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 Second Quarter Highlights For the quarter, Coeur reported revenue of $204.1 million and cash flow from operating activities of $22.6 million. We reported GAAP net loss of $77.4 million, or $0.28 per diluted share. On an adjusted basis 1 , the Company reported EBITDA of $43.3 million and net loss of $13.1 million or $0.05 per diluted share. For the six months ended June 30, 2022, Coeur reported revenue of $392.5 million and cash flow from operating activities of $16.2 million. We reported GAAP net loss of $69.8 million, or $0.26 per diluted share. On an adjusted basis 1 , the Company reported EBITDA of $77.3 million and net loss of $26.9 million or $0.10 per diluted share. • Reaffirming full-year gold and silver production guidance – Increased gold and silver production during the quarter remains in-line with the Company’s expectations, leading Coeur to reaffirm consolidated and site level production guidance for 2022 • Strong quarterly production increases at Kensington, Wharf and Rochester – Kensington’s gold production increased by 23% versus the first quarter, driven by an all-time quarterly record mill throughput. Wharf’s gold production increased by 15% while Rochester’s silver and gold production increased by 5% and 37%, respectively • Full-year cost guidance updated – The Company has updated its full-year site level cost guidance to reflect inflationary pressures. Additionally, Coeur has elected to increase its planned exploration investment by approximately $11 million in 2022 due to positive drilling results at the Kensington, Palmarejo and Silvertip assets • Rochester expansion project remains on-track – The ongoing expansion at the Rochester silver and gold operation in Nevada remains on-track for completion in mid-2023. The total estimated project capital remains approximately $600 million as of June 30, 2022. Coeur has committed approximately $523 million of the project capital and has incurred roughly $350 million towards the expansion • Strategic sale of Victoria Gold shares – Coeur announced the sale of 5 million shares of Victoria Gold Corporation (“Victoria Gold”) stock for net cash proceeds of approximately $40 million, which were received on July 5, 2022 • Appointment of Jeane Hull to Board of Directors – Consistent with the Company’s commitment to Board refreshment and best-in-class corporate governance, Jeane Hull has been appointed to Coeur’s Board of Directors 27 Three Months Ended Six Months Ended In thousands June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021 Financial Results: Gold sales $ 146,625 $ 129,451 $ 276,076 $ 284,480 Silver sales $ 57,498 $ 58,953 $ 116,451 $ 132,495 Consolidated Revenue $ 204,123 $ 188,404 $ 392,527 $ 416,975 Net income (loss) $ (77,434) $ 7,682 $ (69,752) $ 34,206 Net income (loss) per share, diluted $ (0.28) $ 0.03 $ (0.26) $ 0.14 Adjusted net income (loss) (1) $ (13,104) $ (13,782) $ (26,887) $ 13,100 Adjusted net income (loss) per share, diluted (1) $ (0.05) $ (0.05) $ (0.10) $ 0.05 EBITDA (1) $ (32,797) $ 40,377 $ 7,580 $ 134,245 Adjusted EBITDA (1) $ 43,330 $ 41,527 $ 77,261 $ 118,603 Total debt (2) $ 547,500 $ 485,488 $ 547,500 $ 414,246 Operating Results: Gold ounces produced 83,772 75,409 159,181 172,500 Silver ounces produced 2,496,186 2,479,442 4,975,628 4,990,536 Gold ounces sold 84,786 75,211 159,997 171,613 Silver ounces sold 2,543,200 2,450,282 4,993,482 5,018,406 Average realized price per gold ounce $ 1,729 $ 1,721 $ 1,726 $ 1,658 Average realized price per silver ounce $ 22.61 $ 24.06 $ 23.32 $ 26.40 (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 June 30, 2022 compared to Three Months Ended March 31, 2022 Revenue We sold 84,786 gold ounces and 2.5 million silver ounces, compared to 75,211 gold ounces and 2.5 million silver ounces. Revenue increased by $15.7 million, or 8%, as a result of a 13% and 4% increase in gold and silver ounces sold, respectively, partially offset by a 6% decrease in average realized silver prices. The increase in gold and silver ounces sold was primarily due to higher production at Rochester, Kensington and Wharf. Gold and silver represented 72% and 28% of second quarter of 2022 sales revenue, respectively. This compares to gold and silver represented 69% and 31% of first quarter of 2022 sales revenue, respectively. The following table summarizes consolidated metal sales: Three Months Ended Increase (Decrease) Percentage Change In thousands June 30, 2022 March 31, 2022 Gold sales $ 146,625 $ 129,451 $ 17,174 13 % Silver sales 57,498 58,953 (1,455) (2) % Metal sales $ 204,123 $ 188,404 $ 15,719 8 % Costs Applicable to Sales Costs applicable to sales increased $17.4 million, or 13%, primarily due to higher gold and silver ounces sold and higher operating costs primarily due to inflationary pressures relating to consumable costs, most notably higher diesel prices. For a complete discussion of costs applicable to sales, see Results of Operations below. 28 Amortization Amortization increased $1.5 million, or 6%, primarily due to higher gold and silver and ounces sold. Expenses General and administrative expenses decreased $1.0 million, or 10%, primarily due to lower compensation and outside service costs. Exploration expense decreased $0.1 million, or 3% driven by lower spending at Rochester and Canadian exploration investment incentives earned at Silvertip. Pre-development, reclamation, and other expenses decreased $2.2 million, or 20%, stemming from lower costs incurred in connection with the Company’s COVID-19 health and safety protocols, lower ongoing carrying costs at Silvertip and lower operating costs at non-core asset locations. The following table summarizes pre-development, reclamation, and other expenses: Three Months Ended Increase (Decrease) Percentage Change In thousands June 30, 2022 March 31, 2022 COVID-19 $ 318 $ 972 $ (654) (67) % Silvertip ongoing carrying costs 4,754 6,159 (1,405) (23) % Asset retirement accretion 3,529 3,463 66 2 % Other 577 818 (241) (29) % Pre-development, reclamation and other expense $ 9,178 $ 11,412 $ (2,234) (20) % Other Income and Expenses Fair value adjustments, net, decreased to a loss of $62.8 million compared to a gain of $10.6 million as a result of a decrease 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 $2.9 million) increased to $5.2 million from $4.6 million due to higher interest paid under the RCF and finance lease obligations, and lower capitalized interest. Other, net decreased to a gain of $0.3 million compared to a gain of $1.7 million primarily attributable to the $1.5 million gain from the sale of the La Preciosa project in the first quarter of 2022. Income and Mining Taxes During the second quarter of 2022, income and mining tax expense of approximately $11.5 million resulted in an effective tax rate of 17.4% for 2022. This compares to income tax expense of $1.7 million for an effective tax rate of 18.1% for the first quarter of 2022. 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) variations in our income before income taxes; (ii) geographic distribution of that income; (iii) mining taxes; (iv) foreign exchange rates; (v) the impact of uncertain tax positions; (vi) percentage depletion; (vii) the sale of non-core assets; and (viii) the non-recognition of tax assets. Therefore, the effective tax rate will fluctuate, sometimes significantly, period to period. 29 The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit: Three Months Ended June 30, Three months ended March 31, 2022 2022 In thousands Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit United States $ (85,122) $ (998) $ (10,130) $ (1,199) Canada (6,374) (21) (7,525) — Mexico 25,636 (10,483) 27,033 (495) Other jurisdictions (72) — (2) — $ (65,932) $ (11,502) $ 9,376 $ (1,694) 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 loss was $77.4 million, or $0.28 per diluted share, compared to net income of $7.7 million, or $0.03 per diluted share. The decrease in net income was driven by a 6% decrease in average realized silver prices, higher operating costs, unfavorable changes of $73.4 million and $9.8 million in the fair value of the Company’s equity investments and income tax expense, respectively, partially offset by a 13% and 4% increase in gold and silver ounces sold, respectively. Adjusted net loss was $13.1 million, or $0.05 per diluted share, compared to an adjusted net loss of $13.8 million, or $0.05 per share (see “Non-GAAP Financial Performance Measures”). Six Months Ended June 30, 2022 compared to Six Months Ended June 30, 2021 Revenue We sold 159,997 gold ounces and 5.0 million silver ounces, compared to 171,613 gold ounces and 5.0 million silver ounces. Revenue decreased by $24.4 million, or 6%, as a result of a 7% decrease in gold ounces sold and an 12% decrease in average realized silver prices, partially offset by a 4% 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 70% and 30% 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: Six Months Ended Increase (Decrease) Percentage Change In thousands June 30, 2022 June 30, 2021 Gold sales $ 276,076 $ 284,480 $ (8,404) (3) % Silver sales 116,451 132,495 (16,044) (12) % Metal sales $ 392,527 $ 416,975 $ (24,448) (6) % Costs Applicable to Sales Costs applicable to sales increased $43.2 million, or 18%, primarily due to higher operating costs partially due to inflationary pressures related to consumables, most notably higher diesel prices, and employee-related costs and increased maintenance costs, lower of cost or net realizable value (“LCM”) adjustments at Rochester, and the $6.6 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 $7.5 million, or 12%, primarily due to lower gold ounces sold and longer assumed mine life based on year-end mineral reserve growth. Expenses General and administrative expenses decreased $2.5 million, or 11%, primarily due to lower compensation costs. 30 Exploration expense decreased $11.4 million, or 52% driven by lower planned investment across the portfolio and Canadian exploration investment incentives earned at Silvertip. Pre-development, reclamation, and other expenses decreased $5.9 million, or 22%, 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: Six Months Ended Increase (Decrease) Percentage Change In thousands June 30, 2022 June 30, 2021 COVID-19 $ 1,290 $ 5,319 $ (4,029) (76) % Silvertip ongoing carrying costs 10,913 13,368 (2,455) (18) % Asset retirement accretion 6,992 5,870 1,122 19 % Other 1,395 1,893 (498) (26) % Pre-development, reclamation and other expense $ 20,590 $ 26,450 $ (5,860) (22) % Other Income and Expenses During the first half of 2021, the Company incurred a $9.2 million loss in connection with the tender and redemption of the 5.875% Senior Notes due 2024 (the “2024 Senior Notes”) concurrent with the completed offering of the 2029 Senior Notes. Fair value adjustments, net, decreased to a loss of $52.2 million compared to a gain of $33.4 million as a result of an decrease 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 $6.0 million) decreased to $9.7 million from $10.0 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 $2.1 million compared to $4.3 million due to lower gains on the sale of assets. Income and Mining Taxes During the first half of 2022, income and mining tax expense of approximately $13.2 million resulted in an effective tax rate of 23.3% for 2022. This compares to income tax expense of $28.1 million for an effective tax rate of 45.1% 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: Six months ended June 30, 2022 2021 In thousands Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit United States $ (95,252) $ (2,197) $ 21,116 $ (8,853) Canada (13,899) (21) (25,763) — Mexico 52,669 (10,978) 63,741 (19,273) Other jurisdictions (74) — 3,238 — $ (56,556) $ (13,196) $ 62,332 $ (28,126) 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 31 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 loss was $69.8 million, or $0.26 per diluted share, compared to net income of $34.2 million, or $0.14 per diluted share. The decrease in net income was driven by unfavorable changes in the fair value of the Company’s equity investments, higher operating costs, a 7% decrease in gold ounces sold and an 12% decrease in average realized silver prices, partially offset by a 4% increase in average realized gold prices, a $9.2 million loss on debt extinguishment in the comparable period in 2021 and lower income and mining taxes. Adjusted net loss was $26.9 million, or $0.10 per diluted share, compared to adjusted net income of $13.1 million, or $0.05 per diluted share (see “Non-GAAP Financial Performance Measures”). 2022 Guidance Production during the second quarter was in-line with Coeur’s expectations, leading the Company to reaffirm 2022 production guidance. Updated cost guidance reflects industry-wide inflationary pressures on consumables. Updated exploration guidance shows an increase in exploration expense and capitalized exploration The increase in exploration investment reflects additional planned expansion and infill drilling at Silvertip, Palmarejo and Kensington. 2022 Production Guidance Gold Silver (oz) (K oz) Palmarejo 100,000 - 110,000 6,000 - 7,000 Rochester 35,000 - 43,000 3,000 - 4,000 Kensington 110,000 - 120,000 — Wharf 70,000 - 80,000 — Total 315,000 - 353,000 9,000 - 11,000 2022 Costs Applicable to Sales Guidance Previous Updated Gold Silver Gold Silver ($/oz) ($/oz) ($/oz) ($/oz) Palmarejo (co-product) $750 - $850 $13.50 - $14.50 $825 - $925 $12.75 - $13.75 Rochester (co-product) $1,490 - $1,590 $20.75 - $22.75 $1,650 - $1,850 $20.00 - $26.00 Kensington $1,150 - $1,250 $1,300 - $1,400 — Wharf (by-product) $1,225 - $1,325 $1,250 - $1,350 — 2022 Capital, Exploration and G&A Guidance Previous Updated ($M) ($M) Capital Expenditures, Sustaining $115 - $140 $110 - $135 Capital Expenditures, Development $205 - $250 $220 - $260 Exploration, Expensed $18 - $23 $25 - $30 Exploration, Capitalized $18 - $23 $22 - $27 General & Administrative Expenses $42 - $46 $42 - $46 Note: The Company’s previous guidance figures assume estimated prices of $1,800/oz gold and $24.00/oz silver as well as CAD of 1.25 and MXN of 20.00. The Company’s updated guidance figures assume estimated prices of $1,800/oz gold and $22.00/oz silver as well as CAD of 1.25 and MXN of 20.00. Guidance figures exclude the impact of any metal sales or foreign exchange hedges. 32 Results of Operations Palmarejo Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021 Tons milled 539,600 565,211 1,104,811 1,001,763 Average gold grade (oz/t) 0.054 0.056 0.055 0.060 Average silver grade (oz/t) 3.95 3.87 3.91 4.00 Average recovery rate – Au 92.4 % 90.6 % 91.5 % 94.0 % Average recovery rate – Ag 84.2 % 83.0 % 83.6 % 81.6 % Gold ounces produced 27,109 28,931 56,040 56,200 Silver ounces produced 1,795,050 1,812,530 3,607,580 3,269,819 Gold ounces sold 29,285 28,242 57,527 56,203 Silver ounces sold 1,854,695 1,796,028 3,650,723 3,277,315 CAS per gold ounce (1) $ 854 $ 735 $ 802 $ 648 CAS per silver ounce (1) $ 12.96 $ 12.51 $ 12.64 $ 12.04 (1) See Non-GAAP Financial Performance Measures. Three Months Ended June 30, 2022 compared to Three Months Ended March 31, 2022 Gold production decreased 6% as a result of lower mill throughput and gold grade, partially offset by higher recoveries as a result of blending optimization as well as enhancements in the flotation and solution management processes. Silver production decreased 1% as a result of lower mill throughput, partially offset by higher silver grade and recoveries as a result of blending optimization as well as a drawdown of in-circuit inventory. Metal sales were $86.0 million, or 42% of Coeur’s metal sales, compared with $83.1 million, or 44% of Coeur’s metal sales. Revenue for the three months ended June 30, 2022 increased by $2.9 million or 3%, primarily due to a higher volume of gold and silver sales. Costs applicable to sales per gold and silver ounce increased 16% and 4%, respectively, due to the mix of gold and silver sales, higher employee-related and consumable costs largely due to inflationary pressures. Amortization increased to $9.7 million due to higher ounces sold. Capital expenditures decreased to $10.1 million reflecting delays in capital project advancements, partially offset by continued planned investment in underground development and infill drilling. Six Months Ended June 30, 2022 compared to Six Months Ended June 30, 2021 Gold production was in-line with the prior year as a result of higher mill throughput, partially offset by lower gold grade and recoveries. Silver production increased 10% as a result of higher mill throughput and recoveries, partially offset by lower silver grade. Metal sales were $169.0 million, or 44% of Coeur’s metal sales, compared with $165.4 million, or 40% of Coeur’s metal sales. Revenue for the six months ended June 30, 2022 increased by $3.7 million or 2%, of which $10.6 million resulted from a higher volume of gold and silver sales was partially offset by a decrease of $6.9 million primarily due to lower average realized silver prices. Costs applicable to sales per gold and silver ounce increased 24% and 5%, 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 ($6.6 million) included in the prior year. Amortization increased to $19.1 million due to increased sales. Capital expenditures increased to $23.7 million from $19.8 million due to higher underground development, infill drilling activities and equipment purchases. 33 Rochester Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021 Tons placed 4,236,459 4,377,873 8,614,332 6,436,694 Average gold grade (oz/t) 0.003 0.003 0.003 0.003 Average silver grade (oz/t) 0.35 0.34 0.34 0.41 Gold ounces produced 8,319 6,066 14,385 14,136 Silver ounces produced 689,169 655,176 1,344,345 1,661,985 Gold ounces sold 8,071 5,928 13,999 14,752 Silver ounces sold 682,677 638,116 1,320,793 1,683,215 CAS per gold ounce (1) $ 2,351 $ 2,287 $ 2,308 $ 1,557 CAS per silver ounce (1) $ 27.80 $ 29.34 $ 28.71 $ 23.23 (1) See Non-GAAP Financial Performance Measures. Three Months Ended June 30, 2022 compared to Three Months Ended March 31, 2022 Gold and silver production increased 37% and 5%, respectively, largely due to increased placement rates from the first quarter. Metal sales were $30.5 million, or 15% of Coeur’s metal sales, compared with $26.4 million, or 14% of Coeur’s metal sales. Revenue for the three months ended June 30, 2022 increased by $4.1 million or 16%, of which $5.0 million was the result of a higher volume of gold and silver sales, partially offset by a $0.9 million decrease as a result of lower average realized silver prices. Costs applicable to sales per gold ounce increased 3% and decreased 5% per silver ounce due to the mix of gold and silver sales and higher maintenance and consumable costs partially due to inflationary pressures. Amortization increased to $5.0 million due to higher ounces sold. Capital expenditures increased to $47.0 million due to timing of payments related to the POA 11 expansion project. Six Months Ended June 30, 2022 compared to Six Months Ended June 30, 2021 Gold production increased 2% while silver production decreased 19%, as a result of lower tons placed in prior year, lower silver grades and the timing of gold and silver recoveries. Metal sales were $56.9 million, or 14% of Coeur’s metal sales, compared with $70.8 million, or 17% of Coeur’s metal sales. Revenue for the six months ended June 30, 2022 decreased by $14.0 million or 20%, of which $9.8 million was the result of a lower volume of gold and silver sales and $4.2 million was the result of lower average realized silver prices, partially offset by higher average realized gold prices. Costs applicable to sales per gold and silver ounce increased 48% and 24%, respectively, due to the mix of gold and silver sales, higher maintenance and consumable costs partially due to inflationary pressures, and LCM adjustments. Amortization decreased to $9.7 million due to lower ounces sold. Capital expenditures increased to $80.0 million from $72.4 million due to payments related to the POA 11 expansion project. As of June 30, 2022, the total estimated project capital cost remained approximately $600 million. With the commencement of structural, mechanical, piping, electrical and instrumentation construction work, completion of final major high-voltage electrical contracts and initial commitments for the pre-screen addition to the expanded crusher circuit, the Company has committed approximately $523 million and incurred $350 million of the total estimated project cost through June 30, 2022. 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. These scheduled construction completion dates for the project remain unchanged. Construction of the Merrill-Crowe process plant ramped up during the second quarter, including completion of concrete work, continuation of equipment setting, and the commencement of building and process plant steel pipe rack erection, as well as piping and cable tray installation. Work on the crusher corridor included (i) continued civil construction in the primary crusher area, (ii) the completion of concrete work, start of steel construction, and setting of conveyor and equipment in the secondary crusher area, (iii) continued advancement of concrete work and start of steel erection in the secondary stock pile reclaim area, (iv) completion of concrete in the tertiary crusher area, and (v) continuation of concrete in the tertiary reclaim and final product load-out areas. Deliveries of equipment and materials for the project continue to support the overall construction schedule. 34 The Company also recently advanced detailed engineering on the pre-screens. Equipment procurement and construction contract development is well underway as Coeur continues working to align construction of the pre-screens with the completion of the new crusher. Final cost estimates related to pre-screens are expected in the third quarter. The Company began installation of pre-screens on the existing crusher corridor on June 23 and commenced commissioning on July 22. Ramp-up of the pilot system as well as optimization of the product size placed under leach is scheduled to take place during the month of August. The experience and knowledge gained from utilizing pre-screens is expected to facilitate the integration of pre-screen technology into the new crusher system flowsheet for POA 11. Kensington Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021 Tons milled 175,722 165,968 341,690 338,669 Average gold grade (oz/t) 0.17 0.14 0.16 0.19 Average recovery rate 91.6 % 95.3 % 93.3 % 92.9 % Gold ounces produced 27,866 22,646 50,512 59,003 Gold ounces sold 27,666 22,834 50,500 58,391 CAS per gold ounce (1) $ 1,412 $ 1,606 $ 1,500 $ 1,038 (1) See Non-GAAP Financial Performance Measures. Three Months Ended June 30, 2022 compared to Three Months Ended March 31, 2022 Gold production increased 23% as a result of higher mill throughput and higher grade, partially offset by lower recoveries. Metal sales were $50.3 million, or 25% of Coeur’s metal sales, compared to $44.3 million, or 24% of Coeur’s metal sales. Revenue for the three months ended June 30, 2022 increased by $6.0 million or 13%, of which $8.8 million resulted from a higher volume of gold sales, partially offset by a decrease of $2.8 million due to lower average realized gold prices. Costs applicable to sales per gold ounce decreased 12% due to higher production, partially offset by higher consumable costs partially due to inflationary pressures. Amortization increased to $9.4 million primarily due to higher ounces sold. Capital expenditures was consistent quarter over quarter at $8.8 million compared to $8.0 million. Six Months Ended June 30, 2022 compared to Six Months Ended June 30, 2021 Gold production decreased 14% as a result of lower grade and lower mill throughput resulting from the impact of COVID-19 on workforce availability. Metal sales were $94.6 million, or 24% of Coeur’s metal sales, compared to $103.3 million, or 25% of Coeur’s metal sales. Revenue for the six months ended June 30, 2022 decreased by $8.7 million or 8%, of which $14.7 million resulted from lower volume of gold sales, partially offset by an increase of $6.0 million due to higher average realized gold prices. Costs applicable to sales per gold ounce increased 45% due to lower production and higher employee-related, maintenance and consumable costs partially due to inflationary pressures. Amortization decreased to $18.0 million primarily due to lower ounces sold. Capital expenditures increased to $16.8 million from $13.2 million due to higher infill drilling and underground development. Wharf Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021 Tons placed 1,050,215 1,127,569 2,177,784 2,139,524 Average gold grade (oz/t) 0.015 0.025 0.020 0.031 Gold ounces produced 20,478 17,766 38,244 43,161 Silver ounces produced 11,967 11,736 23,703 58,732 Gold ounces sold 19,764 18,207 37,971 42,267 Silver ounces sold 5,828 16,138 21,966 57,876 CAS per gold ounce (1) $ 1,226 $ 1,124 $ 1,177 $ 961 (1) See Non-GAAP Financial Performance Measures. 35 Three Months Ended June 30, 2022 compared to Three Months Ended March 31, 2022 Gold production increased 15% driven by the timing of recoveries due to higher grades placed in the first quarter. Metal sales were $37.4 million, or 18% of Coeur’s metal sales, compared to $34.7 million, or 18% of Coeur’s metal sales. Revenue for the three months ended June 30, 2022 increased by $2.7 million or 8%, of which $2.7 million resulted from a higher volume of gold sales. Costs applicable to sales per gold ounce increased 9% due to higher consumable costs partially due to inflationary pressures. Amortization increased to $2.2 million due to higher ounces sold. Capital expenditures were $0.5 million. Six Months Ended June 30, 2022 compared to Six Months Ended June 30, 2021 Gold production decreased 11% driven by the timing of recoveries. Metal sales were $72.1 million, or 18% of Coeur’s metal sales, compared to $77.5 million, or 19% of Coeur’s metal sales. Revenue for the six months ended June 30, 2022 decreased by $5.4 million, of which $8.9 million was due to a lower volume of gold and silver sales, partially offset by an increase of $3.5 million due to higher average realized gold prices. Costs applicable to sales per gold ounce increased 22% due to higher equipment rental and consumable costs partially due to inflationary pressures. Amortization decreased to $4.3 million due to lower ounces sold. Capital expenditures were $1.8 million. Silvertip Six Months Ended June 30, 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 to advance study work to assess the economics of a potential future expansion and restart of its high-grade Silvertip silver-zinc-lead development project in British Columbia, Canada. The Company’s objective remains to complete an evaluation by year end of higher throughput scenarios to reduce unit costs and to take advantage of Silvertip’s expanding, high-grade resource base. Ongoing carrying costs at Silvertip totaled $10.9 million in the first half of 2022, compared to $13.4 million in the prior year. Capital expenditures during the first half of 2022 totaled $17.6 million compared to $28.9 million in the prior year due to continued infill drilling and underground development. For 2022, capital expenditures are now expected to be approximately $28 - $36 million (previously $18 - $24 million). The revised figures reflect increase underground development and infill drilling. Liquidity and Capital Resources At June 30, 2022, the Company had $75.6 million of cash, cash equivalents and restricted cash and $244.5 million available under the RCF. Cash and cash equivalents increased $17.5 million in the six months ended June 30, 2022, due to the net proceeds of $98.3 million from the sale of 22.1 million shares of its common stock, net proceeds of $15.3 million received from the sale of the La Preciosa project, and a 13% and 4% increase in gold and silver ounces sold, respectively, partially offset by a 6% decrease in average realized silver prices, higher operating costs and capital expenditures related to POA 11 at Rochester. 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 $98.3 million. On May 2, 2022, the Company entered into an amendment (the “Amendment”) to the RCF to, among other things, increase the maximum principal amount of the RCF by $90.0 million in incremental loans and commitments to an aggregate of $390.0 million. At June 30, 2022, the Company had $115.0 million drawn and $30.0 million in outstanding letters of credit under the RCF. The Company also holds $99.1 million of equity securities including a 17.8% interest in Victoria Gold Corporation (“Victoria Gold”). On June 28, 2022, the Company entered into an agreement to sell 5,000,000 shares of common stock of Victoria Gold (“Victoria Gold Common Shares”) at a price of $8.34 per Victoria Gold Common Share, which settled on July 5, 2022 for net proceeds of $40.5 million. Following the sale, the Company holds a 9.4% interest in Victoria Gold. The Company had outstanding forward contracts on 221,000 ounces of gold at June 30, 2022 that settle monthly through December 2023. The Company is targeting to hedge up to 70% of expected gold production in 2022, 50% of expected gold production for the first half of 2023 and 25% of expected gold production for the second half of 2023 in order to protect cash flow during a period of elevated capital expenditures, and may in the future layer on additional hedges as circumstances warrant. The weighted average fixed price on the forward contracts is $1,974 per ounce of gold. 36 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 asset sales, and the monetization of our equity investments, including our remaining common shares of 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 June 30, 2022, the total estimated project capital cost remained approximately $600 million. With the commencement of structural, mechanical, piping, electrical and instrumentation construction work, completion of final major high-voltage electrical contracts and initial commitments for the pre-screen addition to the expanded crusher circuit, the Company has committed approximately $523 million and incurred $350 million of the total estimated project cost through June 30, 2022. 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 provided by operating activities for the three months ended June 30, 2022 was $22.6 million, compared to net cash used in operating activities of $6.4 million for the three months ended March 31, 2022. Net cash provided by operating activities for the six months ended June 30, 2022 was $16.2 million, compared to $53.7 million for the six months ended June 30, 2021. Adjusted EBITDA for the three months ended June 30, 2022 was $43.3 million, compared to $41.5 million for the three months ended March 31, 2022. Adjusted EBITDA for the six months ended June 30, 2022 was $77.3 million, compared to $118.6 million for the six months ended June 30, 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 Six Months Ended In thousands June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021 Cash flow before changes in operating assets and liabilities $ 29,773 $ 23,779 $ 53,552 $ 73,022 Changes in operating assets and liabilities: Receivables (4,882) 9,100 4,218 1,960 Prepaid expenses and other 3,523 (509) 3,014 673 Inventories (11,263) (17,672) (28,935) (14,227) Accounts payable and accrued liabilities 5,493 (21,125) (15,632) (7,728) Cash provided by (used in) operating activities $ 22,644 $ (6,427) $ 16,217 $ 53,700 Net cash provided by operating activities increased $29.1 million for the three months ended June 30, 2022 compared to the three months ended March 31, 2022, primarily as a result of a 13% and 4% increase in gold and silver ounces sold, respectively, mining and income taxes paid at Palmarejo in the first quarter of 2022, lower exploration costs and lower Silvertip ongoing carrying costs, partially offset by a 6% decrease in average realized silver prices and timing of VAT collections at Palmarejo. Revenue for the three months ended June 30, 2022 compared to the three months ended March 31, 2022 increased by $15.7 million, of which $18.6 million was due to higher volume of gold and silver sales, partially offset by a decrease of $2.9 million due to lower average realized silver prices. Net cash provided by operating activities decreased $37.5 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily due to lower gold ounces sold (7%), a 12% decrease in average realized silver prices, and higher operating costs, partially offset by a 4% increase in average realized gold prices, lower exploration costs, lower Silvertip ongoing carrying costs, and timing of VAT collections at Palmarejo. Revenue for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 decreased by $24.4 million, of which $20.6 million was due to lower volume of gold and silver sales and $3.8 million was due to lower average realized silver prices. 37 Cash Used in Investing Activities Net cash used in investing activities in the three months ended June 30, 2022 was $72.5 million compared to $54.1 million in the three months ended March 31, 2022. Cash used in investing activities increased primarily due to the timing of payments related to 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 in the first quarter of 2022. The Company incurred capital expenditures of $73.2 million in the three months ended June 30, 2022 compared with $69.5 million in the three months ended March 31, 2022 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 six months ended June 30, 2022 was $126.7 million compared to $132.1 million in the six months ended June 30, 2021. Cash used in investing activities decreased primarily due to the receipt of net proceeds of $15.3 million from the sale of the La Preciosa project in the first quarter of 2022, partially offset by construction activities related to POA 11 at Rochester. The Company incurred capital expenditures of $142.7 million in the six months ended June 30, 2022 compared with $137.6 million in the six months ended June 30, 2021. Capital expenditures in the six months ended June 30, 2022 were primarily related to POA 11 construction activities at Rochester and underground development at Palmarejo and Kensington. Capital expenditures in the six months ended June 30, 2021 were primarily related to POA 11 construction activities at Rochester, potential expansion expenditures at Silvertip and underground development at Palmarejo and Kensington. 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 June 30, 2022 was $50.7 million compared to $76.7 million in the three months ended March 31, 2022. During the three months ended June 30, 2022, the Company drew $60.0 million, net, from the RCF. During the three months ended March 31, 2022, the Company received net proceeds of $98.3 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. Net cash provided by financing activities in the six months ended June 30, 2022 was $127.5 million compared to $109.8 million in the six months ended June 30, 2021. During the six months ended June 30, 2022, the Company borrowed $155.0 million and repaid $105.0 million under the RCF, and received net proceeds of $98.3 million from the sale of 22.1 million shares of its common stock in the Equity Offering. During the six months ended June 30, 2021, the Company received net proceeds of $367.5 million from the issuance of the 2029 Senior Notes, partially offset by the tender and redemption of the 2024 Senior Notes for $238.3 million, including premiums. 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. 38 Non-GAAP Financial Performance Measures Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles (“GAAP”). Unless otherwise noted, we present the Non-GAAP financial measures in the tables below. These measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP. 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 Six Months Ended In thousands except per share amounts June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021 Net income (loss) $ (77,434) $ 7,682 $ (69,752) $ 34,206 Fair value adjustments, net 62,811 (10,605) 52,205 (33,440) Foreign exchange loss (gain) 513 990 1,503 1,461 (Gain) loss on sale of assets and securities (621) (1,831) (2,452) (4,674) Loss on debt extinguishment — — — 9,172 COVID-19 costs 318 972 1,290 5,319 Interest income on notes receivables (179) — (179) — Tax effect of adjustments (1) 1,488 (10,990) (9,502) 1,056 Adjusted net income (loss) $ (13,104) $ (13,782) $ (26,887) $ 13,100 Adjusted net income (loss) per share - Basic $ (0.05) $ (0.05) $ (0.10) $ 0.05 Adjusted net income (loss) per share - Diluted $ (0.05) $ (0.05) $ (0.10) $ 0.05 ( 1) For the three months ended June 30, 2022, tax effect of adjustments of -$1.5 million (2%) is primarily related to the to the fair value adjustments on the Company’s equity investments. 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 La Preciosa. For the six months ended June 30, 2022, tax effect of adjustments of $9.5 million (-19%) is primarily related to the de-recognition of deferred tax liabilities related to the sale of La Preciosa and the fair value adjustments on the Company’s equity investments. For the six months ended June 30, 2021, tax effect of adjustments of $1.1 million (-3%) are primarily related to the fair value adjustments on the Company’s equity investments. EBITDA and Adjusted EBITDA Management uses EBITDA to evaluate the Company’s operating performance, to plan and forecast its operations, and assess leverage levels and liquidity measures. The Company believes the use of EBITDA reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies. Adjusted EBITDA is a measure used in indenture governing the 2029 Senior Notes and the RCF to determine our ability to make certain payments and incur additional indebtedness. EBITDA and Adjusted EBITDA do not represent, and should not be considered an alternative to, Net income (Loss) or Cash Flow from Operations as determined under GAAP. Other companies may calculate Adjusted EBITDA differently and those calculations may not be comparable to our presentation. Adjusted EBITDA is reconciled to Net income (loss) in the following table: 39 Three Months Ended Six Months Ended In thousands except per share amounts June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021 Net income (loss) $ (77,434) $ 7,682 $ (69,752) $ 34,206 Interest expense, net of capitalized interest 5,170 4,568 9,738 10,003 Income tax provision (benefit) 11,502 1,694 13,196 28,126 Amortization 27,965 26,433 54,398 61,910 EBITDA (32,797) 40,377 7,580 134,245 Fair value adjustments, net 62,810 (10,605) 52,205 (33,440) Foreign exchange (gain) loss 507 559 1,065 1,272 Asset retirement obligation accretion 3,529 3,463 6,992 5,870 Inventory adjustments and write-downs 9,763 8,592 10,760 839 (Gain) loss on sale of assets and securities (621) (1,831) (2,452) (4,674) Loss on debt extinguishment — — — 9,172 COVID-19 costs 318 972 1,290 5,319 Interest income on notes receivables (179) — (179) — Adjusted EBITDA $ 43,330 $ 41,527 $ 77,261 $ 118,603 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 Six Months Ended (Dollars in thousands) June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021 Cash flow from operations $ 22,644 $ (6,427) $ 16,217 $ 53,700 Capital expenditures 73,156 69,502 142,658 137,647 Free cash flow $ (50,512) $ 42,224 $ (75,929) $ (126,441) $ (83,947) 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 Six Months Ended (Dollars in thousands) June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021 Cash provided by (used in) operating activities $ 22,644 $ (6,427) $ 16,217 $ 53,700 Changes in operating assets and liabilities: Receivables 4,882 (9,100) (4,218) (1,960) Prepaid expenses and other (3,523) 509 (3,014) (673) Inventories 11,263 17,672 28,935 14,227 Accounts payable and accrued liabilities (5,493) 21,125 15,632 7,728 Operating cash flow before changes in working capital $ 29,773 $ 23,779 $ 53,552 $ 73,022 Costs Applicable to Sales Management uses CAS to evaluate the Company’s current operating performance and life of mine performance from discovery through reclamation. We believe these measures assist analysts, investors and other stakeholders in understanding the costs associated with producing gold, silver, zinc and lead, assessing our operating performance and ability to generate free cash flow from operations and sustaining production. These measures may not be indicative of operating profit or cash flow from operations as determined under GAAP. Management believes that allocating CAS to gold, silver, zinc and lead based on gold, silver, zinc and lead metal sales relative to total metal sales best allows management, analysts, investors and other stakeholders to evaluate the operating performance of the Company. Other companies may calculate CAS differently as a result of reflecting the benefit from selling non-silver metals as a by-product credit, converting to silver equivalent ounces, and differences in underlying accounting principles and accounting frameworks such as in International Financial Reporting Standards. Three Months Ended June 30, 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) $ 58,800 $ 42,914 $ 48,680 $ 26,600 $ 1,259 $ 178,253 Amortization (9,737) (4,961) (9,369) (2,248) (1,259) (27,574) Costs applicable to sales $ 49,063 $ 37,953 $ 39,311 $ 24,352 $ — $ 150,679 Metal Sales Gold ounces 29,285 8,071 27,666 19,764 84,786 Silver ounces 1,854,695 682,677 — 5,828 — 2,543,200 Zinc pounds — — Lead pounds — — Costs applicable to sales Gold ($/oz) $ 854 $ 2,351 $ 1,412 $ 1,226 Silver ($/oz) $ 12.96 $ 27.80 $ — Zinc ($/lb) $ — Lead ($/lb) $ — 41 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) $ — Six Months Ended June 30, 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) $ 111,411 $ 79,899 $ 94,212 $ 49,518 $ 2,518 $ 337,558 Amortization (19,123) (9,671) (17,991) (4,309) (2,518) (53,612) Costs applicable to sales $ 92,288 $ 70,228 $ 76,221 $ 45,209 $ — $ 283,946 Metal Sales Gold ounces 57,527 13,999 50,500 37,971 159,997 Silver ounces 3,650,723 1,320,793 — 21,966 — 4,993,482 Zinc pounds — — Lead pounds — — Costs applicable to sales Gold ($/oz) $ 802 $ 2,308 $ 1,500 $ 1,177 Silver ($/oz) $ 12.64 $ 28.71 $ — Zinc ($/lb) $ — Lead ($/lb) $ — Six Months Ended June 30, 2021 In thousands (except metal sales, per ounce and per pound amounts) Palmarejo Rochester Kensington Wharf Silvertip Total Costs applicable to sales, including amortization (U.S. GAAP) $ 93,236 $ 72,147 $ 86,752 $ 47,644 $ 2,271 $ 302,050 Amortization (17,330) (10,083) (26,155) (5,469) (2,271) (61,308) Costs applicable to sales $ 75,906 $ 62,064 $ 60,597 $ 42,175 $ — $ 240,742 Metal Sales Gold ounces 56,203 14,752 58,391 42,267 171,613 Silver ounces 3,277,315 1,683,215 57,876 — 5,018,406 Zinc pounds — — Lead pounds — — Costs applicable to sales Gold ($/oz) $ 648 $ 1,557 $ 1,038 $ 961 Silver ($/oz) $ 12.04 $ 23.23 $ — Zinc ($/lb) $ — Lead ($/lb) $ — 42 Reconciliation of Costs Applicable to Sales for 2022 Guidance In thousands (except metal sales, per ounce or per pound amounts) Palmarejo Rochester Kensington Wharf Costs applicable to sales, including amortization (U.S. GAAP) $ 219,862 $ 165,031 $ 191,055 $ 109,179 Amortization (35,687) (22,218) (39,051) (7,811) Costs applicable to sales $ 184,175 $ 142,813 $ 152,004 $ 101,368 By-product credit — — — (745) Adjusted costs applicable to sales $ 184,175 $ 142,813 $ 152,004 $ 100,623 Metal Sales Gold ounces 107,034 37,072 113,890 78,757 Silver ounces 6,831,642 3,257,498 32,199 Revenue Split Gold 51% 47% 100% 100% Silver 49% 53% Adjusted costs applicable to sales Gold ($/oz) $825 - $925 $1,650 - $1,850 $1,300 - $1,400 $1,250 - $1,350 Silver ($/oz) $12.75 - $13.75 $20.00 - $26.00 Reconciliation of Costs Applicable to Sales for Previous 2022 Guidance In thousands (except metal sales, per ounce or per pound amounts) Palmarejo Rochester Kensington Wharf Costs applicable to sales, including amortization (U.S. GAAP) $ 211,800 $ 148,540 $ 185,494 $ 106,175 Amortization (34,183) (20,094) (48,763) (8,378) Costs applicable to sales $ 177,617 $ 128,446 $ 136,731 $ 97,797 By-product credit — — — (1,802) Adjusted costs applicable to sales $ 177,617 $ 128,446 $ 136,731 $ 95,995 Metal Sales Gold ounces 105,255 38,912 116,502 75,261 Silver ounces 6,501,289 3,405,155 75,093 Revenue Split Gold 49% 46% 100% 100% Silver 51% 54% Adjusted costs applicable to sales Gold ($/oz) $750 - $850 $1,490 - $1,590 $1,150 - $1,250 $1,225 - $1,325 Silver ($/oz) $13.50 - $14.50 $20.75 - $22.75 43 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, 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.