Coeur Mining, Inc. 10-Q

Item 1. Financial Statements and Supplementary Data COEUR MINING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, 2022 December 31, 2021 ASSETS Notes In thousands, except share data CURRENT ASSETS Cash and cash equivalents $ 75,389 $ 56,664 Receivables 4 34,947 32,417 Inventory 5 59,405 51,281 Ore on leach pads 5 83,647 81,128 Equity securities 6 36,255 — Prepaid expenses and other 54,590 13,847 Assets held for sale 20 101,750 54,240 445,983 289,577 NON-CURRENT ASSETS Property, plant and equipment, net 370,700 319,967 Mining properties, net 952,189 852,799 Ore on leach pads 5 58,221 73,495 Restricted assets 7,934 9,138 Equity securities 6 9,293 132,197 Receivables 4, 12 8,717 — Other 61,177 57,249 TOTAL ASSETS $ 1,914,214 $ 1,734,422 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 135,996 $ 103,901 Accrued liabilities and other 18 79,611 87,946 Debt 7, 8 26,417 29,821 Reclamation 9 2,853 2,931 Liabilities held for sale 20 12,813 11,269 257,690 235,868 NON-CURRENT LIABILITIES Debt 7, 8 609,262 457,680 Reclamation 9 183,810 178,957 Deferred tax liabilities 9,748 21,969 Other long-term liabilities 32,115 39,686 834,935 698,292 COMMITMENTS AND CONTINGENCIES 17 STOCKHOLDERS’ EQUITY Common stock, par value $ 0.01 per share; authorized 600,000,000 shares, 280,836,100 issued and outstanding at September 30, 2022 and 256,919,803 at December 31, 2021 2,808 2,569 Additional paid-in capital 3,839,725 3,738,347 Accumulated other comprehensive income (loss) 45,694 ( 1,212 ) Accumulated deficit ( 3,066,638 ) ( 2,939,442 ) 821,589 800,262 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,914,214 $ 1,734,422 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 4 COEUR MINING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Notes In thousands, except share data Revenue 3 $ 182,993 $ 207,969 $ 575,520 $ 624,944 COSTS AND EXPENSES Costs applicable to sales (1) 3 163,180 134,340 447,126 375,082 Amortization 29,151 30,962 83,549 92,872 General and administrative 9,722 8,743 29,281 30,764 Exploration 8,406 15,391 19,103 37,503 Pre-development, reclamation, and other 14 9,249 10,506 29,839 36,956 Total costs and expenses 219,708 199,942 608,898 573,177 OTHER INCOME (EXPENSE), NET Loss on debt extinguishment — — — ( 9,173 ) Fair value adjustments, net 12 ( 13,067 ) ( 26,440 ) ( 65,272 ) 7,000 Interest expense, net of capitalized interest 8 ( 5,932 ) ( 3,237 ) ( 15,670 ) ( 13,240 ) Other, net 14 153 ( 26,718 ) 2,203 ( 22,390 ) Total other income (expense), net ( 18,846 ) ( 56,395 ) ( 78,739 ) ( 37,803 ) Income (loss) before income and mining taxes ( 55,561 ) ( 48,368 ) ( 112,117 ) 13,964 Income and mining tax (expense) benefit 10 ( 1,883 ) ( 6,400 ) ( 15,079 ) ( 34,526 ) NET INCOME (LOSS) $ ( 57,444 ) $ ( 54,768 ) $ ( 127,196 ) $ ( 20,562 ) OTHER COMPREHENSIVE INCOME (LOSS): Change in fair value of derivative contracts designated as cash flow hedges 29,060 1,349 58,087 25,723 Reclassification adjustments for realized (gain) loss on cash flow hedges ( 9,910 ) ( 3,902 ) ( 11,181 ) ( 9,683 ) Other comprehensive income (loss) 19,150 ( 2,553 ) 46,906 16,040 COMPREHENSIVE INCOME (LOSS) $ ( 38,294 ) $ ( 57,321 ) $ ( 80,290 ) $ ( 4,522 ) NET INCOME (LOSS) PER SHARE 15 Basic income (loss) per share: Basic $ ( 0.21 ) $ ( 0.21 ) $ ( 0.47 ) $ ( 0.08 ) Diluted $ ( 0.21 ) $ ( 0.21 ) $ ( 0.47 ) $ ( 0.08 ) (1) Excludes amortization. The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 5 COEUR MINING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Notes In thousands CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ ( 57,444 ) $ ( 54,768 ) $ ( 127,196 ) $ ( 20,562 ) Adjustments: Amortization 29,151 30,962 83,549 92,872 Accretion 3,596 3,028 10,588 8,898 Deferred taxes ( 4,730 ) ( 5,964 ) ( 12,288 ) ( 740 ) Loss on debt extinguishment 8 — — — 9,173 Fair value adjustments, net 12 13,067 26,440 62,133 ( 7,000 ) Stock-based compensation 11 2,705 2,671 7,319 10,183 Write-downs 5 21,204 31,249 38,018 31,249 Deferred revenue recognition 17 ( 10,167 ) ( 307 ) ( 10,723 ) ( 15,908 ) Other 1,290 1,493 824 ( 339 ) Changes in operating assets and liabilities: Receivables ( 119 ) ( 944 ) 4,099 1,016 Prepaid expenses and other current assets ( 2,075 ) ( 80 ) 939 593 Inventory and ore on leach pads ( 13,715 ) ( 3,820 ) ( 42,650 ) ( 18,047 ) Accounts payable and accrued liabilities ( 1,880 ) ( 8,114 ) ( 17,512 ) ( 15,842 ) CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ( 19,117 ) 21,846 ( 2,900 ) 75,546 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 96,602 ) ( 71,266 ) ( 239,260 ) ( 208,913 ) Proceeds from the sale of assets — 61 16,001 5,617 Purchase of investments — ( 1,079 ) — ( 1,955 ) Sale of investments 40,469 — 40,469 935 Other ( 42 ) ( 12 ) ( 63 ) ( 42 ) CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ( 56,175 ) ( 72,296 ) ( 182,853 ) ( 204,358 ) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 15 — — 98,335 — Issuance of notes and bank borrowings, net of issuance costs 8 100,000 20,000 255,000 387,493 Payments on debt, finance leases, and associated costs 7, 8 ( 23,211 ) ( 7,944 ) ( 145,515 ) ( 261,522 ) Other ( 2 ) ( 20 ) ( 3,565 ) ( 4,178 ) CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 76,787 12,036 204,255 121,793 Effect of exchange rate changes on cash and cash equivalents ( 234 ) ( 253 ) 25 ( 360 ) INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 1,261 ( 38,667 ) 18,527 ( 7,379 ) Cash, cash equivalents and restricted cash at beginning of period 75,555 125,458 58,289 94,170 Cash, cash equivalents and restricted cash at end of period $ 76,816 $ 86,791 $ 76,816 $ 86,791 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 6 COEUR MINING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED) In thousands Common Stock Shares Common Stock Par Value Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Balances at December 31, 2021 256,919 $ 2,569 $ 3,738,347 $ ( 2,939,442 ) $ ( 1,212 ) $ 800,262 Net income (loss) — — — 7,682 — 7,682 Other comprehensive income (loss) — — — — ( 4,758 ) ( 4,758 ) Common stock issued under "at the market" stock offering 22,053 220 98,279 — — 98,499 Common stock issued/canceled under long-term incentive plans and director fees and options, net 1,862 19 ( 1,730 ) — — ( 1,711 ) Balances at March 31, 2022 280,834 $ 2,808 $ 3,834,896 $ ( 2,931,760 ) $ ( 5,970 ) $ 899,974 Net income (loss) — — — ( 77,434 ) — ( 77,434 ) Other comprehensive income (loss) — — — — 32,514 32,514 Common stock issued/canceled under long-term incentive plans and director fees and options, net ( 29 ) — 2,127 — — 2,127 Balances at June 30, 2022 280,805 $ 2,808 $ 3,837,023 $ ( 3,009,194 ) $ 26,544 $ 857,181 Net income (loss) — — — ( 57,444 ) — ( 57,444 ) Other comprehensive income (loss) — — — — 19,150 19,150 Common stock issued/canceled under long-term incentive plans and director fees and options, net 31 — 2,702 — — 2,702 Balances at September 30, 2022 280,836 $ 2,808 $ 3,839,725 $ ( 3,066,638 ) $ 45,694 $ 821,589 In thousands Common Stock Shares Common Stock Par Value Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Balances at December 31, 2020 243,752 $ 2,438 $ 3,610,297 $ ( 2,908,120 ) $ ( 11,136 ) $ 693,479 Net income (loss) — — — 2,060 — 2,060 Other comprehensive income (loss) — — — — 24,636 24,636 Common stock issued/canceled under long-term incentive plans and director fees and options, net ( 282 ) ( 3 ) 334 — — 331 Balances at March 31, 2021 243,470 $ 2,435 $ 3,610,631 $ ( 2,906,060 ) $ 13,500 $ 720,506 Net income (loss) — — — 32,146 — 32,146 Other comprehensive income (loss) — — — — ( 6,043 ) ( 6,043 ) Common stock issued for investment 12,786 128 118,649 — — 118,777 Common stock issued/canceled under long-term incentive plans and director fees and options, net 792 7 3,016 — — 3,023 Balances at June 30, 2021 257,048 $ 2,570 $ 3,732,296 $ ( 2,873,914 ) $ 7,457 $ 868,409 Net income (loss) — — — ( 54,768 ) — ( 54,768 ) Other comprehensive income (loss) — — — — ( 2,553 ) ( 2,553 ) Common stock issued/canceled under long-term incentive plans and director fees and options, net ( 119 ) ( 1 ) 2,652 — — 2,651 Balances at September 30, 2021 256,929 $ 2,569 $ 3,734,948 $ ( 2,928,682 ) $ 4,904 $ 813,739 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 7 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements NOTE 1 - BASIS OF PRESENTATION The interim condensed consolidated financial statements of Coeur Mining, Inc. and its subsidiaries (collectively, “Coeur” or the “Company”) are unaudited. In the opinion of management, all adjustments and disclosures necessary for the fair presentation of these interim statements have been included. The results reported in these interim statements may not be indicative of the results which will be reported for the year ending December 31, 2022. The condensed consolidated December 31, 2021 balance sheet data was derived from audited consolidated financial statements. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 10-K”). NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Significant Accounting Policies Please see Note 2 — Summary of Significant Accounting Policies contained in the 2021 10-K. Use of Estimates The Company's Consolidated Financial Statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of the Company's Consolidated Financial Statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to metal prices and mineral reserves that are the basis for future cash flow estimates utilized in impairment calculations and units-of production amortization calculations, environmental, reclamation and closure obligations, estimates of recoverable silver and gold in leach pad inventories, estimates of fair value for certain reporting units and asset impairments, valuation allowances for deferred tax assets, and the fair value and accounting treatment of financial instruments, equity securities, asset acquisitions, the allocation of fair value to assets and liabilities assumed in connection with business combinations, and derivative instruments. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results will differ from the amounts estimated in these financial statements. Properties Held for Sale In determining whether to classify a property as held for sale, the Company considers whether: (i) management has committed to a plan to sell the property; (ii) the investment is available for immediate sale, in its present condition; (iii) the Company has initiated a program to locate a buyer; (iv) the Company believes that the sale of the property is probable; (v) the Company has received a significant non-refundable deposit for the purchase of the property; (vi) the Company is actively marketing the property for sale at a price that is reasonable in relation to its estimated fair value; and (vii) actions required for the Company to complete the plan indicate that it is unlikely that any significant changes will be made to the plan. If all of the above criteria are met, the Company classifies the property as held for sale. At September 30, 2022, the Sterling/Crown exploration properties met the held for sale criteria. However, considering that the Sterling/Crown exploration properties are not operating mines, the Company determined that the expected disposal of the Sterling/Crown exploration properties do not represent a strategic shift that had a major effect on the entity's results and operations, therefore, the Sterling/Crown exploration properties are not classified as a discontinued operation. The applicable assets and liabilities of Coeur Sterling, Inc. for the current period presented are classified on the Consolidated Balance Sheets as held for sale. See Note 20 -- Assets and Liabilities Held for Sale for additional detail. Revenue Recognition The Company’s gold stream agreement with a subsidiary of Franco-Nevada Corporation (“Franco-Nevada”) provided for a $ 22.0 million deposit paid by Franco-Nevada in exchange for the right and obligation, commencing in 2016, to purchase 50 % of a portion of Palmarejo gold production at the lesser of $ 800 or market price per ounce. Because there is no minimum obligation associated with the deposit, it is not considered financing, and each shipment is considered to be a separate performance obligation. The streaming agreement represents a contract liability under ASC 606, which requires the Company to ratably recognize a portion of the deposit as revenue for each gold ounce delivered to Franco-Nevada. The remaining unamortized balance is included in Accrued liabilities and other and Other long-term liabilities on the Consolidated Balance Sheet. See Note 17 -- Commitments and Contingencies for additional detail. The following table presents a roll forward of the Franco-Nevada contract liability balance: 8 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements Three Months Ended September 30, Nine Months Ended September 30, In thousands 2022 2021 2022 2021 Opening Balance $ 7,742 $ 8,775 $ 8,150 $ 9,376 Revenue Recognized ( 167 ) ( 307 ) ( 575 ) ( 908 ) Closing Balance $ 7,575 $ 8,468 $ 7,575 $ 8,468 In December 2021, the Company received a $ 15.0 million prepayment (the “December 2021 Prepayment”) for deliveries of gold concentrate from the Kensington mine pursuant to the Amended Sales Contract (as defined in Note 17). In March 2022, the Company exercised an option to receive a $ 10.0 million prepayment (the “March 2022 Prepayment). The Amended Sales Contract represents a contract liability under ASC 606, which requires the Company to recognize ratably a portion of the deposit as revenue for each gold ounce delivered to the customer. The remaining contract liability is included in Accrued liabilities and other on the Consolidated Balance Sheet. See Note 17 -- Commitments and Contingencies for additional detail. The following table presents a roll forward of the Amended Sales Contract liability balance: Three Months Ended September 30, Nine Months Ended September 30, In thousands 2022 2021 2022 2021 Opening Balance $ 25,012 $ 15,004 $ 15,016 $ 15,003 Additions 361 95 10,811 15,096 Revenue Recognized ( 10,000 ) ( 7,500 ) ( 10,454 ) ( 22,500 ) Closing Balance $ 15,373 $ 7,599 $ 15,373 $ 7,599 Recently Issued Accounting Standards In March 2022, the FASB issued ASU 2022-01, “ Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method ” which is intended to make amendments to the fair value hedge accounting previously issued in ASU 2017-12 “ Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ”. The new standard is effective for reporting periods beginning after December 15, 2022. The standard introduced the portfolio layer method allowing multiple hedged layers of a single closed portfolio when applying fair value hedge accounting. The Company plans to adopt the new derivatives and hedging standards effective January 1, 2023 and does not expect the new derivatives and hedging standard to have a material effect on our financial position, results of operations or cash flows. 9 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements NOTE 3 – SEGMENT REPORTING The Company’s operating segments include the Palmarejo, Rochester, Kensington and Wharf mines and Silvertip development property. Except for the Silvertip development property, all operating segments are engaged in the discovery, mining, and production of gold and/or silver. The Silvertip development property, which suspended mining and processing activities in February 2020, is engaged in the discovery of silver, zinc and lead. Other includes the Sterling/Crown exploration properties, other mineral interests, strategic equity investments, corporate office, elimination of intersegment transactions, and other items necessary to reconcile to consolidated amounts. Financial information relating to the Company’s segments is as follows (in thousands): Three Months Ended September 30, 2022 Palmarejo Rochester Kensington Wharf Silvertip Other Total Revenue Gold sales $ 35,285 $ 16,162 $ 49,010 $ 38,724 $ — $ — $ 139,181 Silver sales 29,551 14,011 97 153 — — 43,812 Metal sales 64,836 30,173 49,107 38,877 — — 182,993 Costs and Expenses Costs applicable to sales (1) 43,244 50,760 40,289 28,887 — — 163,180 Amortization 8,027 6,921 10,369 2,191 1,260 383 29,151 Exploration 1,775 601 2,796 — 2,303 931 8,406 Other operating expenses 812 1,804 425 482 4,966 10,482 18,971 Other income (expense) Fair value adjustments, net — — — — — ( 13,067 ) ( 13,067 ) Interest expense, net 26 ( 225 ) ( 442 ) ( 22 ) ( 32 ) ( 5,237 ) ( 5,932 ) Other, net (3) 1,142 ( 101 ) ( 62 ) ( 167 ) ( 85 ) ( 574 ) 153 Income and mining tax (expense) benefit ( 1,805 ) 114 — ( 417 ) — 225 ( 1,883 ) Net Income (loss) $ 10,341 $ ( 30,125 ) $ ( 5,276 ) $ 6,711 $ ( 8,646 ) $ ( 30,449 ) $ ( 57,444 ) Segment assets (2) $ 294,438 $ 769,391 $ 146,128 $ 90,542 $ 242,142 $ 85,034 $ 1,627,675 Capital expenditures $ 10,844 $ 73,995 $ 7,076 $ 458 $ 3,821 $ 408 $ 96,602 (1) Excludes amortization (2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests (3) See Note 14 -- Additional Comprehensive Income (Loss) Detail for additional detail Three Months Ended September 30, 2021 Palmarejo Rochester Kensington Wharf Silvertip Other Total Revenue Gold sales $ 33,237 $ 9,923 $ 51,881 $ 52,689 $ — $ — $ 147,730 Silver sales 41,410 18,402 — 427 — — 60,239 Metal sales 74,647 28,325 51,881 53,116 — — 207,969 Costs and Expenses Costs applicable to sales (1) 39,016 31,669 34,576 29,079 — — 134,340 Amortization 8,747 4,671 12,786 3,158 1,258 342 30,962 Exploration 2,777 2,394 2,681 — 4,592 2,947 15,391 Other operating expenses 855 1,433 515 539 6,090 9,817 19,249 Other income (expense) Fair value adjustments, net — — — — — ( 26,440 ) ( 26,440 ) Interest expense, net ( 135 ) ( 149 ) ( 194 ) ( 39 ) 396 ( 3,116 ) ( 3,237 ) Other, net (3) ( 26,868 ) ( 99 ) ( 62 ) 460 ( 124 ) ( 25 ) ( 26,718 ) Income and mining tax (expense) benefit ( 10,702 ) 1,108 ( 65 ) ( 2,014 ) — 5,273 ( 6,400 ) Net Income (loss) $ ( 14,453 ) $ ( 10,982 ) $ 1,002 $ 18,747 $ ( 11,668 ) $ ( 37,414 ) $ ( 54,768 ) Segment assets (2) $ 285,277 $ 496,940 $ 149,774 $ 73,019 $ 209,498 $ 112,836 $ 1,327,344 Capital expenditures $ 8,506 $ 40,056 $ 6,272 $ 1,045 $ 15,099 $ 288 $ 71,266 (1) Excludes amortization (2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests (3) See Note 14 -- Additional Comprehensive Income (Loss) Detail for additional detail 10 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements Nine Months Ended September 30, 2022 Palmarejo Rochester Kensington Wharf Silvertip Other Total Revenue Gold sales $ 119,486 $ 42,413 $ 143,099 $ 110,259 $ — $ — $ 415,257 Silver sales 114,387 44,632 575 669 — — 160,263 Metal sales 233,873 87,045 143,674 110,928 — — 575,520 Costs and Expenses Costs applicable to sales (1) 135,532 120,988 116,510 74,096 — — 447,126 Amortization 27,150 16,592 28,360 6,500 3,778 1,169 83,549 Exploration 5,071 4,009 4,416 — 2,041 3,566 19,103 Other operating expenses 2,485 5,465 1,348 1,521 16,550 31,751 59,120 Other income (expense) Fair value adjustments, net — — — — — ( 65,272 ) ( 65,272 ) Interest expense, net ( 100 ) ( 606 ) ( 1,111 ) ( 49 ) ( 150 ) ( 13,654 ) ( 15,670 ) Other, net (3) 1,635 ( 192 ) 19 506 ( 320 ) 555 2,203 Income and mining tax (expense) benefit ( 24,325 ) 1,079 127 ( 2,382 ) — 10,422 ( 15,079 ) Net Income (loss) $ 40,845 $ ( 59,728 ) $ ( 7,925 ) $ 26,886 $ ( 22,839 ) $ ( 104,435 ) $ ( 127,196 ) Segment assets (2) $ 294,438 $ 769,391 $ 146,128 $ 90,542 $ 242,142 $ 85,034 $ 1,627,675 Capital expenditures $ 34,515 $ 154,001 $ 23,828 $ 2,294 $ 21,383 $ 3,239 $ 239,260 (1) Excludes amortization (2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests (3) See Note 14 -- Additional Comprehensive Income (Loss) Detail for additional detail Nine Months Ended September 30, 2021 Palmarejo Rochester Kensington Wharf Silvertip Other Total Revenue Gold sales $ 112,036 $ 36,389 $ 155,154 $ 128,631 $ — $ — $ 432,210 Silver sales 127,990 62,778 — 1,966 — — 192,734 Metal sales 240,026 99,167 155,154 130,597 — — 624,944 Costs and Expenses Costs applicable to sales (1) 114,922 93,733 95,173 71,254 — — 375,082 Amortization 26,077 14,754 38,941 8,627 3,529 944 92,872 Exploration 6,304 3,802 5,095 143 11,119 11,040 37,503 Other operating expenses 3,578 4,325 5,783 1,249 18,609 34,176 67,720 Other income (expense) Loss on debt extinguishment — — — — — ( 9,173 ) ( 9,173 ) Fair value adjustments, net — — — — — 7,000 7,000 Interest expense, net ( 471 ) ( 851 ) ( 568 ) ( 122 ) 622 ( 11,850 ) ( 13,240 ) Other, net (3) ( 27,904 ) ( 252 ) ( 104 ) 1,112 ( 463 ) 5,221 ( 22,390 ) Income and mining tax (expense) benefit ( 29,601 ) 937 ( 1,106 ) ( 4,437 ) — ( 319 ) ( 34,526 ) Net Income (loss) $ 31,169 $ ( 17,613 ) $ 8,384 $ 45,877 $ ( 33,098 ) $ ( 55,281 ) $ ( 20,562 ) Segment assets (2) $ 285,277 $ 496,940 $ 149,774 $ 73,019 $ 209,498 $ 112,836 $ 1,327,344 Capital expenditures $ 28,284 $ 112,505 $ 19,519 $ 3,928 $ 44,011 $ 666 $ 208,913 (1) Excludes amortization (2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests (3) See Note 14 -- Additional Comprehensive Income (Loss) Detail for additional detail Assets September 30, 2022 December 31, 2021 Total assets for reportable segments $ 1,627,675 $ 1,424,934 Cash and cash equivalents 75,389 56,664 Other assets 211,150 252,824 Total consolidated assets $ 1,914,214 $ 1,734,422 11 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements Geographic Information Long-Lived Assets September 30, 2022 December 31, 2021 United States $ 835,588 $ 704,007 Mexico 251,270 244,758 Canada 235,907 223,876 Other 124 125 Total $ 1,322,889 $ 1,172,766 Revenue Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 United States $ 118,157 $ 133,322 $ 341,647 $ 384,918 Mexico 64,836 74,647 233,873 240,026 Total 182,993 $ 207,969 $ 575,520 $ 624,944 NOTE 4 – RECEIVABLES Receivables consist of the following: In thousands September 30, 2022 December 31, 2021 Current receivables: Trade receivables $ 4,633 $ 4,879 VAT receivable 10,623 18,415 Income tax receivable 9,015 8,418 Avino note receivable 4,852 — Gold forwards realized gains 5,222 — Other 602 705 $ 34,947 $ 32,417 Non-current receivables: Deferred cash consideration $ 7,567 $ — Contingent consideration 1,150 — $ 8,717 $ — Total receivables $ 43,664 $ 32,417 12 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements NOTE 5 – INVENTORY AND ORE ON LEACH PADS Inventory consists of the following: In thousands September 30, 2022 December 31, 2021 Inventory: Concentrate $ 3,688 $ 1,643 Precious metals 13,164 11,353 Supplies 42,553 38,285 $ 59,405 $ 51,281 Ore on Leach Pads: Current $ 83,647 $ 81,128 Non-current 58,221 73,495 $ 141,868 $ 154,623 Long-term Stockpile (included in Other ) $ 23,955 $ 18,027 Total Inventory and Ore on Leach Pads $ 225,228 $ 223,931 Coeur reports the carrying value of metal and leach pad inventory at the lower of cost or net realizable value, with cost being determined using a weighted average cost method. During the first nine months of 2022, the cost of metal and leach pad inventory at Rochester exceeded its net realizable value which resulted in a non-cash write down for the three and nine months ended September 30, 2022 of $ 24.2 million ($ 21.2 million was recognized in Costs Applicable to Sales and $ 3.0 million in Amortization) and $ 43.2 million ($ 38.0 million was recognized in Cost Applicable to Sales and $ 5.2 million in Amortization), respectively. NOTE 6 – INVESTMENTS Equity Securities The Company makes strategic investments in equity securities of silver and gold exploration, development and royalty and streaming companies. At September 30, 2022 In thousands Cost Gross Unrealized Losses Gross Unrealized Gains Estimated Fair Value Equity Securities Victoria Gold Corp. $ 70,560 $ ( 34,305 ) $ — $ 36,255 Integra Resources Corp. 9,455 ( 7,415 ) — 2,040 Avino Silver & Gold Mines Ltd 13,720 ( 6,580 ) — 7,140 Other 2,233 ( 2,120 ) — 113 Equity securities $ 95,968 $ ( 50,420 ) $ — $ 45,548 At December 31, 2021 In thousands Cost Gross Unrealized Losses Gross Unrealized Gains Estimated Fair Value Equity Securities Victoria Gold Corp. $ 128,710 $ ( 4,499 ) $ — $ 124,211 Integra Resources Corp. 9,455 ( 1,469 ) — 7,986 Equity securities $ 138,165 $ ( 5,968 ) $ — $ 132,197 Changes in the fair value of the Company’s investment in equity securities are recognized each period in the Consolidated Statement of Comprehensive Income (Loss) in Fair value adjustments, net . See Note 12 -- Fair Value Measurements for additional details. On 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 13 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements proceeds of $ 40.5 million. The Company realized a loss of $ 17.7 million on the sale of the Victoria Gold Common Shares, which are recognized in Fair value adjustments, net. On March 21, 2022, the Company closed the sale of its La Preciosa silver project. In connection with the closing of the transaction, the Company received 14,000,000 common shares of Avino Silver & Gold Mines Ltd. (“Avino”) (representing approximately 12.0 % of Avino’s outstanding common shares). See Note 19 -- Dispositions for additional details on the sale. NOTE 7 – LEASES Right of Use Assets and Liabilities The following table summarizes quantitative information pertaining to the Company’s finance and operating leases. Three months ended September 30, Nine months ended September 30, In thousands 2022 2021 2022 2021 Lease Cost Operating lease cost $ 2,906 $ 3,180 $ 8,800 $ 9,437 Short-term operating lease cost $ 2,185 $ 2,441 $ 7,636 $ 7,614 Finance Lease Cost: Amortization of leased assets $ 5,521 $ 5,141 $ 15,889 $ 16,068 Interest on lease liabilities $ 1,341 1,833 3,916 3,441 Total finance lease cost $ 6,862 $ 6,974 $ 19,805 $ 19,509 Supplemental cash flow information related to leases was as follows: Three months ended September 30, Nine months ended September 30, In thousands 2022 2021 2022 2021 Other Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 5,091 $ 5,621 $ 16,437 $ 17,256 Operating cash flows from finance leases $ 1,341 $ 1,833 3,916 $ 3,441 Financing cash flows from finance leases $ 8,210 $ 7,944 $ 24,118 $ 22,970 14 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements Supplemental balance sheet information related to leases was as follows: In thousands September 30, 2022 December 31, 2021 Operating Leases Other assets, non-current $ 23,819 $ 30,987 Accrued liabilities and other 11,109 11,301 Other long-term liabilities 11,700 18,660 Total operating lease liabilities $ 22,809 $ 29,961 Finance Leases Property and equipment, gross $ 143,733 $ 115,597 Accumulated depreciation ( 75,691 ) ( 63,879 ) Property and equipment, net $ 68,042 $ 51,718 Debt, current $ 26,417 $ 29,821 Debt, non-current 40,285 24,407 Total finance lease liabilities $ 66,702 $ 54,228 Weighted Average Remaining Lease Term Weighted-average remaining lease term - finance leases 1.80 1.62 Weighted-average remaining lease term - operating leases 2.53 3.17 Weighted Average Discount Rate Weighted-average discount rate - finance leases 5.17 % 5.08 % Weighted-average discount rate - operating leases 5.21 % 5.20 % Minimum future lease payments under finance and operating leases with terms longer than one year are as follows: As of September 30, 2022 (In thousands) Operating leases Finance leases 2022 $ 2,917 $ 7,076 2023 11,137 24,383 2024 8,952 17,452 2025 214 14,839 2026 220 7,443 Thereafter 946 1,373 Total $ 24,386 $ 72,566 Less: imputed interest ( 1,577 ) ( 5,864 ) Net lease obligation $ 22,809 $ 66,702 NOTE 8 – DEBT September 30, 2022 December 31, 2021 In thousands Current Non-Current Current Non-Current 2029 Senior Notes, net (1) $ — $ 368,977 $ — $ 368,273 Revolving Credit Facility (2) — 200,000 — 65,000 Finance lease obligations 26,417 40,285 29,821 24,407 $ 26,417 $ 609,262 $ 29,821 $ 457,680 (1) Net of unamortized debt issuance costs of $ 6.0 million and $ 6.7 million at September 30, 2022 and December 31, 2021, respectively. (2) Unamortized debt issuance costs of $ 3.0 million and $ 2.4 million at September 30, 2022 and December 31, 2021, respectively, included in Other Non-Current Assets . 15 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements 2029 Senior Notes In March 2021, the Company completed an offering of $ 375.0 million in aggregate principal amount of senior notes in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, for net proceeds of approximately $ 367.5 million (the “2029 Senior Notes”). For more details, please see Note 8 -- Debt contained in the 2021 10-K. Revolving Credit Facility On May 2, 2022, the Company entered into an amendment (the “May Amendment”) to the revolving credit facility (the “RCF”), dated as of September 29, 2017 (as amended, the “Credit Agreement”), by and among the Company, as borrower, certain subsidiaries of the Company, as guarantors, Bank of America, N.A, as administrative agent (the “Agent”), and Bank of America, N.A., Royal Bank of Canada, Bank of Montreal, Chicago Branch, the Bank of Nova Scotia, ING Capital LLC and Goldman Sachs Bank USA (the “RCF Lenders”). The May Amendment, among other things, increased the maximum principal amount of the RCF by $ 90.0 million in incremental loans and commitments to an aggregate amount of $ 390.0 million. At September 30, 2022, the Company had $ 200.0 million drawn at an interest rate of 5.5 %, $ 29.8 million in outstanding letters of credit and $ 160.2 million available under the RCF. Future borrowing may be subject to certain financial covenants. On November 9, 2022, the Company entered into an amendment (the “November Amendment”) to the RCF. The November Amendment, among other things, (1) modifies the financial covenants to provide greater flexibility under the consolidated net leverage ratio requirement through the December 31, 2023 test date, with the ratio returning to the original level as outlined in the RCF starting with the March 31, 2024 test date (the “Amendment Period”), (2) allows up to $ 50 million for integration costs or costs associated with establishing new facilities and certain costs associated with LCM adjustments at Rochester to be excluded from the calculation of Consolidated EBITDA for purposes of the RCF, (3) increases the interest rate on certain borrowings through early 2023, (4) requires the Company to repay outstanding amounts under the RCF if cash-on-hand exceeds $ 60 million during the Amendment Period, and (5) restricts certain payments and the incurrence of certain liens during the Amendment Period. Finance Lease Obligations From time-to-time, the Company acquires mining equipment and facilities under finance lease agreements. In the nine months ended September 30, 2022, the Company entered into new lease financing arrangements primarily for mining equipment at Rochester and Kensington. Coeur secured a finance lease package for nearly $ 60.0 million in 2021, a portion of which has been funded as of September 30, 2022. The package is earmarked for planned equipment purchases for Rochester’s Plan of Operation Amendment 11 (“POA 11”) in 2022, and has an interest rate of 5.22 %. All finance lease obligations are recorded, upon lease inception, at the present value of future minimum lease payments. See Note 7 -- Leases for additional qualitative and quantitative disclosures related to finance leasing arrangements. Interest Expense Three Months Ended September 30, Nine Months Ended September 30, In thousands 2022 2021 2022 2021 2024 Senior Notes $ — $ — $ — $ 2,591 2029 Senior Notes 4,805 4,805 14,414 11,211 Revolving Credit Facility 2,512 508 5,069 1,438 Finance lease obligations 1,341 1,833 3,916 3,441 Amortization of debt issuance costs 535 415 1,448 1,306 Other debt obligations 29 51 162 225 Capitalized interest ( 3,290 ) ( 4,375 ) ( 9,339 ) ( 6,972 ) Total interest expense, net of capitalized interest $ 5,932 $ 3,237 $ 15,670 $ 13,240 16 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements NOTE 9 – RECLAMATION Reclamation and mine closure costs are based principally on legal and regulatory requirements. Management estimates costs associated with reclamation of mining properties. On an ongoing basis, management evaluates its estimates and assumptions, and future expenditures could differ from current estimates. Changes to the Company’s asset retirement obligations are as follows: Three Months Ended September 30, Nine Months Ended September 30, In thousands 2022 2021 2022 2021 Asset retirement obligation - Beginning $ 184,606 $ 143,229 $ 180,156 $ 139,274 Accretion 3,564 3,027 10,482 8,898 Settlements ( 1,507 ) ( 1,501 ) ( 3,975 ) ( 3,417 ) Asset retirement obligation - Ending $ 186,663 $ 144,755 $ 186,663 $ 144,755 NOTE 10 - INCOME AND MINING TAXES The following table summarizes the components of Income and mining tax (expense) benefit for the three and nine months ended September 30, 2022 and 2021 by significant jurisdiction: Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 In thousands Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit United States $ ( 59,012 ) $ ( 74 ) $ ( 30,247 ) $ 4,078 $ ( 154,263 ) $ ( 2,270 ) $ ( 9,131 ) $ ( 4,775 ) Canada ( 8,960 ) — ( 13,879 ) — ( 22,859 ) ( 21 ) ( 39,643 ) — Mexico 12,178 ( 1,809 ) ( 4,138 ) ( 10,478 ) 64,847 ( 12,788 ) 59,603 ( 29,751 ) Other jurisdictions 233 — ( 104 ) — 158 — 3,135 — $ ( 55,561 ) $ ( 1,883 ) $ ( 48,368 ) $ ( 6,400 ) $ ( 112,117 ) $ ( 15,079 ) $ 13,964 $ ( 34,526 ) During the third quarter of 2022, the Company reported estimated income and mining tax expense of approximately $ 1.9 million, resulting in an effective tax rate of 3.4 %. This compares to income tax expense of $ 6.4 million for an effective tax rate of 13.2% during the third quarter of 2021. The comparability of the Company’s income and mining tax (expense) benefit and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) variations in our income before income taxes; (ii) geographic distribution of that income; (iii) mining taxes; (iv) the sale of non-core assets; (v) foreign exchange rates; (vi) the impact of uncertain tax positions; (vii) percentage depletion; and (viii) the non-recognition of tax assets. Therefore, the effective tax rate will fluctuate, sometimes significantly, period to period. A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company ultimately will be more likely than not able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of factors that impact the Company’s ability to realize its deferred tax assets. For additional information, please see the section titled “Risk Factors” in the 2021 10-K. The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The statute of limitations remains open from 2018 forward for the U.S. federal jurisdiction and from 2016 forward for certain other foreign jurisdictions. As a result of statutes of limitation that will begin to expire within the next twelve months in various jurisdictions and possible settlements of audit-related issues with taxing authorities in various jurisdictions with respect to which none of the issues are individually significant, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits will decrease by less than $ 0.1 million in the next twelve months. At September 30, 2022 and December 31, 2021, the Company had $ 0.0 million and $ 0.3 million of total gross unrecognized tax benefits, respectively, that, if recognized, would positively impact the Company’s effective income tax rate. The Company’s continuing practice is to recognize potential interest and/or penalties related to unrecognized tax benefits as part of its income tax expense. At September 30, 2022 and December 31, 2021, the amount of accrued income-tax-related interest and penalties was $ 0.0 million and $ 0.4 million, respectively. 17 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements NOTE 11 – STOCK-BASED COMPENSATION The Company has stock incentive plans for executives, directors and eligible employees. Stock awards include performance shares, restricted stock and stock options. Stock-based compensation expense in the three and nine months ended September 30, 2022 was $ 2.5 million and $ 7.1 million, respectively, compared to $ 2.7 million and $ 10.2 million in the three and nine months ended September 30, 2021. At September 30, 2022, respectively, there was $ 10.1 million of unrecognized stock-based compensation cost which is expected to be recognized over a weighted-average remaining vesting period of 1.6 years. The following table summarizes the grants awarded during the nine months ended September 30, 2022: Grant date Restricted stock Grant date fair value of restricted stock Performance shares Grant date fair value of performance shares February 22, 2022 1,700,619 $ 4.21 1,067,118 $ 4.38 May 16, 2022 157,349 $ 3.39 59,010 $ 4.38 July 19, 2022 97,950 $ 2.90 23,462 $ 4.38 NOTE 12 – FAIR VALUE MEASUREMENTS Three Months Ended September 30, Nine Months Ended September 30, In thousands 2022 2021 2022 2021 Unrealized gain (loss) on equity securities $ 4,614 $ ( 35,709 ) $ ( 44,452 ) $ ( 3,702 ) Realized gain (loss) on equity securities ( 17,681 ) — ( 17,681 ) 769 Exchange agreement embedded derivative — 9,269 — 9,933 Termination of gold zero cost collars — — ( 3,139 ) — Fair value adjustments, net $ ( 13,067 ) $ ( 26,440 ) $ ( 65,272 ) $ 7,000 Accounting standards establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1), secondary priority to quoted prices in inactive markets or observable inputs (Level 2), and the lowest priority to unobservable inputs (Level 3). The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement: Fair Value at September 30, 2022 In thousands Total Level 1 Level 2 Level 3 Assets: Equity securities including warrants $ 45,548 $ 45,435 $ 113 $ — Provisional metal sales contracts 120 — 120 — Gold forwards 47,073 — 47,073 — $ 92,741 $ 45,435 $ 47,306 $ — Liabilities: Provisional metal sales contracts $ 948 $ — $ 948 $ — 18 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Fair Value at December 31, 2021 In thousands Total Level 1 Level 2 Level 3 Assets: Equity securities $ 132,197 $ 132,197 $ — $ — Provisional metal sales contracts 86 — 86 — $ 132,283 $ 132,197 $ 86 $ — Liabilities: Gold zero cost collars $ 1,212 $ — $ 1,212 $ — Provisional metal sales contracts 162 — 162 — $ 1,374 $ — $ 1,374 $ — The Company’s investments in equity securities are recorded at fair market value in the financial statements based primarily on quoted market prices. Such instruments are classified within Level 1 of the fair value hierarchy. The Company’s common share purchase warrants received as consideration in the La Preciosa project sale are valued using the pricing model with inputs derived from observable market data, including quoted market prices and quoted interest curve rates. The model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy. The Company’s gold forward contracts are valued using pricing models with inputs derived from observable market data, including forward market prices, yield curves, credit spreads. The Company’s provisional metal sales contracts include concentrate and certain doré sales contracts that are valued using pricing models with inputs derived from observable market data, including forward market prices. As further discussed in Note 19 -- Dispositions, the consideration for the sale of La Preciosa project included two royalties, a 1.25 % net smelter returns royalty on properties covering the Gloria and Abundancia areas of the La Preciosa project and a 2.00 % gross value royalty on all areas of the La Preciosa project other than the Gloria and Abundancia areas, and contingent consideration of $ 0.25 per silver equivalent ounce (adjusted for inflation) on any new mineral reserves discovered and declared outside of the current resources area at the La Preciosa project, up to a maximum payment of $ 50.0 million. The fair value of the royalties and the contingent consideration assets were $ 11.2 million and $ 1.2 million, respectively, valued as of the date of closing of the transaction and are measured at fair value on a non-recurring basis. The fair value of the royalties and the contingent consideration were valued using Monte Carlo simulation models. The model inputs include significant unobservable inputs and involve significant management judgment. The significant unobservable inputs included assumptions related to metal prices which assumed silver prices ranging from $ 22 to $ 25 per ounce and gold prices ranging from $ 1,700 to $ 1,930 per ounce as well as volatility assumptions for silver and gold prices ( 33.5 % and 19.0 %, respectively), and an assumed weighted average cost of capital of 15.5 %. Such instruments are classified within Level 3 of the fair value hierarchy. No assets or liabilities were transferred between fair value levels in the nine months ended September 30, 2022. The fair value of financial assets and liabilities carried at book value in the financial statements at September 30, 2022 and December 31, 2021 is presented in the following table: September 30, 2022 In thousands Book Value Fair Value Level 1 Level 2 Level 3 Assets: Promissory note $ 4,780 $ 4,593 $ — $ 4,593 $ — Deferred cash consideration $ 7,458 $ 7,348 $ — $ 7,348 $ — Liabilities: 2029 Senior Notes (1) $ 368,977 $ 271,383 $ — $ 271,383 $ — Revolving Credit Facility (2) $ 200,000 $ 200,000 $ — $ 200,000 $ — (1) Net of unamortized debt issuance costs of $ 6.0 million (2) Unamortized debt issuance costs of $ 3.0 million included in Other Non-Current Assets . 19 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements December 31, 2021 In thousands Book Value Fair Value Level 1 Level 2 Level 3 Liabilities: 2029 Senior Notes (1) $ 368,273 $ 337,384 $ — $ 337,384 $ — Revolving Credit Facility (2) $ 65,000 $ 65,000 $ — $ 65,000 $ — (1) Net of unamortized debt issuance costs of $ 6.7 million. (2) Unamortized debt issuance costs of $ 2.4 million included in Other Non-Current Assets . The fair value of the 2029 Senior Notes was estimated using quoted market prices. The fair value of the RCF approximates book value as the liability is secured, has a variable interest rate, and lacks significant credit concerns. Also included in the consideration for the sale of La Preciosa project was a promissory note payable to the Company that matures in March 2023 and deferred cash consideration payable on the first anniversary of initial production from any portion of the La Preciosa project. These assets were valued using the pricing model with inputs derived from observable market data, including synthetic credit rating and quoted discount rate. The model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy. NOTE 13 – DERIVATIVE FINANCIAL INSTRUMENTS & HEDGING ACTIVITIES The Company is exposed to various market risks, including the effect of changes in metal prices, foreign currency exchange rates and interest rates, and uses derivatives to manage financial exposures that occur in the normal course of business. The Company does not hold or issue derivatives for trading or speculative purposes. The Company may elect to designate certain derivatives as hedging instruments under U.S. GAAP. The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking hedge transactions. This process includes linking all derivatives designated as hedges to either recognized assets or liabilities or forecasted transactions and assessing, both at inception and on an ongoing basis, the effectiveness of the hedging relationships. Derivatives Not Designated as Hedging Instruments Provisional Metal Sales The Company enters into sales contracts with third-party smelters, refiners and off-take customers which, in some cases, provide for a provisional payment based upon preliminary assays and quoted metal prices. The provisionally priced sales contracts contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable recorded at the forward price at the time of sale. The embedded derivatives do not qualify for hedge accounting and are marked to market through earnings each period until final settlement. Zero Cost Collars To protect the Company’s exposure to fluctuations in metal prices the Company entered into Asian (or average value) put and call option contracts in net-zero-cost collar arrangements. The contracts were net cash settled monthly and, if the price of gold at the time of expiration is between the put and call prices, would expire at no cost to the Company. If the price of gold at the time of expiration was lower than the put prices or higher than the call prices, it would result in a realized gain or loss, respectively. The Company elected to designate these instruments as cash flow hedges of forecasted transactions at their inception. In the first quarter of 2022, the Company voluntarily de-designated hedge accounting for the zero cost collars and subsequently terminated the arrangements. The cost to terminate the zero cost collars was $ 7.7 million, of which $ 3.1 million was recognized in earnings and the remaining $ 4.6 million, which represents the fair value of the zero cost collars on the date of de-designation, was retained in accumulated other comprehensive income (loss) (“AOCI”) and will be recognized in earnings as the forecasted transactions occur. As of September 30, 2022, there was $ 1.4 million remaining to be recognized in earnings over the next three months. At September 30, 2022, the Company had the following derivative instruments that settle as follows: In thousands except average prices and notional ounces 2022 2023 and Thereafter Provisional gold sales contracts $ 32,768 $ — Average gold price per ounce $ 1,744 $ — Notional ounces 18,789 — 20 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements The following summarizes the classification of the fair value of the derivative instruments: September 30, 2022 In thousands Prepaid expenses and other Accrued liabilities and other Provisional metal sales contracts $ 120 $ 948 December 31, 2021 In thousands Prepaid expenses and other Accrued liabilities and other Provisional metal sales contracts $ 86 $ 162 The following represent mark-to-market gains (losses) on derivative instruments in the three and nine months ended September 30, 2022 and 2021, respectively (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Financial statement line Derivative 2022 2021 2022 2021 Revenue Provisional metal sales contracts $ ( 757 ) $ 79 $ ( 751 ) $ ( 618 ) Fair value adjustments, net Exchange agreement embedded derivative — 9,269 — 9,933 Fair value adjustments, net Terminated zero cost collars — — ( 3,139 ) — $ ( 757 ) $ 9,348 $ ( 3,890 ) $ 9,315 Derivatives Designated as Cash Flow Hedging Strategies To protect the Company’s exposure to fluctuations in metal prices the Company enters into forward contracts. The contracts are net settled monthly and if the actual price of gold at the time of expiration is lower than the fixed price or higher than the fixed prices, it would result in a realized gain or loss, respectively. The Company has elected to designate these instruments as cash flow hedges of forecasted transactions at their inception. At September 30, 2022, the Company had the following derivative cash flow hedge instruments that settle as follows: In thousands except average prices and notional ounces 2022 2023 and Thereafter Gold forwards Average gold fixed price per ounce $ 1,994 $ 1,982 Notional ounces 54,500 112,500 The effective portions of cash flow hedges are recorded in AOCI until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of metal sales revenue are recognized as a component of Revenue in the same period as the related sale is recognized. At inception, the Company performed an assessment of the forecasted transactions and the hedging instruments and determined that the hedging relationships are considered perfectly effective. Future assessments are performed to verify that critical terms of the hedging instruments and the forecasted transactions continue to match, and the forecasted transactions remain probable, as well as an assessment of any adverse developments regarding the risk of the counterparties defaulting on their commitments. There have been no such changes in critical terms or adverse developments. As of September 30, 2022, the Company had $ 47.1 million of net after-tax gain in AOCI related to gains from cash flow hedge transactions, of which $ 41.8 million of net after-tax gains is expected to be recognized in its Consolidated Statement of Comprehensive Income (Loss) during the next 12 months. Actual amounts ultimately reclassified to net income are dependent on the price of gold for metal contracts. The following summarizes the classification of the fair value of the derivative instruments designated as cash flow hedges: September 30, 2022 In thousands Prepaid expenses and other Other assets Accrued liabilities and other Gold forwards $ 41,814 $ 5,259 $ — 21 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements December 31, 2021 In thousands Prepaid expenses and other Other assets Accrued liabilities and other Gold zero cost collars $ — $ — $ 1,212 The following table sets forth the pre-tax gains (losses) on derivatives designated as cash flow hedges that have been included in AOCI and the Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30, 2022 and 2021, respectively (in thousands). Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Amount of Gain (Loss) Recognized in AOCI Gold forwards $ 29,060 $ — $ 62,685 $ — Gold zero cost collars — 1,614 ( 4,598 ) 25,590 Foreign currency forward exchange contracts — ( 265 ) — 133 $ 29,060 $ 1,349 $ 58,087 $ 25,723 Amount of (Gain) Loss Reclassified From AOCI to Earnings Gold forwards $ ( 11,289 ) $ — $ ( 14,399 ) $ — Gold zero cost collars 1,379 23 3,218 853 Foreign currency forward exchange contracts — ( 3,925 ) — ( 10,536 ) $ ( 9,910 ) $ ( 3,902 ) $ ( 11,181 ) $ ( 9,683 ) Credit Risk The credit risk exposure related to any derivative instrument is limited to the unrealized gains, if any, on outstanding contracts based on current market prices. To reduce counter-party credit exposure, the Company enters into contracts with institutions management deems credit-worthy and limits credit exposure to each institution. The Company does not anticipate non-performance by any of its counterparties. NOTE 14 – ADDITIONAL COMPREHENSIVE INCOME (LOSS) DETAIL Pre-development, reclamation, and other consists of the following: Three Months Ended September 30, Nine Months Ended September 30, In thousands 2022 2021 2022 2021 COVID-19 $ 294 $ 617 $ 1,585 $ 5,937 Silvertip ongoing carrying costs 4,628 5,589 15,542 18,957 Asset retirement accretion 3,597 3,027 10,588 8,898 Other 730 1,273 2,124 3,164 Pre-development, reclamation and other $ 9,249 $ 10,506 $ 29,839 $ 36,956 Other, net consists of the following: Three Months Ended September 30, Nine Months Ended September 30, In thousands 2022 2021 2022 2021 Foreign exchange gain (loss) $ 93 $ ( 1,028 ) $ ( 972 ) $ ( 2,299 ) Gain (loss) on sale of assets ( 87 ) ( 92 ) 2,365 4,582 VAT write-down — ( 25,982 ) — ( 25,982 ) Other 147 384 810 1,309 Other, net $ 153 $ ( 26,718 ) $ 2,203 $ ( 22,390 ) NOTE 15 – NET INCOME (LOSS) PER SHARE Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the 22 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements weighted average number of the Company’s common stock outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the three and nine months ended September 30, 2022, there were 3,719,764 and 2,013,571 common stock equivalents, respectively, related to equity-based awards that were not included in the diluted earnings per share calculation as the shares would be antidilutive. Similarly, 1,513,288 and 1,489,158 common stock equivalents were excluded in the diluted earnings per share calculation for the three and nine months ended September 30, 2021, respectively. Three months ended September 30, Nine months ended September 30, In thousands except per share amounts 2022 2021 2022 2021 Net income (loss) available to common stockholders $ ( 57,444 ) $ ( 54,768 ) $ ( 127,196 ) $ ( 20,562 ) Weighted average shares: Basic 278,105 254,744 272,599 247,675 Effect of stock-based compensation plans — — — — Diluted 278,105 254,744 272,599 247,675 Income (loss) per share: Basic $ ( 0.21 ) $ ( 0.21 ) $ ( 0.47 ) $ ( 0.08 ) Diluted $ ( 0.21 ) $ ( 0.21 ) $ ( 0.47 ) $ ( 0.08 ) On March 18, 2022, the Company completed a $ 100.0 million “at the market” offering of its common stock, par value $ 0.01 per share (the “March Equity Offering”). The Equity Offering was conducted pursuant to an ATM Equity Offering Sales Agreement (the “Sales Agreement”), entered into on April 23, 2020 between the Company and BofA Securities, Inc. and RBC Capital Markets, LLC as sales agents. The Company sold a total of 22,053,275 shares of its common stock in the March Equity Offering at an average price of $ 4.53 per share, raising net proceeds (after sales commissions) of $ 98.0 million. Proceeds from the March Equity Offering were used to repay outstanding amounts under the RCF. NOTE 16 - SUPPLEMENTAL GUARANTOR INFORMATION The following summarized financial information is presented to satisfy disclosure requirements of Rule 13-01 of Regulation S-X resulting from the guarantees by Coeur Alaska, Inc., Coeur Explorations, Inc., Coeur Rochester, Inc., Coeur South America Corp., Wharf Resources (U.S.A.), Inc. and its subsidiaries, Coeur Capital, Inc., Coeur Sterling, Inc., Sterling Intermediate Holdco, Inc., and Coeur Sterling Holdings LLC (collectively, the “Subsidiary Guarantors”) of the 2029 Senior Notes. The following schedules present summarized financial information of (a) Coeur, the parent company and (b) the Subsidiary Guarantors (collectively the “Obligor Group”). The summarized financial information of the Obligor Group is presented on a combined basis with intercompany balances and transactions between entities in the Obligor Group eliminated. The Obligor Group’s amounts due from, amounts due to and transactions with certain wholly-owned domestic and foreign subsidiaries of the Company have been presented in separate line items, if they are material. Each of the Subsidiary Guarantors is 100% owned by Coeur and the guarantees are full and unconditional and joint and several obligations. There are no restrictions on the ability of Coeur to obtain funds from the Subsidiary Guarantors by dividend or loan. 23 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements SUMMARIZED BALANCE SHEET Coeur Mining, Inc. Guarantor Subsidiaries In thousands September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021 Current assets $ 99,529 $ 11,143 $ 142,106 $ 128,630 Non-current assets (1) $ 365,784 $ 473,145 $ 1,036,176 $ 830,330 Non-guarantor intercompany assets $ 6,327 $ 19,803 $ — $ — Current liabilities $ 13,334 $ 18,353 $ 174,465 $ 130,307 Non-current liabilities $ 74,794 $ 139,223 $ 678,240 $ 461,904 Non-guarantor intercompany liabilities $ 34,801 $ 30,045 $ 1,608 $ 1,650 (1) Coeur Mining, Inc.’s non-current assets includes its investment in Guarantor Subsidiaries. SUMMARIZED STATEMENTS OF INCOME NINE MONTHS ENDED SEPTEMBER 30, 2022 In thousands Coeur Mining, Inc. Guarantor Subsidiaries Revenue $ — $ 341,647 Gross profit (loss) $ ( 624 ) $ ( 21,940 ) Net income (loss) $ ( 127,196 ) $ ( 41,081 ) NOTE 17 – COMMITMENTS AND CONTINGENCIES Mexico Litigation Matters As of September 30, 2022, $ 26.0 million in principal amount is due from the Mexican government associated with VAT that was paid under Coeur Mexicana, S.A. de C.V.’s (“Coeur Mexicana’s”) prior royalty agreement with a subsidiary of Franco-Nevada Corporation, which was terminated in 2016. Coeur Mexicana applied for and initially received VAT refunds associated with the royalty payments in the normal course; however, in 2011 the Mexican tax authorities began denying Coeur Mexicana’s VAT refunds based on the argument that VAT was not legally due on the royalty payments. Accordingly, Coeur Mexicana began to request refunds of the VAT as undue payments, which the Mexican tax authorities also denied. The Company has since been engaged in ongoing efforts to recover the VAT from the Mexican government (including through litigation and potential arbitration as well as refiling VAT refund requests). Despite a favorable ruling from Mexican tax courts in this matter in 2018, litigation has continued at the administrative, appeals court and supreme court levels, most of which has been determined unfavorably to Coeur based on interpretations of applicable law and prior court decisions which the Company and its counsel believe are contrary to legal precedent, conflicting and erroneous. While the Company believes that it remains legally entitled to be refunded the full amount of the VAT receivable and intends to rigorously continue its VAT recovery efforts, based on the continued failure to recover the VAT receivable and recent unfavorable Mexican court decisions, the Company determined to write down the carrying value of the VAT receivable at September 30, 2021. In September 2022, the Company and Coeur Mexicana filed a request for arbitration under Chapter 11 of the North American Free Trade Agreement, or NAFTA, in connection with this dispute. Outcomes in NAFTA arbitration and the process for recovering funds even if there is a successful outcome in NAFTA arbitration can be lengthy and unpredictable. In addition, ongoing litigation with the Mexican government associated with enforcement of water rights in Mexico, if unsuccessful, may impact Coeur Mexicana’s ability to access new sources of water to provide sufficient supply for its operations at Palmarejo and, if material, may have a material adverse impact on the Company’s operations and financial results. Palmarejo Gold Stream Coeur Mexicana sells 50 % of Palmarejo gold production (excluding production from certain properties acquired in 2015) to a subsidiary of Franco-Nevada Corporation (“Franco-Nevada”) under a gold stream agreement for the lesser of $ 800 24 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements or spot price per ounce. In 2016, Coeur Mexicana received a $ 22.0 million deposit toward future deliveries under the gold stream agreement. In accordance with generally accepted accounting principles, although Coeur Mexicana has satisfied its contractual obligation to repay the deposit to Franco-Nevada, the deposit is accounted for as deferred revenue and is recognized as revenue on a units-of-production basis as ounces are sold to Franco-Nevada. At September 30, 2022 the remaining unamortized balance was $ 7.6 million, which is included in Accrued liabilities and other and Other long-term liabilities on the Consolidated Balance Sheet. Kensington Prepayment In June 2019, Coeur amended its existing sales and purchase contract with a metal sales counterparty for gold concentrate from its Kensington mine (the “Amended Sales Contract”). From time to time thereafter, the Amended Sales Contract has been further amended to allow for additional prepayments, including in June 2021, to provide options for Coeur to receive up to two additional prepayments of up to $ 15.0 million each. The Company exercised these options and received $ 15.0 million both in June 2021 (the "June 2021 Prepayment") and in December 2021 (the "December 2021 Prepayment"). The June 2021 Prepayment was repaid in full before the December 2021 Prepayment was received. In March 2022, the Amended Sales Contract was further amended to allow for an additional $ 10.0 million prepayment which was made in March 2022 (the “March 2022 Prepayment”). The Amended Sales Contract was further amended in June 2022 to consolidate the remaining deliveries of $ 15.0 million and $ 10.0 million under the December 2021 Prepayment and March 2022 Prepayment (the “June 2022 Consolidated Prepayment”), to extend the repayment period for the June 2022 Consolidated Prepayment, and to provide for future prepayments of up to $ 25.0 million on a semi-annual basis through the end of 2024, provided all prior outstanding prepayment amounts are paid before such future prepayments are made. The remaining deliveries of the June 2022 Consolidated Prepayment are recognized as a deferred revenue liability and are presented in Accrued liabilities and other on the Consolidated Balance Sheet. Under the relevant terms of the Amended Sales Contract, Coeur maintains its exposure to the price of gold and expects to recognize the remaining value of the accrued liability by December 2022. POA 11 Expansion Project Coeur achieved several key milestones at the Rochester expansion during the quarter, notably, (i) completion of major concrete work in all areas except the primary crusher pocket and the pre-screens, both of which are in progress, (ii) continuation of structural, mechanical, piping, electrical and instrumentation construction work throughout the project, (iii) commencement of final major high-voltage electrical distribution and substation construction, and (iv) completion of the majority of commitments for the pre-screens. Progress of the Merrill-Crowe plant continued on schedule during the third quarter, including (i) continuation of mechanical equipment setting, (ii) completion of building and process plant steel pipe rack erection, (iii) continuation of piping and cable tray installation, and (iv) rough setting of electrical switchgear. Further work on the crusher corridor has also advanced, including (i) civil work on the primary crusher area with a focus on the primary crusher foundation and commencement of conveyor component installation, (ii) setting of the secondary cone crushers and commencement of piping, cable tray and lighting installation in the secondary crusher area, and (iii) setting of the tertiary HPGR crushers and cable tray and lighting installation in the tertiary crusher area. During the quarter, Coeur successfully aligned the construction of the pre-screens with the completion of the new crusher to maintain a mid-2023 mechanical completion target. Ramp-up and commissioning is anticipated to take place during the second half of next year. Coeur also completed a review of the total capital costs necessary to complete the expansion, resulting in a 9 - 12% increase in the capital estimate to $ 650 - $ 670 million. The estimate reflects the finalization of cost estimates for pre-screens, higher prices and quantities of steel and concrete, and additional contingency. As of September 30, 2022, the Company had committed approximately $ 575 million of capital since the inception of the project and approximately $ 443 million of the estimated project cost had been incurred. Other Commitments and Contingencies As part of its ongoing business and operations, the Company and its affiliates are required to provide surety bonds, bank letters of credit, bank guarantees and, in some cases, cash as financial support for various purposes, including environmental remediation, reclamation, collateral for gold hedges and other general corporate purposes. As of September 30, 2022 and December 31, 2021, the Company had surety bonds totaling $ 326.7 million and $ 315.1 million, respectively, in place as financial support for future reclamation and closure costs. The obligations associated with these instruments are generally related to performance requirements that the Company addresses through its ongoing operations and from time-to-time, the Company may be required to post collateral, including cash or letters of credit which reduce availability under its revolving credit facility, to support these instruments. As the specific requirements are met, the beneficiary of the associated instrument 25 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements cancels and/or returns the instrument to the issuing entity. Certain of these instruments are associated with operating sites with long-lived assets and will remain outstanding until closure. The Company believes it is in compliance with all applicable bonding obligations and will be able to satisfy future bonding requirements through existing or alternative means, as they arise. NOTE 18 – ADDITIONAL BALANCE SHEET DETAIL AND SUPPLEMENTAL CASH FLOW INFORMATION Accrued liabilities and other consist of the following: In thousands September 30, 2022 December 31, 2021 Accrued salaries and wages $ 28,387 $ 28,408 Deferred revenue (1) 16,154 16,093 Income and mining taxes 8,874 13,856 Accrued operating costs 8,095 5,592 Unrealized losses on derivatives 948 1,374 Taxes other than income and mining 2,436 3,284 Accrued interest payable 3,608 8,038 Operating lease liabilities 11,109 11,301 Accrued liabilities and other $ 79,611 $ 87,946 (1) See Note 17 -- Commitments and Contingencies for additional details on deferred revenue liabilities The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that total the same such amounts shown in the statement of cash flows in the three and nine months ended September 30, 2022 and 2021: In thousands September 30, 2022 September 30, 2021 Cash and cash equivalents $ 75,389 $ 85,020 Restricted cash equivalents 1,427 1,771 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 76,816 $ 86,791 NOTE 19 – DISPOSITIONS On October 27, 2021 the Company entered into a definitive agreement (the “La Preciosa Agreement”) to sell its La Preciosa projected located in the State of Durango, Mexico to Avino (the “La Preciosa Sale”). On March 21, 2022, the La Preciosa Sale was completed. Coeur and its subsidiaries received the following consideration at closing: • $ 15.3 million cash, • $ 5.0 million promissory note that matures prior to the first anniversary of the transaction closing, valued at $ 4.7 million, • Equity consideration of 14.0 million units, consisting of one share of Avino common stock and one half of one common share purchase warrant of Avino common stock, valued at $ 13.7 million and $ 2.2 million, respectively. Common share purchase warrants are exercisable at $ 1.09 per share and expire September 2023. • In addition, under the La Preciosa Agreement, Coeur is entitled to the following additional consideration: • $ 8.8 million deferred cash consideration to be paid no later than the first anniversary of initial production from any portion of the La Preciosa project, valued at $ 7.4 million, • Contingent payments of $ 0.25 per silver equivalent ounce (subject to an inflationary adjustment) on any new mineral reserves discovered and declared outside of the current resource area at the La Preciosa project, up to a maximum payment of $ 50.0 million, valued at $ 1.2 million, and • Two royalties, valued at $ 11.2 million, covering the La Preciosa land package, including (i) a 1.25 % net smelter returns royalty on properties covering the Gloria and Abundancia areas of the La Preciosa project and 26 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (ii) a 2.00 % gross value royalty on all areas of the La Preciosa project other than the Gloria and Abundancia areas, offset by the amount of any new mineral reserve contingent payments made to Coeur. The La Preciosa sale resulted in a gain on the sale of $ 1.5 million, which was recognized in Other, Net in the condensed consolidated statements of comprehensive income (loss). NOTE 20 – ASSETS AND LIABILITIES HELD FOR SALE On September 18, 2022, the Company entered into a Stock Purchase Agreement with AngloGold Ashanti (U.S.A.) Holdings Inc., a Delaware corporation and its affiliate for the sale of 100 % of the issued and outstanding shares of Coeur Sterling, Inc. a subsidiary of Coeur that operates the Sterling/Crown exploration properties near Beatty, Nevada, in exchange for: (A) a cash payment of $ 150,000,000 at the closing of the transaction, subject to a customary purchase price adjustment and (B) the right to an additional payment of $ 50,000,000 should Buyer, its affiliates or its successors report gold resources in the Sterling/Crown exploration properties (including any in-situ ounces mined after the closing of the Transaction) equal to or greater than 3,500,000 gold ounces, subject to certain additional terms and conditions detailed in the stock purchase agreement. The transaction was consummated on November 4, 2022. The Company classified the Sterling/Crown exploration properties as held for sale as of September 30, 2022 and the associated assets and liabilities are classified separately on the consolidated balance sheets. The major classes of assets and liabilities associated with the Sterling/Crown exploration properties as of September 30, 2022 are as follows: In thousands September 30, 2022 ASSETS Cash and cash equivalents $ 32 Property, plant and equipment, net 707 Mining properties, net 100,985 Other 26 TOTAL ASSETS $ 101,750 LIABILITIES Accounts payable $ 34 Accrued liabilities and other 78 Reclamation 1,828 Deferred tax liabilities 10,873 TOTAL LIABILITIES $ 12,813 27