What changed in this filing

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Item 7. Management’s Discussion and Analysis

2021-02-17 compared with 2020-02-19 · 318 added, 216 removed, 451 unchanged (54% of the section changed)

6 unchanged sentences

Revenue from secondary metal, such as silver at Wharf, is treated as a cost credit.

We are primarily a gold and silver producer with five operating mines located in the United States, Canada and Mexico and several exploration projects in North America.

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.

2020 Highlights

For the full year, Coeur reported revenue of $785.5 million and cash flow from operating activities of $148.7 million.

Including non-cash write downs totaling $320.0 million, the Company reported GAAP net loss from continuing operations of $346.9 million , or $1.59 per share.

On an adjusted basis 1 , the Company reported EBITDA of $173.9 million and net loss from continuing operations of $54.6 million , or $0.25 per share.

Solid improvement in annual financial results - Revenue, operating cash flow and adjusted EBITDA 1 increased 14% , 357% and 11% , respectively, in 2019.

The year-over-year improvement in financial results reflects solid performance from the Company’s primary gold operations as well as higher precious metals prices in 2019

Three consecutive quarters of increasing, positive free cash flow 1 - Coeur generated $39.3 million of operating cash flow and $18.4 million of free cash flow 1 during the fourth quarter, representing a 63% increase in free cash flow 1 compared to the prior period and a $36.1 million improvement in free cash flow 1 compared to the fourth quarter of 2018.

The third consecutive quarter of increasing, positive free cash flow 1 was primarily driven by strong performance from Palmarejo, Kensington and Wharf operations

Positive results from high-pressure grinding roll (“HPGR”) unit at Rochester - 60-day silver recovery rates from HPGR-crushed ore are in-line with prior test work and appear significantly better than recoveries from traditionally-crushed material.

Permitting and planning for Plan of Operations Amendment 11 (“POA 11”) expansion advancing on-schedule

$250.8 million impairment and temporarily suspending commercial activities at Silvertip - Reduction in carrying value of long-lived assets to approximately $150 million and temporary suspension of mining and processing activities driven by further deterioration in zinc and lead market conditions as well as processing facility-related challenges.

The Company plans to (i) double its exploration investment in 2020 to potentially further expand the mineralized material and extend the mine life, and (ii) pursue a mill expansion to improve the asset’s cost structure and its ability to deliver sustainable cash flow

Success from 2019 exploration campaign delivers mineralization growth - The Company focused its exploration efforts primarily on expansion drilling in 2019.

Measured and indicated mineralized material increased across all metals were higher year-over-year.

Proven and probable silver reserves also increased, while zinc and lead reserves were consistent year-over-year

Over $160.0 million reduction in total debt - The Company ended the year with $295.5 million in total debt, compared to $458.8 million at the end of 2018.

The 36% reduction in total debt 2 reflects the results of Coeur’s deleveraging initiatives and improved financial performance during 2019

We reported GAAP net income from continuing operations of $25.6 million, or $0.11 per diluted share.

On an adjusted basis 1 , the Company reported EBITDA of $263.4 million and net income from continuing operations of $59.0 million, or $0.24 per diluted share.

• Strong second half drove solid full-year 2020 financial results - Revenue, operating cash flow and adjusted EBITDA 1 increased 10%, 62% and 51%, respectively, in 2020.

Additionally, we generated $49.4 million of free cash flow 1 during the year.

These notable year-over-year improvements reflect strong operational performance and the benefit of higher precious metals prices during the second half of 2020

• Solid production in-line with full-year guidance ranges - Coeur successfully achieved its consolidated and site-level production guidance for both gold and silver.

Gold production in the fourth quarter remained strong at 96,377 ounces, bringing the full-year total to 355,678 ounces.

Silver production increased 11% quarter-over-quarter to approximately 2.8 million ounces, largely due to a 38% improvement at Rochester, which helped to drive full-year production to roughly 9.7 million ounces

• Maintained cost and capital discipline - Substantially all of our site-level unit costs were below or within full-year guidance ranges, reflecting prudent cost management during 2020.

Additionally, consolidated figures for capital expenditures, exploration, and general and administrative expenses were also below or within full-year guidance ranges

• Rochester expansion project expected to reposition operation as cornerstone asset - Late in the fourth quarter, Coeur published an updated technical report for its Rochester mine in Nevada which reflects significant reserve growth and the benefits of a larger-scale expansion project.

The 18-year, reserve-based mine plan has an expected after-tax net asset value of $634 million with an anticipated internal rate of return of 31%

• Largest exploration program in Company history led to strong reserve growth - We completed the largest exploration program in its history during 2020, increasing its investment by 68% to $50.6 million and drilling approximately 783,200 feet (238,700 meters).

Proven and probable gold and silver reserves increased 22% and 42%, respectively, while measured and indicated mineralized material were higher across all metals for the second consecutive year.

Additionally, strong drilling results at Silvertip helped to significantly expand zinc and lead mineralized material, marking the largest and most successful exploration program in the history of the project

• C ontinued enhancing balance sheet and increasing financial flexibility - Coeur ended the year with $92.8 million of cash and cash equivalents, 20% and 67% higher quarter-over-quarter and year-over-year, respectively.

The Company also increased the aggregate capacity of the RCF from $250.0 million to $300.0 million and repaid the remaining outstanding borrowings under the facility.

Total debt 3 at the end of the year was $275.5 million, compared to $295.5 million at the end of 2019

Selected Financial and Operating Results

Year Ended December 31,

In thousands 2020 2019 2018

Financial Results from Continuing Operations:

Gold sales $ 584,633 $ 493,347 $ 427,008

Silver sales $ 200,175 $ 191,478 $ 193,153

Zinc sales $ (662) $ 12,806 $ 3,612

Lead sales $ 1,315 $ 13,871 $ 2,131

Consolidated Revenue $ 785,461 $ 711,502 $ 625,904

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Adjusted net income (loss) (1)

$ 59,013 $ (54,583) $ (2,165)

Adjusted net income (loss) per share, diluted (1)

$ 0.24 $ (0.25) $ (0.01)

$ 214,767 $ (154,378) $ 87,102

Adjusted EBITDA (1)

$ 263,365 $ 173,854 $ 157,309

Total debt (2)

$ 275,501 $ 295,497 $ 458,826

Operating Results from Continuing Operations:

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Average realized price per silver ounce $ 20.79 $ 16.07 $ 15.63

Average realized price per zinc pound, gross

Average realized price per lead pound, gross

Average realized price per zinc pound, gross NM (3)

$ 0.71 $ 0.83

Average realized price per lead pound, gross NM (3)

$ 0.84 $ 0.80

Financial and Operating Results from Discontinued Operations:

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(1) See “Non-GAAP Financial Performance Measures.”

(2) Includes capital leases.

(2) Includes finance leases.

Net of debt issuance costs and premium received.

(3) Reported production and financial results include operations through February 28, 2018.

(3) Due to the temporary suspension of mining and processing activities at Silvertip these amounts are not meaningful.

Consolidated Financial Results

Year Ended December 31, 2020 compared to Year Ended December 31, 2019

Revenue increased by $74.0 million or 10%, as a result of a 22% and 29% increase in average realized gold and silver prices, respectively, partially offset by lower gold and silver ounces sold (3% and 19%, respectively), recovery delays at Rochester and the temporary suspension of mining and processing activities at Silvertip in February.

We sold 356,251 gold ounces, 9.6 million silver ounces, 3.2 million zinc pounds and 2.5 million lead pounds compared to 367,650 gold ounces, 11.9 million silver ounces, 18.2 million zinc pounds and 16.5 million lead pounds in the prior year.

Gold and silver accounted for 74% and 25% of 2020 sales revenue, respectively, with zinc and lead accounting for the remaining sales revenue.

This compares to gold and silver accounting for 69% and 27% of 2019 sales revenue.

The following table summarizes consolidated metal sales:

Year ended December 31, Increase (Decrease) Percentage Change

In thousands 2020 2019

Gold sales $ 584,633 $ 493,347 $ 91,286 19 %

Silver sales 200,175 191,478 8,697 5 %

Zinc sales (662) 12,806 (13,468) (105) %

Lead sales 1,315 13,871 (12,556) (91) %

Metal sales $ 785,461 $ 711,502 $ 73,959 10 %

Costs Applicable to Sales

Costs applicable to sales decreased primarily due to the temporary suspension at Silvertip and lower ounces sold at Palmarejo and Rochester.

For a complete discussion of costs applicable to sales, see Results of Operations below.

Amortization decreased $47.5 million, or 27%, primarily due to the temporary suspension at Silvertip, and longer assumed mine life based on year-end 2019 reserve growth at Palmarejo and lower ounces sold at Palmarejo and Rochester.

General and administrative expenses decreased $0.8 million, or 2%, primarily due to lower travel costs.

Exploration expense increased $20.1 million, or 89%, as a result of the decision to implement the largest drilling program in Company history.

The Company completed 617,500 feet (188,225 meters) of expansion drilling and 165,700 feet (50,475 meters) of infill drilling in 2020 compared to 342,500 (104,425 meters) of expansion drilling and 181,600 feet (55,350 meters) of infill drilling in 2019.

Pre-development, reclamation, and other expenses increased $37.2 million, or 202%, 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, partially offset by a gain resulting from the modification of a right of use lease at Silvertip.

The following table summarizes pre-development, reclamation, and other expenses:

Year ended December 31, Increase (Decrease) Percentage Change

In thousands 2020 2019

COVID-19 $ 15,555 $ — $ 15,555 100 %

Silvertip ongoing carrying costs 16,384 — 16,384 100 %

Silvertip temporary suspension costs 11,199 — 11,199 100 %

Gain on modification of right of use lease (4,051) — (4,051) 100 %

Asset retirement accretion 11,754 12,154 (400) (3) %

Other 4,813 6,267 (1,454) (23) %

Pre-development, reclamation and other expense $ 55,654 $ 18,421 $ 37,233 202 %

Other Income and Expenses

Fair value adjustments, net, decreased to a gain of $7.6 million compared to $16.0 million as a result of changes in value related to the Company’s equity investments, primarily Integra Resources Corp.

("Integra Resources") and Metalla Royalty & Streaming Ltd.

("Metalla"), which had estimated fair values of $11.9 million and $1.0 million, respectively, at December 31, 2020.

Interest expense (net of capitalized interest of $1.5 million) decreased to $20.7 million from $24.8 million due to a lower interest rate paid under the RCF and lower average balances of both the RCF and 2024 Senior Notes.

Other, net increased to a loss of $5.9 million compared to a loss of $3.2 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

The Company’s Income and mining tax (expense) benefit consisted of:

Year ended December 31,

In thousands 2020 2019

Income and mining tax (expense) benefit at statutory rate $ (13,161) $ 75,185

State tax provision from continuing operations (152) 1,243

Change in valuation allowance (17,522) (77,220)

Percentage depletion 5,056 820

Uncertain tax positions 2,321 2,358

and foreign permanent differences 3,844 2,272

Foreign exchange rates 1,390 (7,066)

Foreign inflation and indexing 684 (2,933)

Foreign tax rate differences (3,971) 19,729

Mining, foreign withholding, and other taxes (17,457) (2,746)

Other, net 1,923 (513)

Income and mining tax (expense) benefit $ (37,045) $ 11,129

Income and mining tax expense of approximately $37.0 million resulted in an effective tax rate of 59.1% for 2020.

This compares to income tax benefit of $11.1 million or effective tax rate of 3.1% 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) percentage depletion;

(vi) the non-recognition of tax assets;

and (vii) the impact of uncertain tax positions.

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:

Year ended December 31,

In thousands Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit

United States $ 40,891 $ (9,361) $ (16,702) $ (5,446)

Canada (68,730) 232 (365,781) 32,203

Mexico 90,116 (27,949) 25,002 (15,625)

Other jurisdictions 395 33 (544) (3)

$ 62,672 $ (37,045) $ (358,025) $ 11,129

A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized.

The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance.

Conversely, if it is determined that the Company will ultimately be more likely than not able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced.

There are a number of factors that impact the Company’s ability to realize its deferred tax assets.

For additional information, please see the section titled “Risk Factors” included in Item 1A.

Net Income (Loss) from Continuing Operations

Net income from continuing operations was $25.6 million, or $0.11 per diluted share, compared to net loss of $346.9 million, or $1.59 per share.

The increase in net income from continuing operations was driven by strong operating results at Wharf and Palmarejo, a 22% and 29% increase in average realized gold and silver prices, respectively, lower operating costs at Rochester and Silvertip, and an impairment of long-lived assets at Silvertip of $250.8 million in 2019.

This was partially offset by lower sales of gold and silver (3% and 19%, 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 $59.0 million, or $0.24 per diluted share, compared to adjusted net loss of $54.6 million, or $0.25 per share (see “Non-GAAP Financial Performance Measures”).

Year Ended December 31, 2019 compared to Year Ended December 31, 2018

Revenue increased by $85.6 million as a result of a 5% increase in gold ounces sold, combined with a 10% increase in average realized gold prices and the inclusion of full-year sales from the Jualin deposit at Kensington and Silvertip, partially offset by 4% fewer silver ounces sold.

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The following table summarizes consolidated metal sales:

Year ended December 31,

Year ended December 31, Increase (Decrease) Percentage Change

In thousands 2019 2018

Gold sales $ 493,347 $ 427,008 $ 66,339 16 %

Silver sales 191,478 193,153 (1,675) (1) %

Zinc sales 12,806 3,612 9,194 255 %

Lead sales 13,871 2,131 11,740 551 %

Metal sales $ 711,502 $ 625,904 $ 85,598 14 %

Costs Applicable to Sales

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Amortization increased $50.4 million, or 39%, resulting from the inclusion of full-year sales at Silvertip and higher sales at Kensington.

General and administrative expenses increased $3.1 million , or 10% , primarily due to higher employee related expenses and higher legal fees.

General and administrative expenses increased $3.1 million, or 10%, primarily due to higher employee related expenses and legal fees.

Exploration expense decreased $2.9 million, or 11%, as a result of lower near-mine exploration costs at Palmarejo, Kensington and Silvertip as well as lower greenfields explorations expense in the United States and Mexico, partially offset by exploration expense at the Sterling/Crown project located in southern Nevada.

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As a result of the impairment indicators, a recoverability test was performed and the Company concluded that the carrying value of the long-lived assets for the Silvertip property was impaired.

The following table summarizes pre-development, reclamation, and other expenses:

Year ended December 31, Increase (Decrease) Percentage Change

In thousands 2019 2018

Asset retirement accretion $ 12,154 $ 11,116 $ 1,038 9 %

Other 6,267 8,927 (2,660) (30) %

Pre-development, reclamation and other expense 18,421 20,043 $ (1,622) (8) %

Other Income and Expenses

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Year ended December 31,

In thousands 2019 2018

Income and mining tax (expense) benefit at statutory rate $ 75,185 $ 14,052

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Mining, foreign withholding, and other taxes (2,746) (3,857)

Other, net (513) 2,968

Income and mining tax (expense) benefit $ 11,129 $ 16,780

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Year ended December 31,

Income (loss) before tax

Tax (expense) benefit

Income (loss) before tax

Tax (expense) benefit

In thousands Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit

United States $ (16,702) $ (5,446) $ (50,522) $ 16,819

Canada (365,781) 32,203 (43,793) 16,436

Mexico 25,002 (15,625) 32,073 (16,092)

Other jurisdictions (544) (3) (3,493) (383)

$ (358,025) $ 11,129 $ (65,735) $ 16,780

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:

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Net Income (loss) from Discontinued Operations

In respect of the San Bartolomé mine and processing facility’s (which was divested by the Company in February 2018, “Manquiri Divestiture”) operating results, income increased $5.1 million .

In respect of the San Bartolomé mine and processing facility’s (which was divested by the Company in February 2018, the “Manquiri Divestiture”) operating results, income increased $5.1 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.

Year Ended December 31, 2018 compared to Year Ended December 31, 2017

Revenue decreased by $83.7 million as a result of fewer gold (15%) and silver (3%) ounces sold and an 8% decrease in average realized silver prices, partially offset by an increase in average realized gold prices (1%) and sales from Silvertip, which commenced commercial production in September 2018.

The Company sold 12.4 million silver ounces, 350,508 gold ounces, 4.4 million zinc pounds and 2.6 million lead pounds compared to 12.7 million silver ounces and 410,604 gold ounces in the prior year.

Gold contributed 68% of sales, silver contributed 31%, zinc contributed 1% and lead contributed less than 1% , compared to 70% of sales from gold and 30% from silver.

Costs Applicable to Sales

Costs applicable to sales remained comparable despite lower ounces sold due to a $26.7 million write-down of inventory at Silvertip, higher costs applicable to sales per gold ounce at Wharf and Kensington, partially offset by lower costs applicable to sales per silver ounce at Palmarejo.

For a complete discussion of costs applicable to sales, see Results of Operations below.

Amortization decreased $18.1 million, or 12%, due to fewer ounces sold at all operating sites.

General and administrative expenses decreased $2.3 million, or 7%, primarily due to lower compensation costs.

Exploration expense decreased $4.9 million, or 16%, as a result of lower exploration costs at Palmarejo, Rochester, Kensington and La Preciosa as the Company focused its exploration efforts on capitalized infill conversion drilling in 2018.

Pre-development, reclamation, and other expenses increased $1.1 million, or 6%, of which $3.4 million is attributable to the write-down of property, plant and equipment at Rochester.

Other Income and Expenses

Fair value adjustments, net, were a gain of $3.6 million due to a a net gain on equity securities of $3.0 million coupled with favorable fair value adjustment of zinc options.

Effective January 1, 2018, as a result of ASU 2016-01, changes in the fair value of equity investments are recognized as fair value adjustments instead of other comprehensive income (loss) in the Consolidated Statements of Comprehensive Income (Loss).

Interest expense (net of capitalized interest of $1.2 million) increased to $24.4 million from $16.4 million, due to higher average debt levels related to the 2024 Senior Notes and the Facility (each, as defined below).

Other, net was an expense of $24.7 million, as a result of the $18.6 million write-down of the receivable consideration from the Manquiri Divestiture, unfavorable foreign exchange rate movements, a write-down of $6.5 million related to the RMC receivable, partially offset by gains on the sale of non-core assets and investments in 2017.

Income and Mining Taxes

The Company’s Income and mining tax (expense) benefit consisted of:

Year ended December 31,

Income and mining tax (expense) benefit at statutory rate

State tax provision from continuing operations

Change in valuation allowance

Effect of tax legislation

Percentage depletion

Uncertain tax positions

and foreign permanent differences

Foreign exchange rates

Foreign inflation and indexing

Foreign tax rate differences

Mining, foreign withholding, and other taxes

Income and mining tax (expense) benefit

Income and mining tax benefit of approximately $16.8 million results in an effective tax rate of 26% for 2018.

This compares to income tax expense of $29.0 million or effective tax rate of 73% for 2017.

The Company’s effective tax rate is impacted by multiple factors as illustrated above.

The comparability of the Company’s income and mining tax (expense) benefit for the reported periods was primarily impacted by (i) variations in our income before income taxes;

(ii) geographic distribution of that income;

(iii) foreign exchange rates;

(iv) mining taxes;

(v) the non-recognition of tax assets and (vi) the impact of specific transactions.

Therefore, the effective tax rate will fluctuate, sometimes significantly, year to year.

The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit:

Year ended December 31,

Income (loss) before tax

Tax (expense) benefit

Income (loss) before tax

Tax (expense) benefit

United States

Other jurisdictions

A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related benefits will not be realized.

The Company analyzes its deferred tax assets and if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance.

Conversely, if it is determined that the Company will ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced.

There are a number of risk factors that could impact the Company’s ability to realize its deferred tax assets.

The utilization of U.S.

net operating loss carryforwards, tax credit carryforwards, and recognized built-in losses may be subject to limitation under the rules regarding a change in stock ownership as determined by the Internal Revenue Code and state tax laws.

Section 382 of the Internal Revenue Code of 1986, as amended, imposes annual limitations on the utilization of net operating loss carryforwards, tax credit carryforwards, and certain built-in losses upon an ownership change as defined under that Section.

Generally, an ownership change may result from transactions that increase the aggregate ownership of certain shareholders in the Company’s stock by more than 50 percentage points over a three-year testing period.

If the Company experiences an ownership change, an annual limitation would be imposed on certain of the Company’s tax attributes, including net operating losses and certain other losses, credits, deductions or tax basis.

Management has determined that the Company experienced ownership changes, for purposes of 382, during 2002, 2003, 2007, and 2015.

Based on management’s calculations, the Company

does not expect any of its U.S.

tax attributes to expire unused as a result of the Section 382 annual limitations.

However, the annual limitations may impact the timeframe over which the net operating loss carryforwards can be used, potentially impacting cash tax liabilities in a future period.

federal tax credits and state net operating losses may potentially be limited as well.

We continue to maintain a full valuation allowance on our U.S.

net deferred tax assets since it is more likely than not that the related tax benefits will not be realized.

The Company may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership.

As a result, if the Company earns U.S.

federal taxable income, it may be limited in the ability to (1) recognize current deductions on built-in loss assets and (2) offset this income with our pre-change net operating loss carryforwards and other tax credit carryforwards, which may be subject to limitations, potentially resulting in increased future tax liability to us.

Under the new U.S.

federal income tax law, federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such federal net operating losses is limited to 80% of future taxable income.

Net Income (Loss) from Continuing Operations

Net loss from continuing operations was $49.0 million, or $0.26 per share, compared to net income of $10.9 million, or $0.06 per share.

The decrease in net income from continuing operations was impacted by lower operating margin that includes a write-down of $26.7 million at Silvertip of metal inventory as a result of lower than expected production levels, grades and recovery rates as well as reduced process plant availability and unfavorable changes in average realized silver prices, a write-down of $18.6 million on the consideration received from the Manquiri Divestiture, a receivable write-down of $6.5 million related to the RMC bankruptcy, a write-down of $3.4 million of property, plant and equipment at Rochester and higher interest expense.

Net Income (loss) from Discontinued Operations

In respect of San Bartolomé’s operating results, income increased $12.8 million, due to a $1.5 million gain on the sale of San Bartolomé in 2018, partially offset by lower production and higher unit costs.

2021 Guidance Framework

2021 Production Guidance

95,000 - 110,000

6,300 - 7,800

27,000 - 33,000

4,000 - 5,500

115,000 - 130,000

80,000 - 90,000

317,000 - 363,000

10,300 - 13,300

Palmarejo 100,000 - 110,000 6,500 - 7,750

Rochester 22,500 - 32,500 3,200 - 4,400

Kensington 115,000 - 130,000 —

Wharf 85,000 - 95,000 —

Total 322,500 - 367,500 9,700 - 12,150

2021 Costs Applicable to Sales Guidance

($/oz) ($/oz)

Palmarejo (co-product) $710 - $810 $11.00 - $12.00

$10.35 - $11.35

Rochester (co-product) $1,180 - $1,330 $15.00 - $17.00

$1,175 - $1,325

$13.25 - $14.50

$900 - $1,000

Kensington $1,010 - $1,110 —

Wharf (by-product) $960 - $1,060 —

$1,025 - $1,125

2021 Capital, Exploration and G&A Guidance

4 unchanged sentences

General & Administrative Expenses $37 - $41

The Company’s guidance figures assume $1,520/oz gold, $17.25/oz silver, $1.00/lb zinc and $0.86/lb lead as well as CAD of 1.30 and MXN of 19.00.

The Company’s guidance figures assume $1,850/oz gold and $24.00/oz silver as well as CAD of 1.27 and MXN of 19.50.

Guidance figures exclude the impact of any metal sales or foreign exchange hedges.

Results of Continuing Operations

Year Ended December 31,

2020 2019 2018

Tons milled 1,751,525 1,755,957 1,382,471

Average gold grade (oz/t) 0.07 0.08 0.10

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Costs applicable to sales per gold ounce (1)

$ 610 $ 685 $ 561

Costs applicable to sales per silver ounce (1)

$ 9.14 $ 9.13 $ 7.64

(1) See Non-GAAP Financial Performance Measures.

Year Ended December 31, 2020 compared to Year Ended December 31, 2019

Gold and silver production decreased 1% and 7%, respectively, as a result of lower gold and silver grades, partially offset by higher gold and silver recovery.

In the second quarter, Palmarejo temporarily suspended active mining and processing activities in accordance with a COVID-related government decree.

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 as staffing levels returned to a pre-shutdown level.

Despite the temporary suspension, Palmarejo’s milled tons were in-line with the prior year.

Metal sales were $286.6 million, or 36% of Coeur’s metal sales, compared with $252.7 million, or 36% of Coeur’s metal sales.

Costs applicable to sales per gold ounce decreased 11% while costs applicable to sales per silver ounce remained comparable due to higher revenue contribution from silver sales compared to gold.

Additionally, favorable foreign exchange rates and lower compensation and consumable costs contributed to an overall favorable movement in costs applicable to sales.

Amortization decreased to $44.9 million due to longer assumed mine life based on year-end 2019 reserve growth and lower gold and silver ounces sold.

Capital expenditures decreased to $25.5 million from $32.7 million due to lower underground development and lower mining equipment expenditures.

Precious metals mining is considered an essential business activity in Mexico.

The Company is maintaining its rigorous health and safety protocols at Palmarejo aimed at limiting the exposure and transmission of COVID-19.

Year Ended December 31, 2019 compared to Year Ended December 31, 2018

Gold and silver production decreased 9% and 10% in line with Company guidance, respectively, resulting from lower gold and silver grades and lower gold and silver recoveries, partially offset by higher mined tons from Guadalupe, Independencia and the new La Nación underground mine, which began production in the third quarter of 2019.

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Amortization decreased to $59.4 million due to lower ounces sold.

Capital expenditures increased to $32.7 million from $29.4 million due to higher infrastructure expenditures at La Nacion.

Year Ended December 31, 2018 compared to Year Ended December 31, 2017

Gold and silver production increased 1% and 4%, respectively, resulting from higher silver and gold grades, which in turn, contributed to a 5% and 16% decrease in costs applicable to sales per gold and silver ounce, respectively.

Metal sales were $245.8 million, or 40% of Coeur’s metal sales, compared with $274.8 million, or 38% of Coeur’s metal sales.

Amortization decreased to $60.7 million primarily due to lower ounces sold.

Capital expenditures remained comparable at $29.4 million.

Capital expenditures focused on underground development at Guadalupe, Independencia and La Nacion, conversion drilling and the implementation of the new on-site absorption, desorption, and recovery plant.

Capital expenditures increased to $32.7 million from $29.4 million due to higher infrastructure expenditures at La Nación.

Year ended December 31,

2020 2019 2018

Tons placed 15,696,565 10,582,518 16,169,807

Average gold grade (oz/t) 0.002 0.003 0.004

5 unchanged sentences

Costs applicable to sales per gold ounce (1)

$ 1,377 $ 1,251 $ 941

Costs applicable to sales per silver ounce (1)

$ 16.35 $ 14.34 $ 11.54

(1) See Non-GAAP Financial Performance Measures.

Year Ended December 31, 2020 compared to Year Ended December 31, 2019

Gold and silver production decreased 23% and 16%, 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 from ore placed on newly constructed inter-lift liners in the first nine months of 2020.

Metal sales were $110.3 million, or 14% of Coeur’s metal sales, compared with $112.0 million, or 16% of Coeur’s metal sales.

Costs applicable to sales per gold and silver ounce increased 10% and 14%, respectively, driven by higher cyanide and outside service costs and a change in the Company’s recovery rate assumptions, in line with the updated technical report for Rochester filed in December 2020.

Amortization decreased to $14.3 million due to lower ounces sold.

Capital expenditures increased to $37.5 million from $22.6 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.

Year Ended December 31, 2019 compared to Year Ended December 31, 2018

Gold and silver production decreased 35% and 25%, respectively, due to lower placement rates caused by the planned commissioning of the new crushing circuit in the second half of 2019, unplanned downtime, and lower gold and silver grades.

3 unchanged sentences

Capital expenditures increased to $22.6 million from $9.9 million due to the commissioning of the new crushing circuit, including the HPGR unit, and POA 11 expansion related capital expenditures.

Year Ended December 31, 2018 compared to Year Ended December 31, 2017

Gold and silver production increased 7% due to the timing of recoveries, partially offset by lower tons placed, which were anticipated following the decommissioning of a crusher.

Metal sales were $141.8 million, or 23% of Coeur’s metal sales, compared with $152.7 million, or 22% of Coeur’s metal sales.

Costs applicable to sales and amortization remained comparable.

Capital expenditures decreased to $9.9 million from $40.9 million due to the completion of the Stage IV leach pad expansion in 2017.

Capital expenditures focused on the purchase of mining equipment.

Year ended December 31,

2020 2019 2018

Tons milled 675,731 658,378 641,058

Average gold grade (oz/t) 0.20 0.21 0.18

3 unchanged sentences

Costs applicable to sales per gold ounce (1)

$ 975 $ 917 $ 1,055

(1) See Non-GAAP Financial Performance Measures.

Year Ended December 31, 2020 compared to Year Ended December 31, 2019

Gold production decreased 2% as a result of processing lower grade ore and COVID-19 response efforts that temporarily impacted mine production in the first nine months of 2020.

Metal sales were $216.5 million, or 28% of Coeur’s metal sales, compared to $181.1 million, or 25% of Coeur’s metal sales.

Costs applicable to sales per gold ounce increased 6% due to lower production and higher compensation, outside service and maintenance costs, partially offset by lower diesel costs.

Amortization decreased to $49.5 million due to lower ounces sold.

Capital expenditures decreased to $19.8 million from $23.5 million due to lower underground development.

Mining continues to be considered an essential business in Alaska.

Rotational schedules remain extended from 14 days to 28 days in response to concerns related to COVID-19.

All employees are required to quarantine and undergo a testing protocol prior to starting their 21-day rotation.

Year Ended December 31, 2019 compared to Year Ended December 31, 2018

Gold production increased 21% due to higher ore feed from the high-grade Jualin deposit.

3 unchanged sentences

Capital expenditures decreased to $23.5 million from $44.7 million due to lower underground development at Kensington, Jualin and Raven, infill drilling and mining equipment expenditures.

Year Ended December 31, 2018 compared to Year Ended December 31, 2017

Gold production decreased 8% due to lower mill throughput resulting from lower mine production.

Including the 8,208 gold ounces that were sourced from the Jualin deposit before commercial production was declared in December, gold production decreased by 1%.

Metal sales were $132.9 million, or 21% of Coeur’s metal sales, compared to $154.5 million, or 22% of Coeur’s metal sales.

Costs applicable to sales per ounce were 14% higher, primarily due to higher contractor costs and higher diesel costs.

Amortization decreased to $29.5 million from $36.0 million due to higher life of mine reserves and lower ounces sold.

Capital expenditures increased to $44.7 million resulting from increased underground development at Kensington, Jualin and Raven and higher mining equipment expenditures.

Year ended December 31,

2020 2019 2018

Tons placed 4,710,875 4,613,359 4,923,774

Average gold grade (oz/t) 0.027 0.023 0.022

4 unchanged sentences

Costs applicable to sales per gold ounce (1)

$ 923 $ 937 $ 879

(1) See Non-GAAP Financial Performance Measures.

Year Ended December 31, 2020 compared to Year Ended December 31, 2019

Gold production increased 10% largely driven by the stacking of higher-grade ore, partially offset by the impact of inclement weather, which diluted leach pad solutions, during the first half of 2019.

Gold production increased 11% driven by higher grade.

Metal sales were $170.2 million, or 22% of Coeur’s metal sales, compared to $121.4 million, or 17% of Coeur’s metal sales.

Costs applicable to sales per gold ounce increased 7% due to a $3.6 million inventory write-down related to lower expected recoveries from leach pad 1 and higher processing costs during the first half of 2019.

Costs applicable to sales per gold ounce decreased 2% due to higher production and lower diesel costs.

Amortization increased to $12.5 million due to higher ounces sold.

Capital expenditures were $2.4 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 exposure to, and transmission of, COVID-19 at Wharf.

Year Ended December 31, 2019 compared to Year Ended December 31, 2018

Gold production decreased 19% due to unplanned weather-related events and timing of leach pad recoveries.

Metal sales were $121.4 million, or 17% of Coeur’s metal sales, compared to $96.5 million, or 15% of Coeur’s metal sales.

Costs applicable to sales per gold ounce increased 27% due to lower production resulting from the completion of mining at the higher-grade Golden Reward deposit in 2017 and higher equipment rental and diesel costs.

Amortization decreased to $11.1 million due to lower ounces sold.

Capital expenditures decreased to $3.4 million due to lower mining equipment and process plant expenditures.

Amortization increased to $12.3 million due to higher ounces sold.

Capital expenditures were $2.2 million.

Year Ended December 31,

Average silver grade (oz/t)

Average zinc grade (%)

Average lead grade (%)

Average recovery rate – Ag

Average recovery rate – Zn

Average recovery rate – Pb

Silver ounces produced 139,287 1,161,926 182,254

5 unchanged sentences

Costs applicable to sales per silver ounce (2)

$ 31.92 $ 55.91

Costs applicable to sales per zinc pound (2)

$ 2.34 $ 3.34

Costs applicable to sales per lead ounce (2)

$ 1.76 $ 3.23

(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.

Year Ended December 31, 2020 compared to Year Ended December 31, 2019

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.

Ongoing carrying and temporary suspension costs are included in Pre-development, reclamation, and other.

The Company continues to advance its pre-feasibility work for Silvertip.

Notably, the Company developed a new flowsheet that would help support a potential expansion to a throughput rate of 1,750 tonnes per day.

The Company is now progressing the project through a more comprehensive front-end engineering and design phase, focusing on advancing engineering through detailed design to further de-risk capital estimates and enhance schedule certainty with respect to a potential restart or increase certainty for project delivery.

Mining is considered an essential service in the Province of British Columbia.

The Company implemented and continues to maintain strong health and safety protocols, aimed at limiting the exposure to, and transmission of, COVID-19 at the site and in the surrounding communities.

Year Ended December 31, 2019 compared to Year Ended December 31, 2018

Metal sales were $44.3 million compared to $8.9 million.

4 unchanged sentences

Amortization was $36.7 million.

Capital expenditures decreased to $17.5 million from $52.9 million due to pre-production capitalization, construction of the 220-person camp in 2018 and lower conversion drilling in 2019.

Year Ended December 31, 2018 compared to Year Ended December 31, 2017

The Company acquired Silvertip in October 2017.

In September 2018, Silvertip commenced commercial production.

Metal sales were $8.9 million, or 1% of Coeur’s metal sales.

Costs applicable to sales were impacted by a $26.7 million write-down of metal inventory as a result of lower than expected production levels, grades and recovery rates as well as reduced process plant availability and unfavorable changes in metal prices.

Amortization was $5.2 million.

Capital expenditures were $52.9 million primarily related to pre-production capital, underground mine development and capitalized exploration spending.

Capital expenditures decreased to $17.5 million from $52.9 million due to preproduction capitalization, construction of the 220-person camp in 2018 and lower conversion drilling in 2019.

Liquidity and Capital Resources

At December 31, 2019 , the Company had $57.0 million of cash, cash equivalents and restricted cash and $250.0 million available under its revolving credit facility (the “Facility”) provided pursuant to the credit agreement entered into in September, 2017 (as amended, the “Credit Agreement”) among the Company, as borrower, and certain subsidiaries of the Company, as guarantors, and Bank of America, N.A, as administrative agent (the “Agent”), and Bank of America, N.A., Royal Bank of Canada, Bank of Montreal, Chicago Branch, and the Bank of Nova Scotia (the “RCF Lenders”).

Cash and cash equivalents decreased $59.4 million in the year ended December 31, 2019 , primarily due to the Company’s debt reduction efforts including the repayment of the outstanding balance under the Facility, higher Silvertip operating costs, payment of contingent consideration of $18.7 million associated with the Silvertip acquisition and income and mining tax payments at Palmarejo, partially offset by lower capital expenditures, net proceeds of $123.1 million from the sale of 30.9 million shares in the Offerings (as defined in Note 19 -- Net Income (Loss) per Share) and strong operational results from Palmarejo, Kensington and Wharf.

At December 31, 2020, the Company had $94.2 million of cash, cash equivalents and restricted cash and $265.0 million available under its revolving credit facility (“RCF”).

Cash and cash equivalents increased $37.1 million in the year ended December 31, 2020, due to a 22% and 29% increase in average realized gold and silver prices, respectively, strong operational results from Wharf, proceeds from the sale of shares of Metalla common stock, partially offset by lower ounces sold at Palmarejo, Rochester and Kensington, ongoing carrying costs at Silvertip and payment of the cash portion of the contingent consideration of $18.8 million associated with the Silvertip acquisition.

Early in the second quarter, the Company 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 2020.

At December 31, 2020, the Company had no borrowings and $35.0 million in outstanding letters of credit 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 in response to increased volatility and uncertainty associated with COVID-19.

At the date of this filing, the Company has yet to issue any 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 year ended December 31, 2019 was $91.9 million , compared to net cash provided by operating activities for the year ended December 31, 2018 of $20.1 million .

Net cash provided by operating activities for the year ended December 31, 2020 was $148.7 million, compared to $91.9 million for the year ended December 31, 2019.

Adjusted EBITDA from continuing operations for the year ended December 31, 2020 was $263.4 million, compared to $173.9 million for the year ended December 31, 2019 (see “Non-GAAP Financial Performance Measures”).

Net cash provided by (used in) operating activities was impacted by the following key factors for the applicable periods:

Net cash provided by operating activities was impacted by the following key factors for the applicable periods:

Year Ended December 31,

In thousands 2020 2019 2018

Cash flow before changes in operating assets and liabilities $ 162,434 $ 134,234 $ 112,350

Changes in operating assets and liabilities:

Receivables (9,463) (2,739) (9,260)

Prepaid expenses and other (2,621) 280 4,876

Inventories (34,538) (62,998) (44,488)

Accounts payable and accrued liabilities 32,897 23,103 (43,370)

Cash provided by (used in) continuing operating activities $ 148,709 $ 91,880 $ 20,108

Net cash provided by operating activities increased $71.8 million in the year ended December 31, 2019 compared to the year ended December 31, 2018 , primarily due to 5% higher sales of gold at 10% higher average realized prices, the prepayment for deliveries of concentrate from Kensington of $15.0 million, the timing of payments for accounts payables across the company and lower income and mining tax payments at Palmarejo in 2019 when compared to 2018, partially offset by lower than anticipated production at Silvertip that resulted in a $64.6 million write-down of metals inventory.

Net cash provided by operating activities increased $56.8 million in the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to a 22% and 29% increase in average realized gold and silver prices, respectively, and lower metal inventory write-downs at Silvertip, partially offset by lower ounces sold of gold and silver (3% and 19%, respectively).

Revenue for the year ended December 31, 2020 increased by $74.0 million, of which $151.9 million was the result of higher average realized gold and silver prices, partially offset by a decrease of $77.9 million due to lower volume of gold and silver sales.

Net cash provided by operating activities increased $71.8 million in the year ended December 31, 2019 compared to the year ended December 31, 2018, primarily due to 5% higher sales of gold at 10% higher average realized prices, the prepayment for deliveries of concentrate from Kensington of $15.0 million, the timing of payments for accounts payables across the company and lower income and mining tax payments at Palmarejo in 2019 as compared to 2018, partially offset by lower than anticipated production at Silvertip that resulted in a $64.6 million write-down of metals inventory.

Revenue for the year ended December 31, 2019 increased $85.6 million, of which $48.4 million was due primarily to higher average realized gold and silver prices and $37.2 million was due primarily to higher volume of gold, zinc and lead sales.

Cash provided by operating activities decreased $177.1 million in the year ended December 31, 2018 compared to the year ended December 31, 2017, primarily due to lower sales of gold and silver (15% and 3%, respectively) at a lower operating margin per ounce.

In addition, Silvertip incurred higher than anticipated operating costs that included a $26.7 million write-down of metals inventory, and income and mining tax payments made by Coeur Mexicana in 2018 pertaining to 2017 Palmarejo earnings.

Revenue for the year ended December 31, 2018 decreased $83.7 million, $72.8 million of which was due to lower ounces sold and $10.9 million was due to lower average realized prices.

Cash Used in Investing Activities from Continuing Operations

Net cash used in investing activities in the year ended December 31, 2020 was $65.7 million compared to $92.6 million in the year ended December 31, 2019.

Cash used in investing activities decreased primarily due lower capital expenditures, partially offset by receipt of $19.0 million of proceeds under the Manquiri Notes Receivable (as defined in Note 22 -- Discontinued Operations) in 2018.

Cash used in investing activities decreased primarily due to the net proceeds of $30.1 million from the sale of the Company’s equity investments.

The Company had capital expenditures of $99.3 million in the year ended December 31, 2020 compared with $99.8 million in the year ended December 31, 2019.

Capital expenditures in the year ended December 31, 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 year ended December 31, 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.

Capital expenditures in the year ended December 31, 2018 were primarily related to pre-production capital spending and the new 220-person camp at Silvertip, mining equipment at Kensington and underground development at Silvertip, Palmarejo and Kensington.

Net cash used in investing activities in the year ended December 31, 2018 was $102.0 million compared to net cash used in investing activities of $277.2 million in the year ended December 31, 2017.

Cash used in investing activities decreased $175.2 million primarily due to the cash component of the Silvertip acquisition consideration paid in 2017, 2018 payments received totaling $19.0 million related to the Manquiri Divestiture, partially offset by a $4.0 million increase in capital expenditures.

Net cash used in investing activities in the year ended December 31, 2019 was $92.6 million compared to $102.0 million in the year ended December 31, 2018.

The Company had capital expenditures of $99.8 million in the year ended December 31, 2019 compared with $140.8 million in the year ended December 31, 2018.

Capital expenditures in the year ended December 31, 2018 were primarily related to pre-production capital spending at Silvertip and underground development at Silvertip, Palmarejo, and Kensington.

Capital expenditures in the year ended December 31, 2017 were primarily related to underground development at Palmarejo, Silvertip and Kensington, capitalized conversion drilling, and the Stage IV leach pad expansion at Rochester.

Capital expenditures in the year ended December 31, 2019 are described above.

Cash Used in Financing Activities from Continuing Operations

Net cash used in financing activities in the year ended December 31, 2020 was $46.5 million compared to $60.9 million in the year ended December 31, 2019.

During the year ended December 31, 2020, the Company fully repaid the $150.0 million drawn from the RCF during 2020, and paid cash contingent consideration of $18.8 million associated with the Silvertip acquisition.

As of December 31, 2020, there were no borrowings outstanding under the RCF.

During the year ended December 31, 2019, the Company repaid $135.0 million, net, of outstanding amounts under the RCF and paid cash contingent consideration of $18.7 million associated with the Silvertip acquisition, partially offset by net proceeds of approximately $123.1 million from the sale of 30.9 million shares of its common stock.

Net cash used in financing activities in the year ended December 31, 2019 increased to $60.9 million compared to $5.2 million in the year ended December 31, 2018.

During the year ended December 31, 2019 , the Company repaid $135.0 million, net, of outstanding amounts under the Facility and made a payment of contingent consideration of $18.7 million associated with the Silvertip acquisition, partially offset by net proceeds of approximately $123.1 million from the sale of 30.9 million shares through an “at the market” offering.

During the year ended December 31, 2018, the Company drew $35.0 million, net, from the Facility to repay a debt obligation of Silvertip and to finance working capital and general corporate purposes.

As of December 31, 2019, there were no outstanding amounts under the Facility.

During the year ended December 31, 2018, the Company drew $35.0 million, net, from the RCF to repay a debt obligation of Silvertip and to finance working capital and general corporate purposes.

Contractual Obligations

1 unchanged sentence

Payments Due by Period

Contractual Obligations

Contractual Obligations Total Less Than

1 Year 1-3 Years 3-5 Years More Than

Long-term debt obligations:

2 unchanged sentences

Interest on debt 47,145 14,490 32,655 — —

277,145 14,490 262,655 — —

Finance lease obligations (2)

52,338 23,958 26,580 1,800 —

Operating lease obligations:

1 unchanged sentence

Operating leases 44,190 12,602 21,396 9,025 1,167

44,790 12,902 21,696 9,025 1,167

Other long-term obligations:

Reclamation and mine closure (3)

331,992 2,299 16,588 79,493 233,612

Severance payments (4)

7,871 — — — 7,871

Unrecognized tax benefits (5)

1,365 — — — —

Other long-term obligations 23,653 1,965 3,930 2,842 14,916

The Company had all $250.0 million available under the Facility as of December 31, 2019.

364,881 4,264 20,518 82,335 256,399

Total $ 739,154 $ 55,614 $ 331,449 $ 93,160 $ 257,566

(1) The Company had $265.0 million available under the RCF, net of $35.0 million in letters of credit outstanding as of December 31, 2020.

(2) The Company has entered into various finance lease agreements for commitments primarily over the next five years.

6 unchanged sentences

For the years ended December 31, 2020, 2019, and 2018, the Company spent $8.8 million, $8.2 million, and $7.9 million, respectively, in connection with routine environmental compliance activities at its operating properties.

The Company estimates that environmental compliance expenditures during 2020 will be approximately $10.0 million .

The Company estimates that environmental compliance expenditures during 2021 will be between $8.2 million and $9.2 million.

Future environmental compliance expenditures will be determined by governmental regulations and the overall scope of the Company’s operating and development activities.

Critical Accounting Policies and Accounting Developments

Listed below are the accounting policies that we believe are critical to our financial statements due to the degree of

uncertainty regarding the estimates and assumptions involved and the magnitude of the asset, liability, revenue, and expense being reported.

Listed below are the accounting policies that we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates and assumptions involved and the magnitude of the asset, liability, revenue, and expense being reported.

For a discussion of recent accounting pronouncements, see Note 2 -- Summary of Significant Accounting Policies in the notes to the consolidated financial statements.

4 unchanged sentences

In the case of doré shipments, the Company generally sells refined metal at market prices agreed upon by both parties.

The Company also has the right, but not the obligation, to sell a portion of the anticipated refined metal in advance of being fully refined.

The Company also has the right, but not the obligation, to sell a portion of the anticipated refined metal in advance of being

fully refined.

When the Company sells refined metal or advanced metal, the performance obligation is satisfied when the metal is delivered to the customer.

1 unchanged sentence

Under the Company’s concentrate sales contracts with third-party smelters, metal prices are set on a specified future quotational period, typically one to three months, after the shipment date based on market prices.

When the Company sells gold concentrate to the third-party smelters, the performance obligation is satisfied when the concentrate is loaded onto the third-party shipping vessel.

When the Company sells gold concentrate to the third-party smelters, the performance obligation is satisfied when risk of loss is transferred to the customer.

The contracts, in general, provide for provisional payment based upon provisional assays and historical metal prices.

6 unchanged sentences

The quotational period varies by contract, but is generally a one-month period following the shipment of the concentrate.

The performance obligation is satisfied when the concentrate is loaded onto the third-party shipping vessel.

The off-take agreement allows for the Company to sell concentrate in advance of shipment and results in the customer taking ownership of the concentrate prior to shipment.

The performance obligation is satisfied when risk of loss is transferred to the customer.

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

5 unchanged sentences

The preparation of the Company’s consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of its financial statements, the reported amounts of revenue and expenses during the reporting period, and

mined reserves.

There can be no assurance that actual results will not differ from those estimates.

11 unchanged sentences

An impairment loss is measured by discounted estimated future cash flows, and recorded by reducing the asset's carrying amount to fair value.

Future cash flows are estimated based on estimated quantities of recoverable minerals, expected gold, silver, lead and zinc prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans.

Future cash flows are estimated based on estimated quantities of recoverable minerals,

expected gold, silver, lead and zinc prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans.

During 2019, the Company recorded a non-cash impairment charge of $250.8 million.

13 unchanged sentences

As the ore body is drilled in preparation for the blasting process, samples are taken of the drill residue which are assayed to determine estimated quantities of contained metal.

The Company estimates the quantity of ore by utilizing global positioning satellite survey techniques.

The Company then processes the ore through crushing facilities where the output is again weighed and sampled for assaying.

3 unchanged sentences

The quantity of leach solution is measured by flow meters throughout the leaching and precipitation process.

After precipitation, the product is converted to doré, which is the

final product produced by the mine.

After precipitation, the product is converted to doré, which is the final product produced by the mine.

The inventory is stated at lower of cost or net realizable value, with cost being determined using a weighted average cost method.

The historical cost of the metal that is expected to be extracted within twelve months is classified as current.

The historical cost of the metal that is expected to be extracted within 12 months is classified as current.

Ore on leach pad is valued based on actual production costs incurred to produce and place ore on the leach pads, less costs allocated to minerals recovered through the leach process.

2 unchanged sentences

The quantities of metal contained in the ore are estimated based upon actual weights and assay analysis.

The rate at which the leach process extracts gold and silver from the crushed ore is based upon laboratory column tests and actual experience occurring over more than twenty years of leach pad operations at the Rochester mine.

The rate at which the leach process extracts gold and silver from the crushed ore is based upon laboratory column tests and actual experience occurring over more than 20 years of leach pad operations at the Rochester mine.

The assumptions used by the Company to measure metal content during each stage of the inventory conversion process includes estimated recovery rates based on laboratory testing and assaying.

1 unchanged sentence

The ultimate recovery will not be known until leaching operations cease.

Historically, our operating results have not been materially impacted by variations between the estimated and actual recoverable quantities of silver and gold on our leach pads.

Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis.

In 2020, the Company revised its recovery rate assumptions in line with the updated technical report for Rochester filed in December 2020.

This change resulted in an adjustment to the ending Ore on leach pads balance with the resulting charges allocated between Costs Applicable to Sales and Amortization in the amounts of $7.2 million and $1.2 million, respectively.

The Company recognizes obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs.

24 unchanged sentences

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 record a

The Company does not record a U.S.

deferred tax liability for foreign earnings that meet the indefinite reversal criteria.

7 unchanged sentences

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

In February 2016, the FASB issued ASU 2016-02, “ Leases, ” which will require lessees to recognize assets and liabilities for the rights and obligations created by most leases on the balance sheet.

These changes become effective for the Company’s fiscal year beginning January 1, 2019 and the Company adopted it using the cumulative-effect adjustment transition method approved by the FASB in July 2018, which does not require the Company to recast the comparative periods presented when transitioning to the new guidance on January 1, 2019.

The Company has elected to utilize the transition related practical expedients permitted by the new standard.

In addition to existing capital leases and other financing obligations, the adoption of the new standard resulted in the recognition of additional right-of-use assets and lease liabilities related to operating leases of approximately $65.0 million .

These changes did not materially impact the Company’s consolidated net income, financial position or cash flows.

Other Liquidity Matters

30 unchanged sentences

Loss on debt extinguishment — 1,282 —

Silvertip temporary suspension costs 7,164 — —

Silvertip lease modification (4,051) — —

Silvertip gain on contingent consideration (955) — —

Novation 3,819 — —

COVID-19 costs 15,555 — —

Receivable write-down — 1,040 6,536

4 unchanged sentences

Transaction costs — — 5

Impairment of equity and debt securities

Gain on sale of Joaquin project

Gain on repurchase of Rochester royalty

Tax effect of adjustments (1)(2)

— (19,415) (9,750)

Adjusted net income (loss) $ 59,013 $ (54,583) $ (2,165)

3 unchanged sentences

(2) For the year ended December 31, 2018, tax effect of adjustments of $9.8 million (-20%) is primarily related to the write-down of Silvertip start-up costs.

For the year ended December 31, 2017, tax effect of adjustments of $0.8 million (-10%) is primarily related to a taxable gain on the sale of the Joaquin project and deferred taxes on the Metalla transaction

EBITDA and Adjusted EBITDA

1 unchanged sentence

The Company believes the use of EBITDA reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies.

Adjusted EBITDA is a measure used in the 2024 Senior Notes Indenture (as such term is defined in Note 12 -- Debt) and the Facility to determine our ability to make certain payments and incur additional indebtedness.

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.

7 unchanged sentences

Income tax provision (benefit) 37,045 (11,129) (16,780)

Amortization 131,387 178,876 128,473

EBITDA 214,767 (154,378) 87,102

Fair value adjustments, net (7,601) (16,030) (3,638)

5 unchanged sentences

Silvertip inventory write-down 13,717 64,610 26,720

Silvertip temporary suspension costs 7,164 — —

Silvertip lease modification (4,051) — —

Silvertip gain on contingent consideration (955) — —

COVID-19 costs 15,555 — —

Novation 3,819 — —

Wharf inventory write-down 3,323 3,596 —

6 unchanged sentences

Transaction costs — — 5

Gain on sale of Joaquin project

Gain on repurchase of Rochester royalty

Impairment of equity and debt securities

Adjusted EBITDA $ 263,365 $ 173,854 $ 157,309

17 unchanged sentences

Year Ended December 31, 2020

In thousands except per ounce or per pound amounts

In thousands (except metal sales, per ounce and per pound amounts) Palmarejo Rochester Kensington Wharf Silvertip Total

Costs applicable to sales, including amortization (U.S.

GAAP) $ 170,077 $ 100,418 $ 171,204 $ 102,108 $ 26,580 $ 570,387

Amortization (44,873) (14,306) (49,477) (12,473) (8,923) (130,052)

Costs applicable to sales $ 125,204 $ 86,112 $ 121,727 $ 89,635 $ 17,657 $ 440,335

Gold ounces 110,822 26,257 124,793 94,379 356,251

Silver ounces 6,301,516 3,054,139 113,790 158,984 9,628,429

Zinc pounds 3,203,446 3,203,446

Lead pounds 2,453,485 2,453,485

Costs applicable to sales

Silver ($/oz)

Gold ($/oz) $ 610 $ 1,377 $ 975 $ 923

Silver ($/oz) $ 9.14 $ 16.35 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.

Year Ended December 31, 2019

In thousands except per ounce or per pound amounts

In thousands (except metal sales, per ounce and per pound amounts) Palmarejo Rochester Kensington Wharf Silvertip Total

Costs applicable to sales, including amortization (U.S.

GAAP) $ 201,306 $ 118,246 $ 170,194 $ 92,969 $ 145,496 $ 728,211

Amortization (59,379) (18,041) (50,592) (12,280) (36,738) (177,030)

Costs applicable to sales $ 141,927 $ 100,205 $ 119,602 $ 80,689 $ 108,758 $ 551,181

Gold ounces 116,104 36,052 130,495 84,999 367,650

Silver ounces 6,841,380 3,844,556 64,161 1,164,470 11,914,567

Zinc pounds 18,154,521 18,154,521

Lead pounds 16,487,847 16,487,847

Costs applicable to sales

Gold ($/oz) $ 685 $ 1,251 $ 917 $ 937

Silver ($/oz) $ 9.13 $ 14.34 $ 31.92

Zinc ($/lb) $ 2.34

Lead ($/lb) $ 1.76

Year Ended December 31, 2018

In thousands except per ounce or per pound amounts

In thousands (except metal sales, per ounce and per pound amounts) Palmarejo Rochester Kensington Wharf Silvertip Total

Costs applicable to sales, including amortization (U.S.

GAAP) $ 180,832 $ 126,586 $ 141,872 $ 78,273 $ 40,855 $ 568,418

Amortization (60,744) (20,909) (29,508) (11,072) (5,235) (127,468)

Costs applicable to sales $ 120,088 $ 105,677 $ 112,364 $ 67,201 $ 35,620 $ 440,950

Gold ounces 115,592 52,789 106,555 75,572 350,508

Silver ounces 7,229,179 4,854,579 48,085 222,974 12,354,817

Zinc pounds 4,375,995 4,375,995

Lead pounds 2,648,920 2,648,920

Costs applicable to sales

Gold ($/oz) $ 561 $ 941 $ 1,055 $ 879

Silver ($/oz) $ 7.64 $ 11.54 $ 55.91

Zinc ($/lb) $ 3.34

Lead ($/lb) $ 3.23

Reconciliation of Costs Applicable to Sales for 2021 Guidance

In thousands except per ounce amounts

In thousands (except metal sales, per ounce and per pound amounts) Palmarejo Rochester Kensington Wharf

Costs applicable to sales, including amortization (U.S.

GAAP) $ 196,255 $ 105,557 $ 188,349 $ 99,746

Amortization (39,208) (15,899) (59,756) (11,524)

Costs applicable to sales $ 157,047 $ 89,658 $ 128,593 $ 88,222

1 unchanged sentence

Adjusted costs applicable to sales $ 157,047 $ 89,658 $ 128,593 $ 85,967

Gold ounces 107,900 27,200 127,000 89,000

Silver ounces 7,128,000 3,807,000 93,000

Revenue Split

Adjusted costs applicable to sales

$1,175 - $1,325

$900 - $1,000

$1,025 - $1,125

Gold 49% 36% 100% 100%

Silver 51% 64% — —

Costs applicable to sales

Gold ($/oz) $710 - $810 $1,180 - $1,330 $1,010 - $1,110 $960 - $1,060

Silver ($/oz) $11.00 - $12.00 $15.00 - $17.00

$10.35 - $11.35

$13.25 - $14.50

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis