) 1 ( 12 ) 2,005 ( 858 ) ( 4,310 ) Income and mining tax (expense) benefit ( 7,938 ) ( 186 ) ( 854 ) ( 4,806 ) ( 234 ) 2,000 ( 12,018 ) Income (loss) from continuing operations $ 50,534 $ ( 1,413 ) $ 13,767 $ 45,975 $ ( 47,210 ) $ ( 47,906 ) $ 13,747 Income (loss) from discontinued operations $ — $ — $ — $ — $ — $ — $ — Segment assets (2) $ 302,599 $ 325,165 $ 177,700 $ 76,247 $ 155,932 $ 170,208 $ 1,207,851 Capital expenditures $ 16,611 $ 20,634 $ 14,050 $ 1,219 $ 8,630 $ 742 $ 61,886 (1) Excludes amortization (2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests 11 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Nine months ended September 30, 2019 Palmarejo Rochester Kensington Wharf Silvertip Other Total Revenue Gold sales $ 107,063 $ 33,538 $ 138,083 $ 80,277 $ — $ — $ 358,961 Silver sales 76,821 45,765 — 699 13,373 $ — 136,658 Zinc sales — — — — 10,284 — 10,284 Lead sales — — — — 10,559 — 10,559 Metal sales 183,884 79,303 138,083 80,976 34,216 — 516,462 Costs and Expenses Costs applicable to sales (1) 107,137 74,896 90,841 54,942 76,734 — 404,550 Amortization 44,580 12,250 37,816 8,207 26,572 1,333 130,758 Exploration 3,758 331 3,970 102 1,559 5,606 15,326 Other operating expenses 3,798 3,518 962 2,115 881 29,204 40,478 Other income (expense) Loss on debt extinguishment — — — — — (1,282) (1,282) Fair value adjustments, net — — — — — 8,201 8,201 Interest expense, net ( 322 ) ( 599 ) ( 992 ) ( 75 ) ( 997 ) ( 16,274 ) ( 19,259 ) Other, net ( 4,149 ) ( 352 ) ( 102 ) 174 ( 411 ) 1,909 ( 2,931 ) Income and mining tax (expense) benefit ( 684 ) ( 2,737 ) — ( 2,149 ) 18,256 1,300 13,986 Income (loss) from continuing operations $ 19,456 $ ( 15,380 ) $ 3,400 $ 13,560 $ ( 54,682 ) $ ( 42,289 ) $ ( 75,935 ) Income (loss) from discontinued operations $ — $ — $ — $ — — $ 5,693 $ 5,693 Segment assets (2) $ 342,274 $ 283,229 $ 204,926 $ 99,600 417,678 $ 172,735 $ 1,520,442 Capital expenditures $ 24,060 $ 17,665 $ 19,175 $ 1,361 15,456 $ 1,148 $ 78,865 (1) Excludes amortization (2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests Assets September 30, 2020 December 31, 2019 Total assets for reportable segments $ 1,207,851 $ 1,215,783 Cash and cash equivalents 77,148 55,645 Other assets 86,147 107,208 Total consolidated assets $ 1,371,146 $ 1,378,636 Geographic Information Long-Lived Assets September 30, 2020 December 31, 2019 United States $ 489,614 $ 494,286 Mexico 297,386 312,168 Canada 147,197 146,804 Other 662 7,486 Total $ 934,859 $ 960,744 Revenue Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 United States $ 147,973 $ 116,808 $ 361,197 $ 298,362 Mexico 81,755 71,337 194,064 183,884 Canada — 11,324 1,883 34,216 Total 229,728 $ 199,469 $ 557,144 $ 516,462 12 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements NOTE 4 – RECEIVABLES Receivables consist of the following: In thousands September 30, 2020 December 31, 2019 Current receivables: Trade receivables $ 6,589 $ 6,028 Value added tax (“VAT”) receivable 13,156 10,729 Income tax receivable 173 105 Other 2,572 1,804 $ 22,490 $ 18,666 Non-current receivables: VAT receivable (1) $ 23,493 $ 28,009 RMC receivable (2) — 700 23,493 28,709 Total receivables $ 45,983 $ 47,375 (1) Represents VAT that was paid to the Mexican government associated with Coeur Mexicana’s prior royalty agreement with a subsidiary of Franco-Nevada Corporation. The Company continues to pursue recovery from the Mexican government (including through ongoing litigation). See Note 17 -- Commitments and Contingencies for additional detail. The $4.5 million decrease in the nine months ended September 30, 2020 is attributable to a weaker Mexican Peso. (2) Represents receivable due from the successor to Republic Metals Corporation, whose bankruptcy filing in November 2018 impacted approximately 0.4 million ounces of Coeur’s silver and 6,500 ounces of Coeur’s gold. In June 2020, the Company received a $0.7 million payment in respect of certain of its claims in the bankruptcy proceedings. NOTE 5 – INVENTORY AND ORE ON LEACH PADS Inventory consists of the following: In thousands September 30, 2020 December 31, 2019 Inventory: Concentrate $ 1,854 $ 6,557 Precious metals 13,237 14,040 Supplies 31,887 35,289 46,978 55,886 Ore on leach pads: Current 72,326 66,192 Non-current 87,420 71,539 159,746 137,731 Long-term stockpile $ 3,691 $ — Total inventory and ore on leach pads $ 210,415 $ 193,617 Prior to the temporary suspension of mining activities at Silvertip, as a result of lower than expected production levels, grades and recovery rates as well as reduced process plant availability, Silvertip recognized inventory write-downs of $ 10.4 million, which are reflected in Costs applicable to sales for the nine months ended September 30, 2020. Subsequent to the suspension of mining activities, Silvertip has recognized additional supply inventory write-downs of $ 3.3 million, which are reflected in Pre-development, reclamation, and other for the nine months ended September 30, 2020. 13 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements NOTE 6 – INVESTMENTS Equity and Debt Securities The Company makes strategic investments in equity and debt securities of silver and gold exploration, development and royalty and streaming companies. At September 30, 2020 In thousands Cost Gross Unrealized Losses Gross Unrealized Gains Estimated Fair Value Equity Securities Metalla Royalty & Streaming Ltd. $ 1,851 $ — $ 5,269 $ 7,120 Integra Resources Corp. 7,500 — 2,576 10,076 Rockhaven Resources Ltd. 2,064 ( 136 ) — 1,928 Other 448 — 290 738 Equity securities $ 11,863 $ ( 136 ) $ 8,135 $ 19,862 At December 31, 2019 In thousands Cost Gross Unrealized Losses Gross Unrealized Gains Estimated Fair Value Equity Securities Metalla Royalty & Streaming Ltd. $ 10,463 $ — $ 17,725 $ 28,188 Integra Resources Corp. 5,000 — 355 5,355 Rockhaven Resources, Ltd. 2,064 ( 376 ) — 1,688 Other 1,304 ( 889 ) — 415 Equity securities $ 18,831 $ ( 1,265 ) $ 18,080 $ 35,646 On June 30, 2020, the Company completed the sale of 3,910,000 shares of common stock of Metalla Royalty & Streaming Ltd. (“Metalla”) (“Metalla Common Shares”) at a price of $ 5.30 per Metalla Common Share for gross proceeds of $ 20.7 million. After transaction related expenses of $ 1.3 million, the Company recorded a realized gain of $ 11.6 million on the sale of the Metalla Common Shares. In addition, on June 30, 2020, one of the Company’s subsidiaries completed the repurchase from Metalla of a 0.3875 % royalty interest in the Company’s Wharf mine in exchange for 421,554 Metalla Common Shares. Based on the closing price of Metalla Common Shares on June 30, 2020, the Company recorded a realized gain of $ 1.4 million on the royalty repurchase transaction. Following the completion of both transactions, the Company held 909,756 Metalla Common Shares. On September 14, 2020, the Company participated in an offering of shares of common stock of Integra Resources Corp. (“Integra”) (“Integra Common Shares”), exercising a previously-acquired participation right, and purchased an additional 735,294 Integra Common Shares at a price of $ 3.40 per Integra Common Share for a total of $ 2.5 million. Following completion of the transaction, Coeur owned approximately 5.6 % of issued and outstanding Integra Common Shares. NOTE 7 – LEASES Right of Use Assets and Liabilities The following table summarizes quantitative information pertaining to the Company’s finance and operating leases. 14 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Three months ended September 30, Nine months ended September 30, In thousands 2020 2019 2020 2019 Lease Cost Operating lease cost $ 3,067 $ 2,735 $ 8,969 $ 8,850 Short-term operating lease cost $ 2,465 $ 2,899 $ 6,293 $ 9,384 Finance Lease Cost: Amortization of leased assets $ 4,109 $ 4,287 $ 16,506 $ 14,078 Interest on lease liabilities 927 1,210 2,852 3,459 Total finance lease cost $ 5,036 $ 5,497 $ 19,358 $ 17,537 Supplemental cash flow information related to leases was as follows: Three months ended September 30, Nine months ended September 30, In thousands 2020 2019 2020 2019 Other Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 5,850 $ 5,634 $ 16,201 $ 18,234 Operating cash flows from finance leases $ 927 $ 1,210 $ 2,852 $ 3,459 Financing cash flows from finance leases $ 8,557 $ 4,744 $ 20,171 $ 20,210 Supplemental balance sheet information related to leases was as follows: In thousands September 30, 2020 December 31, 2019 Operating Leases Other assets, non-current $ 41,506 $ 49,169 Accrued liabilities and other $ 12,716 $ 13,104 Other long-term liabilities 28,364 40,634 Total operating lease liabilities $ 41,080 $ 53,738 Finance Leases Property and equipment, gross $ 100,474 $ 103,903 Accumulated depreciation ( 54,275 ) ( 42,209 ) Property and equipment, net $ 46,199 $ 61,694 Debt, current $ 23,265 $ 22,746 Debt, non-current 30,459 45,866 Total finance lease liabilities $ 53,724 $ 68,612 Weighted Average Remaining Lease Term Weighted-average remaining lease term - finance leases 1.45 1.73 Weighted-average remaining lease term - operating leases 3.93 4.70 Weighted Average Discount Rate Weighted-average discount rate - finance leases 5.35 % 5.40 % Weighted-average discount rate - operating leases 5.17 % 5.20 % In the quarter ended June 30, 2020, the Company entered into an agreement to modify one of its operating leases, significantly reducing the lease amount and lease term, thereby decreasing the operating lease liability at remeasurement. The Company recognized a gain of $ 4.1 million in connection with this lease modification, which is recognized in Pre-development, reclamation, and other , together with the adjustment to the right of use asset and operating lease liability. Minimum future lease payments under finance and operating leases with terms longer than one year are as follows: 15 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements As of September 30, 2020 (In thousands) Operating leases Finance leases 2020 $ 3,174 $ 5,975 2021 11,119 24,670 2022 10,684 17,822 2023 10,205 8,501 2024 8,605 1,699 Thereafter — 134 Total $ 43,787 $ 58,801 Less: imputed interest ( 2,707 ) ( 5,077 ) Net lease obligation $ 41,080 $ 53,724 NOTE 8 – DEBT September 30, 2020 December 31, 2019 In thousands Current Non-Current Current Non-Current 2024 Senior Notes, net (1) $ — $ 227,414 $ — $ 226,885 Revolving Credit Facility (2) — 20,000 — — Finance lease obligations 23,265 30,459 22,746 45,866 $ 23,265 $ 277,873 $ 22,746 $ 272,751 (1) Net of unamortized debt issuance costs of $ 2.6 million and $ 3.1 million at September 30, 2020 and December 31, 2019, respectively. (2) Unamortized debt issuance costs of $ 1.7 million and $ 2.3 million at September 30, 2020 and December 31, 2019, respectively, included in Other Non-Current Assets . 2024 Senior Notes In May 2017, the Company completed an offering of $ 250.0 million in aggregate principal amount of 5.875% Senior Notes due 2024 (“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, followed by an exchange offer for publicly-traded 2024 Senior Notes. For more details, please see Note 12 -- Debt contained in the 2019 10-K. Revolving Credit Facility At September 30, 2020, the Company had $ 20.0 million drawn, and $ 20.5 million in letters of credit outstanding under, its $ 250.0 million revolving credit facility pursuant to the credit agreement originally entered into in September 2017 and subsequently amended among the Company, as borrower, and certain subsidiaries of the Company, as guarantors, and Bank of America, N.A., Royal Bank of Canada, Bank of Montreal, Chicago Branch, and the Bank of Nova Scotia as lenders (the “RCF”), leaving $ 209.5 million available under the RCF. At September 30, 2020, the interest rate on the principal of the RCF was 2.7 %. Finance Lease Obligations From time-to-time, the Company acquires mining equipment and facilities under finance lease agreements. In the nine months ended September 30, 2020, the Company entered into new lease financing arrangements primarily for mining equipment at Kensington and Palmarejo. All capital lease obligations are recorded, upon lease inception, at the present value of future minimum lease payments. See Note 7 -- Leases for additional qualitative and quantitative disclosures related to finance leasing arrangements. 16 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Interest Expense Three Months Ended September 30, Nine Months Ended September 30, In thousands 2020 2019 2020 2019 2024 Senior Notes $ 3,378 $ 3,563 $ 10,134 $ 10,907 Revolving Credit Facility 767 963 2,520 4,769 Finance lease obligations 927 1,210 2,852 3,459 Amortization of debt issuance costs 372 378 1,143 1,110 Accretion of Silvertip contingent consideration — 182 — 541 Other debt obligations 45 58 261 60 Capitalized interest ( 393 ) ( 374 ) ( 921 ) ( 1,587 ) Total interest expense, net of capitalized interest $ 5,096 $ 5,980 $ 15,989 $ 19,259 NOTE 9 – 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 September 30, Nine Months Ended September 30, In thousands 2020 2019 2020 2019 Asset retirement obligation - Beginning $ 138,904 $ 137,545 $ 134,543 $ 133,508 Accretion 2,924 3,024 8,591 8,878 Settlements ( 930 ) ( 833 ) ( 2,236 ) ( 2,650 ) Asset retirement obligation - Ending $ 140,898 $ 139,736 $ 140,898 $ 139,736 The Company accrued $ 1.8 million and $ 1.9 million at each of September 30, 2020 and December 31, 2019, respectively, for reclamation liabilities related to former mining activities, which are included in Reclamation. NOTE 10 - INCOME AND MINING TAXES The following table summarizes the components of Income and mining tax (expense) benefit for the three and nine months ended September 30, 2020 and 2019 by significant jurisdiction: Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 In thousands Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit United States $ 24,592 $ ( 6,003 ) $ 968 $ 13 $ 26,132 $ ( 5,913 ) $ ( 21,914 ) $ ( 3,549 ) Canada ( 12,895 ) — ( 24,844 ) 1,123 ( 54,544 ) 232 ( 78,937 ) 18,462 Mexico 28,320 ( 7,110 ) 9,882 ( 1,363 ) 54,483 ( 6,366 ) 11,403 ( 938 ) Other jurisdictions ( 48 ) — ( 65 ) 9 ( 306 ) 29 ( 473 ) 11 $ 39,969 $ ( 13,113 ) $ ( 14,059 ) $ ( 218 ) $ 25,765 $ ( 12,018 ) $ ( 89,921 ) $ 13,986 During the third quarter of 2020, the Company reported estimated income and mining tax expense of approximately $ 13.1 million, resulting in an effective tax rate of 32.8 %. This compares to income tax expense of $ 0.2 million for an effective tax rate of 1.6 % during the third quarter of 2019. The comparability of the Company’s income and mining tax (expense) benefit and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) mining taxes; (ii) variations in our income before income taxes; (iii) geographic distribution of that income (iv) foreign exchange rates; (v) the impact of uncertain tax positions; and (vi) the non-recognition of tax assets. Therefore, the effective tax rate will fluctuate, sometimes significantly, period to period. 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 17 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements that the Company ultimately will 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 section titled “Risk Factors” in the 2019 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 2016 forward for the U.S. federal jurisdiction and from 2011 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 $ 0.5 million and $ 1.5 million in the next twelve months. At September 30, 2020 and December 31, 2019, the Company had $ 0.6 million and $ 2.7 million of total gross unrecognized tax benefits from continuing operations, 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 September 30, 2020 and December 31, 2019, the amount of accrued income-tax-related interest and penalties was $ 1.0 million and $ 2.3 million, respectively. NOTE 11 – STOCK-BASED COMPENSATION The Company has stock incentive plans for executives, directors and eligible employees. Stock awards include performance shares, restricted stock and stock options. Stock-based compensation expense in the three and nine months ended September 30, 2020 was $ 2.0 million and $ 6.3 million, respectively, compared to $ 2.5 million and $ 6.7 million for the three and nine months ended September 30, 2019, respectively. At September 30, 2020, there was $ 10.4 million of unrecognized stock-based compensation cost which is expected to be recognized over a weighted-average remaining vesting period of 1.7 years. The following table summarizes the grants awarded during the nine months ended September 30, 2020: Grant date Restricted stock Grant date fair value of restricted stock Performance shares Grant date fair value of performance shares June 3, 2020 167,125 $ 5.21 123,777 $ 3.91 May 19, 2020 — $ — 198,273 $ 3.91 May 13, 2020 54,660 $ 3.97 998,618 $ 3.91 February 25, 2020 120,491 $ 4.94 — $ — February 24, 2020 1,304,763 $ 5.12 — $ — NOTE 12 – FAIR VALUE MEASUREMENTS Three Months Ended September 30, Nine Months Ended September 30, In thousands 2020 2019 2020 2019 Unrealized gain (loss) on equity securities $ 2,276 $ 3,877 $ 12,307 $ 7,515 Realized gain (loss) on equity securities ( 33 ) 485 ( 8,816 ) 859 Interest rate swap, net — 15 — ( 173 ) Fair value adjustments, net $ 2,243 $ 4,377 $ 3,491 $ 8,201 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). 18 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement: Fair Value at September 30, 2020 In thousands Total Level 1 Level 2 Level 3 Assets: Equity securities $ 19,862 $ 19,862 $ — $ — Foreign currency forward exchange contracts 7,614 — 7,614 — Provisional metal sales contracts 3 — 3 — $ 27,479 $ 19,862 $ 7,617 $ — Liabilities: Gold zero cost collars $ 33,926 $ — $ 33,926 $ — Provisional metal sales contracts 299 — 299 — $ 34,225 $ — $ 34,225 $ — Fair Value at December 31, 2019 In thousands Total Level 1 Level 2 Level 3 Assets: Equity and debt securities $ 35,646 $ 35,646 $ — $ — Provisional metal sales contracts 753 — 753 — $ 36,399 $ 35,646 $ 753 $ — Liabilities: Silvertip contingent consideration $ 25,000 $ — $ — $ 25,000 Provisional metal sales contracts 275 — 275 — Gold zero cost collars 136 — 136 — $ 25,411 $ — $ 411 $ 25,000 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. The Company’s foreign currency forward exchange contracts are valued using pricing models with inputs derived from observable market data, including forward market prices and other unobservable inputs. The Company’s gold zero cost collars are valued using pricing models with inputs derived from observable market data, including forward market prices, yield curves, credit spreads, and other unobservable inputs. The Company’s provisional metal sales contracts include concentrate and certain doré sales contracts that are valued using pricing models with inputs derived from observable market data, including forward market prices 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 October 2017, the Company acquired the Silvertip mine from shareholders of JDS Silver Holdings Ltd (the “Silvertip Acquisition”). The consideration for the Silvertip Acquisition included two $ 25.0 million contingent payments, which were payable in cash and common stock upon reaching a future permitting milestone and resource declaration milestone, respectively. The fair value of the Silvertip contingent consideration was 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 was classified within Level 3 of the fair value hierarchy. During 2019, the Company paid the $25.0 million due for the permitting milestone in the form of cash and common stock, and in the first quarter of 2020, the Company paid the remaining $25.0 million due for the resource declaration milestone in the form of cash and common stock. No assets or liabilities were transferred between fair value levels in the nine months ended September 30, 2020. 19 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements The following tables present the changes in the fair value of the Company's Level 3 financial assets and liabilities in the nine months ended September 30, 2020: Nine Months Ended September 30, In thousands Balance at the beginning of the period Revaluation Settlements Accretion Balance at the end of the period Liabilities: Silvertip contingent consideration $ 25,000 $ — $ ( 25,000 ) $ — $ — The fair value of financial assets and liabilities carried at book value in the financial statements at September 30, 2020 and December 31, 2019 is presented in the following table: September 30, 2020 In thousands Book Value Fair Value Level 1 Level 2 Level 3 Liabilities: 2024 Senior Notes (1) $ 227,414 $ 228,824 $ — $ 228,824 $ — Revolving Credit Facility (2) $ 20,000 $ 20,000 $ — $ 20,000 $ — (1) Net of unamortized debt issuance costs of $ 2.6 million. (2) Unamortized debt issuance costs of $ 1.7 million included in Other Non-Current Assets . December 31, 2019 In thousands Book Value Fair Value Level 1 Level 2 Level 3 Liabilities: 2024 Senior Notes (1) $ 226,885 $ 228,585 $ — $ 228,585 $ — Revolving Credit Facility (2) $ — $ — $ — $ — $ — (1) Net of unamortized debt issuance costs of $ 3.1 million. (2) Unamortized debt issuance costs of $ 2.3 million included in Other Non-Current Assets . The fair value of the 2024 Senior Notes was estimated using quoted market prices. The fair value of the RCF approximates book value as the liability is secured, has a variable interest rate, and lacks significant credit concerns. NOTE 13 – DERIVATIVE FINANCIAL INSTRUMENTS & HEDGING ACTIVITIES The Company is exposed to various market risks, including the effect of changes in metal prices, foreign currency exchange rates and interest rates, and uses derivatives to manage financial exposures that occur in the normal course of business. The Company does not hold or issue derivatives for trading or speculative purposes. The Company may elect to designate certain derivatives as hedging instruments under U.S. GAAP. The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking hedge transactions. This process includes linking all derivatives designated as hedges to either recognized assets or liabilities or forecasted transactions and assessing, both at inception and on an ongoing basis, the effectiveness of the hedging relationships. Derivatives Not Designated as Hedging Instruments Provisional Metal Sales The Company enters into sales contracts with third-party smelters, refiners and off-take customers 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. At September 30, 2020, the Company had the following derivative instruments that settle as follows: 20 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements In thousands except average prices and notional ounces 2020 Thereafter Provisional gold sales contracts $ 16,396 $ — Average gold price per ounce $ 1,928 $ — Notional ounces 8,504 — The following summarizes the classification of the fair value of the derivative instruments: September 30, 2020 In thousands Prepaid expenses and other Accrued liabilities and other Provisional metal sales contracts $ 3 $ 299 December 31, 2019 In thousands Prepaid expenses and other Accrued liabilities and other Provisional metal sales contracts $ 753 $ 275 The following represent mark-to-market gains (losses) on derivative instruments in the three and nine months ended September 30, 2020 and 2019, respectively (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Financial statement line Derivative 2020 2019 2020 2019 Revenue Provisional metal sales contracts $ ( 962 ) $ 233 $ 250 $ ( 1,461 ) Fair value adjustments, net Interest rate swaps — 15 — ( 173 ) $ ( 962 ) $ 248 $ 250 $ ( 1,634 ) Derivatives Designated as Cash Flow Hedging Strategies To protect the Company’s exposure to fluctuations in metal prices the Company entered into Asian (or average value) put and call option contracts in net-zero-cost collar arrangements. The contracts are net cash settled monthly and, if the price of gold at the time of expiration is between the put and call prices, would expire at no cost to the Company. If the price of gold at the time of expiration is lower than the put prices or higher than the call prices, it would result in a realized gain or loss, respectively. The Company has elected to designate these instruments as cash flow hedges of forecasted transactions at their inception. To protect the Company’s exposure to fluctuations in foreign currency exchange rates for subsidiaries whose functional currency is U.S dollar and are exposed to forecasted transaction denominated in the Mexican Peso and the Canadian Dollar, in March 2020, the Company entered into foreign currency forward exchange contracts to manage this risk and designated these instruments as cash flow hedges of forecasted foreign denominated transactions. 21 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements At September 30, 2020, the Company had the following derivative cash flow hedge instruments that settle as follows: In thousands except average prices and notional ounces 2020 2021 and Thereafter Gold put options Average gold strike price per ounce $ 1,471 $ 1,612 Notional ounces 55,500 284,700 Gold call options Average gold strike price per ounce $ 1,823 $ 1,943 Notional ounces 55,500 284,700 Foreign currency forward exchange contracts - Mexican Peso Average Mexican Peso exchange rate $ 24.35 $ 25.00 Notional US dollar 15,000 60,000 Foreign exchange forward exchange contracts - Canadian Dollar Average Canadian Dollar exchange rate $ 1.44 — Notional US dollar 7,500 $ — The effective portions of cash flow hedges are recorded in accumulated other comprehensive income (loss) (“AOCI”) until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of metal sales revenue are recognized as a component of net sales in the same period as the related revenue is recognized. Deferred gains and losses associated with cash flow hedges of foreign currency transactions are recognized as a component of costs applicable to sales in the same period the related expenses are incurred. As of September 30, 2020, the Company had $ 26.3 million of net after-tax loss in AOCI related to losses from cash flow hedge transactions, of which $ 13.8 million of net after-tax losses is expected to be recognized in its Condensed Consolidated Statement of Comprehensive Income (Loss) during the next 12 months. Actual amounts ultimately reclassified to net income are dependent on the price of gold for metal contracts and the Canadian and Mexican exchange rates for foreign currency contracts. The following summarizes the classification of the fair value of the derivative instruments designated as cash flow hedges: September 30, 2020 In thousands Prepaid expenses and other Accrued liabilities and other Gold zero cost collars $ — $ 33,926 Foreign currency forward exchange contracts 7,614 — $ 7,614 $ 33,926 December 31, 2019 In thousands Prepaid expenses and other Accrued liabilities and other Gold zero cost collars $ — $ 136 22 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements The following table sets forth the pre-tax gains (losses) on derivatives designated as cash flow hedges that have been included in Accumulated Other Comprehensive Income (“AOCI”) and the Condensed Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30, 2020 and 2019, respectively (in thousands). Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Amount of Gain (Loss) Recognized in AOCI Gold zero cost collars $ ( 24,003 ) $ — $ ( 38,353 ) $ — Foreign currency forward exchange contracts 2,755 — 10,214 — $ ( 21,248 ) $ — $ ( 28,139 ) $ — Amount of (Gain) Loss Reclassified From AOCI to Earnings Gold zero cost collars $ 4,563 $ — $ 4,563 $ — Foreign currency forward exchange contracts ( 1,921 ) — ( 2,600 ) — $ 2,642 $ — $ 1,963 $ — On August 10, 2020, in order to obtain more working capital flexibility, the Company novated certain of its gold zero cost collar option contracts to a different counterparty. Other than a change in counterparty and the credit support provided under the agreements with the old and new counterparties, the novation did not result in any changes to the critical terms of the applicable option contracts, nor was there a change in creditworthiness in relation to the new counterparty. To execute the novation, the Company was required to make an upfront payment of $3.8 million, as compensation for more favorable credit and margin requirements. 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. NOTE 14 - OTHER, NET Other, net consists of the following: Three Months Ended September 30, Nine Months Ended September 30, In thousands 2020 2019 2020 2019 Foreign exchange gain (loss) $ ( 599 ) $ ( 2,945 ) $ ( 665 ) $ ( 4,078 ) Gain (loss) on sale of assets and investments ( 2,476 ) ( 100 ) ( 2,458 ) ( 120 ) Gold zero cost collars novation fee ( 3,819 ) — ( 3,819 ) — Gain (loss) on sale of Manquiri NSR consideration (1) — — 365 — Gain (loss) on Silvertip contingent consideration — — 955 — Interest income on notes receivable — — — 199 Other 582 ( 589 ) 1,312 1,068 Other, net $ ( 6,312 ) $ ( 3,634 ) $ ( 4,310 ) $ ( 2,931 ) (1) As defined in Note 18 -- Discontinued Operations. NOTE 15 – 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 the Company’s common stock outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the three and nine months ended September 30, 2020, there were 182,803 and 1,722,014 common stock equivalents, respectively, related to equity-based awards were not included in the diluted earnings per share calculation as the 23 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements shares would be antidilutive. Similarly, 319,162 and 1,312,737 common stock equivalents were excluded in the diluted earnings per share calculation for the three and nine months ended September 30, 2019, respectively. Three months ended September 30, Nine months ended September 30, In thousands except per share amounts 2020 2019 2020 2019 Net income (loss) available to common stockholders: Income (loss) from continuing operations $ 26,856 $ ( 14,277 ) $ 13,747 $ ( 75,935 ) Income (loss) from discontinued operations — — — 5,693 $ 26,856 $ ( 14,277 ) $ 13,747 $ ( 70,242 ) Weighted average shares: Basic 240,983 225,860 240,729 212,098 Effect of stock-based compensation plans 2,866 — 1,277 — Diluted 243,849 225,860 242,006 212,098 Basic income (loss) per share: Income (loss) from continuing operations $ 0.11 $ ( 0.06 ) $ 0.06 $ ( 0.36 ) Income (loss) from discontinued operations — — — 0.03 Basic (1) $ 0.11 $ ( 0.06 ) $ 0.06 $ ( 0.33 ) Diluted income (loss) per share: Income (loss) from continuing operations $ 0.11 $ ( 0.06 ) $ 0.06 $ ( 0.36 ) Income (loss) from discontinued operations — — — 0.03 Diluted (1) $ 0.11 $ ( 0.06 ) $ 0.06 $ ( 0.33 ) (1) Due to rounding, the sum of net income per share from continuing operations and discontinued operations may not equal net income per share. On April 23, 2020 the Company entered into an ATM Equity Offering Sales Agreement (the “Sales Agreement”) with BofA Securities, Inc. and RBC Capital Markets, LLC as sales agents (the “Sales Agents”) and filed a prospectus supplement for the sale of its common stock, par value $0.01 per share, by way of an “at the market” offering having an aggregate offering price of up to $ 100,000,000 (the “ATM Program”). Sales under the ATM Program, if any, will be made pursuant to the terms of the Sales Agreement. At September 30, 2020, the Company had not sold any of its common stock under the ATM Program. NOTE 16 - 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, Coeur Capital, Inc., Coeur Sterling, Inc., Sterling Intermediate Holdco, Inc., and Coeur Sterling Holdings LLC (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. 24 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements CONDENSED CONSOLIDATING BALANCE SHEET SEPTEMBER 30, 2020 In thousands Coeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS CURRENT ASSETS Cash and cash equivalents $ 13,702 $ 12,359 $ 51,087 $ — $ 77,148 Receivables ( 43 ) 7,150 15,383 — 22,490 Ore on leach pads — 72,326 — — 72,326 Inventory — 23,103 23,875 — 46,978 Prepaid expenses and other 13,313 1,218 5,754 — 20,285 26,972 116,156 96,099 — 239,227 NON-CURRENT ASSETS Property, plant and equipment, net 2,045 149,088 74,982 — 226,115 Mining properties, net — 339,067 369,677 — 708,744 Ore on leach pads — 87,420 — — 87,420 Restricted assets 1,474 206 7,139 — 8,819 Equity and debt securities 19,862 — — — 19,862 Receivables — — 23,493 — 23,493 Net investment in subsidiaries 476,547 75,497 ( 74,760 ) ( 477,284 ) — Other 234,363 50,949 2,641 ( 230,487 ) 57,466 TOTAL ASSETS $ 761,263 $ 818,383 $ 499,271 $ ( 707,771 ) $ 1,371,146 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 3,622 $ 37,662 $ 30,177 $ — $ 71,461 Other accrued liabilities 45,787 39,482 22,721 — 107,990 Debt — 15,823 7,442 — 23,265 Reclamation — 1,628 1,466 — 3,094 49,409 94,595 61,806 — 205,810 NON-CURRENT LIABILITIES Debt 247,415 32,876 228,069 ( 230,487 ) 277,873 Reclamation — 95,187 44,421 — 139,608 Deferred tax liabilities 113 8,190 22,644 — 30,947 Other long-term liabilities 3,543 31,347 17,791 — 52,681 Intercompany payable (receivable) ( 203,444 ) 182,672 20,772 — — 47,627 350,272 333,697 ( 230,487 ) 501,109 STOCKHOLDERS’ EQUITY Common stock 2,437 20,401 214,816 ( 235,217 ) 2,437 Additional paid-in capital 3,608,102 340,700 2,053,231 ( 2,393,931 ) 3,608,102 Accumulated deficit ( 2,920,000 ) 12,415 ( 2,164,279 ) 2,151,864 ( 2,920,000 ) Accumulated other comprehensive income (loss) ( 26,312 ) — — — ( 26,312 ) 664,227 373,516 103,768 ( 477,284 ) 664,227 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 761,263 $ 818,383 $ 499,271 $ ( 707,771 ) $ 1,371,146 25 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements CONDENSED CONSOLIDATING BALANCE SHEET DECEMBER 31, 2019 In thousands Coeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS CURRENT ASSETS Cash and cash equivalents $ 2,985 $ 27,217 $ 25,443 $ — $ 55,645 Receivables ( 65 ) 5,978 12,753 — 18,666 Ore on leach pads — 66,192 — — 66,192 Inventory — 24,763 31,123 — 55,886 Prepaid expenses and other 6,202 1,192 6,653 — 14,047 9,122 125,342 75,972 — 210,436 NON-CURRENT ASSETS Property, plant and equipment, net 2,370 167,159 79,260 — 248,789 Mining properties, net 4,452 327,685 379,818 — 711,955 Ore on leach pads — 71,539 — — 71,539 Restricted assets 1,470 206 7,076 — 8,752 Equity and debt securities 35,646 — — — 35,646 Receivables — — 28,709 — 28,709 Net investment in subsidiaries 325,723 85,755 ( 85,740 ) ( 325,738 ) — Other 267,281 52,040 20,937 ( 277,448 ) 62,810 TOTAL ASSETS $ 646,064 $ 829,726 $ 506,032 $ ( 603,186 ) $ 1,378,636 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 1,277 $ 26,211 $ 41,688 $ — $ 69,176 Other accrued liabilities 9,036 35,547 51,033 — 95,616 Debt — 15,347 7,399 — 22,746 Reclamation — 1,628 1,486 — 3,114 10,313 78,733 101,606 — 190,652 NON-CURRENT LIABILITIES Debt 226,885 32,989 290,325 ( 277,448 ) 272,751 Reclamation — 91,524 41,893 — 133,417 Deferred tax liabilities 50 8,104 33,822 — 41,976 Other long-term liabilities 4,225 40,012 28,599 — 72,836 Intercompany payable (receivable) ( 262,413 ) 246,186 16,227 — — ( 31,253 ) 418,815 410,866 ( 277,448 ) 520,980 STOCKHOLDERS’ EQUITY Common stock 2,415 20,309 215,792 ( 236,101 ) 2,415 Additional paid-in capital 3,598,472 337,975 1,960,187 ( 2,298,162 ) 3,598,472 Accumulated deficit ( 2,933,747 ) ( 26,106 ) ( 2,182,419 ) 2,208,525 ( 2,933,747 ) Accumulated other comprehensive income (loss) ( 136 ) — — — ( 136 ) 667,004 332,178 ( 6,440 ) ( 325,738 ) 667,004 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 646,064 $ 829,726 $ 506,032 $ ( 603,186 ) $ 1,378,636 26 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) THREE MONTHS ENDED SEPTEMBER 30, 2020 In thousands Coeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Revenue $ — $ 147,973 $ 81,755 $ — $ 229,728 COSTS AND EXPENSES Costs applicable to sales (1) — 78,521 34,251 — 112,772 Amortization 175 18,944 13,097 — 32,216 General and administrative 7,754 1 2 — 7,757 Exploration 288 6,633 5,897 — 12,818 Pre-development, reclamation, and other 1,728 4,379 8,924 — 15,031 Total costs and expenses 9,945 108,478 62,171 — 180,594 OTHER INCOME (EXPENSE), NET Loss on debt extinguishment — — — — — Fair value adjustments, net 2,243 — — — 2,243 Other, net 163 ( 2,540 ) ( 229 ) ( 3,706 ) ( 6,312 ) Interest expense, net of capitalized interest ( 4,145 ) ( 862 ) ( 3,795 ) 3,706 ( 5,096 ) Total other income (expense), net ( 1,739 ) ( 3,402 ) ( 4,024 ) — ( 9,165 ) Income (loss) from continuing operations before income and mining taxes ( 11,684 ) 36,093 15,560 — 39,969 Income and mining tax (expense) benefit ( 2,872 ) ( 3,153 ) ( 7,088 ) — ( 13,113 ) Income (loss) from continuing operations ( 14,556 ) 32,940 8,472 — 26,856 Equity income (loss) in consolidated subsidiaries 41,410 ( 3,046 ) 3,052 ( 41,416 ) — Income (loss) from discontinued operations $ — $ — $ — $ — $ — NET INCOME (LOSS) $ 26,854 $ 29,894 $ 11,524 $ ( 41,416 ) $ 26,856 OTHER COMPREHENSIVE INCOME (LOSS): Change in fair value of derivative contracts designated as cash flow hedges ( 18,606 ) — — — ( 18,606 ) Other comprehensive income (loss) ( 18,606 ) — — — ( 18,606 ) COMPREHENSIVE INCOME (LOSS) $ 8,248 $ 29,894 $ 11,524 $ ( 41,416 ) $ 8,250 27 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) THREE MONTHS ENDED SEPTEMBER 30, 2019 In thousands Coeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Revenue $ — $ 116,808 $ 82,661 $ — $ 199,469 COSTS AND EXPENSES Costs applicable to sales (1) — 79,367 61,585 — 140,952 Amortization 216 21,751 23,711 — 45,678 General and administrative 8,973 208 454 — 9,635 Exploration 430 5,010 453 — 5,893 Pre-development, reclamation, and other 15 4,465 371 — 4,851 Total costs and expenses 9,634 110,801 86,574 — 207,009 OTHER INCOME (EXPENSE), NET Loss on debt extinguishment ( 1,282 ) — — — ( 1,282 ) Fair value adjustments, net 4,378 ( 1 ) — — 4,377 Other, net 4,557 ( 814 ) ( 3,017 ) ( 4,360 ) ( 3,634 ) Interest expense, net of capitalized interest ( 4,729 ) ( 838 ) ( 4,773 ) 4,360 ( 5,980 ) Total other income (expense), net 2,924 ( 1,653 ) ( 7,790 ) — ( 6,519 ) Income (loss) from continuing operations before income and mining taxes ( 6,710 ) 4,354 ( 11,703 ) — ( 14,059 ) Income and mining tax (expense) benefit 3,808 ( 3,740 ) ( 286 ) — ( 218 ) Income (loss) from continuing operations ( 2,902 ) 614 ( 11,989 ) — ( 14,277 ) Equity income (loss) in consolidated subsidiaries ( 11,371 ) ( 4 ) 95 11,280 — NET INCOME (LOSS) $ ( 14,273 ) $ 610 $ ( 11,894 ) $ 11,280 $ ( 14,277 ) OTHER COMPREHENSIVE INCOME (LOSS), net of tax: Unrealized gain (loss) on hedges, net of tax of $363 for the three and nine months ended September 30, 2019 1,132 — — — 1,132 COMPREHENSIVE INCOME (LOSS) $ ( 13,141 ) $ 610 $ ( 11,894 ) $ 11,280 $ ( 13,145 ) 28 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS THREE MONTHS ENDED SEPTEMBER 30, 2020 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 30,905 48,535 41,440 ( 41,416 ) 79,464 Cash provided by (used in) activities of discontinued operations — — — — — CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 30,905 48,535 41,440 ( 41,416 ) 79,464 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures ( 74 ) ( 15,859 ) ( 7,063 ) — ( 22,996 ) Proceeds from the sale of assets — 730 — — 730 Purchase of investments ( 2,500 ) — — — ( 2,500 ) Sales of investments — — — — — Proceeds from notes receivable — — — — — Other — — ( 25 ) — ( 25 ) Investments in consolidated subsidiaries ( 41,410 ) — ( 6 ) 41,416 — Cash provided by (used in) activities of operations ( 43,984 ) ( 15,129 ) ( 7,094 ) 41,416 ( 24,791 ) Cash provided by (used in) activities of discontinued operations — — — — — CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ( 43,984 ) ( 15,129 ) ( 7,094 ) 41,416 ( 24,791 ) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of notes and bank borrowings, net of issuance costs — — — — — Payments on debt, capital leases, and associated costs ( 40,000 ) ( 4,009 ) ( 4,548 ) — ( 48,557 ) Silvertip Contingent Consideration — — — — — Net intercompany financing activity 43,347 ( 38,968 ) 1 ( 4,379 ) — — Other 114 — — — 114 Cash provided by (used in) activities of operations 3,461 ( 42,977 ) ( 8,927 ) — ( 48,443 ) Cash provided by (used in) activities of discontinued operations — — — — — CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 3,461 ( 42,977 ) ( 8,927 ) — ( 48,443 ) Effect of exchange rate changes on cash and cash equivalents — 6 ( 16 ) — ( 10 ) Less net cash provided by (used in) discontinued operations — — — — — NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 9,618 ) ( 9,565 ) 25,403 — 6,220 Cash, cash equivalents and restricted cash at beginning of period 27,016 21,884 23,408 — 72,308 Cash, cash equivalents and restricted cash at end of period $ 17,398 $ 12,319 $ 48,811 $ — $ 78,528 29 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS THREE MONTHS ENDED SEPTEMBER 30, 2019 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 ( 18,772 ) 24,553 24,935 11,280 41,996 Cash provided by (used in) activities of discontinued operations — — — — — CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ( 18,772 ) 24,553 24,935 11,280 41,996 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures ( 239 ) ( 16,748 ) ( 13,691 ) — ( 30,678 ) Proceeds from the sale of assets — 26 — — 26 Purchase of investments — — — — — Sales of investments 1,007 — — — 1,007 Proceeds from notes receivable — — — — — Other 2 ( 44 ) ( 15 ) — ( 57 ) Investments in consolidated subsidiaries 11,372 45 ( 137 ) ( 11,280 ) — Cash provided by (used in) activities of continuing operations 12,142 ( 16,721 ) ( 13,843 ) ( 11,280 ) ( 29,702 ) Cash provided by (used in) activities of discontinued operations — — — — — CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 12,142 ( 16,721 ) ( 13,843 ) ( 11,280 ) ( 29,702 ) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 73,781 — — — 73,781 Issuance of notes and bank borrowings, net of issuance costs 30,000 — — — 30,000 Payments on debt, capital leases, and associated costs ( 83,034 ) ( 3,305 ) ( 1,439 ) — ( 87,778 ) Net intercompany financing activity ( 6,842 ) ( 12,322 ) 1 19,164 1 — — Other 301 — — — 301 Cash provided by (used in) activities of continuing operations 14,206 ( 15,627 ) 17,725 — 16,304 Cash provided by (used in) activities of discontinued operations — — — — — CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 14,206 ( 15,627 ) 17,725 — 16,304 Effect of exchange rate changes on cash and cash equivalents — 74 ( 266 ) — ( 192 ) Less net cash provided by (used in) discontinued operations — — — — — NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 7,576 ( 7,721 ) 28,551 — 28,406 Cash, cash equivalents and restricted cash at beginning of period 4,043 16,669 18,563 — 39,275 Cash, cash equivalents and restricted cash at end of period $ 11,619 $ 8,948 $ 47,114 $ — $ 67,681 30 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) NINE MONTHS ENDED SEPTEMBER 30, 2020 In thousands Coeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Revenue $ — $ 361,197 $ 195,947 $ — $ 557,144 COSTS AND EXPENSES Costs applicable to sales (1) — 214,997 106,707 — 321,704 Amortization 577 55,547 40,130 — 96,254 General and administrative 25,276 3 14 — 25,293 Exploration 998 18,613 11,448 — 31,059 Pre-development, reclamation, and other 1,850 12,353 26,058 — 40,261 Total costs and expenses 28,701 301,513 184,357 — 514,571 OTHER INCOME (EXPENSE), NET Loss on debt extinguishment — — — — — Fair value adjustments, net 3,491 — — — 3,491 Other, net 8,701 ( 2,638 ) 688 ( 11,061 ) ( 4,310 ) Interest expense, net of capitalized interest ( 12,920 ) ( 2,331 ) ( 11,799 ) 11,061 ( 15,989 ) Total other income (expense), net ( 728 ) ( 4,969 ) ( 11,111 ) — ( 16,808 ) Income (loss) from continuing operations before income and mining taxes ( 29,429 ) 54,715 479 — 25,765 Income and mining tax (expense) benefit 166 ( 5,846 ) ( 6,338 ) — ( 12,018 ) Income (loss) from continuing operations ( 29,263 ) 48,869 ( 5,859 ) — 13,747 Equity income (loss) in consolidated subsidiaries 43,008 ( 10,221 ) 10,027 ( 42,814 ) — Income (loss) from discontinued operations — — — — — NET INCOME (LOSS) $ 13,745 $ 38,648 $ 4,168 $ ( 42,814 ) $ 13,747 OTHER COMPREHENSIVE INCOME (LOSS): Change in fair value of derivative contracts designated as cash flow hedges ( 26,176 ) — — — ( 26,176 ) Other comprehensive income (loss) ( 26,176 ) — — — ( 26,176 ) COMPREHENSIVE INCOME (LOSS) $ ( 12,431 ) $ 38,648 $ 4,168 $ ( 42,814 ) $ ( 12,429 ) 31 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) NINE MONTHS ENDED SEPTEMBER 30, 2019 In thousands Coeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Revenue $ — $ 298,361 $ 218,101 $ — $ 516,462 COSTS AND EXPENSES Costs applicable to sales (1) — 220,680 183,870 — 404,550 Amortization 656 58,922 71,180 — 130,758 General and administrative 24,429 778 1,652 — 26,859 Exploration 1,116 8,219 5,991 — 15,326 Pre-development, reclamation, and other 255 8,397 4,967 — 13,619 Total costs and expenses 26,456 296,996 267,660 — 591,112 OTHER INCOME (EXPENSE), NET Loss on debt extinguishment ( 1,282 ) — — — ( 1,282 ) Fair value adjustments, net 8,210 ( 9 ) — — 8,201 Other, net 14,648 ( 376 ) ( 4,230 ) ( 12,973 ) ( 2,931 ) Interest expense, net of capitalized interest ( 16,273 ) ( 1,738 ) ( 14,221 ) 12,973 ( 19,259 ) Total other income (expense), net 5,303 ( 2,123 ) ( 18,451 ) — ( 15,271 ) Income (loss) from continuing operations before income and mining taxes ( 21,153 ) ( 758 ) ( 68,010 ) — ( 89,921 ) Income and mining tax (expense) benefit 1,420 ( 4,888 ) 17,454 — 13,986 Income (loss) from continuing operations ( 19,733 ) ( 5,646 ) ( 50,556 ) — ( 75,935 ) Equity income (loss) in consolidated subsidiaries ( 56,200 ) ( 634 ) 355 56,479 — Income (loss) from discontinued operations $ 5,693 $ — $ — $ — $ 5,693 NET INCOME (LOSS) $ ( 70,240 ) $ ( 6,280 ) $ ( 50,201 ) $ 56,479 $ ( 70,242 ) OTHER COMPREHENSIVE INCOME (LOSS), net of tax: Unrealized gain (loss) on debt securities, net of tax 59 — — — 59 Unrealized gain (loss) on hedges, net of tax of $363 for the three and nine months ended September 30, 2019 1,132 — — — 1,132 Other comprehensive income (loss) 1,191 — — — 1,191 COMPREHENSIVE INCOME (LOSS) $ ( 69,049 ) $ ( 6,280 ) $ ( 50,201 ) $ 56,479 $ ( 69,051 ) 32 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2020 In thousands Coeur Mining, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES: Cash provided by (used in) activities of operations $ 12,764 $ 88,894 $ 22,576 $ ( 42,814 ) $ 81,420 Cash provided by (used in) activities of discontinued operations — — — — CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 12,764 $ 88,894 $ 22,576 $ ( 42,814 ) $ 81,420 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures ( 251 ) ( 36,394 ) ( 25,241 ) — ( 61,886 ) Proceeds from the sale of assets 4,500 745 — — 5,245 Purchase of investments ( 2,500 ) — — — ( 2,500 ) Sales of investments 19,802 — — — 19,802 Proceeds from notes receivable — — — — — Other — — ( 225 ) — ( 225 ) Investments in consolidated subsidiaries ( 43,008 ) ( 38 ) 232 42,814 — Cash provided by (used in) activities of continuing operations ( 21,457 ) ( 35,687 ) ( 25,234 ) 42,814 ( 39,564 ) Cash provided by (used in) activities of discontinued operations — — — — — CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ( 21,457 ) ( 35,687 ) ( 25,234 ) 42,814 ( 39,564 ) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of notes and bank borrowings, net of issuance costs 150,000 — — — 150,000 Payments on debt, capital leases, and associated costs ( 130,000 ) ( 11,658 ) ( 8,513 ) — ( 150,171 ) Silvertip contingent consideration — — ( 18,750 ) — ( 18,750 ) Net intercompany financing activity 1,131 ( 56,439 ) 55,308 — — Other ( 1,718 ) — — — ( 1,718 ) Cash provided by (used in) activities of operations 19,413 ( 68,097 ) 28,045 — ( 20,639 ) Cash provided by (used in) activities of discontinued operations — — — — — CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 19,413 ( 68,097 ) 28,045 — ( 20,639 ) Effect of exchange rate changes on cash and cash equivalents 3 ( 29 ) 319 — 293 Less net cash provided by (used in) discontinued operations — — — — — NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 10,723 ( 14,919 ) 25,706 — 21,510 Cash, cash equivalents and restricted cash at beginning of period 6,675 27,238 23,105 — 57,018 Cash, cash equivalents and restricted cash at end of period $ 17,398 $ 12,319 $ 48,811 $ — $ 78,528 33 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2019 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 ( 96,935 ) 76,116 16,925 56,479 52,585 Cash provided by (used in) activities of discontinued operations — — — — — CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ( 96,935 ) 76,116 16,925 56,479 52,585 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures ( 349 ) ( 38,999 ) ( 39,517 ) — ( 78,865 ) Proceeds from the sale of assets — 836 94 — 930 Purchase of investments — — — — — Sales of investments 2,109 — — — 2,109 Proceeds from notes receivable 7,168 — — — 7,168 Other 2,034 69 ( 142 ) — 1,961 Investments in consolidated subsidiaries 56,112 130 237 ( 56,479 ) — Cash provided by (used in) activities of continuing operations 67,074 ( 37,964 ) ( 39,328 ) ( 56,479 ) ( 66,697 ) Cash provided by (used in) activities of discontinued operations — — — — — CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 67,074 ( 37,964 ) ( 39,328 ) ( 56,479 ) ( 66,697 ) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 122,668 — — — 122,668 Issuance of notes and bank borrowings, net of issuance costs 45,000 — — — 45,000 Payments on debt, capital leases, and associated costs ( 180,841 ) ( 13,445 ) ( 6,765 ) — ( 201,051 ) Net intercompany financing activity 44,863 ( 48,628 ) 3,765 — — Other ( 2,958 ) — — — ( 2,958 ) Cash provided by (used in) activities of continuing operations 28,732 ( 62,073 ) ( 3,000 ) — ( 36,341 ) Cash provided by (used in) activities of discontinued operations — — — — — CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 28,732 ( 62,073 ) ( 3,000 ) — ( 36,341 ) Effect of exchange rate changes on cash and cash equivalents — 76 ( 11 ) — 65 Less net cash provided by (used in) discontinued operations — — — — — NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 1,129 ) ( 23,845 ) ( 25,414 ) — ( 50,388 ) Cash, cash equivalents and restricted cash at beginning of period 12,748 32,793 72,528 — 118,069 Cash, cash equivalents and restricted cash at end of period $ 11,619 $ 8,948 $ 47,114 $ — $ 67,681 34 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements NOTE 17 – 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 certain properties acquired in 2015) to a subsidiary of Franco-Nevada Corporation (“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 Mexicana 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. At September 30, 2020 the remaining unamortized balance was $ 10.0 million, which is included in Accrued liabilities and other and Other long-term liabilities on the Consolidated Balance Sheet. Kensington Prepayment In June 2019, Coeur entered into a transaction with an existing metal sales counterparty whereby it amended its existing sales and purchase contract for gold concentrate from its Kensington mine (the “Amended Sales Contract”) to allow for a $ 25.0 million prepayment for deliveries of gold concentrate from the Kensington mine, for which deliveries were made to the counterparty in 2019. The Amended Sales Contract also includes an option for an additional $ 15.0 million prepayment for deliveries of gold concentrate, which Coeur exercised in December 2019. In the first half of 2020, the Kensington mine delivered $ 15.0 million of gold concentrate to the counterparty in satisfaction of this prepayment obligation. The Amended Sales Contract was further amended in June 2020 to include options for Coeur to receive up to two additional prepayments of up to $ 15.0 million each for deliveries of gold concentrate from the Kensington mine, and Coeur exercised the option to receive the first $ 15.0 million prepayment in June 2020 (the “June 2020 Prepayment”). In the third quarter of 2020, the Kensington mine delivered $ 5.2 million. The remaining deliveries of $ 9.9 million under the June 2020 Prepayment are recognized as a deferred revenue liability and are presented in Accrued liabilities and other on the Consolidated Balance Sheet. Under the relevant terms of the Amended Sales Contract, Coeur maintains its exposure to the price of gold and expects to recognize the remaining value of the accrued liability by December 31, 2020. Silvertip Contingent Consideration A total of up to $ 50.0 million of contingent consideration, payable in cash and common stock, was payable in conjunction with the Silvertip Acquisition based upon the achievement of two milestones, one of which was achieved and paid during 2019 and the other of which was achieved and paid during the first quarter of 2020. The first milestone payment of $ 25.0 million was contingent upon receipt of a permit expansion for a sustained mining and milling rate of 1,000 tonnes per day (the “Permit contingent consideration”). The permit application was submitted to the British Columbia Ministry of Energy and Mining on April 30, 2018 and following its approval in November 2019, the Company made a payment of $ 25.0 million in the form of $ 18.7 million in cash and 1.0 million shares of common stock to satisfy the Permit contingent consideration obligation. At December 31, 2019, based on the Silvertip mine’s total mineralized material (including reserves) (the “Resource contingent consideration”), the former JDS Silver Holdings Ltd. shareholders were entitled to the full second contingent payment of $ 25.0 million. In the first quarter of 2020, the Company made a payment of $ 25.0 million in the form of $ 18.8 million in cash and 0.9 million shares of common stock to satisfy the Resource contingent consideration obligation. Mexico VAT Litigation Included in non-current receivables as of September 30, 2020 are $ 23.5 million due from the Mexican government associated with VAT that was paid under Coeur Mexicana’s prior royalty agreement with a subsidiary of Franco-Nevada Corporation, which was terminated in 2016. Under the royalty agreement, Coeur applied for and initially received VAT refunds associated with the royalty payments in the normal course; however, in 2011 the Mexican tax authorities began denying the Company’s VAT refunds based on the argument that VAT was not legally due on the royalty payments. Accordingly, Coeur began to request refunds of the VAT as undue payments, which the Mexican tax authorities also denied. The Company has since been engaged in ongoing efforts to recover the VAT from the Mexican government (including through litigation and potential arbitration). Despite a favorable ruling from Mexican tax courts in this matter in 2018, litigation continues, some of which was determined unfavorably to the Company in 2019 and 2020 based on interpretations of applicable law and prior court decisions which the Company and its counsel believe are erroneous and which are now under appeal. While the Company believes that it remains legally entitled to be refunded the full amount of the VAT receivable, the Company may continue to experience delays or obstacles in the recovery of VAT and it is possible that some or all of the VAT receivable may not ultimately be recovered as outcomes in Mexican tax courts and the process for recovering funds even if there is a successful outcome in litigation can be unpredictable. The continued failure to recover the VAT receivable may result in the Company recording a reserve against some or all of this amount, which, if material, may have a material adverse impact on the Company’s financial statements. 35 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Other Commitments and Contingencies As part of its ongoing business and operations, the Company and its affiliates are required to provide surety bonds, bank letters of credit, bank guarantees and, in some cases, cash as financial support for various purposes, including environmental remediation, reclamation, collateral for gold hedges and other general corporate purposes. As of September 30, 2020 and December 31, 2019, the Company had surety bonds totaling $ 212.8 million and $ 215.6 million, respectively, in place as financial support for future reclamation and closure costs. The obligations associated with these instruments are generally related to performance requirements that the Company addresses through its ongoing operations and from time-to-time, the Company may be required to post collateral, including cash, to support these instruments. As the specific requirements are met, the beneficiary of the associated instrument cancels and/or returns the instrument to the issuing entity. Certain of these instruments are associated with operating sites with long-lived assets and will remain outstanding until closure. The Company believes it is in compliance with all applicable bonding obligations and will be able to satisfy future bonding requirements through existing or alternative means, as they arise. NOTE 18 – DISCONTINUED OPERATIONS In December 2017, the Company and certain of its subsidiaries entered into a definitive agreement (as amended, the “Manquiri Agreement”) to sell all of the outstanding capital stock of Empresa Minera Manquiri S.A. (“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 Manquiri Agreement, the capital stock in Manquiri was sold to Ag-Mining Investments, AB, a privately-held Swedish company (the “Buyer”), in exchange for, among other items, (A) 2.0% net smelter returns royalty on all metals processed through the San Bartolomé mine’s processing facility (the “NSR”) and (B) promissory notes payable by the Buyer with an aggregate principal amount equal to $27.6 million (the “Manquiri Notes Receivable”). In September 2018, the Company entered into the 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 forgo any rights to any value added tax refunds collected or received by Manquiri. On February 28, 2019, the parties executed a letter agreement (the “February Letter Agreement”), which amended certain terms of the Manquiri Agreement. Pursuant to the February Letter Agreement, the Buyer agreed to accelerate repayment of the remaining aggregate $6.0 million owed under the Manquiri Notes Receivable, which was received. As of the date of the entry into the February Letter Agreement, the remaining obligations under the Manquiri Agreement (including post-closing indemnification obligations) terminated. The Company recorded a $ 5.7 million gain on the sale Manquiri following the release of the indemnification liability (associated with termination of post-closing indemnification obligations) pursuant to the February Letter Agreement. In January 2020, the Buyer purchased the NSR from Coeur by making a payment to Coeur of $ 4.5 million. Coeur recorded a gain of $ 0.4 million following the payment. NOTE 19 – ADDITIONAL BALANCE SHEET DETAIL AND SUPPLEMENTAL CASH FLOW INFORMATION Accrued liabilities and other consist of the following: In thousands September 30, 2020 December 31, 2019 Accrued salaries and wages $ 23,202 $ 20,047 Silvertip contingent consideration — 25,000 Deferred revenue (1) 11,463 16,672 Income and mining taxes 14,784 11,243 Accrued operating costs 2,991 3,752 Unrealized losses on derivatives 34,224 411 Taxes other than income and mining 3,392 3,554 Accrued interest payable 5,218 1,833 Operating lease liabilities 12,716 13,104 Accrued liabilities and other $ 107,990 $ 95,616 (1) See Note 17 -- Commitments and Contingencies for additional details on deferred revenue liabilities 36 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements T he following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that total the same such amounts shown in the statement of cash flows in the three and nine months ended September 30, 2020 and 2019: In thousands September 30, 2020 September 30, 2019 Cash and cash equivalents $ 77,148 $ 65,319 Restricted cash equivalents 1,380 2,362 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 78,528 $ 67,681 37