Coeur Mining, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis (“MD&A”) provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Coeur Mining, Inc. and its subsidiaries (collectively the “Company”, “our”, or “we”). We use certain non-GAAP financial performance measures in our MD&A. For a detailed description of these measures, please see “Non-GAAP Financial Performance Measures” at the end of this Item. We provide Costs applicable to sales (“CAS”) split, referred to as the co-product method, based on revenue contribution for Palmarejo, Rochester and Silvertip and based on the primary metal, referred to as the by-product method, for Wharf. Revenue from secondary metal, such as silver at Wharf, is treated as a cost credit. Overview We are primarily a gold and silver producer with five mines located in the United States, Mexico and Canada and several exploration projects in North America. Third Quarter Highlights For the quarter, Coeur reported revenue of $229.7 million and cash flow from operating activities of $79.5 million. The Company reported GAAP net income from continuing operations of $26.9 million, or $0.11 per share. On an adjusted basis 1 , the Company reported EBITDA of $90.8 million and net income from continuing operations of $38.2 million, or $0.16 per share. For nine months ended September 30, 2020, Coeur reported revenue of $557.1 million and cash flow from operating activities of $81.4 million. The Company reported GAAP net income from continuing operations of $13.7 million, or $0.06 per share. On an adjusted basis 1 , the Company reported EBITDA of $179.4 million and net income from continuing operations of $39.9 million, or $0.17 per share. • Highest quarterly financial results in nearly a decade - Revenue increased 49% and adjusted EBITDA 1 more than doubled quarter-over-quarter. Operating cash flow was eight-times higher and now totals $81.4 million through the first nine months of the year. Free cash flow 1 increased significantly to $56.5 million, leading to year-to-date positive free cash flow1 of $19.5 million • Strong quarter-over-quarter production growth - Gold production increased 23% to 95,995 ounces driven by improved operational performance at Palmarejo, Rochester and Wharf, while silver production of 2.6 million ounces was 58% higher largely due to positive results at Palmarejo • Well-executed restart at Palmarejo following temporary suspension - Palmarejo generated strong operational and financial results after being temporarily suspended for approximately 45 days in the prior period due to a COVID-19 related government decree. Gold production nearly doubled while silver production was more than two-times higher quarter-over-quarter, helping to generate $49.7 million and $44.7 million in operating and free cash flow 1 , respectively • Successfully commenced construction on schedule for Rochester expansion - The Company broke ground in early August on the Plan of Operations Amendment 11 (“POA 11”) expansion project at its Rochester mine. Coeur plans to file an updated technical report in December, which will provide a detailed economic and technical overview of the expansion project • Record quarterly results at Wharf - Wharf produced 33,440 ounces of gold, which generated $39.1 million in operating cash flow and $38.6 million free cash flow 1 during the third quarter - all new quarterly records since Coeur’s acquisition of Wharf in early 2015 for approximately $99.5 million. Cumulative operating and free cash flow 1 since acquisition now totals $256.0 million and $232.4 million, respectively • Continued execution of the Company’s largest exploration program in its history - Building on the success from the first half of the year, approximately 20 drill rigs continue to operate across the Company, including at the new C-Horst discovery located in the northernmost portion of the Crown Block in southern Nevada. Results indicate potential for strong resource growth at Palmarejo, Rochester, Kensington, Silvertip and C-Horst, while infill drilling has demonstrated near-term upside potential for reserve growth at Palmarejo and Rochester • Bolstered balance sheet and financial flexibility - The Company reduced total debt 2 by $47.5 million, or 14%, quarter-over-quarter while cash and cash equivalents increased 9% to $77.1 million as of September 30, 2020 38 Selected Financial and Operating Results Three Months Ended September 30, Nine Months Ended September 30, In thousands 2020 2019 2020 2019 Financial Results from Continuing Operations: Gold sales $ 167,132 $ 141,871 $ 422,639 $ 358,961 Silver sales $ 62,596 $ 51,581 $ 133,852 $ 136,658 Zinc sales $ — $ 2,046 $ (662) $ 10,284 Lead sales $ — $ 3,971 $ 1,315 $ 10,559 Consolidated Revenue $ 229,728 $ 199,469 $ 557,144 $ 516,462 Net income (loss) $ 26,856 $ (14,277) $ 13,747 $ (75,935) Net income (loss) per share, diluted $ 0.11 $ (0.06) $ 0.06 $ (0.36) Adjusted net income (loss) (1) $ 38,248 $ (5,340) $ 39,932 $ (51,283) Adjusted net income (loss) per share, diluted (1) $ 0.16 $ (0.02) $ 0.17 $ (0.24) EBITDA (1) $ 77,281 $ 37,599 $ 138,008 $ 60,096 Adjusted EBITDA (1) $ 90,777 $ 61,006 $ 179,381 $ 114,918 Total debt (2) $ 301,138 $ 298,720 $ 301,138 $ 298,720 Operating Results from Continuing Operations: Gold ounces produced 95,995 99,782 259,301 264,702 Silver ounces produced 2,565,349 3,019,869 6,862,177 8,571,796 Zinc pounds produced — 4,197,110 2,459,756 13,237,837 Lead pounds produced — 4,477,653 2,176,847 12,534,228 Gold ounces sold 95,283 100,407 258,851 272,118 Silver ounces sold 2,591,779 3,004,815 6,913,585 8,688,195 Zinc pounds sold — 4,076,390 3,203,446 14,101,967 Lead pounds sold — 4,330,862 2,453,485 12,264,343 Average realized price per gold ounce $ 1,754 $ 1,413 $ 1,633 $ 1,319 Average realized price per silver ounce $ 24.15 $ 17.17 $ 19.36 $ 15.73 Average realized price per zinc pound, gross $ — $ 0.86 $ (0.21) $ 1.07 Average realized price per lead pound, gross $ — $ 0.98 $ 0.54 $ 0.92 Financial and Operating Results from Discontinued Operations: Income (loss) from discontinued operations $ — $ — $ — $ 5,693 (1) See “Non-GAAP Financial Performance Measures.” (2) Includes capital leases. Net of debt issuance costs and premium received. 39 Consolidated Financial Results Three Months Ended September 30, 2020 compared to Three Months Ended September 30, 2019 Revenue Revenue increased by $30.3 million or 15%, as a result of a 24% and 41% increase in average realized gold and silver prices, respectively, combined with a 36% increase in gold ounces sold at Wharf, partially offset by lower gold and silver ounces sold (5% and 14%, respectively) due to lower gold grades at Kensington, recovery delays at Rochester and the temporary suspension of operations at Silvertip in February. The Company sold 95,283 gold ounces and 2.6 million silver ounces compared to 100,407 gold ounces, 3.0 million silver ounces, 4.1 million zinc pounds and 4.3 million lead pounds in the prior year. Gold contributed to 73% of sales, silver contributed 27%, compared to 71% of sales from gold, 26% from silver, 1% from zinc and less than 2% from lead. The following table summarizes consolidated metal sales: Three months ended September 30, Increase (Decrease) Percentage Change In thousands 2020 2019 Gold sales $ 167,132 $ 141,871 $ 25,261 18 % Silver sales 62,596 51,581 11,015 21 % Zinc sales — 2,046 (2,046) (100) % Lead sales — 3,971 (3,971) (100) % Metal sales $ 229,728 $ 199,469 $ 30,259 15 % Costs Applicable to Sales Costs applicable to sales decreased primarily due to the temporary suspension at Silvertip and lower sales at Rochester For a complete discussion of costs applicable to sales, see Results of Operations below. Amortization Amortization decreased $13.5 million, or 29%, resulting from lower sales volumes and the temporary suspension at Silvertip. Expenses General and administrative expenses decreased $1.9 million, or 19%, primarily due to lower compensation costs, legal fees and travel costs. Exploration expense increased $6.9 million, or 118%, as a result of exploration expense at the Sterling/Crown project located in southern Nevada and higher exploration expense at Silvertip, Kensington and Palmarejo. The Company completed 217,768 feet (66,376 meters) of expansion drilling and 39,114 feet (11,922 meters) of infill drilling in the third quarter of 2020 compared to 86,018 feet (26,218 meters) of resource expansion drilling and 24,343 feet (7,420 meters) of resource infill drilling in the third quarter of 2019. Pre-development, reclamation, and other expenses increased $10.2 million, or 210%, stemming from ongoing carrying and temporary suspension costs at Silvertip and incremental costs incurred to comply with the Company’s COVID-19 health and safety protocols. The following table summarizes pre-development, reclamation, and other expenses: Three months ended September 30, Increase (Decrease) Percentage Change In thousands 2020 2019 COVID-19 $ 4,037 $ — $ 4,037 100 % Silvertip ongoing carrying costs 3,913 — 3,913 100 % Silvertip temporary suspension costs 2,768 — 2,768 100 % Asset retirement accretion 2,968 3,080 (112) (4) % Other 1,345 1,771 (426) (24) % Pre-development, reclamation and other expense $ 15,031 $ 4,851 $ 10,180 210 % 40 Other Income and Expenses Fair value adjustments, net, decreased to a gain of $2.2 million compared to $4.4 million as a result of lower favorable fair value adjustments and realized gains primarily related to the Company’s equity investments in Integra and Metalla, which had estimated fair values of $10.1 million and $7.1 million, respectively, at September 30, 2020. Interest expense (net of capitalized interest of $0.4 million) decreased to $5.1 million from $6.0 million due to a lower interest rate paid on the debt under the RCF and lower average debt levels related to the RCF and 2024 Senior Notes. Other, net decreased to a loss of $6.3 million compared to a loss of $3.6 million due to an increase in losses on the sale of assets and a one-time fee of $3.8 million related to the novation of certain of the Company’s gold zero cost collars, partially offset by a reduction in foreign exchange losses Income and Mining Taxes During the third quarter of 2020, income and mining tax expense of approximately $13.1 million resulted in an effective tax rate of 32.8% for 2020. This compares to income tax expense of $0.2 million or effective tax rate of 1.6% for 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. The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit: Three months ended September 30, 2020 2019 In thousands Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit United States $ 24,592 $ (6,003) $ 968 $ 13 Canada (12,895) — (24,844) 1,123 Mexico 28,320 (7,110) 9,882 (1,363) Other jurisdictions (48) — (65) 9 $ 39,969 $ (13,113) $ (14,059) $ (218) A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company will ultimately be more likely than not able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of factors that impact the Company’s ability to realize its deferred tax assets. For additional information, please see “Item 1A - Risk Factors” in the 2019 10-K. 41 Net Income (Loss) from Continuing Operations Net income from continuing operations was $26.9 million, or $0.11 per share, compared to net loss of $14.3 million, or $0.06 per share. The increase in net income from continuing operations was driven by strong operating results at Wharf and Palmarejo, a 24% and 41% increase in average realized gold and silver prices, respectively, and lower operating costs at Rochester and Silvertip. This was partially offset by lower sales of gold and silver (5% and 14%, respectively), higher exploration expense, ongoing carrying and severance costs at Silvertip and incremental costs associated with the Company’s COVID-19 health and safety protocols. Adjusted net income was $38.2 million, or $0.16 per share, compared to adjusted net loss of $5.3 million, or $0.02 per share (see “Non-GAAP Financial Performance Measures”). Nine Months Ended September 30, 2020 compared to Nine Months Ended September 30, 2019 Revenue Revenue increased by $40.7 million or 8%, as a result of a 24% and 23% increase in average realized gold and silver prices, respectively, and 26% increase in gold ounces sold at Wharf, partially offset by lower sales of gold and silver (5% and 20%, respectively) due to the temporary suspension of active mining operations at Palmarejo during a portion of the second quarter, the temporary suspension of operations at Silvertip in February, lower gold grades at Kensington, and recovery delays at Rochester. The Company sold 258,851 gold ounces, 6.9 million silver ounces, 3.2 million zinc pounds and 2.5 million lead pounds compared to 272,118 gold ounces, 8.7 million silver ounces, 14.1 million zinc pounds and 12.3 million lead pounds in the prior year. Gold contributed to 76% of sales, silver contributed 24%, compared to 70% of sales from gold, 26% from silver, 2% from zinc and less than 2% from lead. The following table summarizes consolidated metal sales: Nine months ended September 30, Increase (Decrease) Percentage Change In thousands 2020 2019 Gold sales $ 422,639 $ 358,961 $ 63,678 18 % Silver sales 133,852 136,658 (2,806) (2) % Zinc sales (662) 10,284 (10,946) (106) % Lead sales 1,315 10,559 (9,244) (88) % Metal sales $ 557,144 $ 516,462 $ 40,682 8 % Costs Applicable to Sales Costs applicable to sales decreased primarily due to the temporary suspensions at Palmarejo and Silvertip and lower sales at Rochester. For a complete discussion of costs applicable to sales, see Results of Operations below. Amortization Amortization decreased $34.5 million, or 26%, resulting from lower sales volume and the temporary suspensions at Palmarejo and Silvertip. Expenses General and administrative expenses decreased by $1.6 million, or 6%, primarily due to lower travel costs and legal fees, partially offset by higher compensation costs. Exploration expense increased $15.7 million, or 103%, as a result of exploration expense at the Sterling/Crown project located in southern Nevada and higher exploration expense at Silvertip, Kensington and Palmarejo. The Company completed 477,454 feet (145,528 meters) of expansion drilling and 122,686 feet (37,395 meters) of infill drilling in the nine months of 2020 compared to 239,266 (72,928 meters) of resource expansion drilling and 129,514 feet (39,476 meters) of resource infill drilling in the first nine months of 2019. Pre-development, reclamation, and other expenses increased $26.6 million, or 196%, stemming from ongoing carrying and temporary suspension costs at Silvertip including a $3.3 million write down of obsolete supply inventory and incremental costs associated with the Company’s COVID-19 health and safety protocols, partially offset by a gain resulting from the modification of a right of use lease. 42 The following table summarizes pre-development, reclamation, and other expenses: Nine months ended September 30, Increase (Decrease) Percentage Change In thousands 2020 2019 COVID-19 $ 10,418 $ — $ 10,418 — % Silvertip ongoing carrying costs 11,704 — 11,704 — % Silvertip temporary suspension costs 10,107 — 10,107 — % Gain on modification of right of use lease (4,051) — (4,051) — % Asset retirement accretion 8,724 9,030 (306) (3) % Other 3,359 4,589 (1,230) (27) % Pre-development, reclamation and other expense $ 40,261 $ 13,619 $ 26,642 196 % Other Income and Expenses Fair value adjustments, net, decreased to a gain of $3.5 million compared to $8.2 million as a result of lower favorable fair value adjustments and realized gains primarily related to the Company’s equity investments in Integra and Metalla, which had estimated fair values of $10.1 million and $7.1 million, respectively, at September 30, 2020. Interest expense (net of capitalized interest of $0.9 million) decreased to $16.0 million from $19.3 million due to due to a lower interest rate paid on the debt under the RCF and average debt levels related to the RCF and 2024 Senior Notes. Other, net decreased to a loss of $4.3 million compared to a loss of $2.9 million due to an increase in losses on sale of assets, a one-time fee of $3.8 million related to the novation of certain of the Company’s gold zero cost collars, partially offset by a reduction in foreign exchange losses. Income and Mining Taxes During the first nine months of 2020, income and mining tax expense of approximately $12.0 million resulted in an effective tax rate of 46.7% for 2020. This compares to income tax benefit of $14.0 million or effective tax rate of 15.6% for 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. The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit: Nine months ended September 30, 2020 2019 In thousands Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit United States $ 26,132 $ (5,913) $ (21,914) $ (3,549) Canada (54,544) 232 (78,937) 18,462 Mexico 54,483 (6,366) 11,403 (938) Other jurisdictions (306) 29 (473) 11 $ 25,765 $ (12,018) $ (89,921) $ 13,986 A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company will ultimately be more likely than not able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of factors that impact the Company’s ability to realize its deferred tax assets. For additional information, please see “Item 1A - Risk Factors” in the 2019 10-K. 43 Net Income (Loss) from Continuing Operations Net income from continuing operations was $13.7 million, or $0.06 per share, compared to net loss of $75.9 million, or $0.36 per share. The increase in net income from continuing operations was driven by strong operating results at Wharf, a 24% and 23% increase in average realized gold and silver prices, respectively, and lower operating costs at Palmarejo and Silvertip. This was partially offset by lower sales from Palmarejo, Kensington and Rochester, higher explorations costs, ongoing carrying and severance costs at Silvertip and incremental costs associated with the Company’s COVID-19 health and safety protocols. Adjusted net income was $39.9 million, or $0.17 per share, compared to adjusted net loss of $51.3 million, or $0.24 per share (see “Non-GAAP Financial Performance Measures”). Net Income (loss) from Discontinued Operations In respect of the San Bartolomé mine and processing facility’s operating results, income decreased $5.7 million. In February 2019, the Company recorded an adjustment to the gain from the Manquiri Divestiture following the release of a liability associated with the Company’s post-closing indemnification obligations which were extinguished at that time. 2020 Guidance Framework 2020 Production Guidance Previous Updated Gold Silver Gold Silver (oz) (K oz) (oz) (K oz) Palmarejo 95,000 - 105,000 6,000 - 7,000 100,000 - 110,000 6,000 - 7,000 Rochester 27,000 - 33,000 3,500 - 4,500 27,000 - 33,000 3,100 - 3,700 Kensington 125,000 - 135,000 — 122,500 - 130,000 — Wharf 80,000 - 90,000 — 85,000 - 95,000 — Total 327,000 - 363,000 9,500 - 11,500 334,500 - 368,000 9,100 - 10,700 2020 Costs Applicable to Sales Guidance Previous Updated Gold Silver Gold Silver ($/oz) ($/oz) ($/oz) ($/oz) Palmarejo (co-product) $785 - $885 $9.50 - $10.50 $650 - $750 $9.50 - $10.50 Rochester (co-product) $1,250 - $1,400 $12.75 - $14.00 $1,150 - $1,300 $13.50 - $14.75 Kensington $900 - $1,000 — $900 - $1,000 — Wharf (by-product) $950 - $1,000 — $875 - $925 — 2020 Capital, Exploration and G&A Guidance Previous Updated ($M) ($M) Capital Expenditures, Sustaining $70 - $85 $55 - $60 Capital Expenditures, Development $40 - $45 $45 - $55 Exploration, Expensed $37 - $43 $43 - $49 Exploration, Capitalized $7 - $11 $7 - $11 General & Administrative Expenses $32 - $36 $32 - $36 Note: The Company’s previous guidance reflects realized prices through the first half of 2020 and estimated prices of $1,650/oz gold and $16.50/oz silver as well as CAD of 1.36 and MXN of 21.00 for the second half of the year. The Company’s updated guidance reflects realized prices through September 30, 2020 and estimated prices of $1,850/oz gold and $24.00/oz silver as well as CAD of 1.30 and MXN of 21.00 for the fourth quarter. 44 Results of Continuing Operations Palmarejo Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Tons milled 492,474 442,464 1,241,677 1,269,178 Average gold grade (oz/t) 0.07 0.09 0.07 0.08 Average silver grade (oz/t) 4.37 4.88 4.52 4.76 Average recovery rate – Au 91.3 % 81.7 % 90.3 % 84.1 % Average recovery rate – Ag 82.8 % 79.6 % 80.0 % 78.4 % Gold ounces produced 29,296 31,779 76,097 83,230 Silver ounces produced 1,783,524 1,719,815 4,485,549 4,732,870 Gold ounces sold 27,252 32,731 75,463 88,152 Silver ounces sold 1,765,371 1,747,250 4,534,802 4,862,065 Costs applicable to sales per gold ounce (1) $ 603 $ 663 $ 637 $ 705 Costs applicable to sales per silver ounce (1) $ 10.09 $ 8.99 $ 9.03 $ 9.25 (1) See Non-GAAP Financial Performance Measures. Three Months Ended September 30, 2020 compared to Three Months Ended September 30, 2019 Gold production decreased 8% as a result of lower grade, partially offset by higher mill throughput and recovery, while silver production increased 4% due to higher mill throughput and recovery, partially offset by lower grade. Metal sales were $81.8 million, or 36% of Coeur’s metal sales, compared with $71.3 million, or 36% of Coeur’s metal sales. Costs applicable to sales per gold ounce decreased 9% and per silver ounce increased 12% due to higher revenue contribution from silver sales compared to gold as well as favorable foreign exchange rates and lower consumable costs. Amortization decreased to $11.9 million due to lower gold ounces sold. Capital expenditures decreased to $5.0 million from $7.8 million due to lower underground development and infill drilling activities. Nine Months Ended September 30, 2020 compared to Nine Months Ended September 30, 2019 Gold and silver production decreased 9% and 5%, respectively, due to lower gold and silver grades and the temporary suspension of active mining and processing activities in accordance with a COVID-related government decree issued in the second quarter. After receiving guidance from the Mexican government in May that the suspension decree did not apply to precious metals mining, production began ramping back up in June, increasing steadily during the month. Workforce staffing levels gradually increased to near full capacity during September, up from approximately 85% earlier in the third quarter due to compliance with restrictions related to COVID-19. Coeur expects workforce staffing to stay at similar levels for the remainder of 2020. Metal sales were $194.1 million, or 35% of Coeur’s metal sales, compared with $183.9 million, or 36% of Coeur’s metal sales. Favorable foreign exchange rates and lower consumable costs led to a 10% and 2% decrease in costs applicable to sales per gold and silver ounce, respectively. Amortization decreased to $32.4 million due to lower ounces sold. Capital expenditures decreased to $16.6 million from $24.1 million due to the impact of the temporary suspension on underground development and infill drilling activities and fewer mining equipment purchases. 45 Rochester Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Tons placed 4,523,767 2,516,353 11,695,676 7,970,199 Average gold grade (oz/t) 0.002 0.004 0.002 0.003 Average silver grade (oz/t) 0.49 0.43 0.52 0.45 Gold ounces produced 6,462 7,901 17,557 24,766 Silver ounces produced 739,886 982,455 2,155,577 2,913,033 Gold ounces sold 6,834 7,651 17,585 24,804 Silver ounces sold 785,887 951,043 2,141,803 2,913,130 Costs applicable to sales per gold ounce (1) $ 1,118 $ 1,487 $ 1,299 $ 1,268 Costs applicable to sales per silver ounce (1) $ 14.58 $ 17.21 $ 14.73 $ 14.91 (1) See Non-GAAP Financial Performance Measures. Three Months Ended September 30, 2020 compared to Three Months Ended September 30, 2019 Gold and silver production decreased 18% and 25%, respectively, due to the impact of dilution from stacking high-pressure grinding roll (“HPGR”) crushed material on top of historic ore on the Stage IV leach pad and upset conditions in the Merrill-Crowe process plant due to higher-than-expected fine particulates in pregnant solution (“turbidity”) from ore placed on newly constructed inter-lift liners. Metal sales were $32.1 million, or 14% of Coeur’s metal sales, compared with $27.5 million, or 14% of Coeur’s metal sales. Costs applicable to sales per gold and silver ounce decreased 25% and 15%, respectively, driven by lower diesel costs and a one-time charge associated with the operation’s power costs in 2019. Amortization decreased to $3.3 million due to lower ounces sold. Capital expenditures decreased to $9.8 million from $10.2 million due to the timing of payments related to the commencement of construction activities related to POA 11. Nine Months Ended September 30, 2020 compared to Nine Months Ended September 30, 2019 Gold and silver production decreased 29% and 26%, respectively, due to the impact of dilution from stacking HPGR-crushed material on top of historic ore on the Stage IV leach pad and upset conditions in the Merrill-Crowe process plant due to high turbidity of solution. Metal sales were $72.2 million, or 13% of Coeur’s metal sales, compared with $79.3 million, or 15% of Coeur’s metal sales. Costs applicable to sales per gold ounce increased 2% and silver ounce decreased 1%, respectively, driven by higher revenue contribution from gold sales compared to silver, higher outside service costs, partially offset by higher silver grades and lower diesel costs. Amortization decreased to $9.2 million due to lower ounces sold. Capital expenditures increased to $20.6 million from $17.7 million due to the commencement of construction activities related to POA 11. Mining remains an essential business in Nevada. The Company implemented and continues to maintain strong health and safety protocols, aimed at limiting the exposure to, and transmission of, COVID-19. 46 Kensington Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Tons milled 163,276 166,475 496,095 491,317 Average gold grade (oz/t) 0.18 0.22 0.20 0.22 Average recovery rate 93.7 % 93.2 % 93.0 % 92.2 % Gold ounces produced 26,797 34,156 91,877 98,178 Gold ounces sold 27,815 35,452 92,963 101,202 Costs applicable to sales per gold ounce (1) $ 1,134 $ 833 $ 994 $ 898 (1) See Non-GAAP Financial Performance Measures. Three Months Ended September 30, 2020 compared to Three Months Ended September 30, 2019 Gold production decreased 22% resulting from processing of additional lower grade development ore and surface stockpile material as a result of mine sequencing and COVID-19 contact tracing temporarily impacting mine production, respectively. Metal sales were $52.4 million, or 23% of Coeur’s metal sales, compared to $52.6 million, or 26% of Coeur’s metal sales. Costs applicable to sales per gold ounce increased 36% due to lower production and higher maintenance costs, partially offset by lower diesel costs. Amortization decreased to $11.5 million due to lower ounces sold. Capital expenditures increased to $5.3 million from $4.9 million due to higher mining infrastructure capital expenditures. Nine Months Ended September 30, 2020 compared to Nine Months Ended September 30, 2019 Gold production decreased 6% due to processing of additional lower grade development ore and surface stockpile material as a result of mine sequencing and COVID-19 contact tracing temporarily impacting mine production, respectively. Metal sales were $159.2 million, or 29% of Coeur’s metal sales, compared to $138.1 million, or 27% of Coeur’s metal sales. Costs applicable to sales per gold ounce increased 11% due to lower production and higher maintenance costs, partially offset by lower diesel costs. Amortization decreased to $36.3 million due to lower ounces sold. Capital expenditures decreased to $14.1 million from $19.2 million due to lower underground development at Kensington and Jualin, and lower infill drilling and mining equipment expenditures. Mining continues to be considered an essential business in Alaska. Rotational schedules remain extended from 14 days to 21 days in response to concerns related to COVID-19. All employees are required to quarantine for 7 days and undergo a testing protocol prior to starting their 21-day rotation. Wharf Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Tons placed 1,315,542 1,503,021 3,663,228 3,512,966 Average gold grade (oz/t) 0.025 0.027 0.028 0.024 Gold ounces produced 33,440 25,946 73,770 58,528 Silver ounces produced 41,939 17,975 81,764 43,838 Gold ounces sold 33,382 24,573 72,840 57,960 Silver ounces sold 40,521 16,612 77,996 43,028 Costs applicable to sales per gold ounce (1) $ 805 $ 887 $ 914 $ 936 (1) See Non-GAAP Financial Performance Measures. 47 Three Months Ended September 30, 2020 compared to Three Months Ended September 30, 2019 Gold production increased 29% driven by timing of recoveries. Metal sales were $63.5 million, or 28% of Coeur’s metal sales, compared to $36.7 million, or 18% of Coeur’s metal sales. Costs applicable to sales per gold ounce decreased 9% due to higher production and lower diesel costs. Amortization increased to $4.0 million due to higher ounces sold. Capital expenditures were $0.5 million. Nine Months Ended September 30, 2020 compared to Nine Months Ended September 30, 2019 Gold production increased 26% due to substantially higher crushing rates in the second quarter, higher grades, and timing of recoveries. Metal sales were $129.8 million, or 23% of Coeur’s metal sales, compared to $81.0 million, or 16% of Coeur’s metal sales. Costs applicable to sales per gold ounce decreased 2% due to higher production and lower diesel costs partially offset by higher equipment rental and outside service costs and a $3.3 million inventory write-down related to lower expected recoveries from leach pads 4 and 5. Amortization increased to $9.6 million due to higher ounces sold. Capital expenditures were $1.2 million. South Dakota’s public order mandating the closure of all public-facing businesses does not include Wharf. The Company implemented and continues to maintain strong health and safety protocols, aimed at limiting the exposure to, and transmission of, COVID-19 at Wharf. Silvertip Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Silver ounces produced — 299,624 139,287 882,055 Zinc pounds produced — 4,197,110 2,459,756 13,237,837 Lead pounds produced — 4,477,653 2,176,847 12,534,228 Silver ounces sold — 289,910 158,984 869,972 Zinc pounds sold — 4,076,390 3,203,446 14,101,967 Lead pounds sold — 4,330,862 2,453,485 12,264,343 Costs applicable to sales per silver ounce (2) — 32.92 NM (3) 29.09 Costs applicable to sales per zinc pound (2) — 1.74 NM (3) 2.24 Costs applicable to sales per lead ounce (2) — 1.74 NM (3) 1.62 (1) Operational results in the table above reflect performance prior to the temporary suspension of mining and processing activities in February 2020. (2) See Non-GAAP Financial Performance Measures. (3) Due to the temporary suspension of mining and processing activities these amounts are not meaningful. Silvertip temporarily suspended mining and processing activities (unrelated to COVID-19) in February 2020. Operational results in the table above reflect performance prior to the temporary suspension of mining and processing activities. Ongoing carrying and temporary suspension costs are included in Pre-development, reclamation, and other. Rotational schedules have been transitioned back to 14 days (previously 21 days) as a result of easing concerns related to COVID-19 in British Columbia. Liquidity and Capital Resources At September 30, 2020, the Company had $78.5 million of cash, cash equivalents and restricted cash and $209.5 million available under its RCF. Cash and cash equivalents increased $21.5 million in the nine months ended September 30, 2020, due to a 24% and 23% increase in average realized gold and silver prices, respectively, strong operational results from Wharf, lower capital expenditures, proceeds from the sale of Metalla Common Shares and a $20.0 million increase in the amount outstanding under the RCF, partially offset by lower ounces sold at Palmarejo, Rochester and Kensington, ongoing carrying costs at Silvertip and the payment of the cash portion of the contingent consideration of $18.8 million associated with the Silvertip acquisition. The Company has completed various scenario planning analyses to consider potential impacts of COVID-19 on its business, including volatility in commodity prices, temporary disruptions and/or curtailments of operating activities (voluntary or involuntary). To provide additional flexibility to respond to potential downside scenarios, the Company has been able to periodically draw and make repayments under its RCF throughout the first nine months of 2020 and at September 30, 2020 had $20.0 million outstanding under the RCF. Additionally, Coeur established the $100.0 million ATM Program during the second quarter as a means to proactively increase its financial flexibility during the current period of 48 volatility and uncertainty. At the date of this filing, the Company has yet to issue shares of its common stock under the ATM Program. Cash Provided by Operating Activities from Continuing Operations Net cash provided by operating activities for the three months ended September 30, 2020 was $79.5 million, compared to $42.0 million for the three months ended September 30, 2019. Net cash provided by operating activities for the nine months ended September 30, 2020 was $81.4 million, compared to $52.6 million for the nine months ended September 30, 2019. Adjusted EBITDA from continuing operations for the three months ended September 30, 2020 was $90.8 million, compared to $61.0 million for the three months ended September 30, 2019. Adjusted EBITDA from continuing operations for the nine months ended September 30, 2020 was $179.4 million, compared to $114.9 million for the nine months ended September 30, 2019 (see “Non-GAAP Financial Performance Measures”). Net cash used in operating activities was impacted by the following key factors for the applicable periods: Three Months Ended September 30, Nine Months Ended September 30, In thousands 2020 2019 2020 2019 Cash flow before changes in operating assets and liabilities $ 57,378 $ 30,976 $ 103,933 $ 76,617 Changes in operating assets and liabilities: Receivables (1,497) (3,350) (3,846) (20,709) Prepaid expenses and other (1,921) 1,375 (1,186) (2,143) Inventories (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) continuing operating activities $ 79,464 $ 41,996 $ 81,420 $ 52,585 Net cash provided by operating activities increased $37.5 million in the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to a 24% and 41% increase in average realized gold and silver prices, respectively, and lower metal inventory write-downs at Silvertip, partially offset by lower sales of gold and silver (5% and 14%, respectively). Revenue for the three months ended September 30, 2020 increased by $30.3 million, of which $49.2 million was the result of higher average realized gold and silver prices, partially offset by a decrease of $19.0 million due to lower volume of gold and silver sales. Net cash provided by operating activities increased $28.8 million in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due a 24% and 23% increase in average realized gold and silver prices, respectively, lower metal inventory write-downs at Silvertip, and the timing of VAT collection at Palmarejo, partially offset by payments for accounts payable at Silvertip, the receipt of prepayment for deliveries of concentrate from Kensington of $10.6 million in 2019 compared to the delivery of gold concentrate of $5.1 million in 2020, and lower sales of gold and silver (5% and 20%, respectively). Revenue for the nine months ended September 30, 2020 increased by $40.7 million, of which $99.7 million was the result of higher average realized gold and silver prices, partially offset by a decrease of $59.0 million due to lower volume of gold and silver sales. Cash Used in Investing Activities from Continuing Operations Net cash used in investing activities in the three months ended September 30, 2020 was $24.8 million compared to $29.7 million in the three months ended September 30, 2019. Cash used in investing activities decreased primarily due to lower capital expenditures, partially offset by the purchase of $2.5 million of additional Integra Common Shares. The Company had capital expenditures of $23.0 million in the three months ended September 30, 2020 compared with $30.7 million in the three months ended September 30, 2019. Capital expenditures in the three months ended September 30, 2020 were primarily related to the commencement of POA 11 construction activities at Rochester and underground development at Palmarejo and Kensington. Capital expenditures in the three months ended September 30, 2019 were primarily related to underground development at Silvertip, Palmarejo, and Kensington, a new thickener at Palmarejo, POA 11 and the new crushing circuit, including the HPGR unit, at Rochester. 49 Net cash used in investing activities in the nine months ended September 30, 2020 was $39.6 million compared to $66.7 million in the nine months ended September 30, 2019. Cash used in investing activities decreased primarily due to lower capital expenditures and net proceeds of $19.4 million from the sale of Metalla Common Shares. The Company had capital expenditures of $61.9 million in the nine months ended September 30, 2020 compared with $78.9 million in the nine months ended September 30, 2019. Capital expenditures in the nine months ended September 30, 2020 were primarily related to POA 11 at Rochester, which commenced construction activities during the third quarter, and underground development at Palmarejo and Kensington. Capital expenditures in the nine months ended September 30, 2019 were primarily related to underground development at Silvertip, Palmarejo, and Kensington, a new thickener at Palmarejo, POA 11 and the new crushing circuit, including the HPGR unit, at Rochester. Cash Provided by (Used in) Financing Activities from Continuing Operations Net cash used in financing activities in the three months ended September 30, 2020 was $48.4 million compared to net cash provided by financing activities of $16.3 million in the three months ended September 30, 2019. During the three months ended September 30, 2020, the Company repaid $40.0 million under the RCF. During the three months ended September 30, 2019, the Company received net proceeds of approximately $73.8 million from the sale of 14.2 million shares of its common stock, partially offset by the repayment $53.0 million, net, of outstanding amounts under the RCF. Net cash used in financing activities in the nine months ended September 30, 2020 was $20.6 million compared to $36.3 million in the nine months ended September 30, 2019. During the nine months ended September 30, 2020, the Company drew $20.0 million, net, from the RCF, and paid cash contingent consideration of $18.8 million associated with the Silvertip acquisition. During the nine months ended September 30, 2019, the Company repaid $135.0 million, net, of outstanding amounts under the RCF and received net proceeds of approximately $122.7 million from the sale of 30.9 million shares of its common stock. Critical Accounting Policies and Accounting Developments Please see Note 2 -- Summary of Significant Accounting Policies contained in the 2019 10-K and in Note 2 - Summary of Significant Accounting Policies contained in this Report for the Company’s critical accounting policies and estimates. Other Liquidity Matters We believe that our liquidity and capital resources in the U.S. are adequate to fund our U.S. operations and corporate activities. The Company has asserted indefinite reinvestment of earnings from its Mexican operations as determined by management’s judgment about and intentions concerning the future operations of the Company. The Company does not believe that the amounts reinvested will have a material impact on liquidity. In order to reduce indebtedness, future cash interest payments and/or amounts due at maturity or upon redemption and for general working capital purposes, from time-to-time we may (1) issue equity securities for cash in public or private offerings or (2) repurchase certain of our debt securities for cash or in exchange for other securities, which may include secured or unsecured notes or equity, in each case in open market or privately negotiated transactions. We evaluate any such transactions in light of prevailing market conditions, liquidity requirements, contractual restrictions, and other factors. The amounts involved may be significant and any debt repurchase transactions may occur at a substantial discount to the debt securities’ face amount. Non-GAAP Financial Performance Measures Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles (“GAAP”). Unless otherwise noted, we present the Non-GAAP financial measures of our continuing operations in the tables below. For additional information regarding our discontinued operations, see Note 18 -- to the Consolidated Financial Statements. These measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP. 50 Adjusted Net Income (Loss) Management uses Adjusted net income (loss) to evaluate the Company’s operating performance, and to plan and forecast its operations. The Company believes the use of Adjusted net income (loss) reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies. Management’s determination of the components of Adjusted net income (loss ) are evaluated periodically and is based, in part, on a review of non-GAAP financial measures used by mining industry analysts. The tax effect of adjustments are based on statutory tax rates and the Company’s tax attributes, including the impact through the Company’s valuation allowance. The combined effective rate of tax adjustments may not be consistent with the statutory tax rates or the Company’s effective tax rate due to jurisdictional tax attributes and related valuation allowance impacts which may minimize the tax effect of certain adjustments and may not apply to gains and losses equally. Adjusted net income (loss) is reconciled to Net income (loss) in the following table: Three Months Ended September 30, Nine Months Ended September 30, In thousands except per share amounts 2020 2019 2020 2019 Net income (loss) $ 26,856 $ (14,277) $ 13,747 $ (70,242) (Income) loss from discontinued operations, net of tax — — — (5,693) Fair value adjustments, net (2,243) (4,377) (3,491) (8,201) Foreign exchange loss (gain) 1,233 2,022 (4,761) 4,167 (Gain) loss on sale of assets and securities 2,476 100 2,093 120 Silvertip inventory write-down 1,232 13,966 13,717 41,285 Wharf inventory write-down — — 3,323 — Loss on debt extinguishment — 1,282 — 1,282 Silvertip temporary suspension costs 838 — 6,073 — Silvertip lease modification — — (4,051) — Silvertip gain on contingent consideration — — (955) — Novation 3,819 — 3,819 — COVID-19 costs 4,037 — 10,418 — Receivable write-down — 1,040 — 1,040 Interest income on notes receivables — — — (198) Tax effect of adjustments (1)(2) — (5,096) — (14,843) Adjusted net income (loss) $ 38,248 $ (5,340) $ 39,932 $ (51,283) Adjusted net income (loss) per share - Basic $ 0.16 $ (0.02) $ 0.17 $ (0.24) Adjusted net income (loss) per share - Diluted $ 0.16 $ (0.02) $ 0.17 $ (0.24) (1) For the three months ended September 30, 2019, tax effect of adjustments of $5.1 million (42%) is primarily related to the write-down of Silvertip inventory. (2) For the nine months ended September 30, 2019, tax effect of adjustments of $14.8 million (42%) is primarily related to the write-down of Silvertip inventory. EBITDA and Adjusted EBITDA Management uses EBITDA to evaluate the Company’s operating performance, to plan and forecast its operations, and assess leverage levels and liquidity measures. The Company believes the use of EBITDA reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies. Adjusted EBITDA is a measure used in indenture governing the 2024 Senior Notes and the RCF to determine our ability to make certain payments and incur additional indebtedness. EBITDA and Adjusted EBITDA do not represent, and should not be considered an alternative to, Net income (Loss) or Cash Flow from Operations as determined under GAAP. Other companies may calculate Adjusted EBITDA differently and those calculations may not be comparable to our presentation. Adjusted EBITDA is reconciled to Net income (loss) in the following table: 51 Three Months Ended September 30, Nine Months Ended September 30, In thousands except per share amounts 2020 2019 2020 2019 Net income (loss) $ 26,856 $ (14,277) $ 13,747 $ (70,242) (Income) loss from discontinued operations, net of tax — — — (5,693) Interest expense, net of capitalized interest 5,096 5,980 15,989 19,259 Income tax provision (benefit) 13,113 218 12,018 (13,986) Amortization 32,216 45,678 96,254 130,758 EBITDA 77,281 37,599 138,008 60,096 Fair value adjustments, net (2,243) (4,377) (3,491) (8,201) Foreign exchange (gain) loss 599 2,945 665 4,078 Asset retirement obligation accretion 2,968 3,080 8,724 9,030 Inventory adjustments and write-downs (230) 5,371 1,038 6,386 (Gain) loss on sale of assets and securities 2,476 100 2,093 120 Silvertip inventory write-down 1,232 13,966 13,717 41,285 Silvertip temporary suspension costs 838 — 6,073 — Silvertip lease modification — — (4,051) — Silvertip gain on contingent consideration — — (955) — COVID-19 costs 4,037 — 10,418 — Novation 3,819 — 3,819 — Wharf inventory write-down — — 3,323 — Loss on debt extinguishment — 1,282 — 1,282 Receivable write-down — 1,040 — 1,040 Interest income on notes receivables — — — (198) Adjusted EBITDA $ 90,777 $ 61,006 $ 179,381 $ 114,918 Free Cash Flow Management uses Free Cash Flow as a non-GAAP measure to analyze cash flows generated from operations. Free Cash Flow is Cash Provided By (used in) Operating Activities of Continuing Operations less Capital expenditures from continuing operations as presented on the Consolidated Statements of Cash Flows. The Company believes Free Cash Flow is also useful as one of the bases for comparing the Company’s performance with its competitors. Although Free Cash Flow and similar measures are frequently used as measures of cash flows generated from operations by other companies, the Company’s calculation of Free Cash Flow is not necessarily comparable to such other similarly titled captions of other companies. The following table sets forth a reconciliation of Free Cash Flow, a non-GAAP financial measure, to Cash Provided By (used in) Operating Activities of Continuing Operations , which the Company believes to be the GAAP financial measure most directly comparable to Free Cash Flow. Three Months Ended September 30, Nine Months Ended September 30, (Dollars in thousands) 2020 2019 2020 2019 Cash flow from continuing operations $ 79,464 $ 41,996 $ 81,420 $ 52,585 Capital expenditures from continuing operations 22,996 30,678 61,886 78,865 Free cash flow $ 56,468 $ 11,318 $ 19,534 (26,280) 52 Costs Applicable to Sales Management uses CAS to evaluate the Company’s current operating performance and life of mine performance from discovery through reclamation. We believe these measures assist analysts, investors and other stakeholders in understanding the costs associated with producing gold, silver, zinc and lead, assessing our operating performance and ability to generate free cash flow from operations and sustaining production. These measures may not be indicative of operating profit or cash flow from operations as determined under GAAP. Management believes that allocating CAS to gold, silver, zinc and lead based on gold, silver, zinc and lead metal sales relative to total metal sales best allows management, analysts, investors and other stakeholders to evaluate the operating performance of the Company. Other companies may calculate CAS differently as a result of reflecting the benefit from selling non-silver metals as a by-product credit, converting to silver equivalent ounces, and differences in underlying accounting principles and accounting frameworks such as in International Financial Reporting Standards. Three Months Ended September 30, 2020 In thousands except per ounce or per pound amounts Palmarejo Rochester Kensington Wharf Silvertip Total Costs applicable to sales, including amortization (U.S. GAAP) $ 46,163 $ 22,382 $ 43,053 $ 31,887 $ 1,185 $ 144,670 Amortization (11,912) (3,278) (11,523) (4,000) (1,185) (31,898) Costs applicable to sales $ 34,251 $ 19,104 $ 31,530 $ 27,887 $ — $ 112,772 Metal Sales Gold ounces 27,252 6,834 27,815 33,382 95,283 Silver ounces 1,765,371 785,887 40,521 — 2,591,779 Zinc pounds — — Lead pounds — — Costs applicable to sales Gold ($/oz) $ 603 $ 1,118 $ 1,134 $ 805 Silver ($/oz) $ 10.09 $ 14.58 $ — Zinc ($/lb) $ — Lead ($/lb) $ — Three Months Ended September 30, 2019 In thousands except per ounce or per pound amounts Palmarejo Rochester Kensington Wharf Silvertip Total Costs applicable to sales, including amortization (U.S. GAAP) $ 53,237 $ 31,999 $ 43,085 $ 25,385 $ 32,457 $ 186,163 Amortization (15,840) (4,250) (13,552) (3,301) (8,268) (45,211) Costs applicable to sales $ 37,397 $ 27,749 $ 29,533 $ 22,084 $ 24,189 $ 140,952 Metal Sales Gold ounces 32,731 7,651 35,452 24,573 100,407 Silver ounces 1,747,250 951,043 16,612 289,910 3,004,815 Zinc pounds 4,076,390 4,076,390 Lead pounds 4,330,862 4,330,862 Costs applicable to sales Gold ($/oz) $ 663 $ 1,487 $ 833 $ 887 Silver ($/oz) $ 8.99 $ 17.21 $ 32.92 Zinc ($/lb) $ 1.74 Lead ($/lb) $ 1.74 53 Nine Months Ended September 30, 2020 In thousands except per ounce or per pound amounts Palmarejo Rochester Kensington Wharf Silvertip Total Costs applicable to sales, including amortization (U.S. GAAP) $ 121,407 $ 63,590 $ 128,717 $ 77,807 $ 25,418 $ 416,939 Amortization (32,357) (9,194) (36,298) (9,625) (7,761) (95,235) Costs applicable to sales $ 89,050 $ 54,396 $ 92,419 $ 68,182 $ 17,657 $ 321,704 Metal Sales Gold ounces 75,463 17,585 92,963 72,840 258,851 Silver ounces 4,534,802 2,141,803 77,996 158,984 6,913,585 Zinc pounds 3,203,446 3,203,446 Lead pounds 2,453,485 2,453,485 Costs applicable to sales Gold ($/oz) $ 637 $ 1,299 $ 994 $ 914 Silver ($/oz) $ 9.03 $ 14.73 NM (1) Zinc ($/lb) NM (1) Lead ($/lb) NM (1) (1) Due to the temporary suspension of mining and processing activities these amounts are not meaningful. Nine Months Ended September 30, 2019 In thousands except per ounce or per pound amounts Palmarejo Rochester Kensington Wharf Silvertip Total Costs applicable to sales, including amortization (U.S. GAAP) $ 151,717 $ 87,146 $ 128,657 $ 63,149 $ 103,306 $ 533,975 Amortization (44,580) (12,250) (37,816) (8,207) (26,572) (129,425) Costs applicable to sales $ 107,137 $ 74,896 $ 90,841 $ 54,942 $ 76,734 $ 404,550 Metal Sales Gold ounces 88,152 24,804 101,202 57,960 272,118 Silver ounces 4,862,065 2,913,130 43,028 869,972 8,688,195 Zinc pounds 14,101,967 14,101,967 Lead pounds 12,264,343 12,264,343 Costs applicable to sales Gold ($/oz) $ 705 $ 1,268 $ 898 $ 936 Silver ($/oz) $ 9.25 $ 14.91 $ 29.09 Zinc ($/lb) $ 2.24 Lead ($/lb) $ 1.62 54 Reconciliation of Costs Applicable to Sales for 2020 Guidance In thousands except per ounce or per pound amounts Palmarejo Rochester Kensington Wharf Costs applicable to sales, including amortization (U.S. GAAP) $ 179,529 $ 102,554 $ 175,424 $ 94,989 Amortization (44,409) (14,561) (52,201) (11,600) Costs applicable to sales $ 135,120 $ 87,993 $ 123,223 $ 83,389 By-product credit — — — (2,058) Adjusted costs applicable to sales $ 135,120 $ 87,993 $ 123,223 $ 81,331 Metal Sales Gold ounces 106,500 31,400 126,700 89,500 Silver ounces 6,400,000 3,600,000 95,000 Revenue Split Gold 52 % 43 % 100 % 100 % Silver 48 % 57 % — — Costs applicable to sales Gold ($/oz) $650 - $750 $1,150 - $1,300 $900 - $1,000 $875 - $925 Silver ($/oz) $9.50 - $10.50 $13.50 - $14.75 Reconciliation of Costs Applicable to Sales for Previous 2020 Guidance In thousands except per ounce or per pound amounts Palmarejo Rochester Kensington Wharf Costs applicable to sales, including amortization (U.S. GAAP) $ 178,977 $ 105,053 $ 178,595 $ 94,142 Amortization (42,220) (15,177) (54,009) (11,202) Costs applicable to sales $ 136,757 $ 89,876 $ 124,586 $ 82,940 By-product credit — — — (998) Adjusted costs applicable to sales $ 136,757 $ 89,876 $ 124,586 $ 81,942 Metal Sales Gold ounces 97,800 32,000 132,800 84,900 Silver ounces 6,300,000 3,800,000 60,350 Revenue Split Gold 56 % 46 % 100 % 100 % Silver 44 % 54 % — — Costs applicable to sales Gold ($/oz) $785 - $885 $1,250 - $1,400 $900 - $1,000 $950 - $1,000 Silver ($/oz) $9.50 - $10.50 $12.75 - $14.00 55 Cautionary Statement Concerning Forward-Looking Statements This report contains numerous forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) relating to the Company’s gold, silver, zinc and lead mining business, including statements regarding anticipated production, costs and expenses, operations at the Company’s mines, exploration and development efforts, including the filing of an updated technical report for Rochester, COVID-19 planning, response and mitigation efforts, expectations regarding the Company's mines, hedging strategies, realization of deferred tax assets, expectations about the recovery of VAT in Mexico, timing of completion of obligations under the Amended Sales Contract at Kensington, staffing levels, liquidity management, financing plans, and risk management strategies. Such forward-looking statements are identified by the use of words such as “believes,” “intends,” “expects,” “hopes,” “may,” “should,” “plan,” “projected,” “contemplates,” “anticipates” or similar words. Actual results could differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ materially from those projected in the forward-looking statements include (i) the risk factors set forth in Part II, Item 1A of this report and in “Risk Factors” section of the 2019 10-K, the risk factors set forth in the report on Form 10-Q for the quarterly periods ended March 31, 2020 and June 30, 2020, and the risks set forth in this MD&A and Item 3 of this report, (ii) the risks and hazards inherent in the mining business (including risks inherent in developing large-scale mining projects, environmental hazards, industrial accidents, weather or geologically related conditions), (iii) changes in the market prices of gold, silver, zinc and lead and a sustained lower price or higher treatment and refining charge environment, (iv) the uncertainties inherent in the Company’s production, exploratory and developmental activities, including risks relating to permitting and regulatory delays (including the impact of government shutdowns), ground conditions and grade variability, (v) any future labor disputes or work stoppages (involving the Company and its subsidiaries or third parties), (vi) the uncertainties inherent in the estimation of mineral reserves and mineralized material, (vii) changes that could result from the Company’s future acquisition of new mining properties or businesses, (viii) the loss of access to any third-party smelter to whom the Company markets its production, (ix) the potential effects of the COVID-19 pandemic, including impacts to the availability of our workforce, continued access to financing sources, government orders that may require temporary suspension of operations at one or more of our sites and effects on our suppliers or the refiners and smelters to whom the Company markets its production, (x) the effects of environmental and other governmental regulations, (xi) the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries, and (xii) the Company’s ability to raise additional financing necessary to conduct its business, make payments or refinance its debt. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.