What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-04-28 compared with 2020-10-28 · 139 added, 343 removed, 249 unchanged (66% of the section changed)

7 unchanged sentences

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

First Quarter Highlights

For the quarter, Coeur reported revenue of $202.1 million and cash flow from operating activities of $(4.4) 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

We reported GAAP net income of $2.1 million, or $0.01 per diluted share.

On an adjusted basis 1 , the Company reported EBITDA of $65.9 million and net income of $13.9 million, or $0.06 per diluted share.

• Higher margins helped drive a stronger start to the year – Coeur’s first quarter results reflect a strong start to the year led by solid production and higher prices.

Notably, quarterly revenue, operating cash flow before changes in working capital 1 and adjusted EBITDA 1 increased 17%, 38% and 42% year-over-year, respectively

• Solid gold production and unit costs – The Company’s gold production of 85,225 ounces exceeded expectations for the quarter, tracking well towards its full-year guidance range.

Additionally, all of the Company’s site-level gold unit costs were either below or within their full-year guidance ranges

• Further enhanced liquidity and balance sheet – Coeur successfully refinanced its 5.875% senior notes due 2024 (“2024 Senior Notes”) with 5.125% senior notes due 2029 (“2029 Senior Notes”), capturing a lower interest rate, extending the maturity and opportunistically upsizing the offering.

The Company also extended the maturity of its senior secured revolving credit facility (“RCF”) from October 2022 to March 2025.

Together, these efforts improved Coeur’s liquidity profile and bolstered its balance sheet, helping to enhance financial flexibility ahead of a period of planned capital intensity

• Commenced major construction on Rochester expansion – The Company began major construction on the Plan of Operations Amendment 11 (“POA 11”) expansion at its Rochester mine.

Overall project progress was approximately 20% complete at the end of the first quarter.

Key elements of the project timeline remain on schedule and are expected to be largely completed by late next year

• Encouraging results from aggressive investment in exploration – Following its successful program in 2020, Coeur began the year with the largest exploration campaign in Company history.

The Company invested approximately $14.9 million ($9.7 million expensed and $5.2 million capitalized) in exploration during the quarter, drilling roughly 250,500 feet (76,375 meters) across all sites.

Drilling activities at Silvertip and Crown ramped up significantly during the quarter, while Coeur’s other sites continued to advance their resource expansion and infill programs

Selected Financial and Operating Results

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

In thousands 2021 2020

Financial Results from Continuing Operations:

Financial Results:

Gold sales $ 138,322 $ 127,605

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$ 412,125 $ 343,109

Operating Results from Continuing Operations:

Operating Results:

Gold ounces produced 85,225 85,077

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Average realized price per lead pound, gross (3)

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.

(2) Includes finance leases.

Net of debt issuance costs and premium received.

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

Consolidated Financial Results

Three Months Ended September 30, 2020 compared to Three Months Ended September 30, 2019

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 decreased $13.5 million, or 29%, resulting from lower sales volumes and the temporary suspension at Silvertip.

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 %

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,

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.

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 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.

Three Months Ended March 31, 2021 compared to Three Months Ended March 31, 2020

Revenue increased by $29.0 million, or 17%, as a result of a 12% and 57% increase in average realized gold and silver prices, respectively, partially offset by lower gold and silver ounces sold (3% and 10%, respectively).

We sold 83,112 gold ounces and 2.4 million silver ounces, compared to 85,635 gold ounces, 2.7 million silver ounces, 3.2 million zinc pounds and 2.5 million lead pounds in the prior year.

Gold and silver accounted for 68% and 32% of 2021 sales revenue, respectively.

This compares to gold and silver accounting for 74% and 25% of first quarter 2020 sales revenue, respectively, with zinc and lead accounting for the remaining 2020 sales revenue.

The following table summarizes consolidated metal sales:

Nine months ended September 30, Increase (Decrease) Percentage Change

Three months ended March 31, Increase (Decrease) Percentage Change

In thousands 2021 2020

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Costs Applicable to Sales

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

Costs applicable to sales decreased $10.8 million, or 9%, primarily due to the temporary suspension at Silvertip, lower ounces sold at Palmarejo and the favorable impact from foreign currency hedges.

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

Amortization decreased $34.5 million, or 26%, resulting from lower sales volume and the temporary suspensions at Palmarejo and Silvertip.

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.

Amortization decreased $6.2 million, or 17%, primarily due to the temporary suspension at Silvertip, longer assumed mine life based on year-end 2020 mineral reserve growth at Palmarejo and lower ounces sold at Palmarejo.

General and administrative expenses increased $2.6 million, or 30%, primarily due to higher employee incentive compensation costs.

Exploration expense increased $3.3 million, or 51%, as the Company maintained its commitment to a higher-level of exploration investment following the completion of the largest and most successful drilling campaign in Coeur’s history during 2020.

The Company completed 122,300 feet (37,275 meters) of expansion drilling and 128,200 feet (39,100 meters) of infill drilling in the first quarter of 2021 compared 119,471 feet (36,415 meters) of expansion drilling and 50,209 feet (15,304 meters) of infill drilling in the first quarter of 2020.

Pre-development, reclamation, and other expenses increased $7.2 million, or 109%, stemming from full-quarter ongoing carrying and temporary suspension costs at Silvertip and incremental costs incurred in connection with the Company’s COVID-19 health and safety protocols, and a gain resulting from the modification of a right of use lease at Silvertip in 2020.

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

Nine months ended September 30, Increase (Decrease) Percentage Change

Three months ended March 31, Increase (Decrease) Percentage Change

In thousands 2021 2020

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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.

During the first quarter of 2021, the Company incurred a $9.2 million loss in connection with the tender and redemption of the 2024 Senior Notes concurrent with the completed offering of the 2029 Senior Notes.

Fair value adjustments, net, decreased to a loss of $3.8 million compared to loss of $8.8 million in the prior year quarter, a result of unfavorable changes in value related to the Company’s prior equity investment in Metalla Royalty & Streaming Ltd.

Interest expense (net of capitalized interest of $0.8 million) decreased to $4.9 million from $5.1 million due to higher capitalized interest associated with the POA 11 project at Rochester, partially offset by higher interest paid under the 2029 Senior Notes compared to the 2024 Senior Notes.

Other, net increased to a gain of $3.6 million compared to $1.9 million due to an increase in gains on the sale of assets.

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.

During the first quarter of 2021, income and mining tax expense of approximately $12.8 million resulted in an effective tax rate of 86.1% for 2021.

This compares to income tax benefit of $3.9 million or effective tax rate of 24.9% for 2020.

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(iv) foreign exchange rates;

(v) the impact of uncertain tax positions;

and (vi) the non-recognition of tax assets.

(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:

Nine months ended September 30,

Three months ended March 31,

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

9 unchanged sentences

For additional information, please see “Item 1A - Risk Factors” in the 2020 10-K.

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

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

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.

Results of Continuing Operations

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Net Income (Loss)

Net income was $2.1 million, or $0.01 per diluted share, compared to net loss of $11.9 million, or $0.05 per share.

The increase in net income was driven by strong operating results at Wharf, a 12% and 57% increase in average realized gold and silver prices, respectively, and lower operating costs at Silvertip.

This was partially offset by lower sales of gold and silver (3% and 10%, respectively), higher exploration expense, a $9.2 million loss on debt extinguishment, a full-quarter of 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 $13.9 million, or $0.06 per diluted share, compared to adjusted net loss of $0.9 million, or $0.00 per share (see “Non-GAAP Financial Performance Measures”).

Results of Operations

Three Months Ended March 31,

Tons milled 484,390 479,562

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Costs applicable to sales per gold ounce (1)

$ 603 $ 663 $ 637 $ 705

Costs applicable to sales per silver ounce (1)

1 unchanged sentence

(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.

Three Months Ended March 31, 2021 compared to Three Months Ended March 31, 2020

Gold and silver production decreased 9% and 13%, respectively, as a result of lower gold and silver grades, as expected, partially offset by higher mill throughput and higher gold recovery.

Metal sales were $80.3 million, or 40% of Coeur’s metal sales, compared with $74.3 million, or 43% 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.

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Revenue for the three months ended March 31, 2021 increased by $6.0 million or 8%, of which $21.0 million was the result of higher average realized gold and silver prices, partially offset by a decrease of $15.0 million due to lower volume of gold and silver sales.

Costs applicable to sales per gold ounce decreased 3% while costs applicable to sales per silver ounce increased 32% due to the mix of gold and silver sales, lower production and higher maintenance costs partially offset by the favorable impact from foreign currency hedges.

Amortization decreased to $9.1 million due to a longer mine life based on year-end 2020 reserve growth and lower ounces sold.

Capital expenditures increased to $10.0 million from $7.1 million attributable to higher underground development at the La Nacion deposit.

Three Months Ended March 31,

Tons placed 3,240,917 3,428,578

10 unchanged sentences

(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.

Three Months Ended March 31, 2021 compared to Three Months Ended March 31, 2020

Gold and silver production increased 16% and 13%, respectively, due to the timing of recoveries, higher gold grade and the restocking of leach pad inventory after the commissioning of the high pressure grinding roll in 2019, which adversely impacted 2020 gold and silver production.

Metal sales were $32.8 million, or 16% of Coeur’s metal sales, compared with $19.4 million, or 11% 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.

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Revenue for the three months ended March 31, 2021 increased by $13.4 million or 69%, of which $7.1 million was the result of higher average realized gold and silver prices, and $6.3 million due to higher volume of gold and silver sales.

Costs applicable to sales per gold ounce decreased 6% while costs applicable to sales per silver

ounce increased 31% due to the mix of gold and silver sales as well as higher equipment maintenance costs.

Amortization increased to $3.6 million due to higher ounces sold.

Capital expenditures increased to $30.2 million from $5.1 million due to the commencement of construction activities related to POA 11 in August 2020.

Three Months Ended March 31,

Tons milled 170,358 162,341

4 unchanged sentences

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.

Three Months Ended March 31, 2021 compared to Three Months Ended March 31, 2020

Gold production decreased 4% as a result of lower grade, partially offset by higher mill throughput.

Metal sales were $54.5 million, or 27% of Coeur’s metal sales, compared to $51.7 million, or 30% 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.

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Revenue for the three months ended March 31, 2021 increased by $2.8 million or 5%, of which $4.9 million resulted from higher average realized gold prices, partially offset by a decrease of $2.1 million due to lower volume of gold sales.

Costs applicable to sales per gold ounce increased 7% due to lower production and higher equipment rental, outside service and maintenance costs.

Amortization increased to $13.4 million primarily due to higher Jualin production.

Capital expenditures increased to $7.2 million from $4.8 million due to higher infill drilling.

Three Months Ended March 31,

Tons placed 1,114,043 946,449

7 unchanged sentences

(1) See Non-GAAP Financial Performance Measures.

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.

Three Months Ended March 31, 2021 compared to Three Months Ended March 31, 2020

Gold production increased 22% driven by higher grade, higher placed tons and favorable weather conditions.

Metal sales were $34.5 million, or 17% of Coeur’s metal sales, compared to $25.9 million, or 15% 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.

Revenue for the three months ended March 31, 2021 increased by $8.7 million or 34%, of which $5.3 million resulted from a higher volume of gold and silver sales and $3.4 million due to higher average realized gold and silver prices.

Costs applicable to sales per gold ounce decreased 13% due to higher production and lower diesel and cyanide costs.

Amortization remained comparable at $2.5 million due to a lower units-of-production depletion rate.

Capital expenditures were $1.5 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.

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Silver ounces produced — 139,287

5 unchanged sentences

Costs applicable to sales per silver ounce (2)

— 32.92 NM (3)

Costs applicable to sales per zinc pound (2)

— 1.74 NM (3)

Costs applicable to sales per lead ounce (2)

— 1.74 NM (3)

(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.

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

(2) See Non-GAAP Financial Performance Measures.

Three Months Ended March 31, 2021 compared to Three Months Ended March 31, 2020

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.

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.

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.

Coeur continued advancing Silvertip’s revised 1,750 tonnes per day flowsheet through a more comprehensive engineering and design phase, with detailed design approaching 30% completion and exploration results demonstrating the potential for mine life extensions with continued drilling.

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

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,

At March 31, 2021, the Company had $155.4 million of cash, cash equivalents and restricted cash and $265.0 million available under its RCF.

Cash and cash equivalents increased $61.3 million in the three months ended March 31, 2021, due to a 12% and 57% increase in average realized gold and silver prices, respectively, strong operational results from Wharf, net proceeds of $367.5 million from the issuance of the 2029 Senior Notes, partially offset by the tender and redemption of the 2024 Senior Notes for $238.3 million, including premiums, and $4.0 million of accrued and unpaid interest, lower ounces sold at Palmarejo and Kensington and ongoing carrying costs at Silvertip.

Since the start of the COVID-19 pandemic, 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 subsequent to the start of the COVID-19 pandemic.

At March 31, 2021, the Company had no borrowings and $35.0 million in outstanding letters of credit under the RCF, which was amended in March 2021 to allow the Company to obtain one or more increases of the RCF in an aggregate amount of up to $100.0 million and extend the maturity to March 2025.

Additionally, Coeur established a $100.0 million ATM Program in April 2020 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 and intends to maintain the program during the POA 11 construction.

Cash Used in Operating Activities

Net cash used in operating activities for the three months ended March 31, 2021 was $4.4 million, compared to $8.0 million for the three months ended March 31, 2020.

Adjusted EBITDA for the three months ended March 31, 2021 was $65.9

million, compared to $46.5 million for the three months ended March 31, 2020 (see “Non-GAAP Financial Performance Measures”).

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

Three Months Ended March 31,

In thousands 2021 2020

5 unchanged sentences

Accounts payable and accrued liabilities (28,797) (15,051)

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.

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.

Cash provided by (used in) operating activities $ (4,359) $ (7,991)

Net cash used in operating activities decreased $3.6 million for the three months ended March 31, 2021, primarily due to a 12% and 57% increase in average realized gold and silver prices, respectively, partially offset by lower ounces sold of gold and silver (3% and 10%, respectively), higher income and mining tax payments at Palmarejo and payment of $4.0 million of interest related to the tender and redemption of the 2024 Senior Notes.

Revenue for the three months ended March 31, 2021 increased by $29.0 million, of which $40.1 million was the result of higher average realized gold and silver prices, partially offset by a decrease of $11.1 million due to lower volume of gold and silver sales.

Cash Used in Investing Activities

Net cash used in investing activities in the three months ended March 31, 2021 was $53.9 million compared to $17.7 million in the three months ended March 31, 2020.

Cash used in investing activities increased primarily due to the commencement of construction activities related to POA 11 in August 2020 at Rochester.

The Company incurred capital expenditures of $59.4 million in the three months ended March 31, 2021 compared with $22.2 million in the three months ended March 31, 2020.

Capital expenditures in the three months ended March 31, 2021 were primarily related to POA 11 construction activities at Rochester, potential expansion expenditures at Silvertip and underground development at Palmarejo and Kensington.

Capital expenditures in the three months ended March 31, 2020 were primarily related to underground development at Silvertip, Palmarejo, and Kensington and POA 11 capital expenditures at Rochester.

Cash Provided by Financing Activities

Net cash provided by financing activities in the three months ended March 31, 2021 was $119.6 million compared to $23.4 million in the three months ended March 31, 2020.

During the three months ended March 31, 2021, the Company received net proceeds of $367.5 million from the issuance of the 2029 Senior Notes, partially offset by the tender and redemption of the 2024 Senior Notes for $238.3 million, including premiums.

During the three months ended March 31, 2020, the Company drew $50.0 million from the RCF, partially offset by the payment of contingent consideration of $18.8 million associated with the Silvertip acquisition.

Critical Accounting Policies and Accounting Developments

11 unchanged sentences

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.

Unless otherwise noted, we present the Non-GAAP financial measures in the tables below.

These measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.

6 unchanged sentences

Adjusted net income (loss) is reconciled to Net income (loss) in the following table:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

In thousands except per share amounts 2021 2020

Net income (loss) $ 2,060 $ (11,900)

(Income) loss from discontinued operations, net of tax — — — (5,693)

Fair value adjustments, net 3,799 8,819

1 unchanged sentence

(Gain) loss on sale of assets and securities (4,053) (374)

Silvertip inventory write-down 1,232 13,966 13,717 41,285

Wharf inventory write-down — — 3,323 —

Loss on debt extinguishment 9,172 —

Silvertip inventory write-down — 10,381

Silvertip temporary suspension costs — 3,509

1 unchanged sentence

Silvertip gain on contingent consideration — (955)

Novation 3,819 — 3,819 —

COVID-19 costs 3,005 272

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) $ 13,940 $ (919)

1 unchanged sentence

Adjusted net income (loss) per share - Diluted $ 0.06 $ 0.00

(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

5 unchanged sentences

Adjusted EBITDA is reconciled to Net income (loss) in the following table:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

In thousands except per share amounts 2021 2020

Net income (loss) $ 2,060 $ (11,900)

(Income) loss from discontinued operations, net of tax — — — (5,693)

Interest expense, net of capitalized interest 4,910 5,128

7 unchanged sentences

(Gain) loss on sale of assets and securities (4,053) (374)

Loss on debt extinguishment 9,172 —

Silvertip inventory write-down — 10,381

3 unchanged sentences

COVID-19 costs 3,005 272

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 $ 65,866 $ 46,451

1 unchanged sentence

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.

Free Cash Flow is Cash Provided By (used in) Operating Activities less Capital expenditures 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,

The following table sets forth a reconciliation of Free Cash Flow, a non-GAAP financial measure, to Cash Provided By (used in) Operating Activities , which the Company believes to be the GAAP financial measure most directly comparable to Free Cash Flow.

Three Months Ended March 31,

(Dollars in thousands) 2021 2020

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

Cash flow from operations $ (4,359) $ (7,991)

Capital expenditures 59,424 22,208

Free cash flow $ (63,783) (30,199)

Operating Cash Flow Before Changes in Working Capital

Management uses Operating Cash Flow Before Changes in Working Capital as a non-GAAP measure to analyze cash flows generated from operations.

Operating Cash Flow Before Changes in Working Capital is Cash Provided By (used in) Operating Activities excluding the change in Receivables , Prepaid expenses and other , Inventories and Accounts payable and accrued liabilities as presented on the Consolidated Statements of Cash Flows.

The Company believes Operating Cash Flow Before Changes in Working Capital is also useful as one of the bases for comparing the Company’s performance with its competitors.

Although Operating Cash Flow Before Changes in Working Capital and similar measures are frequently used as measures of cash flows generated from operations by other companies, the Company’s calculation of Operating Cash Flow Before Changes in Working Capital is not necessarily comparable to such other similarly titled captions of other companies.

The following table sets forth a reconciliation of Operating Cash Flow Before Changes in Working Capital, a non-GAAP financial measure, to Cash Provided By (used in) Operating Activities , which the Company believes to be the GAAP financial measure most directly comparable to Operating Cash Flow Before Changes in Working Capital.

Three Months Ended March 31,

(Dollars in thousands) 2021 2020

Cash provided by (used in) operating activities $ (4,359) $ (7,991)

Changes in operating assets and liabilities:

Receivables (999) 813

Prepaid expenses and other 655 346

Inventories 17,486 21,925

Accounts payable and accrued liabilities 28,797 15,051

Operating cash flow before changes in working capital $ 41,580 $ 30,144

Costs Applicable to Sales

4 unchanged sentences

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

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

Three Months Ended March 31, 2021

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.

11 unchanged sentences

Lead ($/lb) $ —

Nine Months Ended September 30, 2020

In thousands except per ounce or per pound amounts Palmarejo Rochester Kensington Wharf Silvertip Total

Three Months Ended March 31, 2020

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.

12 unchanged sentences

(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

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

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

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

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

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.

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 operations at the Company’s mines, exploration and development efforts, expectations regarding the Rochester POA 11 expansion project, COVID-19 planning, response and mitigation efforts, 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, 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.

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 2020 10-K, 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.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis