Coeur Mining, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis (“MD&A”) provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Coeur Mining, Inc. and its subsidiaries (collectively the “Company”, “our”, or “we”). We use certain non-GAAP financial performance measures in our MD&A. For a detailed description of these measures, please see “Non-GAAP Financial Performance Measures” at the end of this Item. We provide Costs applicable to sales (“CAS”) split, referred to as the co-product method, based on revenue contribution for Palmarejo, Rochester and Silvertip and based on the primary metal, referred to as the by-product method, for Wharf. Revenue from secondary metal, such as silver at Wharf, is treated as a cost credit. Overview We are primarily a gold and silver producer with five mines located in the United States, Mexico and Canada and several exploration projects in North America. Second Quarter Highlights For the quarter, Coeur reported revenue of $214.9 million and cash flow from operating activities of $58.1 million. We reported GAAP net income of $32.1 million, or $0.13 per diluted share. On an adjusted basis 1 , the Company reported EBITDA of $52.7 million and net loss of $0.8 million, or $0.00 per diluted share. For the six months ended June 30, 2021, Coeur reported revenue of $417.0 million and cash flow from operating activities of $53.7 million. We reported GAAP net income of $34.2 million, or $0.14 per diluted share. On an adjusted basis 1 , the Company reported EBITDA of $118.6 million and net income of $13.1 million or $0.05 per diluted share. • Quarterly revenue and cash flow growth – Revenue increased 6% quarter-over-quarter and 39% year-over-year due to higher gold and silver ounces sold and a higher average realized silver price. Operating cash flow improved by $62.4 million quarter-over-quarter and $48.1 million year-over-year to $58.1 million • Higher quarterly production and stronger expected second half – Gold production increased 2% quarter-over-quarter to 87,275 ounces led by a 27% improvement at Wharf, while silver production of 2.6 million ounces was 8% higher largely due to a 15% increase at Rochester. Year-over-year, gold and silver production increased 12% and 60%, respectively, driven by increases at Palmarejo and Rochester. Production levels are expected to continue climbing in the second half of the year and be within the Company’s full-year guidance of 322,500 - 367,500 ounces of gold and 9.7 - 12.2 million ounces of silver • New quarterly drilling record from largest exploration campaign in Company history – A new quarterly record was achieved during the period with the completion of approximately 320,400 feet (97,675 meters) of drilling and 27 currently active drill rigs. Investment in exploration totaled approximately $18.6 million ($12.4 million expensed and $6.2 million capitalized) in the quarter with significant increases in drilling activity at Palmarejo and Rochester as well as the Crown district in southern Nevada • Rochester expansion progressing according to schedule – Coeur advanced major construction on the Plan of Operations Amendment 11 (“POA 11”) expansion at Rochester on schedule, with solid ongoing environmental and safety performance. Placement of over-liner material on the new Stage VI leach pad commenced approximately six weeks ahead of schedule, and concrete foundation work for the Merrill-Crowe process plant and crusher corridor is scheduled to begin in the third quarter. Overall project progress was approximately 31% complete at the end of the second quarter • Accelerating investment at Silvertip based on positive results – The Company is increasing its investment at Silvertip during the second half of 2021 to complete several surface projects to support a potential restart of active mining and processing activities in 2023 • Strategic investment in Victoria – Coeur acquired a 17.8% ownership interest in Victoria Gold Corp. (“Victoria”) during the second quarter for consideration of approximately $118.8 million. Victoria owns and operates the new open pit, heap leach Eagle gold mine located in central Yukon Territory, Canada. The investment is consistent with the Company’s strategy and complements its existing portfolio of gold and silver assets located in high-quality jurisdictions 31 Selected Financial and Operating Results Three Months Ended June 30, Six Months Ended June 30, In thousands 2021 2020 2021 2020 Financial Results: Gold sales $ 146,158 $ 127,902 $ 284,480 $ 255,507 Silver sales $ 68,700 $ 26,347 $ 132,495 $ 71,256 Zinc sales $ — $ — $ — $ (662) Lead sales $ — $ — $ — $ 1,315 Consolidated Revenue $ 214,858 $ 154,249 $ 416,975 $ 327,416 Net income (loss) $ 32,146 $ (1,209) $ 34,206 $ (13,109) Net income (loss) per share, diluted $ 0.13 $ (0.01) $ 0.14 $ (0.05) Adjusted net income (loss) (1) $ (840) $ 2,601 $ 13,100 $ 1,682 Adjusted net income (loss) per share, diluted (1) $ 0.00 $ 0.01 $ 0.05 $ 0.01 EBITDA (1) $ 84,552 $ 35,276 $ 134,245 $ 60,727 Adjusted EBITDA (1) $ 52,738 $ 42,150 $ 118,603 $ 88,601 Total debt (2) $ 414,246 $ 298,720 $ 414,246 $ 343,109 Operating Results: Gold ounces produced 87,275 78,229 172,500 163,306 Silver ounces produced 2,587,393 1,620,410 4,990,536 4,296,828 Zinc pounds produced — — — 2,459,756 Lead pounds produced — — — 2,176,847 Gold ounces sold 88,501 77,933 171,613 163,568 Silver ounces sold 2,582,902 1,621,028 5,018,406 4,321,806 Zinc pounds sold — — — 3,203,446 Lead pounds sold — — — 2,453,485 Average realized price per gold ounce $ 1,651 $ 1,641 $ 1,658 $ 1,562 Average realized price per silver ounce $ 26.60 $ 16.25 $ 26.40 $ 16.49 Average realized price per zinc pound, gross (3) $ — $ — $ — NM Average realized price per lead pound, gross (3) $ — $ — $ — NM (1) See “Non-GAAP Financial Performance Measures.” (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 June 30, 2021 compared to Three Months Ended June 30, 2020 Revenue Revenue increased by $60.6 million, or 39%, as a result of a 1% and 64% increase in average realized gold and silver prices, respectively and higher gold and silver ounces sold (14% and 59%, respectively). In 2020, production was impacted by the temporary suspension of active mining operations at Palmarejo due to a government decree in response to COVID-19. We sold 88,501 gold ounces and 2.6 million silver ounces, compared to 77,933 gold ounces and 1.6 million silver ounces in the prior year. Gold and silver accounted for 68% and 32% of second quarter 2021 sales revenue, respectively. This compares to gold and silver accounting for 83% and 17% of second quarter 2020 sales revenue, respectively. 32 The following table summarizes consolidated metal sales: Three months ended June 30, Increase (Decrease) Percentage Change In thousands 2021 2020 Gold sales $ 146,158 $ 127,902 $ 18,256 14 % Silver sales 68,700 26,347 42,353 161 % Metal sales $ 214,858 $ 154,249 $ 60,609 39 % Costs Applicable to Sales Costs applicable to sales increased $42.6 million, or 47%, primarily due to higher ounces sold resulting from the temporary suspension of active mining operations at Palmarejo in 2020 and a non-cash inventory charge of $8.6 million related to a change in the Company’s recovery rate assumption on the Stage IV leach pad, partially offset by the favorable impact of foreign currency hedges. For a complete discussion of costs applicable to sales, see Results of Operations below. Amortization Amortization increased $4.1 million, or 15%, primarily due higher ounces sold resulting from the temporary suspension of active mining operations at Palmarejo in 2020. Expenses General and administrative expenses increased $1.9 million, or 21%, primarily due to higher employee incentive compensation costs. Exploration expense increased $0.6 million, or 5%, attributable to ramp up of drilling activity at Palmarejo and Crown as well as the continuation of expansion and infill programs across the rest of the Company’s portfolio. The Company completed 184,700 feet (56,300 meters) of expansion drilling and 135,900 feet (41,375 meters) of infill drilling in the second quarter of 2021 compared 160,680 feet (48,976 meters) of expansion drilling and 33,363 feet (10,169 meters) of infill drilling in the second quarter of 2020. Pre-development, reclamation, and other expenses decreased $5.9 million, or 32%, stemming from lower costs incurred in connection with the Company’s COVID-19 health and safety protocols and one-time costs at Silvertip including a $2.1 million write down of obsolete supply inventory in 2020. The following table summarizes pre-development, reclamation, and other expenses: Three months ended June 30, Increase (Decrease) Percentage Change In thousands 2021 2020 COVID-19 $ 2,315 $ 6,108 $ (3,793) (62) % Silvertip ongoing carrying costs 6,447 5,183 1,264 24 % Silvertip temporary suspension costs — 3,829 (3,829) (100) % Asset retirement accretion 2,965 2,908 57 2 % Other 1,011 647 364 56 % Pre-development, reclamation and other expense $ 12,738 $ 18,675 $ (5,937) (32) % Other Income and Expenses Fair value adjustments, net, increased to a gain of $37.2 million compared to $10.1 million, as a result of favorable changes in value related to the Company’s recent investment in Victoria. The estimated fair values of the Company’s equity investments in Victoria and Integra were $164.7 million and $9.6 million, respectively, at June 30, 2021. Interest expense (net of capitalized interest of $1.8 million) decreased to $5.1 million from $5.8 million due to higher capitalized interest associated with the POA 11 project at Rochester, and lower interest paid under the RCF, partially offset by higher interest paid under the 2029 Senior Notes compared to the 2024 Senior Notes. Other, net increased to a gain of $0.7 million compared to $0.1 million due to an increase in gains on the sale of assets. 33 Income and Mining Taxes During the second quarter of 2021, income and mining tax expense of approximately $15.3 million resulted in an effective tax rate of 32.3% for 2021. This compares to income tax expense of $2.8 million or effective tax rate of 173.9% for 2020. 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: Three months ended June 30, 2021 2021 2020 In thousands Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit United States $ 29,647 $ (7,228) $ 12,546 $ 827 Canada (12,979) — (15,621) 217 Mexico 30,827 (8,112) 4,805 (3,888) Other jurisdictions (9) — (95) — $ 47,486 $ (15,340) $ 1,635 $ (2,844) 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 2020 10-K. Net Income (Loss) Net income was $32.1 million, or $0.13 per diluted share, compared to net loss of $1.2 million, or $0.01 per share. The increase in net income was driven a 1% and 64% increase in average realized gold and silver prices, respectively, higher gold and silver ounces sold (14% and 59%, respectively), favorable changes in value related to the Company’s recent investment in Victoria and lower costs incurred in connection with the Company’s COVID-19 health and safety protocols. Also, in 2020, production was impacted by the temporary suspension of active mining operations at Palmarejo. This was partially offset by higher exploration and income and mining tax expense. Adjusted net loss was $0.8 million, or $0.00 per diluted share, compared to adjusted net income of $2.6 million, or $0.01 per share (see “Non-GAAP Financial Performance Measures”). Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020 Revenue Revenue increased by $89.6 million, or 27%, as a result of a 6% and 60% increase in average realized gold and silver prices, respectively, and higher gold and silver ounces sold (5% and 16%, respectively). In 2020, production was impacted by the temporary suspension of active mining operations at Palmarejo due to a government decree in response to COVID-19. We sold 171,613 gold ounces and 5.0 million silver ounces, compared to 163,568 gold ounces, 4.3 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 78% and 21% of first quarter 2020 sales revenue, respectively, with zinc and lead accounting for the remaining 2020 sales revenue. 34 The following table summarizes consolidated metal sales: Six months ended June 30, Increase (Decrease) Percentage Change In thousands 2021 2020 Gold sales $ 284,480 $ 255,507 $ 28,973 11 % Silver sales 132,495 71,256 61,239 86 % Zinc sales — (662) 662 (100) % Lead sales — 1,315 (1,315) (100) % Metal sales $ 416,975 $ 327,416 $ 89,559 27 % Costs Applicable to Sales Costs applicable to sales increased $31.8 million, or 15%, primarily due to higher ounces sold resulting from the 2020 temporary suspension of active mining operations at Palmarejo and Silvertip and a non-cash inventory charge of $8.6 million related to a change in the Company’s recovery rate assumption on the Stage IV leach pad, partially offset by the favorable impact from foreign currency hedges. For a complete discussion of costs applicable to sales, see Results of Operations below. Amortization Amortization decreased $2.1 million, or 3%, primarily due to the 2020 temporary suspension of active mining operations at Palmarejo and Silvertip and longer assumed mine life based on year-end 2020 mineral reserve growth at Palmarejo, partially offset by higher ounces sold. Expenses General and administrative expenses increased $4.5 million, or 26%, primarily due to higher employee incentive compensation costs. Exploration expense increased $3.9 million, or 21%, 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 313,300 feet (95,525 meters) of expansion drilling and 263,700 feet (80,350 meters) of infill drilling in the first half of 2021 compared 280,151 feet (85,391 meters) of expansion drilling and 83,572 feet (25,473 meters) of infill drilling in the first half of 2020. Pre-development, reclamation, and other expenses increased $1.2 million, or 5%, stemming from full-year ongoing carrying costs at Silvertip, partially offset by a gain resulting from the modification of a right of use lease at Silvertip in 2020, lower costs incurred in connection with the Company’s COVID-19 health and safety protocols and one-time costs at Silvertip including a $2.1 million write down of obsolete supply inventory in 2020. The following table summarizes pre-development, reclamation, and other expenses: Six months ended June 30, Increase (Decrease) Percentage Change In thousands 2021 2020 COVID-19 $ 5,319 $ 6,380 $ (1,061) (17) % Silvertip ongoing carrying costs 13,368 7,792 5,576 72 % Silvertip temporary suspension costs — 7,338 (7,338) (100) % Gain on modification of right of use lease — (4,051) 4,051 (100) % Asset retirement accretion 5,870 5,755 115 2 % Other 1,893 2,016 (123) (6) % Pre-development, reclamation and other expense $ 26,450 $ 25,230 $ 1,220 5 % Other Income and Expenses During the first half 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, increased to a gain of $33.4 million compared to $1.2 million as a result of favorable changes in value related to the Company’s recent investment in Victoria. The estimated fair values of the Company’s equity investments in Victoria and Integra were $164.7 million and $9.6 million, respectively, at June 30, 2021. 35 Interest expense (net of capitalized interest of $2.6 million) decreased to $10.0 million from $10.9 million due to higher capitalized interest associated with the POA 11 project at Rochester, and lower interest paid under the RCF, partially offset by higher interest paid under the 2029 Senior Notes compared to the 2024 Senior Notes. Other, net increased to a gain of $4.3 million compared to $2.0 million due to an increase in gains on the sale of assets. Income and Mining Taxes During the first half of 2021, income and mining tax expense of approximately $28.1 million resulted in an effective tax rate of 45.1% for 2021. This compares to income tax benefit of $1.1 million or effective tax rate of 7.7% for 2020. 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: Six months ended June 30, 2021 2020 In thousands Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit United States $ 21,116 $ (8,853) $ 1,540 $ 91 Canada (25,763) — (41,650) 232 Mexico 63,741 (19,273) 26,163 743 Other jurisdictions 3,238 — (257) 29 $ 62,332 $ (28,126) $ (14,204) $ 1,095 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 2020 10-K. Net Income (Loss) Net income was $34.2 million, or $0.14 per diluted share, compared to net loss of $13.1 million, or $0.05 per share. The increase in net income was driven by a 6% and 60% increase in average realized gold and silver prices, respectively, higher sales of gold and silver (5% and 16%, respectively), favorable changes in value related to the Company’s recent investment in Victoria, and lower operating costs at Silvertip. This was partially offset by higher exploration expense, a $9.2 million loss on debt extinguishment, severance costs and a full-year of ongoing carrying costs at Silvertip and higher income and mining taxes. Adjusted net income was $13.1 million, or $0.05 per diluted share, compared to $1.7 million, or $0.01 per share (see “Non-GAAP Financial Performance Measures”). 36 Results of Operations Palmarejo Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Tons milled 517,373 269,641 1,001,763 749,203 Average gold grade (oz/t) 0.058 0.066 0.060 0.070 Average silver grade (oz/t) 3.94 4.46 4.00 4.61 Average recovery rate – Au 92.4 % 86.0 % 94.0 % 89.7 % Average recovery rate – Ag 81.9 % 72.2 % 81.6 % 78.3 % Gold ounces produced 27,595 15,223 56,200 46,801 Silver ounces produced 1,666,545 867,134 3,269,819 2,702,025 Gold ounces sold 30,516 16,924 56,203 48,211 Silver ounces sold 1,639,620 874,642 3,277,315 2,769,431 Costs applicable to sales per gold ounce (1) $ 659 $ 690 $ 648 $ 659 Costs applicable to sales per silver ounce (1) $ 13.29 $ 8.18 $ 12.04 $ 8.31 (1) See Non-GAAP Financial Performance Measures. Three Months Ended June 30, 2021 compared to Three Months Ended June 30, 2020 Gold and silver production increased 81% and 92%, respectively, as a result of the temporary suspension of active mining operations at Palmarejo in 2020 due to a government decree in response to COVID-19. Metal sales were $85.0 million, or 40% of Coeur’s metal sales, compared with $38.0 million, or 25% of Coeur’s metal sales. Revenue for the three months ended June 30, 2021 increased by $47.1 million or 124%, of which $38.8 million was the result of a higher volume of gold and silver sales and $8.3 million due to higher average realized gold and silver prices. Costs applicable to sales per gold ounce decreased 4% while costs applicable to sales per silver ounce increased 62% due to the mix of gold and silver sales, lower gold and silver grades, and higher consumable and maintenance costs, partially offset by the favorable impact of foreign currency hedges. Amortization increased to $8.3 million due to higher ounces sold. Capital expenditures increased to $9.8 million from $4.5 million due to the impact of the 2020 temporary suspension on underground development and infill drilling activities. Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020 Gold and silver production increased 20% and 21%, respectively, as a result of the temporary suspension of active mining operations at Palmarejo in 2020 and higher recoveries, partially offset by lower gold and silver grades. Metal sales were $165.4 million, or 40% of Coeur’s metal sales, compared with $112.3 million, or 34% of Coeur’s metal sales. Revenue for the six months ended June 30, 2021 increased by $53.1 million or 47%, of which $28.5 million was the result of higher average realized gold and silver prices, and $24.6 million was due to a higher volume of gold and silver sales. Costs applicable to sales per gold ounce decreased 2% while costs applicable to sales per silver ounce increased 45% due to the mix of gold and silver sales, lower gold and silver grades, and higher consumable and maintenance costs, partially offset by the favorable impact from foreign currency hedges. Amortization decreased to $17.3 million due to a longer anticipated mine life based on year-end 2020 reserve growth, partially offset by higher ounces sold. Capital expenditures increased to $19.8 million from $11.6 million attributable to higher underground development at the La Nacion deposit and the impact of the 2020 temporary suspension on underground development and infill drilling activities. 37 Rochester Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Tons placed 3,195,777 3,743,331 6,436,694 7,171,909 Average gold grade (oz/t) 0.003 0.002 0.003 0.002 Average silver grade (oz/t) 0.38 0.51 0.41 0.54 Gold ounces produced 7,232 5,159 14,136 11,095 Silver ounces produced 888,307 728,312 1,661,985 1,415,691 Gold ounces sold 7,818 5,278 14,752 10,751 Silver ounces sold 911,861 723,679 1,683,215 1,355,916 Costs applicable to sales per gold ounce (1) $ 1,800 $ 1,529 $ 1,557 $ 1,444 Costs applicable to sales per silver ounce (1) $ 26.28 $ 14.19 $ 23.23 $ 14.58 (1) See Non-GAAP Financial Performance Measures. Three Months Ended June 30, 2021 compared to Three Months Ended June 30, 2020 Gold and silver production increased 40% and 22%, 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 $38.1 million, or 18% of Coeur’s metal sales, compared with $20.6 million, or 13% of Coeur’s metal sales. Revenue for the three months ended June 30, 2021 increased by $17.4 million or 84%, of which $9.4 million was the result of a higher volume of gold and silver sales and $8.0 million was due to higher average realized gold and silver prices. Costs applicable to sales per gold and silver ounce increased 18% and 85%, respectively, due to the mix of gold and silver sales, higher consumable costs and a non-cash inventory charge of $8.6 million related to a change in the Company’s recovery rate assumption on the Stage IV leach pad. Amortization increased to $6.5 million due to higher ounces sold. Capital expenditures increased to $42.3 million from $5.8 million due to the commencement of construction activities related to POA 11 in August 2020. Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020 Gold and silver production increased 27% and 17%, 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 $70.8 million, or 17% of Coeur’s metal sales, compared with $40.0 million, or 12% of Coeur’s metal sales. Revenue for the six months ended June 30, 2021 increased by $30.8 million or 77%, of which $15.8 million was the result of a higher volume of gold and silver sales and $15.0 million was the result of higher average realized gold and silver prices. Costs applicable to sales per gold and silver ounce increased 8% and 59%, respectively, due to the mix of gold and silver sales, higher consumable and equipment maintenance costs, and a non-cash inventory charge of $8.6 million related to a change in the Company’s recovery rate assumption on the Stage IV leach pad. Amortization increased to $10.1 million due to higher ounces sold. Capital expenditures increased to $72.4 million from $10.9 million due to the commencement of construction activities related to POA 11 in August 2020. 38 Kensington Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Tons milled 168,311 170,478 338,669 332,819 Average gold grade (oz/t) 0.18 0.21 0.19 0.21 Average recovery rate 92.7 % 92.0 % 92.9 % 92.7 % Gold ounces produced 28,322 33,058 59,003 65,080 Gold ounces sold 26,796 32,367 58,391 65,148 Costs applicable to sales per gold ounce (1) $ 1,090 $ 939 $ 1,038 $ 935 (1) See Non-GAAP Financial Performance Measures. Three Months Ended June 30, 2021 compared to Three Months Ended June 30, 2020 Gold production decreased 14% as a result of lower grade and mill throughput. Metal sales were $48.8 million, or 23% of Coeur’s metal sales, compared to $55.2 million, or 36% of Coeur’s metal sales. Revenue for the three months ended June 30, 2021 decreased by $6.4 million or 12%, of which $10.1 million resulted from a lower volume of gold sales, partially offset by an increase of $3.7 million due to higher average realized gold prices. Costs applicable to sales per gold ounce increased 16% due to lower production and higher diesel and outside service costs. Amortization decreased slightly to $12.7 million due to lower ounces sold partially offset by higher Jualin production. Capital expenditures increased to $6.0 million from $3.9 million due to higher infill drilling and underground development. Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020 Gold production decreased 9% as a result of lower grade, partially offset by higher mill throughput. Metal sales were $103.3 million, or 25% of Coeur’s metal sales, compared to $106.8 million, or 33% of Coeur’s metal sales. Revenue for the six months ended June 30, 2021 decreased by $3.6 million or 3%, of which $12.0 million resulted from lower volume of gold sales, partially offset by an increase of $8.4 million due to higher average realized gold prices. Costs applicable to sales per gold ounce increased 11% due to lower production and higher diesel, outside service and maintenance costs. Amortization increased to $26.2 million primarily due to higher Jualin production, partially offset by lower ounces sold. Capital expenditures increased to $13.2 million from $8.7 million due to higher infill drilling and underground development. Wharf Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Tons placed 1,025,481 1,401,237 2,139,524 2,347,686 Average gold grade (oz/t) 0.032 0.032 0.031 0.029 Gold ounces produced 24,126 24,789 43,161 40,330 Silver ounces produced 32,541 24,964 58,732 39,825 Gold ounces sold 23,371 23,364 42,267 39,458 Silver ounces sold 31,421 22,707 57,876 37,475 Costs applicable to sales per gold ounce (1) $ 967 $ 945 $ 961 $ 1,005 (1) See Non-GAAP Financial Performance Measures. 39 Three Months Ended June 30, 2021 compared to Three Months Ended June 30, 2020 Gold production decreased 3% driven by lower placed tons. Metal sales were $42.9 million, or 20% of Coeur’s metal sales, compared to $40.5 million, or 26% of Coeur’s metal sales. Revenue for the three months ended June 30, 2021 increased by $2.5 million or 6%, of which $2.2 million resulted from higher average realized gold and silver prices and $0.3 million was due to a higher volume of gold and silver sales. Costs applicable to sales per gold ounce slightly increased 2% due to higher employee-related costs, partially offset by a $3.3 million inventory write-down related to lower expected recoveries from leach pads 4 and 5 in 2020. Amortization decreased slightly to $3.0 million due to a lower units-of-production depletion rate. Capital expenditures were $1.4 million. Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020 Gold production increased 7% driven by higher grade and favorable weather conditions. Metal sales were $77.5 million, or 19% of Coeur’s metal sales, compared to $66.3 million, or 20% of Coeur’s metal sales. Revenue for the six months ended June 30, 2021 increased by $11.1 million or 17%, of which $5.6 million resulted from higher average realized gold and silver prices and $5.5 million was due to a higher volume of gold and silver sales. Costs applicable to sales per gold ounce decreased 4% due to higher production and a $3.3 million inventory write-down related to lower expected recoveries from leach pads 4 and 5 in 2020, partially offset by higher equipment rental and employee-related costs. Amortization remained decreased slightly to $5.5 million due to a lower units-of-production depletion rate. Capital expenditures were $2.9 million. Silvertip Three and Six Months Ended June 30, 2021 2020 2021 2020 Silver ounces produced — — — 139,287 Zinc pounds produced — — — 2,459,756 Lead pounds produced — — — 2,176,847 Silver ounces sold — — — 158,984 Zinc pounds sold — — — 3,203,446 Lead pounds sold — — — 2,453,485 Costs applicable to sales per silver ounce (2) $ — $ — $ — NM (1) Costs applicable to sales per zinc pound (2) $ — $ — $ — NM (1) Costs applicable to sales per lead ounce (2) $ — $ — $ — NM (1) (1) Due to the temporary suspension of mining and processing activities these amounts are not meaningful. (2) See Non-GAAP Financial Performance Measures. Three and Six Months Ended June 30, 2021 compared to Three and Six Months Ended June 30, 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. Ongoing carrying and temporary suspension costs are included in Pre-development, reclamation, and other. The Company plans to release an updated mine plan and economic analysis for Silvertip at the end of the year, including additional exploration results, updated engineering and revised capital estimate as well as information regarding the anticipated benefits of the 1,750 tonnes per day flowsheet which will be reflected in a technical report that is expected to be filed in early 2022. In June 2021, Silvertip repurchased from Silvertip Resources Investment Cayman Ltd. for $7.0 million a net smelter returns royalty of 1.429% on the first 1,434,000 metric tonnes of mineralized material mined, and 1.00% thereafter. Liquidity and Capital Resources At June 30, 2021, the Company had $125.5 million of cash, cash equivalents and restricted cash and $265.0 million available under its RCF. Cash and cash equivalents increased $31.3 million in the six months ended June 30, 2021, due to a 6% and 60% increase in average realized gold and silver prices, respectively, higher gold and silver ounces sold (5% and 16%, respectively), 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 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 40 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 June 30, 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 Provided by Operating Activities Net cash provided by operating activities for the three months ended June 30, 2021 was $58.1 million, compared to $9.9 million for the three months ended June 30, 2020. Net cash provided by operating activities for the six months ended June 30, 2021 was $53.7 million, compared to $2.0 million for the six months ended June 30, 2020. Adjusted EBITDA for the three months ended June 30, 2021 was $52.7 million, compared to $42.2 million for the three months ended June 30, 2020. Adjusted EBITDA for the six months ended June 30, 2021 was $118.6 million, compared to $88.6 million for the six months ended June 30, 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 June 30, Six Months Ended June 30, In thousands 2021 2020 2021 2020 Cash flow before changes in operating assets and liabilities $ 31,442 $ 16,411 $ 73,022 $ 46,555 Changes in operating assets and liabilities: Receivables 961 (1,536) 1,960 (2,349) Prepaid expenses and other 1,328 1,081 673 735 Inventories 3,259 (8,056) (14,227) (29,981) Accounts payable and accrued liabilities 21,069 2,047 (7,728) (13,004) Cash provided by (used in) operating activities $ 58,059 $ 9,947 $ 53,700 $ 1,956 Net cash provided by operating activities increased $48.1 million for the three months ended June 30, 2021 compared to the three months ended June 30, 2020, primarily due to a 1% and 64% increase in average realized gold and silver prices, respectively, higher ounces sold of gold and silver (14% and 59%, respectively), improved recoveries at Rochester, and a reduction in accounts payable at Silvertip due the temporary suspension in 2020. Revenue for the three months ended June 30, 2021 increased by $60.6 million, of which $43.0 million was the result of the higher volume of gold and silver sales and $17.6 million was due to higher average realized gold and silver prices. Net cash provided by operating activities increased $51.7 million for the six months ended June 30, 2021, primarily due to a 6% and 60% increase in average realized gold and silver prices, respectively, higher gold and silver ounces sold (5% and 16%, respectively), improved recoveries at Rochester, a reduction in accounts payable at Silvertip due the temporary suspension in 2020, partially offset by a payment of $4.0 million of interest related to the tender and redemption of the 2024 Senior Notes. Revenue for the six months ended June 30, 2021 increased by $89.6 million, of which $57.8 million was the result of higher average realized gold and silver prices and $31.7 million was due to the higher volume of gold and silver sales. Cash Provided by (Used in) Investing Activities Net cash used in investing activities in the three months ended June 30, 2021 was $78.1 million compared to net cash provided by investing activities $2.9 million in the three months ended June 30, 2020. Cash used in investing activities increased primarily due to construction activities related to POA 11 at Rochester in the current period and the impact of the net proceeds of $19.4 million from the sale of Metalla Common Shares in the comparable period of 2020. The Company incurred capital expenditures of $78.2 million in the three months ended June 30, 2021 compared with $16.7 million in the three months ended June 30, 2020. Capital expenditures in the three months ended June 30, 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 June 30, 2020 were primarily related to underground development at Silvertip, Palmarejo, and Kensington and POA 11 capital expenditures at Rochester. 41 Net cash used in investing activities in the six months ended June 30, 2021 was $132.1 million compared to $14.8 million in the six months ended June 30, 2020. Cash used in investing activities increased primarily due to construction activities related to POA 11 at Rochester in the current period and the impact of the net proceeds of $19.4 million from the sale of Metalla Common Shares in the comparable period of 2020. The Company incurred capital expenditures of $137.6 million in the six months ended June 30, 2021 compared with $38.9 million in the six months ended June 30, 2020. Capital expenditures in the six months ended June 30, 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 six months ended June 30, 2020 were primarily related to underground development at Silvertip, Palmarejo, and Kensington and POA 11 capital expenditures at Rochester. Recently-signed construction contracts related to POA 11 have begun demonstrating signs of inflationary pressures, specifically with respect to building materials and fuel as well as overall tightness in the construction market. Cash Provided by (Used in) Financing Activities Net cash used in financing activities in the three months ended June 30, 2021 was $9.8 million compared to net cash provided by financing activities of $4.4 million in the three months ended June 30, 2020. During the three months ended June 30, 2021, the Company repaid $9.6 million of principal under outstanding finance leases. During the three months ended June 30, 2020, the Company borrowed $100.0 million and repaid $90.0 million under the RCF. Net cash provided by financing activities in the six months ended June 30, 2021 was $109.8 million compared to $27.8 million in the six months ended June 30, 2020. During the six months ended June 30, 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 six months ended June 30, 2020, the Company drew $150.0 million from the RCF, partially offset by the repayment of $90.0 million under the RCF and the payment of contingent consideration of $18.8 million associated with the Silvertip acquisition. The Company secured a finance lease package for nearly $60 million during the quarter, a portion of which has been funded as of June 30, 2021. The package is earmarked for planned equipment purchases for the project in 2021 and 2022, and has an interest rate of 5.20%. Critical Accounting Policies and Accounting Developments Please see Note 2 -- Summary of Significant Accounting Policies contained in the 2020 10-K and in Note 2 - Summary of Significant Accounting Policies contained in this Report for the Company’s critical accounting policies and estimates. Other Liquidity Matters We believe that our liquidity and capital resources in the U.S. are adequate to fund our U.S. operations and corporate activities. The Company has asserted indefinite reinvestment of earnings from its Mexican operations as determined by management’s judgment about and intentions concerning the future operations of the Company. The Company does not believe that the amounts reinvested will have a material impact on liquidity. In order to reduce indebtedness, future cash interest payments and/or amounts due at maturity or upon redemption and for general working capital purposes, from time-to-time we may (1) issue equity securities for cash in public or private offerings or (2) repurchase certain of our debt securities for cash or in exchange for other securities, which may include secured or unsecured notes or equity, in each case in open market or privately negotiated transactions. We evaluate any such transactions in light of prevailing market conditions, liquidity requirements, contractual restrictions, and other factors. The amounts involved may be significant and any debt repurchase transactions may occur at a substantial discount to the debt securities’ face amount. Non-GAAP Financial Performance Measures Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles (“GAAP”). Unless otherwise noted, we present the Non-GAAP financial measures in the tables below. These measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP. 42 Adjusted Net Income (Loss) Management uses Adjusted net income (loss) to evaluate the Company’s operating performance, and to plan and forecast its operations. The Company believes the use of Adjusted net income (loss) reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies. Management’s determination of the components of Adjusted net income (loss ) are evaluated periodically and is based, in part, on a review of non-GAAP financial measures used by mining industry analysts. The tax effect of adjustments are based on statutory tax rates and the Company’s tax attributes, including the impact through the Company’s valuation allowance. The combined effective rate of tax adjustments may not be consistent with the statutory tax rates or the Company’s effective tax rate due to jurisdictional tax attributes and related valuation allowance impacts which may minimize the tax effect of certain adjustments and may not apply to gains and losses equally. Adjusted net income (loss) is reconciled to Net income (loss) in the following table: Three Months Ended June 30, Six Months Ended June 30, In thousands except per share amounts 2021 2020 2021 2020 Net income (loss) $ 32,146 $ (1,209) $ 34,206 $ (13,109) Fair value adjustments, net (37,239) (10,067) (33,440) (1,248) Foreign exchange loss (gain) 1,503 626 1,461 (5,994) (Gain) loss on sale of assets and securities (621) (9) (4,674) (383) Loss on debt extinguishment — — 9,172 — Silvertip inventory write-down — 2,104 — 12,485 Wharf inventory write-down — 3,323 — 3,323 Silvertip temporary suspension costs — 1,725 — 5,234 Silvertip lease modification — — — (4,051) Silvertip gain on contingent consideration — — — (955) COVID-19 costs 2,315 6,108 5,319 6,380 Tax effect of adjustments (1) 1,056 — 1,056 — Adjusted net income (loss) $ (840) $ 2,601 $ 13,100 $ 1,682 Adjusted net income (loss) per share - Basic $ 0.00 $ 0.01 $ 0.05 $ 0.01 Adjusted net income (loss) per share - Diluted $ 0.00 $ 0.01 $ 0.05 $ 0.01 (1) For the three and six months ended June 30, 2021, tax effect of adjustments of $1.1 million (3%) and $1.1 million (4%) are primarily related to the fair value adjustments on the Company’s equity investments. EBITDA and Adjusted EBITDA Management uses EBITDA to evaluate the Company’s operating performance, to plan and forecast its operations, and assess leverage levels and liquidity measures. The Company believes the use of EBITDA reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies. Adjusted EBITDA is a measure used in indenture governing the 2029 Senior Notes and the RCF to determine our ability to make certain payments and incur additional indebtedness. EBITDA and Adjusted EBITDA do not represent, and should not be considered an alternative to, Net income (Loss) or Cash Flow from Operations as determined under GAAP. Other companies may calculate Adjusted EBITDA differently and those calculations may not be comparable to our presentation. Adjusted EBITDA is reconciled to Net income (loss) in the following table: 43 Three Months Ended June 30, Six Months Ended June 30, In thousands except per share amounts 2021 2020 2021 2020 Net income (loss) $ 32,146 $ (1,209) $ 34,206 $ (13,109) (Income) loss from discontinued operations, net of tax — — — — Interest expense, net of capitalized interest 5,093 5,765 10,003 10,893 Income tax provision (benefit) 15,340 2,844 28,126 (1,095) Amortization 31,973 27,876 61,910 64,038 EBITDA 84,552 35,276 134,245 60,727 Fair value adjustments, net (37,239) (10,067) (33,440) (1,248) Foreign exchange (gain) loss 499 (11) 1,272 65 Asset retirement obligation accretion 2,965 2,908 5,870 5,755 Inventory adjustments and write-downs 267 793 839 1,269 (Gain) loss on sale of assets and securities (621) (9) (4,674) (383) Loss on debt extinguishment — — 9,172 — Silvertip inventory write-down — 2,104 — 12,485 Silvertip temporary suspension costs — 1,725 — 5,234 Silvertip lease modification — — — (4,051) Silvertip gain on contingent consideration — — — (955) COVID-19 costs 2,315 6,108 5,319 6,380 Wharf inventory write-down — 3,323 — 3,323 Adjusted EBITDA $ 52,738 $ 42,150 $ 118,603 $ 88,601 Free Cash Flow Management uses Free Cash Flow as a non-GAAP measure to analyze cash flows generated from operations. Free Cash Flow is Cash Provided By (used in) Operating Activities 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 , which the Company believes to be the GAAP financial measure most directly comparable to Free Cash Flow. Three Months Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2021 2020 2021 2020 Cash flow from operations $ 58,059 $ 9,947 $ 53,700 $ 1,956 Capital expenditures 78,223 16,682 137,647 38,890 Free cash flow $ (20,164) $ (6,735) $ (83,947) (36,934) 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. 44 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 June 30, Six Months Ended June 30, (Dollars in thousands) 2021 2020 2021 2020 Cash provided by (used in) operating activities $ 58,059 $ 9,947 $ 53,700 $ 1,956 Changes in operating assets and liabilities: Receivables (961) 1,536 (1,960) 2,349 Prepaid expenses and other (1,328) (1,081) (673) (735) Inventories (3,259) 8,056 14,227 29,981 Accounts payable and accrued liabilities (21,069) (2,047) 7,728 13,004 Operating cash flow before changes in working capital $ 31,442 $ 16,411 $ 73,022 $ 46,555 Costs Applicable to Sales Management uses CAS to evaluate the Company’s current operating performance and life of mine performance from discovery through reclamation. We believe these measures assist analysts, investors and other stakeholders in understanding the costs associated with producing gold, silver, zinc and lead, assessing our operating performance and ability to generate free cash flow from operations and sustaining production. These measures may not be indicative of operating profit or cash flow from operations as determined under GAAP. Management believes that allocating CAS to gold, silver, zinc and lead based on gold, silver, zinc and lead metal sales relative to total metal sales best allows management, analysts, investors and other stakeholders to evaluate the operating performance of the Company. Other companies may calculate CAS differently as a result of reflecting the benefit from selling non-silver metals as a by-product credit, converting to silver equivalent ounces, and differences in underlying accounting principles and accounting frameworks such as in International Financial Reporting Standards. Three Months Ended June 30, 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. GAAP) $ 50,189 $ 44,537 $ 41,913 $ 26,437 $ 1,185 $ 164,261 Amortization (8,271) (6,506) (12,710) (2,994) (1,185) (31,666) Costs applicable to sales $ 41,918 $ 38,031 $ 29,203 $ 23,443 $ — $ 132,595 Metal Sales Gold ounces 30,516 7,818 26,796 23,371 88,501 Silver ounces 1,639,620 911,861 31,421 — 2,582,902 Zinc pounds — — Lead pounds — — Costs applicable to sales Gold ($/oz) $ 659 $ 1,800 $ 1,090 $ 967 Silver ($/oz) $ 13.29 $ 26.28 $ — Zinc ($/lb) $ — Lead ($/lb) $ — 45 Three Months Ended June 30, 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. GAAP) $ 26,095 $ 21,348 $ 43,235 $ 25,653 $ 1,231 $ 117,562 Amortization (7,270) (3,012) (12,853) (3,181) (1,231) (27,547) Costs applicable to sales $ 18,825 $ 18,336 $ 30,382 $ 22,472 $ — $ 90,015 Metal Sales Gold ounces 16,924 5,278 32,367 23,364 77,933 Silver ounces 874,642 723,679 22,707 — 1,621,028 Zinc pounds — — Lead pounds — — Costs applicable to sales Gold ($/oz) $ 690 $ 1,529 $ 939 $ 945 Silver ($/oz) $ 8.18 $ 14.19 $ — Zinc ($/lb) $ — Lead ($/lb) $ — Six Months Ended June 30, 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. GAAP) $ 93,236 $ 72,147 $ 86,752 $ 47,644 $ 2,271 $ 302,050 Amortization (17,330) (10,083) (26,155) (5,469) (2,271) (61,308) Costs applicable to sales $ 75,906 $ 62,064 $ 60,597 $ 42,175 $ — $ 240,742 Metal Sales Gold ounces 56,203 14,752 58,391 42,267 171,613 Silver ounces 3,277,315 1,683,215 57,876 — 5,018,406 Zinc pounds — — Lead pounds — — Costs applicable to sales Gold ($/oz) $ 648 $ 1,557 $ 1,038 $ 961 Silver ($/oz) $ 12.04 $ 23.23 $ — Zinc ($/lb) $ — Lead ($/lb) $ — Six Months Ended June 30, 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. GAAP) $ 75,244 $ 41,208 $ 85,664 $ 45,920 $ 24,233 $ 272,269 Amortization (20,445) (5,916) (24,775) (5,625) (6,576) (63,337) Costs applicable to sales $ 54,799 $ 35,292 $ 60,889 $ 40,295 $ 17,657 $ 208,932 Metal Sales Gold ounces 48,211 10,751 65,148 39,458 163,568 Silver ounces 2,769,431 1,355,916 37,475 158,984 4,321,806 Zinc pounds 3,203,446 3,203,446 Lead pounds 2,453,485 2,453,485 Costs applicable to sales Gold ($/oz) $ 659 $ 1,444 $ 935 $ 1,005 Silver ($/oz) $ 8.31 $ 14.58 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. 46 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 operations at the Company’s mines, exploration and development efforts, strategies, expectations regarding the Rochester POA 11 expansion project, the Silvertip mine's planned restart, 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, risk management strategies, capital allocation and anticipated production, costs, and expenses. 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 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. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.