Coeur Mining, Inc. 10-Q

Item 1. Financial Statements and Supplementary Data COEUR MINING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, 2022 December 31, 2021 ASSETS Notes In thousands, except share data CURRENT ASSETS Cash and cash equivalents $ 73,330 $ 56,664 Receivables 4 29,221 32,417 Inventory 5 52,944 51,281 Ore on leach pads 5 89,406 81,128 Prepaid expenses and other 14,340 13,847 Assets held for sale 19 — 54,240 259,241 289,577 NON-CURRENT ASSETS Property, plant and equipment, net 337,455 319,967 Mining properties, net 913,138 852,799 Ore on leach pads 5 73,133 73,495 Restricted assets 9,254 9,138 Equity securities 6 161,894 132,197 Other 63,086 57,249 TOTAL ASSETS $ 1,817,201 $ 1,734,422 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 103,266 $ 103,901 Accrued liabilities and other 18 82,438 87,946 Debt 7, 8 29,620 29,821 Reclamation 9 2,853 2,931 Liabilities held for sale 19 — 11,269 218,177 235,868 NON-CURRENT LIABILITIES Debt 7, 8 455,868 457,680 Reclamation 9 181,473 178,957 Deferred tax liabilities 24,647 21,969 Other long-term liabilities 37,062 39,686 699,050 698,292 COMMITMENTS AND CONTINGENCIES 17 STOCKHOLDERS’ EQUITY Common stock, par value $ 0.01 per share; authorized 300,000,000 shares, 280,834,764 issued and outstanding at March 31, 2022 and 256,919,803 at December 31, 2021 2,808 2,569 Additional paid-in capital 3,834,896 3,738,347 Accumulated other comprehensive income (loss) ( 5,970 ) ( 1,212 ) Accumulated deficit ( 2,931,760 ) ( 2,939,442 ) 899,974 800,262 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,817,201 $ 1,734,422 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 4 COEUR MINING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) Three Months Ended March 31, 2022 2021 Notes In thousands, except share data Revenue 3 $ 188,404 $ 202,117 COSTS AND EXPENSES Costs applicable to sales (1) 3 133,267 108,147 Amortization 26,433 29,937 General and administrative 10,272 11,554 Exploration 5,418 9,666 Pre-development, reclamation, and other 14 11,412 13,712 Total costs and expenses 186,802 173,016 OTHER INCOME (EXPENSE), NET Loss on debt extinguishment — ( 9,173 ) Fair value adjustments, net 12 10,605 ( 3,799 ) Interest expense, net of capitalized interest 8 ( 4,568 ) ( 4,910 ) Other, net 14 1,737 3,627 Total other income (expense), net 7,774 ( 14,255 ) Income (loss) before income and mining taxes 9,376 14,846 Income and mining tax (expense) benefit 10 ( 1,694 ) ( 12,786 ) NET INCOME (LOSS) $ 7,682 $ 2,060 OTHER COMPREHENSIVE INCOME (LOSS): Change in fair value of derivative contracts designated as cash flow hedges ( 5,218 ) 27,357 Reclassification adjustments for realized (gain) loss on cash flow hedges 460 ( 2,721 ) Other comprehensive income (loss) ( 4,758 ) 24,636 COMPREHENSIVE INCOME (LOSS) $ 2,924 $ 26,696 NET INCOME (LOSS) PER SHARE 15 Basic income (loss) per share: Basic $ 0.03 $ 0.01 Diluted $ 0.03 $ 0.01 (1) Excludes amortization. The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 5 COEUR MINING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, 2022 2021 Notes In thousands CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 7,682 $ 2,060 Adjustments: Amortization 26,433 29,937 Accretion 3,463 2,905 Deferred taxes ( 8,262 ) 124 Loss on debt extinguishment 8 — 9,173 Fair value adjustments, net 12 ( 13,744 ) 3,799 Stock-based compensation 11 2,267 4,256 Write-downs 5 7,595 — Deferred revenue recognition 17 ( 315 ) ( 8,346 ) Other ( 1,340 ) ( 2,328 ) Changes in operating assets and liabilities: Receivables 9,100 999 Prepaid expenses and other current assets ( 509 ) ( 655 ) Inventory and ore on leach pads ( 17,672 ) ( 17,486 ) Accounts payable and accrued liabilities ( 21,125 ) ( 28,797 ) CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ( 6,427 ) ( 4,359 ) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 69,502 ) ( 59,424 ) Proceeds from the sale of assets 15,371 4,588 Sale of investments — 935 Other ( 11 ) ( 17 ) CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ( 54,142 ) ( 53,918 ) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 15 98,397 — Issuance of notes and bank borrowings, net of issuance costs 8 85,000 367,493 Payments on debt, finance leases, and associated costs 7, 8 ( 103,267 ) ( 243,967 ) Other ( 3,403 ) ( 3,925 ) CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 76,727 119,601 Effect of exchange rate changes on cash and cash equivalents 272 ( 51 ) INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 16,430 61,273 Cash, cash equivalents and restricted cash at beginning of period 58,289 94,170 Cash, cash equivalents and restricted cash at end of period $ 74,719 $ 155,443 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 6 COEUR MINING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED) In thousands Common Stock Shares Common Stock Par Value Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Balances at December 31, 2021 256,919 $ 2,569 $ 3,738,347 $ ( 2,939,442 ) $ ( 1,212 ) $ 800,262 Net income (loss) — — — 7,682 — 7,682 Other comprehensive income (loss) — — — — ( 4,758 ) ( 4,758 ) Common stock issued under "at the market" stock offering 22,053 220 98,279 — — 98,499 Common stock issued/canceled under long-term incentive plans and director fees and options, net 1,862 19 ( 1,730 ) — — ( 1,711 ) Balances at March 31, 2022 280,834 $ 2,808 $ 3,834,896 $ ( 2,931,760 ) $ ( 5,970 ) $ 899,974 In thousands Common Stock Shares Common Stock Par Value Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Balances at December 31, 2020 243,752 $ 2,438 $ 3,610,297 $ ( 2,908,120 ) $ ( 11,136 ) $ 693,479 Net income (loss) — — — 2,060 — 2,060 Other comprehensive income (loss) — — — — 24,636 24,636 Common stock issued/canceled under long-term incentive plans and director fees and options, net ( 282 ) ( 3 ) 334 — — 331 Balances at March 31, 2021 243,470 $ 2,435 $ 3,610,631 $ ( 2,906,060 ) $ 13,500 $ 720,506 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 7 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements NOTE 1 - BASIS OF PRESENTATION The interim condensed consolidated financial statements of Coeur Mining, Inc. and its subsidiaries (collectively, “Coeur” or the “Company”) are unaudited. In the opinion of management, all adjustments and disclosures necessary for the fair presentation of these interim statements have been included. The results reported in these interim statements may not be indicative of the results which will be reported for the year ending December 31, 2022. The condensed consolidated December 31, 2021 balance sheet data was derived from audited consolidated financial statements. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 10-K”). NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Significant Accounting Policies Please see Note 2 — Summary of Significant Accounting Policies contained in the 2021 10-K. Use of Estimates The Company's Consolidated Financial Statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of the Company's Consolidated Financial Statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to metal prices and mineral reserves that are the basis for future cash flow estimates utilized in impairment calculations and units-of production amortization calculations, environmental, reclamation and closure obligations, estimates of recoverable silver and gold in leach pad inventories, estimates of fair value for certain reporting units and asset impairments, valuation allowances for deferred tax assets, and the fair value and accounting treatment of financial instruments, equity securities, asset acquisitions, the allocation of fair value to assets and liabilities assumed in connection with business combinations, and derivative instruments. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results will differ from the amounts estimated in these financial statements. Revenue Recognition The Company’s gold stream agreement with a subsidiary of Franco-Nevada Corporation (“Franco-Nevada”) provided for a $ 22.0 million deposit paid by Franco-Nevada in exchange for the right and obligation, commencing in 2016, to purchase 50 % of a portion of Palmarejo gold production at the lesser of $ 800 or market price per ounce. Because there is no minimum obligation associated with the deposit, it is not considered financing, and each shipment is considered to be a separate performance obligation. The streaming agreement represents a contract liability under ASC 606, which requires the Company to ratably recognize a portion of the deposit as revenue for each gold ounce delivered to Franco-Nevada. The remaining unamortized balance is included in Accrued liabilities and other and Other long-term liabilities on the Consolidated Balance Sheet. See Note 17 -- Commitments and Contingencies for additional detail. The following table presents a roll forward of the Franco-Nevada contract liability balance: Three Months Ended March 31, In thousands 2022 2021 Opening Balance $ 8,150 $ 9,376 Revenue Recognized ( 315 ) ( 346 ) Closing Balance $ 7,835 $ 9,030 In December 2021, the Company received a $ 15.0 million prepayment (the “December 2021 Prepayment”) for deliveries of gold concentrate from the Kensington mine pursuant to the Amended Sales Contract (as defined in Note 17). In March 2022, the Company exercised an option to receive a $ 10.0 million prepayment (the “March 2022 Prepayment). The Amended Sales Contract represents a contract liability under ASC 606, which requires the Company to recognize ratably a portion of the deposit as revenue for each gold ounce delivered to the customer. The remaining contract liability is included in Accrued liabilities and other on the Consolidated Balance Sheet. See Note 17 -- Commitments and Contingencies for additional detail. 8 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements The following table presents a roll forward of the Amended Sales Contract liability balance: Three Months Ended March 31, In thousands 2022 2021 Opening Balance $ 15,016 $ 15,003 Additions 10,139 101 Revenue Recognized — ( 8,000 ) Closing Balance $ 25,155 $ 7,104 Recently Issued Accounting Standards In March 2022, the FASB issued ASU 2022-01, “ Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method ” which is intended to make amendments to the fair value hedge accounting previously issued in ASU 2017-12 “ Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ”. The new standard is effective for reporting periods beginning after December 15, 2022. The standard introduced the portfolio layer method allowing multiple hedged layers of a single closed portfolio when applying fair value hedge accounting. The Company plans to adopt the new derivatives and hedging standards effective January 1, 2023 and does not expect the new derivatives and hedging standard to have a material effect on our financial position, results of operations or cash flows. 9 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements NOTE 3 – SEGMENT REPORTING The Company’s operating segments include the Palmarejo, Rochester, Kensington and Wharf mines and Silvertip development property. Except for the Silvertip development property, all operating segments are engaged in the discovery, mining, and production of gold and/or silver. The Silvertip development property, which suspended mining and processing activities in February 2020, is engaged in the discovery of silver, zinc and lead. Other includes the Sterling/Crown development properties, other mineral interests, strategic equity investments, corporate office, elimination of intersegment transactions, and other items necessary to reconcile to consolidated amounts. Financial information relating to the Company’s segments is as follows (in thousands): Three Months Ended March 31, 2022 Palmarejo Rochester Kensington Wharf Silvertip Other Total Revenue Gold sales $ 40,074 $ 11,052 $ 44,059 $ 34,266 $ — $ — $ 129,451 Silver sales 42,999 15,317 245 392 — — 58,953 Metal sales 83,073 26,369 44,304 34,658 — — 188,404 Costs and Expenses Costs applicable to sales (1) 43,225 32,275 36,910 20,857 — — 133,267 Amortization 9,386 4,710 8,622 2,061 1,259 395 26,433 Exploration 1,610 1,942 402 — — 1,464 5,418 Other operating expenses 921 1,831 615 512 6,494 11,311 21,684 Other income (expense) Fair value adjustments, net — — — — — 10,605 10,605 Interest expense, net ( 115 ) ( 178 ) ( 248 ) ( 13 ) ( 68 ) ( 3,946 ) ( 4,568 ) Other, net (3) ( 339 ) ( 48 ) 106 39 ( 5 ) 1,984 1,737 Income and mining tax (expense) benefit ( 12,075 ) ( 35 ) — ( 993 ) — 11,409 ( 1,694 ) Net Income (loss) $ 15,402 $ ( 14,650 ) $ ( 2,387 ) $ 10,261 $ ( 7,826 ) $ 6,882 $ 7,682 Segment assets (2) $ 288,081 $ 618,481 $ 149,840 $ 91,527 $ 234,693 $ 127,015 $ 1,509,637 Capital expenditures $ 13,611 $ 33,050 $ 7,924 $ 1,361 $ 11,859 $ 1,697 $ 69,502 (1) Excludes amortization (2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests (3) See Note 14 -- Additional Comprehensive Income (Loss) Detail for additional detail Three Months Ended March 31, 2021 Palmarejo Rochester Kensington Wharf Silvertip Other Total Revenue Gold sales $ 37,567 $ 12,440 $ 54,466 $ 33,849 $ — $ — $ 138,322 Silver sales 42,778 20,317 — 700 — — 63,795 Metal sales 80,345 32,757 54,466 34,549 — — 202,117 Costs and Expenses Costs applicable to sales (1) 33,988 24,033 31,394 18,732 — — 108,147 Amortization 9,059 3,577 13,445 2,475 1,086 295 29,937 Exploration 1,693 472 1,109 67 2,932 3,393 9,666 Other operating expenses 1,270 1,448 2,995 185 6,555 12,813 25,266 Other income (expense) Loss on debt extinguishment — — — — — ( 9,173 ) ( 9,173 ) Fair value adjustments, net — — — — — ( 3,799 ) ( 3,799 ) Interest expense, net ( 187 ) ( 222 ) ( 232 ) ( 37 ) 45 ( 4,277 ) ( 4,910 ) Other, net (3) ( 665 ) ( 61 ) — 24 ( 102 ) 4,431 3,627 Income and mining tax (expense) benefit ( 11,340 ) ( 138 ) ( 334 ) ( 1,129 ) — 155 ( 12,786 ) Net Income (loss) $ 22,143 $ 2,806 $ 4,957 $ 11,948 $ ( 10,630 ) $ ( 29,164 ) $ 2,060 Segment assets (2) $ 306,648 $ 388,047 $ 162,727 $ 79,018 $ 169,328 $ 177,516 $ 1,283,284 Capital expenditures $ 9,983 $ 30,177 $ 7,202 $ 1,481 $ 10,387 $ 194 $ 59,424 (1) Excludes amortization (2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests (3) See Note 14 -- Additional Comprehensive Income (Loss) Detail for additional detail 10 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements Assets March 31, 2022 December 31, 2021 Total assets for reportable segments $ 1,509,637 $ 1,424,934 Cash and cash equivalents 73,330 56,664 Other assets 234,234 252,824 Total consolidated assets $ 1,817,201 $ 1,734,422 Geographic Information Long-Lived Assets March 31, 2022 December 31, 2021 United States $ 774,536 $ 704,007 Mexico 247,218 244,758 Canada 228,715 223,876 Other 124 125 Total $ 1,250,593 $ 1,172,766 Revenue Three months ended March 31, 2022 2021 United States $ 105,331 $ 121,772 Mexico 83,073 80,345 Total $ 188,404 $ 202,117 NOTE 4 – RECEIVABLES Receivables consist of the following: In thousands March 31, 2022 December 31, 2021 Current receivables: Trade receivables $ 7,080 $ 4,879 VAT receivable 8,293 18,415 Income tax receivable 8,827 8,418 Avino note receivable 4,709 — Other 312 705 $ 29,221 $ 32,417 NOTE 5 – INVENTORY AND ORE ON LEACH PADS Inventory consists of the following: 11 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements In thousands March 31, 2022 December 31, 2021 Inventory: Concentrate $ 1,943 $ 1,643 Precious metals 11,867 11,353 Supplies 39,134 38,285 $ 52,944 $ 51,281 Ore on Leach Pads: Current $ 89,406 $ 81,128 Non-current 73,133 73,495 $ 162,539 $ 154,623 Long-term Stockpile (included in Other ) $ 18,142 $ 18,027 Total Inventory and Ore on Leach Pads $ 233,625 $ 223,931 Coeur reports the carrying value of metal and leach pad inventory at the lower of cost or net realizable value, with cost being determined using a weighted average cost method. At the end of the first quarter of 2022, the cost of metal and leach pad inventory at Rochester exceeded its net realizable value which resulted in a non-cash write down of $ 8.6 million ($ 7.6 million was recognized in Costs Applicable to Sales and $ 1.0 million in Amortization). NOTE 6 – INVESTMENTS Equity Securities The Company makes strategic investments in equity securities of silver and gold exploration, development and royalty and streaming companies. At March 31, 2022 In thousands Cost Gross Unrealized Losses Gross Unrealized Gains Estimated Fair Value Equity Securities Victoria Gold Corp. $ 128,710 $ — $ 12,410 $ 141,120 Integra Resources Corp. 9,455 ( 4,074 ) — 5,381 Avino Silver & Gold Mines Ltd 13,720 ( 560 ) — 13,160 Other 2,233 — — 2,233 Equity securities $ 154,118 $ ( 4,634 ) $ 12,410 $ 161,894 At December 31, 2021 In thousands Cost Gross Unrealized Losses Gross Unrealized Gains Estimated Fair Value Equity Securities Victoria Gold Corp. $ 128,710 $ ( 4,499 ) $ — $ 124,211 Integra Resources Corp. 9,455 ( 1,469 ) — 7,986 Equity securities $ 138,165 $ ( 5,968 ) $ — $ 132,197 Changes in the fair value of the Company’s investment in equity securities are recognized each period in the Consolidated Statement of Comprehensive Income (Loss) in Fair value adjustments, net . See Note 12 -- Fair Value Measurements for additional details. On March 21, 2022, the Company closed the sale of its La Preciosa silver project. In connection with the closing of the transaction, the Company received 14,000,000 common shares of Avino Silver & Gold Mines Ltd. (“Avino”) (representing approximately 12.0 % of Avino’s outstanding common shares). See Note 19 -- Dispositions for additional details on the sale. 12 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements NOTE 7 – LEASES Right of Use Assets and Liabilities The following table summarizes quantitative information pertaining to the Company’s finance and operating leases. Three months ended March 31, In thousands 2022 2021 Lease Cost Operating lease cost $ 3,016 $ 3,151 Short-term operating lease cost $ 2,608 $ 3,045 Finance Lease Cost: Amortization of leased assets $ 5,207 $ 5,888 Interest on lease liabilities 1,221 589 Total finance lease cost $ 6,428 $ 6,477 Supplemental cash flow information related to leases was as follows: Three months ended March 31, In thousands 2022 2021 Other Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 5,624 $ 6,401 Operating cash flows from finance leases $ 1,221 $ 589 Financing cash flows from finance leases $ 8,239 $ 5,663 Supplemental balance sheet information related to leases was as follows: In thousands March 31, 2022 December 31, 2021 Operating Leases Other assets, non-current $ 28,369 $ 30,987 Accrued liabilities and other 11,101 11,301 Other long-term liabilities 16,304 18,660 Total operating lease liabilities $ 27,405 $ 29,961 Finance Leases Property and equipment, gross $ 124,996 $ 115,597 Accumulated depreciation ( 64,722 ) ( 63,879 ) Property and equipment, net $ 60,274 $ 51,718 Debt, current $ 29,620 $ 29,821 Debt, non-current 32,360 24,407 Total finance lease liabilities $ 61,980 $ 54,228 Weighted Average Remaining Lease Term Weighted-average remaining lease term - finance leases 1.86 1.62 Weighted-average remaining lease term - operating leases 2.97 3.17 Weighted Average Discount Rate Weighted-average discount rate - finance leases 5.03 % 5.08 % Weighted-average discount rate - operating leases 5.20 % 5.20 % Minimum future lease payments under finance and operating leases with terms longer than one year are as follows: 13 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements As of March 31, 2022 (In thousands) Operating leases Finance leases 2022 $ 8,664 $ 21,022 2023 10,868 19,304 2024 8,812 11,713 2025 213 10,164 2026 220 5,614 Thereafter 945 1,135 Total $ 29,722 $ 68,952 Less: imputed interest ( 2,317 ) ( 6,972 ) Net lease obligation $ 27,405 $ 61,980 NOTE 8 – DEBT March 31, 2022 December 31, 2021 In thousands Current Non-Current Current Non-Current 2029 Senior Notes, net (1) $ — $ 368,508 $ — $ 368,273 Revolving Credit Facility (2) — 55,000 — 65,000 Finance lease obligations 29,620 32,360 29,821 24,407 $ 29,620 $ 455,868 $ 29,821 $ 457,680 (1) Net of unamortized debt issuance costs of $ 6.5 million and $ 6.7 million at March 31, 2022 and December 31, 2021, respectively. (2) Unamortized debt issuance costs of $ 2.2 million and $ 2.4 million at March 31, 2022 and December 31, 2021, respectively, included in Other Non-Current Assets . 2029 Senior Notes In March 2021, the Company completed an offering of $ 375.0 million in aggregate principal amount of senior notes in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, for net proceeds of approximately $ 367.5 million (the “2029 Senior Notes”). For more details, please see Note 8 -- Debt contained in the 2021 10-K. Revolving Credit Facility At March 31, 2022, the Company had $ 215.0 million available under its $ 300.0 million revolving credit facility (the “RCF”) provided pursuant to the credit agreement entered into in September 2017 (as amended, the “Credit Agreement”) among the Company, as borrower, and certain subsidiaries of the Company, as guarantors, and Bank of America, N.A, as administrative agent (the “Agent”), and Bank of America, N.A., Royal Bank of Canada, Bank of Montreal, Chicago Branch, the Bank of Nova Scotia and ING Capital LLC (the “RCF Lenders”). At March 31, 2022, the Company had $ 55.0 million drawn at an interest rate of 2.7 % and $ 30.0 million in outstanding letters of credit under the RCF. On May 2, 2022, the Company entered into an amendment (the “Amendment”) to the RCF, by and among the Company, certain subsidiaries of the Company, as guarantors, the lenders party thereto and the Agent. The Amendment, among other things, increases the maximum principal amount of the RCF by $ 90.0 million in incremental loans and commitments to an aggregate of $ 390.0 million. Finance Lease Obligations From time-to-time, the Company acquires mining equipment and facilities under finance lease agreements. In the three months ended March 31, 2022, the Company entered into new lease financing arrangements primarily for mining equipment at Rochester and Kensington. Coeur secured a finance lease package for nearly $ 60 million in 2021, a portion of which has been funded as of March 31, 2022. The package is earmarked for planned equipment purchases for POA 11 in 2022, and has an interest rate of 5.22 %. All finance lease obligations are recorded, upon lease inception, at the present value of future minimum lease payments. See Note 7 -- Leases for additional qualitative and quantitative disclosures related to finance leasing arrangements. 14 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements Interest Expense Three Months Ended March 31, In thousands 2022 2021 2024 Senior Notes $ — $ 2,591 2029 Senior Notes 4,805 1,602 Revolving Credit Facility 1,187 480 Finance lease obligations 1,221 589 Amortization of debt issuance costs 417 404 Other debt obligations 127 57 Capitalized interest ( 3,189 ) ( 813 ) Total interest expense, net of capitalized interest $ 4,568 $ 4,910 NOTE 9 – RECLAMATION Reclamation and mine closure costs are based principally on legal and regulatory requirements. Management estimates costs associated with reclamation of mining properties. On an ongoing basis, management evaluates its estimates and assumptions, and future expenditures could differ from current estimates. Changes to the Company’s asset retirement obligations are as follows: Three Months Ended March 31, In thousands 2022 2021 Asset retirement obligation - Beginning $ 181,888 $ 139,274 Accretion 3,457 2,908 Settlements ( 1,019 ) ( 770 ) Asset retirement obligation - Ending $ 184,326 $ 141,412 NOTE 10 - INCOME AND MINING TAXES The following table summarizes the components of Income and mining tax (expense) benefit for the three months ended March 31, 2022 and 2021 by significant jurisdiction: Three months ended March 31, 2022 2021 In thousands Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit United States $ ( 10,130 ) $ ( 1,199 ) $ ( 8,531 ) $ ( 1,625 ) Canada ( 7,525 ) — ( 12,785 ) — Mexico 27,033 ( 495 ) 32,914 ( 11,161 ) Other jurisdictions ( 2 ) — 3,248 — $ 9,376 $ ( 1,694 ) $ 14,846 $ ( 12,786 ) During the first quarter of 2022, the Company reported estimated income and mining tax expense of approximately $ 1.7 million, resulting in an effective tax rate of 18.1 %. This compares to income tax expense of $ 12.8 million for an effective tax rate of 86.1 % during the first quarter of 2021. 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) the sale of non-core assets; (ii) the non-recognition of tax assets; (iii) variations in our income before income taxes; (iv) geographic distribution of that income; (v) mining taxes; (vi) foreign exchange rates; (vii) the impact of uncertain tax positions; and (viii) percentage depletion. Therefore, the effective tax rate will fluctuate, sometimes significantly, period to period. A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company ultimately will be more likely than not able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number 15 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements of factors that impact the Company’s ability to realize its deferred tax assets. For additional information, please see the section titled “Risk Factors” in the 2021 10-K. The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The statute of limitations remains open from 2018 forward for the U.S. federal jurisdiction and from 2016 forward for certain other foreign jurisdictions. As a result of statutes of limitation that will begin to expire within the next twelve months in various jurisdictions and possible settlements of audit-related issues with taxing authorities in various jurisdictions with respect to which none of the issues are individually significant, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits will decrease by less than $ 0.1 million in the next twelve months. At March 31, 2022 and December 31, 2021, the Company had $ 0.0 million and $ 0.3 million of total gross unrecognized tax benefits, respectively, that, if recognized, would positively impact the Company’s effective income tax rate. The Company’s continuing practice is to recognize potential interest and/or penalties related to unrecognized tax benefits as part of its income tax expense. At March 31, 2022 and December 31, 2021, the amount of accrued income-tax-related interest and penalties was $ 0.0 million and $ 0.4 million, respectively. NOTE 11 – STOCK-BASED COMPENSATION The Company has stock incentive plans for executives, directors and eligible employees. Stock awards include performance shares, restricted stock and stock options. Stock-based compensation expense in the three months ended March 31, 2022 and 2021 was $ 2.3 million and $ 4.3 million, respectively. At March 31, 2022, there was $ 13.7 million of unrecognized stock-based compensation cost which is expected to be recognized over a weighted-average remaining vesting period of 1.9 years. The following table summarizes the grants awarded during the three months ended March 31, 2022: Grant date Restricted stock Grant date fair value of restricted stock Performance shares Grant date fair value of performance shares February 22, 2022 1,700,619 $ 4.21 1,067,118 $ 4.38 NOTE 12 – FAIR VALUE MEASUREMENTS Three Months Ended March 31, In thousands 2022 2021 Unrealized gain (loss) on equity securities $ 13,744 $ ( 4,568 ) Realized gain (loss) on equity securities — 769 Termination of gold zero cost collars ( 3,139 ) — Fair value adjustments, net $ 10,605 $ ( 3,799 ) Accounting standards establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1), secondary priority to quoted prices in inactive markets or observable inputs (Level 2), and the lowest priority to unobservable inputs (Level 3). 16 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement: Fair Value at March 31, 2022 In thousands Total Level 1 Level 2 Level 3 Assets: Equity securities including warrants $ 164,127 $ 161,894 $ 2,233 $ — Provisional metal sales contracts 461 — 461 — $ 164,588 $ 161,894 $ 2,694 $ — Liabilities: Gold forwards $ 1,832 $ — $ 1,832 $ — Provisional metal sales contracts 46 — 46 — $ 1,878 $ — $ 1,878 $ — Fair Value at December 31, 2021 In thousands Total Level 1 Level 2 Level 3 Assets: Equity securities $ 132,197 $ 132,197 $ — $ — Provisional metal sales contracts 86 — 86 — $ 132,283 $ 132,197 $ 86 $ — Liabilities: Gold zero cost collars $ 1,212 $ — $ 1,212 $ — Provisional metal sales contracts 162 — 162 — $ 1,374 $ — $ 1,374 $ — The Company’s investments in equity securities are recorded at fair market value in the financial statements based primarily on quoted market prices. Such instruments are classified within Level 1 of the fair value hierarchy. The Company’s common share purchase warrants received as consideration in the La Preciosa project sale are valued using the pricing model with inputs derived from observable market data, including quoted market prices and quoted interest curve rates. The model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy. The Company’s gold forward contracts valued using pricing models with inputs derived from observable market data, including forward market prices, yield curves, credit spreads. The Company’s provisional metal sales contracts include concentrate and certain doré sales contracts that are valued using pricing models with inputs derived from observable market data, including forward market prices. As further discussed in Note 19 — Dispositions, the consideration for the sale of La Preciosa project included two royalties, a 1.25 % net smelter returns royalty on properties covering the Gloria and Abundancia areas of the La Preciosa project and a 2.00 % gross value royalty on all areas of the La Preciosa project other than the Gloria and Abundancia areas, and contingent consideration of $ 0.25 per silver equivalent ounce (adjusted for inflation) on any new mineral reserves discovered and declared outside of the current resources area at the La Preciosa project, up to a maximum payment of $ 50.0 million. The fair value of the royalties and the contingent consideration assets were $ 11.2 million and $ 1.2 million, respectively, valued as of the date of closing of the transaction and are measured at fair value on a non-recurring basis. The fair value of the royalties and the contingent consideration were valued using Monte Carlo simulation models. The model inputs include significant unobservable inputs and involve significant management judgment. The significant unobservable inputs included assumptions related to metal prices which assumed silver prices ranging from $ 22 to $ 25 per ounce and gold prices ranging from $ 1,930 to $ 1,700 per ounce as well as volatility assumptions for silver and gold prices ( 33.5 % and 19.0 %, respectively), and an assumed weighted average cost of capital of 15.5 %. Such instruments are classified within Level 3 of the fair value hierarchy. 17 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements The following table presents the changes in the fair value of the Company's Level 3 financial assets: In thousands Fair value at December 31, 2021 Initial valuation Revaluation Fair value at March 31, 2022 Assets: Royalties $ — $ 11,200 $ — $ 11,200 Contingent consideration $ — $ 1,150 $ — $ 1,150 $ — $ 12,350 $ — $ 12,350 No assets or liabilities were transferred between fair value levels in the three months ended March 31, 2022. The fair value of financial assets and liabilities carried at book value in the financial statements at March 31, 2022 and December 31, 2021 is presented in the following table: March 31, 2022 In thousands Book Value Fair Value Level 1 Level 2 Level 3 Assets: Promissory note $ 4,709 $ 4,709 $ — $ 4,709 $ — Deferred cash consideration $ 7,350 $ 7,350 $ — $ 7,350 $ — Liabilities: 2029 Senior Notes (1) $ 368,508 $ 319,390 $ — $ 319,390 $ — Revolving Credit Facility (2) $ 55,000 $ 55,000 $ — $ 55,000 $ — (1) Net of unamortized debt issuance costs of $ 6.5 million (2) Unamortized debt issuance costs of $ 2.2 million included in Other Non-Current Assets . December 31, 2021 In thousands Book Value Fair Value Level 1 Level 2 Level 3 Liabilities: 2029 Senior Notes (1) $ 368,273 $ 337,384 $ — $ 337,384 $ — Revolving Credit Facility (2) $ 65,000 $ 65,000 $ — $ 65,000 $ — (1) Net of unamortized debt issuance costs of $ 6.7 million. (2) Unamortized debt issuance costs of $ 2.4 million included in Other Non-Current Assets . The fair value of the 2029 Senior Notes was estimated using quoted market prices. The fair value of the RCF approximates book value as the liability is secured, has a variable interest rate, and lacks significant credit concerns. Also included in the consideration for the sale of La Preciosa project was a promissory note payable to the Company that matures in March 2023 and deferred cash consideration payable on the first anniversary of initial production from any portion of the La Preciosa project. These assets were valued using the pricing model with inputs derived from observable market data, including synthetic credit rating and quoted discount rate. The model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy. NOTE 13 – DERIVATIVE FINANCIAL INSTRUMENTS & HEDGING ACTIVITIES The Company is exposed to various market risks, including the effect of changes in metal prices, foreign currency exchange rates and interest rates, and uses derivatives to manage financial exposures that occur in the normal course of business. The Company does not hold or issue derivatives for trading or speculative purposes. The Company may elect to designate certain derivatives as hedging instruments under U.S. GAAP. The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking hedge transactions. This process includes linking all derivatives designated as hedges to either recognized assets or liabilities or forecasted transactions and assessing, both at inception and on an ongoing basis, the effectiveness of the hedging relationships. 18 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Derivatives Not Designated as Hedging Instruments Provisional Metal Sales The Company enters into sales contracts with third-party smelters, refiners and off-take customers which, in some cases, provide for a provisional payment based upon preliminary assays and quoted metal prices. The provisionally priced sales contracts contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable recorded at the forward price at the time of sale. The embedded derivatives do not qualify for hedge accounting and are marked to market through earnings each period until final settlement. Zero Cost Collars To protect the Company’s exposure to fluctuations in metal prices the Company entered into Asian (or average value) put and call option contracts in net-zero-cost collar arrangements. The contracts were net cash settled monthly and, if the price of gold at the time of expiration is between the put and call prices, would expire at no cost to the Company. If the price of gold at the time of expiration was lower than the put prices or higher than the call prices, it would result in a realized gain or loss, respectively. The Company elected to designate these instruments as cash flow hedges of forecasted transactions at their inception. In the first quarter of 2022, the Company voluntarily de-designated hedge accounting for the zero cost collars and subsequently terminated the arrangements. The cost to terminate the zero cost collars was $ 7.7 million, of which $ 3.1 million was recognized in earnings and the remaining $ 4.6 million, which represents the fair value of the zero cost collars on the date of de-designation, was retained in AOCI and will be recognized in earnings as the forecasted transactions occur. At March 31, 2022, the Company had the following derivative instruments that settle as follows: In thousands except average prices and notional ounces 2022 2023 and Thereafter Provisional gold sales contracts $ 24,283 $ — Average gold price per ounce $ 1,938 $ — Notional ounces 12,530 — The following summarizes the classification of the fair value of the derivative instruments: March 31, 2022 In thousands Prepaid expenses and other Accrued liabilities and other Provisional metal sales contracts $ 461 $ 46 December 31, 2021 In thousands Prepaid expenses and other Accrued liabilities and other Provisional metal sales contracts $ 86 $ 162 The following represent mark-to-market gains (losses) on derivative instruments in the three months ended March 31, 2022 and 2021, respectively (in thousands): Three Months Ended March 31, Financial statement line Derivative 2022 2021 Revenue Provisional metal sales contracts $ 492 $ ( 559 ) Fair value adjustments, net Terminated zero cost collars ( 3,139 ) — $ ( 2,647 ) $ ( 559 ) Derivatives Designated as Cash Flow Hedging Strategies To protect the Company’s exposure to fluctuations in metal prices the Company entered into forward contracts. The contracts are net settled monthly and if the actual price of gold at the time of expiration is lower than the fixed price or higher than the fixed prices, it would result in a realized gain or loss, respectively. The Company has elected to designate these instruments as cash flow hedges of forecasted transactions at their inception. 19 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements At March 31, 2022, the Company had the following derivative cash flow hedge instruments that settle as follows: In thousands except average prices and notional ounces 2022 2023 and Thereafter Gold forwards Average gold fixed price per ounce $ 1,955 $ 1,956 Notional ounces 157,000 75,000 The effective portions of cash flow hedges are recorded in accumulated other comprehensive income (loss) (“AOCI”) until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of metal sales revenue are recognized as a component of Revenue in the same period as the related sale is recognized. At inception, the Company performed an assessment of the forecasted transactions and the hedging instruments and determined that the hedging relationships are considered perfectly effective. Future assessments are performed to verify that critical terms of the hedging instruments and the forecasted transactions continue to match, and the forecasted transactions remain probable, as well as an assessment of any adverse developments regarding the risk of the counterparties defaulting on their commitments. There have been no such changes in critical terms or adverse developments. As of March 31, 2022, the Company had $ 1.8 million of net after-tax loss in AOCI related to losses from cash flow hedge transactions, of which $ 1.8 million of net after-tax losses is expected to be recognized in its Consolidated Statement of Comprehensive Income (Loss) during the next 12 months. Actual amounts ultimately reclassified to net income are dependent on the price of gold for metal contracts. The following summarizes the classification of the fair value of the derivative instruments designated as cash flow hedges: March 31, 2022 In thousands Prepaid expenses and other Accrued liabilities and other Gold forwards $ — $ 1,832 December 31, 2021 In thousands Prepaid expenses and other Accrued liabilities and other Gold zero cost collars $ — $ 1,212 The following table sets forth the pre-tax gains (losses) on derivatives designated as cash flow hedges that have been included in AOCI and the Consolidated Statement of Comprehensive Income (Loss) for the quarter ended March 31, 2022 and 2021, respectively (in thousands). 20 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Three Months Ended March 31, 2022 2021 Amount of Gain (Loss) Recognized in AOCI Gold forwards $ ( 1,832 ) $ — Gold zero cost collars ( 3,386 ) 28,547 Foreign currency forward exchange contracts — ( 1,190 ) $ ( 5,218 ) $ 27,357 Amount of (Gain) Loss Reclassified From AOCI to Earnings Gold forwards $ — $ — Gold zero cost collars 460 392 Foreign currency forward exchange contracts — ( 3,113 ) $ 460 $ ( 2,721 ) Credit Risk The credit risk exposure related to any derivative instrument is limited to the unrealized gains, if any, on outstanding contracts based on current market prices. To reduce counter-party credit exposure, the Company enters into contracts with institutions management deems credit-worthy and limits credit exposure to each institution. The Company does not anticipate non-performance by any of its counterparties. NOTE 14 – ADDITIONAL COMPREHENSIVE INCOME (LOSS) DETAIL Pre-development, reclamation, and other consists of the following: Three Months Ended March 31, In thousands 2022 2021 COVID-19 $ 972 $ 3,005 Silvertip ongoing carrying costs 6,159 6,921 Asset retirement accretion 3,463 2,905 Other 818 881 Pre-development, reclamation and other $ 11,412 $ 13,712 Other, net consists of the following: Three Months Ended March 31, In thousands 2022 2021 Foreign exchange gain (loss) $ ( 559 ) $ ( 773 ) Gain (loss) on sale of assets 1,831 4,053 Other 465 347 Other, net $ 1,737 $ 3,627 NOTE 15 – NET INCOME (LOSS) PER SHARE Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of the Company’s common stock outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the three months ended March 31, 2022 and 2021, there were 1,151,073 and 112,610 common stock equivalents, respectively, related to equity-based awards that were not included in the diluted earnings per share calculation as the shares would be antidilutive. 21 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Three months ended March 31, In thousands except per share amounts 2022 2021 Net income (loss) available to common stockholders $ 7,682 $ 2,060 Weighted average shares: Basic 261,458 241,397 Effect of stock-based compensation plans 2,105 3,123 Diluted 263,563 244,520 Income (loss) per share: Basic $ 0.03 $ 0.01 Diluted $ 0.03 $ 0.01 On March 18, 2022, the Company completed a $ 100.0 million “at the market” offering of its common stock, par value $ 0.01 per share (the “Equity Offering”). The Equity Offering was conducted pursuant to an ATM Equity Offering Sales Agreement (the “Sales Agreement”), entered into on April 23, 2020 between the Company and BofA Securities, Inc. and RBC Capital Markets, LLC as sales agents. The Company sold a total of 22,053,275 shares of its common stock in the Equity Offering at an average price of $ 4.53 per share, raising net proceeds (after sales commissions) of $ 98.0 million. Proceeds from the Equity Offering were used to repay outstanding amounts under the RCF. NOTE 16 - SUPPLEMENTAL GUARANTOR INFORMATION The following summarized financial information is presented to satisfy disclosure requirements of Rule 13-01 of Regulation S-X resulting from the guarantees by Coeur Alaska, Inc., Coeur Explorations, Inc., Coeur Rochester, Inc., Coeur South America Corp., Wharf Resources (U.S.A.), Inc. and its subsidiaries, Coeur Capital, Inc., Coeur Sterling, Inc., Sterling Intermediate Holdco, Inc., and Coeur Sterling Holdings LLC (collectively, the “Subsidiary Guarantors”) of the 2029 Senior Notes. The following schedules present summarized financial information of (a) Coeur, the parent company and (b) the Subsidiary Guarantors (collectively the “Obligor Group”). The summarized financial information of the Obligor Group is presented on a combined basis with intercompany balances and transactions between entities in the Obligor Group eliminated. The Obligor Group’s amounts due from, amounts due to and transactions with certain wholly-owned domestic and foreign subsidiaries of the Company have been presented in separate line items, if they are material. Each of the Subsidiary Guarantors is 100% owned by Coeur and the guarantees are full and unconditional and joint and several obligations. There are no restrictions on the ability of Coeur to obtain funds from the Subsidiary Guarantors by dividend or loan. 22 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements SUMMARIZED BALANCE SHEET MARCH 31, 2022 In thousands Coeur Mining, Inc. Guarantor Subsidiaries ASSETS CURRENT ASSETS Cash and cash equivalents $ 4,035 $ 18,949 Receivables 4,569 7,553 Ore on leach pads — 89,406 Inventory — 26,815 Prepaid expenses and other 8,808 1,114 17,412 143,837 NON-CURRENT ASSETS Property, plant and equipment, net 1,343 203,363 Mining properties, net 11,200 559,217 Ore on leach pads — 73,133 Restricted assets 1,493 206 Equity securities 161,894 — Net investment in subsidiaries 772,325 54,326 Other 47,455 51,214 TOTAL ASSETS $ 1,013,122 $ 1,085,296 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 1,740 $ 64,113 Other accrued liabilities 9,629 54,189 Debt — 24,538 Reclamation — 1,561 11,369 144,401 NON-CURRENT LIABILITIES Debt 451,522 65,909 Reclamation — 127,268 Deferred tax liabilities 920 7,456 Other long-term liabilities 3,142 18,956 Intercompany payable (receivable) ( 353,805 ) 341,389 101,779 560,978 STOCKHOLDERS’ EQUITY Common stock 2,808 19,417 Additional paid-in capital 3,834,896 340,700 Accumulated deficit ( 2,931,760 ) 19,800 Accumulated other comprehensive income (loss) ( 5,970 ) — 899,974 379,917 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,013,122 $ 1,085,296 23 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements SUMMARIZED BALANCE SHEET DECEMBER 31, 2021 In thousands Coeur Mining, Inc. Guarantor Subsidiaries ASSETS CURRENT ASSETS Cash and cash equivalents $ 2,499 $ 16,126 Receivables ( 14 ) 5,607 Ore on leach pads — 81,128 Inventory — 24,954 Prepaid expenses and other 8,660 813 11,145 128,628 NON-CURRENT ASSETS Property, plant and equipment, net 1,476 188,721 Mining properties, net — 514,397 Ore on leach pads — 73,495 Restricted assets 1,496 206 Equity and debt securities 132,197 — Net investment in subsidiaries 794,254 56,623 Other 47,317 53,511 TOTAL ASSETS $ 987,885 $ 1,015,581 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 1,624 $ 59,463 Other accrued liabilities 16,729 45,676 Debt — 23,608 Reclamation — 1,561 18,353 130,308 NON-CURRENT LIABILITIES Debt 463,318 53,166 Reclamation — 125,695 Deferred tax liabilities 751 7,422 Other long-term liabilities 3,266 20,826 Intercompany payable (receivable) ( 298,065 ) 286,655 169,270 493,764 STOCKHOLDERS’ EQUITY Common stock 2,569 19,356 Additional paid-in capital 3,738,347 340,701 Accumulated deficit ( 2,939,442 ) 31,452 Accumulated other comprehensive income (loss) ( 1,212 ) — 800,262 391,509 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 987,885 $ 1,015,581 24 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements SUMMARIZED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 2022 In thousands Coeur Mining, Inc. Guarantor Subsidiaries Revenue $ — $ 105,331 Gross profit (loss) $ ( 208 ) $ ( 289 ) Net income (loss) $ 7,682 $ ( 11,592 ) NOTE 17 – COMMITMENTS AND CONTINGENCIES Mexico Litigation Matters As of March 31, 2022, $ 26.0 million is due from the Mexican government associated with VAT that was paid under Coeur Mexicana, S.A. de C.V.’s (“Coeur Mexicana’s”) prior royalty agreement with a subsidiary of Franco-Nevada Corporation, which was terminated in 2016. Coeur Mexicana applied for and initially received VAT refunds associated with the royalty payments in the normal course; however, in 2011 the Mexican tax authorities began denying Coeur Mexicana’s VAT refunds based on the argument that VAT was not legally due on the royalty payments. Accordingly, Coeur Mexicana began to request refunds of the VAT as undue payments, which the Mexican tax authorities also denied. The Company has since been engaged in ongoing efforts to recover the VAT from the Mexican government (including through litigation and potential arbitration as well as refiling VAT refund requests). Despite a favorable ruling from Mexican tax courts in this matter in 2018, litigation has continued at the administrative, appeals court and supreme court levels, most of which has been determined unfavorably to Coeur based on interpretations of applicable law and prior court decisions which the Company and its counsel believe are contrary to legal precedent, conflicting and erroneous. While the Company believes that it remains legally entitled to be refunded the full amount of the VAT receivable and intends to rigorously continue its VAT recovery efforts, based on the continued failure to recover the VAT receivable and recent unfavorable Mexican court decisions, the Company determined to write down the carrying value of the VAT receivable at September 30, 2021. In March 2022, Coeur Mexicana filed an updated notice of intent to initiate an arbitration proceeding under Chapter 11 of the North American Free Trade Agreement, or NAFTA, in connection with this dispute and may elect to formally proceed with arbitration under NAFTA. Outcomes in NAFTA arbitration and the process for recovering funds even if there is a successful outcome in NAFTA arbitration can be lengthy and unpredictable. In addition, ongoing litigation with the Mexican government associated with enforcement of water rights in Mexico, if unsuccessful, may impact Coeur Mexicana’s ability to access new sources of water to provide sufficient supply for its operations at Palmarejo and, if material, may have a material adverse impact on the Company’s operations and financial results. Palmarejo Gold Stream Coeur Mexicana sells 50 % of Palmarejo gold production (excluding production from certain properties acquired in 2015) to a subsidiary of Franco-Nevada Corporation (“Franco-Nevada”) under a gold stream agreement for the lesser of $ 800 or spot price per ounce. In 2016, Coeur Mexicana received a $ 22.0 million deposit toward future deliveries under the gold stream agreement. In accordance with generally accepted accounting principles, although Coeur Mexicana has satisfied its contractual obligation to repay the deposit to Franco-Nevada, the deposit is accounted for as deferred revenue and is recognized as revenue on a units-of-production basis as ounces are sold to Franco-Nevada. At March 31, 2022 the remaining unamortized balance was $ 7.8 million, which is included in Accrued liabilities and other and Other long-term liabilities on the Consolidated Balance Sheet. Kensington Prepayment In June 2019, Coeur amended its existing sales and purchase contract with a metal sales counterparty for gold concentrate from its Kensington mine (the “Amended Sales Contract”). From time to time thereafter, the Amended Sales Contract has been further amended to allow for additional prepayments, including in June 2021, to provide options for Coeur to receive up to two additional prepayments of up to $ 15.0 million each. In June 2021 and December 2021, the Company exercised these options and received the $ 15.0 million June 2021 Prepayment and the $ 15.0 million December 2021 Prepayment. The June 2021 Prepayment was paid back in full before the December 2021 Prepayment was received. In March 2022, the Amended Sales Contract was further amended to allow for an additional $ 10.0 million prepayment. The additional $ 10.0 million prepayment was made in March 2022 (the “March 2022 Prepayment”). The remaining deliveries of $ 15.0 million and $ 10.0 million under the December 2021 Prepayment and March 2022 Prepayment are recognized as a deferred revenue liability and are presented in Accrued liabilities and other on the Consolidated Balance Sheet. Under the relevant terms of the 25 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Amended Sales Contract, Coeur maintains its exposure to the price of gold and expects to recognize the remaining value of the accrued liability by March 2023. POA 11 Expansion Project As of March 31, 2022, Coeur incurred approximately $ 283 million toward the expansion. With the formalization of the recently-awarded structural, mechanical, piping, electrical and instrumentation (“SMPEI”) and final major high-voltage electrical contracts, the Company has committed approximately $ 477 million of capital since the inception of the project, representing 80 % of the re-baselined cost estimate of $ 597 million. Coeur estimates capital expenditures related to POA 11 in 2022 to be approximately $ 217 - $ 257 million and $ 131 - $ 171 million in 2023. The expansion consists of three major components: (i) a new 300 million ton leach pad, for which civil work is essentially complete and piping work is near completion; (ii) a Merrill-Crowe process plant with construction completion scheduled for the first half of 2023; and (iii) a new three-stage crushing circuit with construction completion scheduled for mid-2023. Progress on the Merrill-Crowe process plant included completion of concrete work, the start of equipment setting, and steel and process pipe rack erection. Work on the crusher corridor included substantial completion of excavation in the primary crusher area, completion of concrete work and the start of steel construction in the secondary crusher areas, and continued advancement of concrete work in the secondary stock pile reclaim and tertiary crusher areas. Coeur also began pre-assembly of conveyor components, and deliveries of equipment and materials for the project continue. The Company is also advancing detailed engineering, and equipment procurement is underway for the implementation of pre-screens into the expansion flowsheet. Coeur intends to align construction of the pre-screens with the completion of the new crusher corridor . Other Commitments and Contingencies As part of its ongoing business and operations, the Company and its affiliates are required to provide surety bonds, bank letters of credit, bank guarantees and, in some cases, cash as financial support for various purposes, including environmental remediation, reclamation, collateral for gold hedges and other general corporate purposes. As of March 31, 2022 and December 31, 2021, the Company had surety bonds totaling $ 315.5 million and $ 315.1 million, respectively, in place as financial support for future reclamation and closure costs. The obligations associated with these instruments are generally related to performance requirements that the Company addresses through its ongoing operations and from time-to-time, the Company may be required to post collateral, including cash or letters of credit which reduce availability under its revolving credit facility, to support these instruments. As the specific requirements are met, the beneficiary of the associated instrument cancels and/or returns the instrument to the issuing entity. Certain of these instruments are associated with operating sites with long-lived assets and will remain outstanding until closure. The Company believes it is in compliance with all applicable bonding obligations and will be able to satisfy future bonding requirements through existing or alternative means, as they arise. NOTE 18 – ADDITIONAL BALANCE SHEET DETAIL AND SUPPLEMENTAL CASH FLOW INFORMATION Accrued liabilities and other consist of the following: In thousands March 31, 2022 December 31, 2021 Accrued salaries and wages $ 22,253 $ 28,408 Deferred revenue (1) 26,240 16,093 Income and mining taxes 7,987 13,856 Accrued operating costs 6,975 5,592 Unrealized losses on derivatives 1,878 1,374 Taxes other than income and mining 2,844 3,284 Accrued interest payable 3,160 8,038 Operating lease liabilities 11,101 11,301 Accrued liabilities and other $ 82,438 $ 87,946 (1) See Note 17 -- Commitments and Contingencies for additional details on deferred revenue liabilities 26 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that total the same such amounts shown in the statement of cash flows in the three months ended March 31, 2022 and 2021: In thousands March 31, 2022 March 31, 2021 Cash and cash equivalents $ 73,330 $ 154,066 Restricted cash equivalents 1,389 1,377 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 74,719 $ 155,443 NOTE 19 – DISPOSITIONS On October 27, 2021 the Company entered into a definitive agreement (the “Agreement”) to sell its La Preciosa projected located in the State of Durango, Mexico to Avino (the “La Preciosa Sale”). On March 21, 2022, the La Preciosa Sale was completed. Coeur and its subsidiaries received the following consideration at closing: • $ 15.3 million cash, • $ 5.0 million promissory note that matures prior to the first anniversary of the transaction closing, valued at $ 4.7 million, • Equity consideration of 14.0 million units, consisting of one share of Avino common stock and one half of one common share purchase warrant of Avino common stock, valued at $ 13.7 million and $ 2.2 million, respectively. Common share purchase warrants are exercisable at $ 1.09 per share and expire September 2023. • In addition, under the Agreement, Coeur is entitled to the following additional consideration: ◦ $ 8.8 million deferred cash consideration to be paid no later than the first anniversary of initial production from any portion of the La Preciosa project, valued at $ 7.4 million, ◦ Contingent payments of $ 0.25 per silver equivalent ounce (subject to an inflationary adjustment) on any new mineral reserves discovered and declared outside of the current resource area at the La Preciosa project, up to a maximum payment of $ 50.0 million, valued at $ 1.2 million, and ◦ Two royalties, valued at $ 11.2 million, covering the La Preciosa land package, including (i) a 1.25 % net smelter returns royalty on properties covering the Gloria and Abundancia areas of the La Preciosa project and (ii) a 2.00 % gross value royalty on all areas of the La Preciosa project other than the Gloria and Abundancia areas, offset by the amount of any new mineral reserve contingent payments made to Coeur. The La Preciosa sale resulted in a gain on the sale of $ 1.6 million, which was recognized in Other, Net in the condensed consolidated statements of comprehensive income (loss). 27