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”) allocation, 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 assets located in the United States, Canada and Mexico First Quarter Highlights For the quarter, Coeur reported revenue of $188.4 million and cash flow from operating activities of $(6.4) million. We reported GAAP net income of $7.7 million, or $0.03 per diluted share. On an adjusted basis 1 , the Company reported EBITDA of $41.5 million and net loss of $13.8 million or $0.05 per diluted share. • First quarter production on plan and in-line with 2022 guidance – Solid performances at Palmarejo and Wharf more than offset COVID-19 impacts at Kensington and lower production levels at Rochester, leading to total production of 75,409 ounces of gold and 2.5 million ounces of silver • Enhanced liquidity and balance sheet strength – Coeur recently announced multiple initiatives to bolster its liquidity and balance sheet flexibility, including increased additional downside protection from gold hedging in 2022 and 2023, expansion of its revolving credit facility (“RCF”) by $90 million and the completion of its $100 million at-the-market (“ATM”) equity offering • Rochester expansion project advancing – The Rochester expansion project continued to advance with construction completion targeted for mid-2023. Coeur has now committed approximately 80% of the $597 million capital estimate and has incurred approximately $283 million of the estimated total as of the end of the first quarter • New discovery at Silvertip highlights recent exploration success – Camp Creek West discovery holes support the potential for significant additional resource expansion at Silvertip. Recent high-grade intercepts at Kensington and Palmarejo also demonstrate the potential for further mine life extensions • Strategic sale of La Preciosa silver project completed – Coeur closed the sale of the La Preciosa silver project during the quarter for total fixed proceeds of nearly $36 million, including $15 million in cash, and additional potential contingent consideration of up to $59 million plus two royalties covering the La Preciosa land package • Kensington POA 1 key federal authorizations received – The U.S. Forest Service issued the Final Record of Decision approving Coeur’s proposed amendment to increase tailings and waste rock storage capacity to accommodate future growth potential at Kensington. Similarly, the Company also received the U.S. Army Corps of Engineers Record of Decision and Permit • Updated greenhouse gas (“GHG”) net intensity targets – On April 27, 2022, Coeur published its 2021 ESG Report which included an updated GHG emissions target of a 35% reduction in net intensity by the end of 2024. The Company’s previous goal was a 25% net intensity reduction by 2025 28 Selected Financial and Operating Results Three Months Ended In thousands March 31, 2022 December 31, 2021 March 31, 2021 Financial Results: Gold sales $ 129,451 $ 146,943 $ 138,322 Silver sales $ 58,953 $ 60,941 $ 63,795 Consolidated Revenue $ 188,404 $ 207,884 $ 202,117 Net income (loss) $ 7,682 $ (10,760) $ 2,060 Net income (loss) per share, diluted $ 0.03 $ (0.04) $ 0.01 Adjusted net income (loss) (1) $ (13,782) $ (11,615) $ 13,941 Adjusted net income (loss) per share, diluted (1) $ (0.05) $ (0.05) $ 0.06 EBITDA (1) $ 40,377 $ 28,326 $ 49,693 Adjusted EBITDA (1) $ 41,527 $ 48,700 $ 65,867 Total debt (2) $ 485,488 $ 487,201 $ 412,125 Operating Results: Gold ounces produced 75,409 88,946 85,225 Silver ounces produced 2,479,442 2,615,182 2,403,143 Gold ounces sold 75,211 88,930 83,112 Silver ounces sold 2,450,282 2,624,428 2,435,504 Average realized price per gold ounce $ 1,721 $ 1,652 $ 1,664 Average realized price per silver ounce $ 24.06 $ 23.22 $ 26.19 (1) See “Non-GAAP Financial Performance Measures.” (2) Includes finance leases. Net of debt issuance costs and premium received. Consolidated Financial Results Three Months Ended March 31, 2022 compared to Three Months Ended December 31, 2021 Revenue We sold 75,211 gold ounces and 2.5 million silver ounces, compared to 88,930 gold ounces and 2.6 million silver ounces. Revenue decreased by $19.5 million, or 9%, as a result of a 15% and 7% decrease in gold and silver ounces sold, respectively, partially offset by a 4% increase in average realized gold and silver prices. The decrease in gold and silver ounces sold was primarily due to lower production at Rochester, Kensington and Wharf. Gold and silver accounted for 69% and 31% of 2022 sales revenue, respectively. This compares to gold and silver accounting for 71% and 29% of 2021 sales revenue, respectively. The following table summarizes consolidated metal sales: Three Months Ended Increase (Decrease) Percentage Change In thousands March 31, 2022 December 31, 2021 Gold sales $ 129,451 $ 146,943 $ (17,492) (12) % Silver sales 58,953 60,941 (1,988) (3) % Metal sales $ 188,404 $ 207,884 $ (19,480) (9) % Costs Applicable to Sales Costs applicable to sales decreased $3.2 million, or 2%, primarily due to lower gold and silver ounces sold, partially offset by higher operating costs partially due to inflationary pressures and the $3.3 million favorable impact from foreign currency hedges in the comparable period of 2021. For a complete discussion of costs applicable to sales, see Results of Operations below. 29 Amortization Amortization decreased $9.0 million, or 25%, primarily due to lower gold and silver and ounces sold. Expenses General and administrative expenses increased $0.6 million, or 7%, primarily due to higher employee incentive compensation and outside service costs. Exploration expense decreased $8.2 million, or 60% driven by lower planned investment across the portfolio. Pre-development, reclamation, and other expenses decreased $0.3 million, or 3%, stemming from lower operating costs at noncore asset locations, partially offset by higher costs incurred in connection with the Company’s COVID-19 health and safety protocols, and higher asset retirement accretion. The following table summarizes pre-development, reclamation, and other expenses: Three Months Ended Increase (Decrease) Percentage Change In thousands March 31, 2022 December 31, 2021 COVID-19 $ 972 $ 681 $ 291 43 % Silvertip ongoing carrying costs 6,159 5,971 188 3 % Asset retirement accretion 3,463 3,091 372 12 % Other 818 1,979 (1,161) (59) % Pre-development, reclamation and other expense $ 11,412 $ 11,722 $ (310) (3) % Other Income and Expenses Fair value adjustments, net, increased to a gain of $10.6 million compared to a loss of $7.5 million as a result of an increase in the value of the Company’s equity investments. For additional details on the Company’s equity investments see Note 6 -- Investments. Interest expense (net of capitalized interest of $3.2) increased to $4.6 million from $3.2 million due to lower capitalized interest and higher interest paid under the RCF and finance lease obligations. Other, net increased to a gain of $1.7 million compared to a loss of $0.5 million attributable to the $1.6 million gain from the sale of the La Preciosa project. Income and Mining Taxes During the first quarter of 2022, income and mining tax expense of approximately $1.7 million resulted in an effective tax rate of 18.1% for 2022. This compares to income tax expense of $0.4 million for an effective tax rate of 4.2% for 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 non-recognition of tax assets and liabilities; (ii) variations in our income before income taxes; (iii) geographic distribution of that income; (iv) mining taxes; (v) foreign exchange rates; (vi) the impact of uncertain tax positions; and (vii) percentage depletion. Therefore, the effective tax rate will fluctuate, sometimes significantly, period to period. 30 The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit: Three months ended March 31, Three months ended December 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) $ (25,065) $ (1,367) Canada (7,525) — (12,656) 1,224 Mexico 27,033 (495) 27,630 (289) Other jurisdictions (2) — (237) — $ 9,376 $ (1,694) $ (10,328) $ (432) 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 2021 10-K. Net Income (Loss) Net income was $7.7 million, or $0.03 per diluted share, compared to net loss of $10.8 million, or $0.04 per share. The increase in net income was driven by a 4% increase in average realized gold and silver prices, lower exploration expense, higher gains from the sale of assets, and favorable changes in the fair value of the Company’s equity investments, partially offset by a 15% and 7% decrease in gold and silver ounces sold, respectively, and higher operating costs. Adjusted net loss was $13.8 million, or $0.05 per diluted share, compared to an adjusted net loss of $11.6 million, or $0.05 per share (see “Non-GAAP Financial Performance Measures”). Three Months Ended March 31, 2022 compared to Three Months Ended March 31, 2021 Revenue We sold 75,211 gold ounces and 2.5 million silver ounces, compared to 83,112 gold ounces and 2.4 million silver ounces. Revenue decreased by $13.7 million, or 7%, as a result of a 10% decrease in gold ounces sold and an 8% decrease in average realized silver prices, partially offset by a 3% increase in average realized gold prices. The decrease in gold ounces sold was primarily due to lower grades at Kensington. Gold and silver accounted for 69% and 31% of 2022 sales revenue, respectively. This compares to gold and silver accounting for 68% and 32% of 2021 sales revenue, respectively. The following table summarizes consolidated metal sales: Three Months Ended Increase (Decrease) Percentage Change In thousands March 31, 2022 March 31, 2021 Gold sales $ 129,451 $ 138,322 $ (8,871) (6) % Silver sales 58,953 63,795 (4,842) (8) % Metal sales $ 188,404 $ 202,117 $ (13,713) (7) % Costs Applicable to Sales Costs applicable to sales increased $25.1 million, or 23%, primarily due to a lower of cost or net realizable value (“LCM”) adjustment of $7.6 million at Rochester, higher operating costs partially due to inflationary pressures, and the $3.1 million favorable impact from foreign currency hedges in the comparable period of 2021. For a complete discussion of costs applicable to sales, see Results of Operations below. Amortization Amortization decreased $3.5 million, or 12%, primarily due to lower gold ounces sold. Expenses General and administrative expenses decreased $1.3 million, or 11%, primarily due to lower compensation costs. Exploration expense decreased $4.2 million, or 44% driven by lower planned investment across the portfolio. 31 Pre-development, reclamation, and other expenses decreased $2.3 million, or 17%, stemming from lower costs incurred in connection with the Company’s COVID-19 health and safety protocols, and lower ongoing carrying costs at Silvertip, partially offset by higher asset retirement accretion. The following table summarizes pre-development, reclamation, and other expenses: Three Months Ended Increase (Decrease) Percentage Change In thousands March 31, 2022 March 31, 2021 COVID-19 $ 972 $ 3,005 $ (2,033) (68) % Silvertip ongoing carrying costs 6,159 6,921 (762) (11) % Asset retirement accretion 3,463 2,905 558 19 % Other 818 881 (63) (7) % Pre-development, reclamation and other expense $ 11,412 $ 13,712 $ (2,300) (17) % Other Income and Expenses During the first quarter of 2021, the Company incurred a $9.2 million loss in connection with the tender and redemption of the 5.875% Senior Notes due 2024 (the “2024 Senior Notes”) concurrent with the completed offering of the 2029 Senior Notes. Fair value adjustments, net, increased to a gain of $10.6 million compared to a loss of $3.8 million as a result of an increase in the value of the Company’s equity investments. For additional details on the Company’s equity investments see Note 6 -- Investments. Interest expense (net of capitalized interest of $3.2 million) decreased to $4.6 million from $4.9 million due to higher capitalized interest associated with the POA 11 project at Rochester, partially offset by higher interest paid under the 2029 Senior Notes compared to the 2024 Senior Notes, and higher interest paid under the RCF and finance lease obligations. Other, net decreased to a gain of $1.7 million compared to $3.6 million due to lower gains on the sale of assets. Income and Mining Taxes During the first quarter of 2022, income and mining tax expense of approximately $1.7 million resulted in an effective tax rate of 18.1% for 2022. This compares to income tax expense of $12.8 million for an effective tax rate of 86.1% for 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. The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit: 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) 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 2021 10-K. 32 Net Income (Loss) Net income was $7.7 million, or $0.03 per diluted share, compared to $2.1 million, or $0.01 per share. The increase in net income was driven by lower exploration expense, favorable changes in the fair value of the Company’s equity investments, $9.2 million loss on debt extinguishment in the comparable period in 2021 and lower income and mining taxes, partially offset by higher operating costs, a 10% decrease in gold ounces sold and an 8% decrease in average realized silver prices. Adjusted net loss was $13.8 million, or $0.05 per diluted share, compared to an adjusted net income of $34.3 million, or $0.06 per share (see “Non-GAAP Financial Performance Measures”). Results of Operations Palmarejo Three Months Ended March 31, 2022 December 31, 2021 March 31, 2021 Tons milled 565,211 587,615 484,390 Average gold grade (oz/t) 0.056 0.055 0.062 Average silver grade (oz/t) 3.87 3.86 4.07 Average recovery rate – Au 90.6 % 89.7 % 95.7 % Average recovery rate – Ag 83.0 % 81.3 % 81.3 % Gold ounces produced 28,931 28,748 28,605 Silver ounces produced 1,812,530 1,843,252 1,603,274 Gold ounces sold 28,242 27,706 25,687 Silver ounces sold 1,796,028 1,813,884 1,637,695 CAS per gold ounce (1) $ 735 $ 657 $ 622 CAS per silver ounce (1) $ 12.51 $ 11.32 $ 11.00 (1) See Non-GAAP Financial Performance Measures. Three Months Ended March 31, 2022 compared to Three Months Ended December 31, 2021 Gold production increased 1% as a result of higher gold grade and recoveries, partially offset by lower mill throughput. Silver production decreased 2% as a result of lower mill throughput, partially offset by higher silver grade and recoveries. Metal sales were $83.1 million, or 44% of Coeur’s metal sales, compared with $80.3 million, or 39% of Coeur’s metal sales. Revenue for the three months ended March 31, 2022 increased by $2.8 million or 4%, of which $2.5 million was due to higher average realized gold and silver prices and $0.3 million was the result of a higher volume of gold sales. Costs applicable to sales per gold and silver ounce increased 12% and 11%, respectively, due to the mix of gold and silver sales, higher consumable costs largely due to inflationary pressures and the absence of the favorable impact of foreign currency hedges of $3.3 million included in the prior quarter. Amortization decreased to $9.4 million due to longer assumed mine life based on year-end mineral reserve growth. Capital expenditures increased to $13.6 million from $8.3 million due to higher underground development, infill drilling activities and equipment purchases. Three Months Ended March 31, 2022 compared to Three Months Ended March 31, 2021 Gold production increased 1% as a result of higher mill throughput, partially offset by lower gold grade and recoveries. Silver production increased 13% as a result of higher mill throughput and recoveries, partially offset by lower silver grade. Metal sales were $83.1 million, or 44% of Coeur’s metal sales, compared with $80.3 million, or 40% of Coeur’s metal sales. Revenue for the three months ended March 31, 2022 increased by $2.7 million or 3%, of which $7.4 million was the result of a higher volume of gold and silver sales, partially offset by a decrease of $4.7 million due to lower average realized gold and silver prices. Costs applicable to sales per gold and silver ounce increased 18% and 14%, respectively, due to the mix of gold and silver sales, higher employee-related, maintenance and consumable costs largely due to inflationary pressures, and the absence of the favorable impact of foreign currency hedges ($3.1 million) included in the prior year quarter. Amortization increased to $9.4 million due to increased sales partially offset by longer assumed mine life based on year-end mineral reserve growth. Capital expenditures increased to $13.6 million from $10.0 million due to higher underground development, infill drilling activities and equipment purchases. 33 Rochester Three Months Ended March 31, 2022 December 31, 2021 March 31, 2021 Tons placed 4,377,873 3,823,763 3,240,917 Average gold grade (oz/t) 0.003 0.003 0.003 Average silver grade (oz/t) 0.34 0.40 0.45 Gold ounces produced 6,066 6,864 6,904 Silver ounces produced 655,176 757,479 773,678 Gold ounces sold 5,928 7,385 6,934 Silver ounces sold 638,116 800,195 771,354 CAS per gold ounce (1) $ 2,287 $ 2,133 $ 1,317 CAS per silver ounce (1) $ 29.34 $ 27.18 $ 19.32 (1) See Non-GAAP Financial Performance Measures. Three Months Ended March 31, 2022 compared to Three Months Ended December 31, 2021 Gold and silver production decreased 12% and 14%, respectively, as a result of lower tons placed in the prior quarter, lower silver grades and the timing of gold and silver recoveries. Metal sales were $26.4 million, or 14% of Coeur’s metal sales, compared with $31.7 million, or 15% of Coeur’s metal sales. Revenue for the three months ended March 31, 2022 decreased by $5.3 million or 17%, of which $6.6 million was the result of lower volume of gold and silver sales partially offset by a $1.3 million increase as a result of higher average realized gold and silver prices. Costs applicable to sales per gold and silver ounce increased 7% and 8%, respectively, due to the mix of gold and silver sales, higher maintenance and consumable costs partially due to inflationary pressures. Amortization decreased to $4.7 million due to lower gold and silver ounces sold. Capital expenditures decreased to $33.1 million from $53.9 million due to timing of payments related to the POA 11 expansion project. Three Months Ended March 31, 2022 compared to Three Months Ended March 31, 2021 Gold and silver production decreased 12% and 15%, respectively, as a result of lower tons placed in prior year, lower silver grades and the timing of gold and silver recoveries. Metal sales were $26.4 million, or 14% of Coeur’s metal sales, compared with $32.8 million, or 16% of Coeur’s metal sales. Revenue for the three months ended March 31, 2022 decreased by $6.4 million or 20%, of which $5.1 million was the result of a lower volume of gold and silver sales and $1.3 million was the result of lower average realized silver prices. Costs applicable to sales per gold and silver ounce increased 74% and 52%, respectively, due to the mix of gold and silver sales, higher employee-related, maintenance and consumable costs partially due to inflationary pressures, and a LCM adjustment of $7.6 million included in the current year. Amortization increased to $4.7 million due to an LCM adjustment of $1.0 million in the current year. Capital expenditures increased to $33.1 million from $30.2 million due to payments related to the 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 . 34 Kensington Three Months Ended March 31, 2022 December 31, 2021 March 31, 2021 Tons milled 165,968 168,295 170,358 Average gold grade (oz/t) 0.14 0.21 0.19 Average recovery rate 95.3 % 93.9 % 93.2 % Gold ounces produced 22,646 33,516 30,681 Gold ounces sold 22,834 33,889 31,595 CAS per gold ounce (1) $ 1,606 $ 1,114 $ 994 (1) See Non-GAAP Financial Performance Measures. Three Months Ended March 31, 2022 compared to Three Months Ended December 31, 2021 Gold production decreased 32% as a result of lower grade and lower mill throughput resulting from the impact of COVID-19 on workforce availability. Metal sales were $44.3 million, or 24% of Coeur’s metal sales, compared to $59.9 million, or 29% of Coeur’s metal sales. Revenue for the three months ended March 31, 2022 decreased by $15.5 million or 26%, of which $21.4 million resulted from lower volume of gold sales, partially offset by an increase of $5.9 million due to higher average realized gold prices. Costs applicable to sales per gold ounce increased 44% due to lower production and higher employee-related, maintenance and consumable costs, partially due to inflationary pressures. Amortization decreased to $8.6 million primarily due to lower ounces sold. Capital expenditures was consistent quarter over quarter at $7.9 million compared to $8.0 million. Three Months Ended March 31, 2022 compared to Three Months Ended March 31, 2021 Gold production decreased 26% as a result of lower grade and lower mill throughput resulting from the impact of COVID-19 on workforce availability. Metal sales were $44.3 million, or 24% of Coeur’s metal sales, compared to $54.5 million, or 27% of Coeur’s metal sales. Revenue for the three months ended March 31, 2022 decreased by $10.2 million or 19%, of which $16.9 million resulted from lower volume of gold sales, partially offset by an increase of $6.7 million due to higher average realized gold prices. Costs applicable to sales per gold ounce increased 62% due to lower production and higher employee-related, maintenance and consumable costs, partially due to inflationary pressures. Amortization decreased to $8.6 million primarily due to lower ounces sold. Capital expenditures increased to $7.9 million from $7.2 million due to higher infill drilling and underground development. Wharf Three Months Ended March 31, 2022 December 31, 2021 March 31, 2021 Tons placed 1,127,569 1,074,189 1,114,043 Average gold grade (oz/t) 0.025 0.022 0.030 Gold ounces produced 17,766 19,818 19,035 Silver ounces produced 11,736 14,451 26,191 Gold ounces sold 18,207 19,950 18,896 Silver ounces sold 16,138 10,349 26,455 CAS per gold ounce (1) $ 1,124 $ 1,107 $ 954 (1) See Non-GAAP Financial Performance Measures. 35 Three Months Ended March 31, 2022 compared to Three Months Ended December 31, 2021 Gold production decreased 10% driven by the timing of recoveries. Metal sales were $34.7 million, or 18% of Coeur’s metal sales, compared to $36.1 million, or 17% of Coeur’s metal sales. Revenue for the three months ended March 31, 2022 decreased by $1.5 million or 4%, of which $3.2 million resulted from a lower volume of gold sales, partially offset by an increase of $1.7 million due to higher average realized gold and silver prices. Costs applicable to sales per gold ounce increased 2% due to higher consumable and employee-related costs partially due to inflationary pressures. Amortization decreased to $2.1 million due to lower ounces sold. Capital expenditures were $1.4 million. Three Months Ended March 31, 2022 compared to Three Months Ended March 31, 2021 Gold production decreased 7% driven by the timing of recoveries. Metal sales were $34.7 million, or 18% of Coeur’s metal sales, compared to $34.5 million, or 17% of Coeur’s metal sales. Revenue for the three months ended March 31, 2022 increased slightly by $0.1 million, of which $1.7 million was due to higher average realized gold prices, partially offset by a decrease of $1.6 million resulted from a lower volume of gold and silver sales. Costs applicable to sales per gold ounce increased 18% due to higher equipment rental, consumable and employee-related costs partially due to inflationary pressures. Amortization decreased to $2.1 million due to lower ounces sold. Capital expenditures were $1.4 million. Silvertip Three Months Ended March 31, 2022 Silvertip suspended mining and processing activities, unrelated to COVID-19, in February 2020. Ongoing carrying and suspension costs are included in Pre-development, reclamation, and other. Coeur continues advancing study work to assess the economics of a potential larger expansion and restart of Silvertip. The Company’s objective remains targeting a higher throughput rate to lower unit costs and to take advantage of Silvertip’s expanding resource base, while sequencing an expansion and restart following the completion and commissioning of POA 11. Results from this ongoing work remain on track and are expected to be available by the end of the year. Coeur continues to generate positive results from ongoing exploration as the Company evaluates various opportunities to enhance the economics of a potential expansion and restart of Silvertip. Ongoing carrying costs at Silvertip totaled $6.2 million in the first quarter, compared to $6.0 million in the prior period. Capital expenditures decreased to $11.9 million from $26.1 million as residual costs for completed mill decommissioning and planned early civil works construction were paid during the prior quarter. For 2022, capital expenditures are expected to be approximately $18 - $24 million, primarily focused on underground development and infill drilling as well as study work to evaluate additional opportunities to enhance the economics of a potential expansion and restart. Liquidity and Capital Resources At March 31, 2022, the Company had $74.7 million of cash, cash equivalents and restricted cash and $215.0 million available under the RCF. Cash and cash equivalents increased $16.7 million in the three months ended March 31, 2022, due to the net proceeds of $98.4 million from the sale of 22.1 million shares of its common stock, proceeds of $15.3 million received from the sale of the La Preciosa project, and a 4% increase in average realized gold and silver prices. This was partially offset by a 15% and 7% decrease in gold and silver ounces sold and capital expenditures related to POA 11 at Rochester. The RCF was amended in March 2021 to extend the maturity to March 2025 and to potentially allow the Company to obtain one or more increases of the RCF in an aggregate amount of up to $100.0 million. At March 31, 2022, the Company had $55.0 million drawn 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 Bank of America, N.A., as administrative 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. The Company also holds $161.9 million of equity securities including a 17.8% interest in Victoria Gold. In March 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 Company sold a total of 22,053,275 shares of 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. We currently believe we have sufficient sources of funding to meet our business requirements for the next twelve months and longer-term. We expect to use a combination of cash provided by operating activities, borrowings under our RCF and additional finance leases to fund near term capital requirements, including those described in this Report for POA 11 and in our 2022 capital expenditure guidance. We also have additional potential sources of funding including proceeds from potential 36 asset sales, and the monetization of our equity investments, including our investment in Victoria Gold. Our longer-term plans contemplate the expansion and restart of Silvertip, as well as the continued exploration and potential development of our other projects, such as Crown/Sterling and the Lincoln Hill area adjacent to Rochester. As of March 31, 2022, Coeur incurred approximately $283 million toward the expansion. With the formalization of the recently-awarded 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. We also have additional obligations as part of our ordinary course of business, beyond those committed for capital expenditures and other purchase obligations and commitments for purchases of goods and services. If and to the extent liquidity resources are insufficient to support short- and long-term expenditures, we may need to incur additional indebtedness or issue additional equity securities, among other financing options, which may not be available on acceptable terms or at all. This could have a material adverse impact on the Company, as discussed in more detail under Item 1A – Risk Factors in the 2021 10-K and part II, Item 1A of this report. Cash Provided by (Used in) Operating Activities Net cash used in operating activities for the three months ended March 31, 2022 was $6.4 million, compared to net cash provided by operating activities of $34.9 million for the three months ended December 31, 2021 and net cash used in operating activities of $4.4 million for the three months ended March 31, 2021. Adjusted EBITDA for the three months ended March 31, 2022 was $41.5 million, compared to $48.7 million for the three months ended December 31, 2021 and $65.9 million for the three months ended March 31, 2021 (see “Non-GAAP Financial Performance Measures”). Net cash provided by (used in) operating activities was impacted by the following key factors for the applicable periods: Three Months Ended In thousands March 31, 2022 December 31, 2021 March 31, 2021 Cash flow before changes in operating assets and liabilities $ 23,779 $ 37,789 $ 41,580 Changes in operating assets and liabilities: Receivables 9,100 (1,999) 999 Prepaid expenses and other (509) (104) (655) Inventories (17,672) (9,581) (17,486) Accounts payable and accrued liabilities (21,125) 8,831 (28,797) Cash provided by (used in) operating activities $ (6,427) $ 34,936 $ (4,359) Net cash provided by operating activities decreased $41.4 million for the three months ended March 31, 2022 compared to the three months ended December 31, 2021, primarily as a result of a 15% and 7% decrease in gold and silver ounces sold, respectively, mining and income taxes at Palmarejo, and timing of metal recoveries at Rochester and Wharf, partially offset by a 4% increase in average realized gold and silver prices, lower exploration costs and timing of VAT collections at Palmarejo. Revenue for the three months ended March 31, 2022 compared to the three months ended December 31, 2021 decreased by $19.5 million, of which $27.8 million was due to lower volume of gold and silver sales, partially offset by $8.3 million due to higher average realized gold and silver prices. Net cash used in operating activities increased $2.1 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021, primarily due to lower gold ounces sold (10%), an 8% decrease in average realized silver prices, and higher operating costs, partially offset by a 3% increase in average realized gold prices, lower exploration costs, and timing of VAT collections at Palmarejo. Revenue for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 decreased by $13.7 million, of which $13.3 million was due to lower volume of gold and silver sales and $5.2 million due to lower average realized silver prices, partially offset by $4.8 million due to higher average realized gold prices. 37 Cash Used in Investing Activities Net cash used in investing activities in the three months ended March 31, 2022 was $54.1 million compared to $99.7 million in the three months ended December 31, 2021. Cash used in investing activities decreased primarily due to the timing of payments related to the POA 11 construction activities at Rochester and the impact of the receipt of net proceeds of $15.3 million from the sale of the La Preciosa project. The Company incurred capital expenditures of $69.5 million in the three months ended March 31, 2022 compared with $100.9 million in the three months ended December 31, 2021 primarily related to POA 11 construction activities at Rochester, and underground development at Palmarejo and Kensington in both periods. Net cash used in investing activities in the three months ended March 31, 2022 was $54.1 million compared to $53.9 million in the three months ended March 31, 2021. Cash used in investing activities increased primarily due to construction activities related to POA 11 at Rochester, partially offset by the impact of the receipt of net proceeds of $15.3 million from the sale of the La Preciosa project. The Company incurred capital expenditures of $69.5 million in the three months ended March 31, 2022 compared with $59.4 million in the three months ended March 31, 2021. Capital expenditures in the three months ended March 31, 2022 were primarily related to POA 11 construction activities at Rochester, and underground development at Palmarejo and Kensington. Capital expenditures in the three months ended March 31, 2021 were primarily related to POA 11 construction activities at Rochester, potential expansion expenditures at Silvertip and underground development at Palmarejo and Kensington. The Company is experiencing inflationary pressures, specifically with respect to building materials and fuel as well as overall tightness in the construction market related to capital projects, most notably the POA 11 project at Rochester, and to operating costs company-wide. Cash Provided by Financing Activities Net cash provided by financing activities in the three months ended March 31, 2022 was $76.7 million compared to $36.3 million in the three months ended December 31, 2021. During the three months ended March 31, 2022, the Company received net proceeds of $98.4 million from the sale of 22.1 million shares of its common stock in the Equity Offering, partially offset by the net repayment of $10.0 million under the RCF. During the three months ended December 31, 2021, the Company drew $45.0 million, net, from the RCF. Net cash provided by financing activities in the three months ended March 31, 2022 was $76.7 million compared to $119.6 million in the three months ended March 31, 2021. During the three months ended March 31, 2022, the Company received net proceeds of $98.4 million from the sale of 22.1 million shares of its common stock in the Equity Offering, partially offset by the net repayment of $10.0 million under the RCF. During the three months ended March 31, 2021, the Company received net proceeds of $367.5 million from the issuance of the 2029 Senior Notes, partially offset by the tender and redemption of the 2024 Senior Notes for $238.3 million, including premiums. Critical Accounting Policies and Accounting Developments See Note 2 - Summary of Significant Accounting Policies contained in the 2021 10-K and 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, fund 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 38 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. 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 In thousands except per share amounts March 31, 2022 December 31, 2021 March 31, 2021 Net income (loss) $ 7,682 $ (10,760) $ 2,060 Fair value adjustments, net (10,605) 7,543 3,799 Foreign exchange loss (gain) 990 146 (43) (Gain) loss on sale of assets and securities (1,831) 471 (4,053) Loss on debt extinguishment — — 9,173 COVID-19 costs 972 681 3,005 Tax effect of adjustments (1) (10,990) (9,696) — Adjusted net income (loss) $ (13,782) $ (11,615) $ 13,941 Adjusted net income (loss) per share - Basic $ (0.05) $ (0.05) $ 0.06 Adjusted net income (loss) per share - Diluted $ (0.05) $ (0.05) $ 0.06 ( 1) For the three months ended March 31, 2022, tax effect of adjustments of $11.0 million (96%) is primarily related to the de-recognition of deferred tax liabilities related to the sale of Proyectos Mineros La Preciosa, S.A. de C.V. For the three months ended December 31, 2021, tax effect of adjustments of $9.7 million (-115%) is primarily related to the VAT write-off. 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: 39 Three Months Ended In thousands except per share amounts March 31, 2022 December 31, 2021 March 31, 2021 Net income (loss) $ 7,682 $ (10,760) $ 2,060 Interest expense, net of capitalized interest 4,568 3,211 4,910 Income tax provision (benefit) 1,694 432 12,786 Amortization 26,433 35,443 29,937 EBITDA 40,377 28,326 49,693 Fair value adjustments, net (10,605) 7,543 3,799 Foreign exchange (gain) loss 559 479 773 Asset retirement obligation accretion 3,463 3,091 2,905 Inventory adjustments and write-downs 8,592 8,109 572 (Gain) loss on sale of assets and securities (1,831) 471 (4,053) Loss on debt extinguishment — — 9,173 COVID-19 costs 972 681 3,005 Adjusted EBITDA $ 41,527 $ 48,700 $ 65,867 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 (Dollars in thousands) March 31, 2022 December 31, 2021 March 31, 2021 Cash flow from operations $ (6,427) $ 34,936 $ (4,359) Capital expenditures 69,502 100,868 59,424 Free cash flow $ (75,929) $ 42,224 $ (65,932) $ (63,783) Operating Cash Flow Before Changes in Working Capital Management uses Operating Cash Flow Before Changes in Working Capital as a non-GAAP measure to analyze cash flows generated from operations. Operating Cash Flow Before Changes in Working Capital is Cash Provided By (used in) Operating Activities excluding the change in Receivables , Prepaid expenses and other , Inventories and Accounts payable and accrued liabilities as presented on the Consolidated Statements of Cash Flows. The Company believes Operating Cash Flow Before Changes in Working Capital is also useful as one of the bases for comparing the Company’s performance with its competitors. Although Operating Cash Flow Before Changes in Working Capital and similar measures are frequently used as measures of cash flows generated from operations by other companies, the Company’s calculation of Operating Cash Flow Before Changes in Working Capital is not necessarily comparable to such other similarly titled captions of other companies. The following table sets forth a reconciliation of Operating Cash Flow Before Changes in Working Capital, a non-GAAP financial measure, to Cash Provided By (used in) Operating Activities , which the Company believes to be the GAAP financial measure most directly comparable to Operating Cash Flow Before Changes in Working Capital. 40 Three Months Ended (Dollars in thousands) March 31, 2022 December 31, 2021 March 31, 2021 Cash provided by (used in) operating activities $ (6,427) $ 34,936 $ (4,359) Changes in operating assets and liabilities: Receivables (9,100) 1,999 (999) Prepaid expenses and other 509 104 655 Inventories 17,672 9,581 17,486 Accounts payable and accrued liabilities 21,125 (8,831) 28,797 Operating cash flow before changes in working capital $ 23,779 $ 37,789 $ 41,580 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 March 31, 2022 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) $ 52,611 $ 36,985 $ 45,532 $ 22,918 $ 1,259 $ 159,305 Amortization (9,386) (4,710) (8,622) (2,061) (1,259) (26,038) Costs applicable to sales $ 43,225 $ 32,275 $ 36,910 $ 20,857 $ — $ 133,267 Metal Sales Gold ounces 28,242 5,928 22,834 18,207 75,211 Silver ounces 1,796,028 638,116 — 16,138 — 2,450,282 Zinc pounds — — Lead pounds — — Costs applicable to sales Gold ($/oz) $ 735 $ 2,287 $ 1,606 $ 1,124 Silver ($/oz) $ 12.51 $ 29.34 $ — Zinc ($/lb) $ — Lead ($/lb) $ — 41 Three Months Ended December 31, 2021 In thousands (except metal sales, per ounce and per pound amounts) Palmarejo Rochester Kensington Wharf Silvertip Total Costs applicable to sales, including amortization (U.S. GAAP) $ 48,719 $ 42,939 $ 53,884 $ 24,735 $ 1,268 $ 171,545 Amortization (9,985) (5,433) (15,992) (2,411) (1,268) (35,089) Costs applicable to sales $ 38,734 $ 37,506 $ 37,892 $ 22,324 $ — $ 136,456 Metal Sales Gold ounces 27,706 7,385 33,889 19,950 — 88,930 Silver ounces 1,813,884 800,195 — 2,614,079 Zinc pounds — — Lead pounds — — Costs applicable to sales Gold ($/oz) $ 657 $ 2,133 $ 1,114 $ 1,107 Silver ($/oz) $ 11.32 $ 27.18 $ — Zinc ($/lb) $ — Lead ($/lb) $ — Three Months Ended March 31, 2021 In thousands (except metal sales, per ounce and per pound amounts) Palmarejo Rochester Kensington Wharf Silvertip Total Costs applicable to sales, including amortization (U.S. GAAP) $ 43,047 $ 27,610 $ 44,839 $ 21,207 $ 1,086 $ 137,789 Amortization (9,059) (3,577) (13,445) (2,475) (1,086) (29,642) Costs applicable to sales $ 33,988 $ 24,033 $ 31,394 $ 18,732 $ — $ 108,147 Metal Sales Gold ounces 25,687 6,934 31,595 18,896 — 83,112 Silver ounces 1,637,695 771,354 — 26,455 — 2,435,504 Zinc pounds — — Lead pounds — — Costs applicable to sales Gold ($/oz) $ 622 $ 1,317 $ 994 $ 954 Silver ($/oz) $ 11.00 $ 19.32 $ — Zinc ($/lb) $ — Lead ($/lb) $ — 42 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 and silver mining business, including statements regarding operations at the Company’s properties, exploration and development efforts, strategies, expectations regarding the Rochester POA 11 expansion project, the Silvertip mine's potential expansion and restart, supply and labor disruption, inflation, expectations regarding the consideration received from the sale of the La Preciosa project, 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 2021 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 and silver 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 and recovery 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 resources, (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 workforce, equipment and materials availability, inflationary pressures, 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.